Cognizant Technology Solutions Corporation · NASDAQ:CTSH
Cognizant Technology Solutions — Q2 2023 Earnings Presentation
18 slides from Cognizant Technology Solutions's earnings presentation, Aug 2, 2023
Slide 1: Second Quarter 2023 Financial Results and Highlights
Exhibit 99.3 Second Quarter 2023 Financial Results and Highlights August 2, 2023 © 2023 Cognizant
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 assump
Slide 3: Results Summary: Q2 2023
Results Summary: Q2 2023 Revenue GAAP and Adjusted Operating Margin1 Down 0.4% Y/Y as reported, and 0.1% Y/Y in constant currency1 15.5% 15.5% 14.2% $4,906M $4,886M 11.8% Q2 '22 Q2 '23 Q2 '22 Q2 '23 Q2 '22 Q2 '23 GAAP Operating Margin Adjusted Operating Margin1 Diluted Earnings Per Share (EPS) Cash
Slide 4: Revenue, Operating Margin and EPS
Revenue, Operating Margin and EPS $ in millions except per share amounts $4,906 $4,857 $4,839 $4,886 $4,826 $4,812 $1.08 $1.14 $1.17 $1.11 $1.10 $1.01 1 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Revenue Adjusted Diluted EPS Revenue Growth, Operating Margin and EPS Q1 '22 Q2 '22 Q3 '22 Q4 '221 Q1 '23
Slide 5: Revenue Performance: Q2 2023
Revenue Performance: Q2 2023 Segments Geography $ in millions $ in millions Rest of World Communications, Media & (4.9%) Y/Y Technology —% Y/Y CC (1.2%) Y/Y (0.4%) Y/Y CC Europe $330 $806 Financial Services +7.1% Y/Y (5.1%) Y/Y +6.3% Y/Y CC $1,463 (4.8%) Y/Y CC $967 Products & Resources +3.2% Y/Y $1
Slide 6: Financial Services
Financial Services Revenue1 Q2 2023 Geography $ in millions $ in millions $1,528 $1,542 $1,521 Rest of World $1,481 $1,476 $1,463 (14.9%) Y/Y (11.8%) Y/Y CC Europe $126 +6.9% Y/Y +6.1% Y/Y CC $310 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 $1,027 1 Revenue growth North America Q1 '22 Q2 '22 Q3 '22 Q4
Slide 7: Health Sciences
Health Sciences Revenue Q2 2023 Geography $ in millions $ in millions Rest of World $1,426 $1,433 $1,440 $1,392 $1,408 $1,405 —% Y/Y +5.1% Y/Y CC $28 Europe +5.3% Y/Y +2.6% Y/Y CC $179 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 $1,233 Revenue growth Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 North Ame
Slide 8: Products & Resources
Products & Resources Revenue Q2 2023 Geography $ in millions $ in millions $1,177 $1,148 $1,148 Rest of World $1,130 $1,140 +7.5% Y/Y $1,118 +11.8% Y/Y CC $100 Europe +7.2% Y/Y +7.6% Y/Y CC $297 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 $780 Revenue growth Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 N
Slide 9: Communications, Media & Technology
Communications, Media & Technology Revenue Q2 2023 Geography $ in millions $ in millions $816 $806 Rest of World $776 $783 $784 $785 (2.6%) Y/Y +6.3% Y/Y CC $76 Europe +9.0% Y/Y +8.5% Y/Y CC $181 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 $549 Revenue growth North America Q1 '22 Q2 '22 Q3 '22 Q4 '22
Slide 10: Trailing Twelve Month Bookings
Trailing Twelve Month Bookings1 $ in billions $26.4 $25.6 $24.1 $23.2 $23.1 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q2 2023 bookings increased 17% year-over-year Trailing twelve month bookings of $26.4 billion, which represented a book-to-bill of 1.4x 1 See “About Non-GAAP Financial Measures and Performa
Slide 11: Employee Metrics
Employee Metrics Headcount in thousands 341.3 349.4 355.3 351.5 345.6 340.4 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Additional Employee Metrics Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Trailing 12-Month Voluntary Attrition - Tech Services 29.8% 31.1% 29.2% 25.6% 23.1% 19.9% Utilization Q1 '22 Q2
Slide 12: Cash Flow, Balance Sheet & Capital Allocation
Cash Flow, Balance Sheet & Capital Allocation Annual Quarterly $ in millions $ in millions Share $771 $1,066 $315 $222 Repurchases $1,422 Acquisitions $409 $970 $776 $318 $315 $367 $367 $214 Dividends $509 $564 $578 $141 $141 $139 $150 $148 FY 2021 FY 2022 Trailing 12-Months Q2 '22 Q3 '22 Q4 '22 Q1
Slide 13: Third Quarter and Full-Year 2023 Guidance
Third Quarter and Full-Year 2023 Guidance1 FY 2023 Guidance Assumptions $19.2 to $19.6B Revenue Includes ~100 bps of inorganic contribution (0.9%)-1.1% Y/Y or (1.0%)-1.0% Y/Y CC Adjusted Operating Margin2 14.2% to 14.7% Interest Income ~$115M Adjusted effective tax rate2 23% to 24% Share Count 506M
Slide 14: Appendix: About Non-GAAP Financial Measures and Performance Metrics
APPENDIX: About Non-GAAP Financial Measures and Performance Metrics
Slide 15: About Non-GAAP Financial Measures and Performance Metrics
About Non-GAAP Financial Measures and Performance Metrics 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
Slide 16: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures (in millions, except per share amounts) Three Months Ended: Guidance Full Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Year 2023(1) GAAP income from operations $ 724 $ 760 $ 798 $ 686 $ 702 $ 577 NextGen chargesa) — — —
Slide 17: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Notes: (a) NextGen charges for the three and six months ended June 30, 2023 include $78 million of employee separation costs, $37 million of facility exit costs and $2 million of third party and other costs. We expect to record total costs of approximat
Slide 18: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Reconciliation of free cash flow Three Months Ended (in millions) Mar 31, 2022 June 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Net cash provided by operating activities $ 306 $ 528 $ 1,032 $ 702 $ 729 $ 36 Purchases of property and equ
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