Cognizant Technology Solutions Corporation · NASDAQ:CTSH

Cognizant Technology Solutions — Q3 2019 Earnings Presentation

20 slides from Cognizant Technology Solutions's earnings presentation, Oct 30, 2019

  1. Slide 1: Third Quarter 2019 Financial Results and Highlights

    Exhibit 99.2 THIRD QUARTER 2019 Financial Results and Highlights October 30, 2019 © 2019 Cognizant

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This earnings supplement includes statements which 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 assu

  3. Slide 3: Third Quarter Summary

    Third Quarter Summary REVENUE • $4.25B, increased 4.2% (5.1% CC1) Y/Y • GAAP Operating Margin of 15.7%, declined 260bps Y/Y OPERATING MARGIN • Adjusted Operating Margin1 of 17.3%, declined 120bps Y/Y NET INCOME • $497M, increased 4.2% Y/Y DILUTED EARNINGS • GAAP diluted EPS of $0.90, increased 9.5%

  4. Slide 4: Revenue and GAAP & Adjusted Diluted EPS

    Revenue and GAAP & Adjusted Diluted EPS $ IN MILLIONS EXCEPT PER SHARE AMOUNTS $4,248 $4,129 $4,141 $4,078 $4,110 $4,006 $3,912 $3,828 $3,766 $3,670 $3,546 $1.08 $1.05 $1.05 $0.98 $0.96 $0.94 $0.91 $0.94 $0.83 $0.88 $0.75 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 R

  5. Slide 5: Revenue Performance: Q3 2019 Segments and Geography

    Revenue Performance: Q3 2019 Segments Geography $ IN MILLIONS $ IN MILLIONS COMMUNICATIONS, REST OF WORLD MEDIA & TECHNOLOGY +8.9% Y/Y +9.4% Y/Y +11.1% Y/Y CC +10.6% Y/Y CC $270 FINANCIAL EUROPE $615 SERVICES +4.4% Y/Y +8.8% Y/Y CC +1.9% Y/Y $755 $1,492 +3.0% Y/Y CC PRODUCTS & RESOURCES +11.9% Y/Y $

  6. Slide 6: GAAP & Adjusted Operating Margin

    GAAP & Adjusted Operating Margin 19.2% 18.3% 18.5% 17.6% 17.2% 17.7% 17.2% 17.3% 17.7% 17.7% 17.3% 16.4% 16.5% 16.7% 16.8% 17.0% 16.1% 16.0% 16.1% 15.7% 14.9% 13.1% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 GAAP OPERATING MARGIN ADJUSTED OPERATING MARGIN 6

  7. Slide 7: Financial Services Revenue Geography

    Financial Services Revenue Geography $ IN MILLIONS $ IN MILLIONS REST OF WORLD $1,492 (2.2%) Y/Y $1,469 $1,464 $1,473 $1,461 $1,451 +0.2% Y/Y CC $1,427 $1,427 $1,436 $1,406 $131 $1,376 EUROPE +4.0% Y/Y +8.1% Y/Y CC $309 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 $1,

  8. Slide 8: Healthcare Revenue Geography

    Healthcare Revenue Geography $ IN MILLIONS $ IN MILLIONS REST OF WORLD +38.5% Y/Y $1,202 EUROPE $1,189 $1,175 +53.6% Y/Y CC $1,156 $1,165 +31.5% Y/Y $18 $1,125 $1,121 $1,134 +34.5% Y/Y CC $1,085 $121 $1,050 $1,003 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 $1,036 Re

  9. Slide 9: Products & Resources Revenue Geography

    Products & Resources Revenue Geography $ IN MILLIONS $ IN MILLIONS REST OF WORLD $966 +25.5% Y/Y $914 $927 +26.9% Y/Y CC $863 $891 $821 $840 $69 $774 $782 $737 $747 EUROPE +5.5% Y/Y +10.8% Y/Y CC $210 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 $687 Revenue Growth NO

  10. Slide 10: Communications, Media & Technology Revenue Geography

    Communications, Media & Technology Revenue Geography $ IN MILLIONS $ IN MILLIONS REST OF WORLD +13.0% Y/Y +12.7% Y/Y CC $585 $595 $607 $615 $541 $562 $509 $52 $467 $480 $494 EUROPE $430 (14.8%) Y/Y (10.2%) Y/Y CC $115 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 $448

  11. Slide 11: Employee Metrics: Headcount and Attrition

    Employee Metrics Headcount and Attrition NUMBER OF EMPLOYEES IN THOUSANDS 24% 24% 23% 23% 22% 23% 20% 19% 18% 19% 289.9 15% 288.2 281.6 285.8 274.2 268.9 261.2 260.0 261.4 256.8 256.1 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 HEADCOUNT QUARTERLY ANNUALIZED ATTRITIO

  12. Slide 12: Cash Flow, Balance Sheet & Capital Allocation

    Cash Flow, Balance Sheet & Capital Allocation $ IN MILLIONS $118 $116 $116 $116 $1,514 $633 $267 $86 $118 $771 $1,054 $111 $332 $45 $632 $30 $89 $13 $90 $477 $116 $35 $259 $316 $6 $197 $66 $144 $146 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 ACQUISITIONS SHARE REPURCHASES DIVI

  13. Slide 13: Revenue & Operating Metrics

    Revenue & Operating Metrics REVENUE BY… Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 SERVICE LINE OUTSOURCING 42.0% 42.9% 42.3% 41.8% 41.4% 41.1% 40.4% CONSULTING & TECH SERVICES 58.0% 57.1% 57.7% 58.2% 58.6% 58.9% 59.6% CONTRACT TYPE FIXED BID 38.9% 36.2% 36.4% 36.6% 35.7% 35.7% 36.3% TIME & MATERIAL

  14. Slide 14: 2020 Fit for Growth Plan

    2020 Fit for Growth Plan Protect and optimize the core 2020 Fit for Growth Plan Drive efficiency, tooling, delivery optimization, protect $150-200M Restructuring charges renewals, strengthen industry mix and scale internationally $500-550M Gross annualized savings Streamline operating model Drive ef

  15. Slide 15: Guidance

    Guidance1 • Q4 ’19: 2.1-3.1% Y/Y CC2 REVENUE • FY19: 4.6-4.9% Y/Y CC3 FY19 ADJUSTED OPERATING MARGIN4 • Approximately 16.5-17.0% FY19 TAX RATE • 24-26% FY19 SHARE COUNT • Approximately 560 million FY19 ADJUSTED DILUTED EPS4 • $3.95-3.98 1 Guidance is as of October 30, 2019 2 4Q’19 revenue guidance b

  16. Slide 16: Appendix: About Non-GAAP Financial Measures

    APPENDIX: About Non-GAAP Financial Measures

  17. Slide 17: About Non-GAAP Financial Measures

    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

  18. Slide 18: Reconciliations of Non-GAAP Financial Measures (Unaudited)

    Reconciliations of Non-GAAP Financial Measures (Unaudited) (In millions, except per share amounts) Three Months Ended: Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Guidance 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Full Year 2019 GAAP income fr

  19. Slide 19: Reconciliations of Non-GAAP Financial Measures (Unaudited)

    Reconciliations of Non-GAAP Financial Measures (Unaudited) (a) During the three months ended September 30, 2019, we incurred $65 million in realignment charges that include $33 million in employee separation costs, $18 million in employee retention costs and $14 million in third party realignment co

  20. Slide 20: Reconciliations of Non-GAAP Financial Measures (Unaudited)

    Reconciliations of Non-GAAP Financial Measures (Unaudited) (f) Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income: Three Months Ended Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, 2017 2017 2017 2017 2018 2018 2018 2018

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