Cognizant Technology Solutions Corporation · NASDAQ:CTSH
Cognizant Technology Solutions — Q4 2020 Earnings Presentation
24 slides from Cognizant Technology Solutions's earnings presentation, Feb 3, 2021
Slide 1: Fourth Quarter 2020 Financial Results and Highlights
Fourth Quarter 2020 Financial Results and Highlights February 3, 2021 Exhibit 99.3
Slide 2: Forward-Looking Statements
Forward-Looking Statements This earnings supplement includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assum
Slide 3: Results Summary: Q4 2020
Results Summary: Q4 2020 1 See “About Non-GAAP Financial Measures” at the end of this earnings supplement for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable. 2 Cognizant made an offer in the fourth quarter to settle and exit a large custom
Slide 4: Results Summary: FY2020
Results Summary: FY2020 REVENUE Down -0.8% Y/Y as reported and down -0.7% Y/Y constant currency 2020 includes -70bps impact from the offer made to settle and exit a large customer engagement1 and -110bps impact from exit of certain content services OPERATING MARGIN 2020 includes -80bps impact from A
Slide 5: Revenue and GAAP & Adjusted Diluted EPS
$3,912 $4,006 $4,078 $4,129 $4,110 $4,141 $4,248 $4,284 $4,225 $4,000 $4,243 $4,184 $0.94 $1.05 $1.05 $0.98 $0.91 $0.94 $1.08 $1.07 $0.96 $0.82 $0.97 $0.67 Revenue Adjusted Diluted EPS Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 $ In Millions Except Per Share
Slide 6: Revenue Performance: Q4 2020
$3,206 $699 $279 $1,305 $1,270 $948 $661 Revenue Performance: Q4 2020 PRODUCTS & RESOURCES COMMUNICATIONS, MEDIA & TECHNOLOGY 1 HEALTHCARE FINANCIAL SERVICES 2 NORTH AMERICA EUROPE 2 REST OF WORLD Segments $ IN MILLIONS Geography $ IN MILLIONS +4.6% Y/Y +3.4% Y/Y CC (1.6%) Y/Y (2.4%) Y/Y CC +4.0% Y/
Slide 7: Revenue Performance: FY 2020
$12,581 $2,988 $1,083 $5,621 $4,852 $3,696 $2,483 Revenue Performance: FY 2020 PRODUCTS & RESOURCES COMMUNICATIONS, MEDIA & TECHNOLOGY 1 HEALTHCARE NORTH AMERICA EUROPE 2 REST OF WORLD Segments $ IN MILLIONS Geography $ IN MILLIONS +1.4% Y/Y +1.6% Y/Y CC (2.0%) Y/Y (1.7%) Y/Y CC +3.3% Y/Y +3.1% Y/Y
Slide 8: GAAP & Adjusted Operating Margin
17.7% 16.7% 18.3% 16.8% 13.1% 14.9% 15.7% 14.6% 13.7% 11.7% 14.2% 11.1% 17.7% 19.2% 18.5% 17.0% 16.0% 16.1% 17.3% 17.0% 15.1% 14.1% 15.9% 12.3% GAAP Operating Margin Adjusted Operating Margin Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 GAAP & Adjusted Operatin
Slide 9: Financial Services
$990 $185 $130 Financial Services NORTH AMERICA EUROPE1 REST OF WORLD Q1 ‘18 Q2 ‘18 Q3 ‘18 Q4 ‘18 Q1 ‘19 Q2 ‘19 Q3 ‘19 Q4 ‘19 Q1 ‘20 Q2 ‘20 Q3 ‘20 Q4 ‘20 Y/Y 6.2% 4.5% 2.6% 1.7% (1.7%) 0.3% 1.9% 1.2% 1.0% (5.2%) (1.5%) (11.1%) Y/Y CC 3.9% 3.5% 3.5% 2.8% 0.2% 1.7% 3.0% 1.5% 1.8% (4.3%) (2.2%) (11.4%)
Slide 10: Healthcare
$1,090 $158 $22 Healthcare NORTH AMERICA EUROPE REST OF WORLD (8.3%) Y/Y (9.0%) Y/Y CC +17.9% Y/Y +11.6% Y/Y CC +2.5% Y/Y and CC Revenue Revenue Growth $ IN MILLIONS $ IN MILLIONS Q1 ‘18 Q2 ‘18 Q3 ‘18 Q4 ‘18 Q1 ‘19 Q2 ‘19 Q3 ‘19 Q4 ‘19 Q1 ‘20 Q2 ‘20 Q3 ‘20 Q4 ‘20 Y/Y 11.8% 10.1% 9.6% 6.8% 3.9% (1.9%
Slide 11: Products & Resources
$675 $206 $67 NORTH AMERICA EUROPE Products & Resources The decline was driven by retail, consumer goods, travel and hospitality clients that were particularly adversely affected by the pandemic, partially offset by double-digit constant currency growth in manufacturing, logistics, energy and utilit
Slide 12: Communications, Media & Technology
$451 $150 $60$509 $541 $562 $585 $595 $607 $615 $632 $626 $580 $616 $661 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Communications, Media & Technology NORTH AMERICA REST OF WORLD +15.4% Y/Y +18.0% Y/Y CC +19.0% Y/Y +12.1% Y/Y CC (0.7%) Y/Y and CC EUROPE Reven
Slide 13: Employee Metrics
83% 83% 83% 83% 83% 83% 84% 85% 83% 80% 85% 87% 92% 93% 93% 92% 91% 92% 92% 92% 91% 91% 93% 91% Offshore, Excluding Trainees % Onsite % Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Employee Metrics Headcount and Annualized Attrition NUMBER OF EMPLOYEES IN THOUS
Slide 14: Cash Flow, Balance Sheet & Capital Allocation
$468 $453 $480 $1,111 $617 $1,123 $1,261 $2,247 $1,621 FY2018 FY2019 FY2020 Cash Flow, Balance Sheet & Capital Allocation $ IN MILLIONS Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 ’20 Q2 ’20 Q3 ’20 Q4 ’20 OPERATING CASH FLOW $388 $640 $862 $702 $269 $575 $717 $938 $497 $979 $925 $898
Slide 15: Revenue & Operating Metrics
REVENUE BY… Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Q1 ’20 Q2 ’20 Q3 ’20 Q4 ’20 OUTSOURCING 42% 43% 42% 42% 41% 41% 40% 40% 40% 39% 38% 39% CONSULTING & TECH SERVICES 58% 57% 58% 58% 59% 59% 60% 60% 60% 61% 62% 61% FIXED BID 39% 36% 36% 37% 36% 36% 36% 37% 37% 37% 37% 37% TIME & MATE
Slide 16: 2020 Fit for Growth Plan Updates
2020 Fit for Growth Protect and optimize the core Drive efficiency, tooling, delivery optimization, protect renewals, strengthen industry mix and scale internationally Reduce duplication and simplify delivery Reinvest in sales, branding, talent and automation tools Eliminate costs to fund growth inv
Slide 17: 2021 Guidance
2021 Guidance1 1 Guidance is as of February 3, 2021 and does not account for any potential impact from events such as changes to tax and immigration policies. 2 A full reconciliation of Adjusted Operating Margin, Adjusted Diluted EPS and Adjusted effective tax rate guidance to the corresponding GAAP
Slide 18: APPENDIX: About Non-GAAP Financial Measures
APPENDIX: About Non-GAAP Financial Measures
Slide 19: About Non-GAAP Financial Measures
To supplement our financial results presented in accordance with GAAP, this earnings supplement includes references to the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted
Slide 20: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Please refer to page 22, 23 and 24 of this earnings supplement for corresponding Non-GAAP notes. (in millions, except per share amounts) Three Months Ended: Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 3
Slide 21: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Please refer to page 22, 23 and 24 of this earnings supplement for corresponding Non-GAAP notes. (in millions, except per share amounts) Year Ended: Dec 31, 2019 Dec 31, 2020 Guidance Full Year 2021 GAAP income from operations $ 2,453 $ 2,114 Realignmen
Slide 22: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Notes: (a) During the fourth quarter of 2020, we incurred $2 million of realignment charges, solely related to professional fees. For the full year 2020, we incurred $42 million of realignment charges that include $27 million of professional fees and $1
Slide 23: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures (g) Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income: Three Months Ended Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2
Slide 24: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures (h) During the third quarter of 2020, after a thorough analysis of the impact of several changes in tax law on the cost of earnings repatriation and considering our strategic decision to increase our investments to accelerate growth in various internati
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