Cognizant Technology Solutions Corporation · NASDAQ:CTSH
Cognizant Technology Solutions — Q1 2023 Earnings Presentation
18 slides from Cognizant Technology Solutions's earnings presentation, May 3, 2023
Slide 1: First Quarter 2023 Financial Results and Highlights
Exhibit 99.3 First Quarter 2023 Financial Results and Highlights May 3, 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: Q1 2023
Results Summary: Q1 2023 Revenue GAAP and Adjusted Operating Margin1 Down 0.3% Y/Y as reported, or up 1.5% Y/Y in constant currency1 $4,826M $4,812M 15.0% 14.6% Q1 '22 Q1 '23 Q1 '22 Q1 '23 Diluted Earnings Per Share (EPS) Cash Flow $1.14 $729M $1.11 $631M $1.07 $1.08 $306M $186M Q1 '22 Q1 '23 Q1 '22
Slide 4: Revenue, Operating Margin and EPS
Revenue, Operating Margin and EPS $ in millions except per share amounts $4,906 $4,857 $4,839 $4,826 $4,812 $1.08 $1.14 $1.17 $1.11 $1.01 1 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Revenue Adjusted Diluted EPS Revenue Growth, Operating Margin and EPS Q1 '22 Q2 '22 Q3 '22 Q4 '221 Q1 '23 Y/Y 9.7% 7.0% 2.4%
Slide 5: Revenue Performance: Q1 2023
Revenue Performance: Q1 2023 Segments Geography $ in millions $ in millions Rest of World Communications, Media & (4.9%) Y/Y Technology +0.9% Y/Y CC +1.2% Y/Y +3.9% Y/Y Europe $328 $785 Financial Services +3.0% Y/Y (3.4%) Y/Y +9.7% Y/Y CC $1,476 (1.4%) Y/Y CC $939 Products & Resources (1.1%) Y/Y $1,
Slide 6: Financial Services
Financial Services Revenue1 Q1 2023 Geography $ in millions $ in millions $1,528 $1,542 Rest of World $1,521 $1,481 $1,476 (7.9%) Y/Y (3.5%) Y/Y CC Europe $129 +1.9% Y/Y +8.5% Y/Y CC $314 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 $1,033 1 Revenue growth North America Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 (4.4
Slide 7: Health Sciences
Health Sciences Revenue Q1 2023 Geography $ in millions $ in millions $1,408 $1,426 $1,433 Rest of World $1,392 $1,405 (27.3%) Y/Y $24 (20.4%) Y/Y CC Europe (1.8%) Y/Y +1.7% Y/Y CC $161 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 $1,248 Revenue growth Q1 '22 Q2 '22 Q3'22 Q4'22 Q1'23 North America Y/Y 8.1% 6.
Slide 8: Products & Resources
Products & Resources Revenue Q1 2023 Geography $ in millions $ in millions $1,130 $1,140 $1,148 $1,148 Rest of World $1,118 +3.3% Y/Y +7.6% Y/Y CC $95 Europe +1.8% Y/Y +10.0% Y/Y CC $282 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 $741 Revenue growth Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 North America Y/Y 13.2%
Slide 9: Communications, Media & Technology
Communications, Media & Technology Revenue Q1 2023 Geography $ in millions $ in millions $816 Rest of World $776 $783 $784 $785 —% Y/Y +10.0% Y/Y CC $80 Europe +11.7% Y/Y +19.6% Y/Y CC $182 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 $523 Revenue growth North America Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 (1.9%)
Slide 10: Trailing Twelve Month Bookings
Trailing Twelve Month Bookings1 $ in billions $25.6 $24.1 $23.4 $23.2 $23.1 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q1 2023 bookings increased 28% year-over-year Trailing twelve month bookings of $25.6 billion, which represented a book-to-bill of 1.3x 1 See “About Non-GAAP Financial Measures and Performa
Slide 11: Employee Metrics
Employee Metrics Headcount in thousands 341.3 349.4 355.3 351.5 340.4 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Additional Employee Metrics Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 1 Trailing 12-Month Voluntary Attrition - Tech Services 30% 31% 29% 26% 23% Utilization Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Offshore
Slide 12: Cash Flow, Balance Sheet & Capital Allocation
Cash Flow, Balance Sheet & Capital Allocation Annual Quarterly $ in millions $ in millions Share $771 $1,170 $315 $222 Repurchases $1,422 Acquisitions $474 $409 $970 $776 $318 $315 $367 Dividends $367 $509 $564 $571 $143 $141 $141 $139 $150 FY 2021 FY 2022 Trailing 12-Months Q1 '22 Q2 '22 Q3 '22 Q4
Slide 13: Second Quarter and Full-Year 2023 Guidance
Second Quarter and Full-Year 2023 Guidance1 FY 2023 Guidance Assumptions $19.2 to $19.6B Revenue Includes ~100 bps of inorganic contribution (1.2%)-0.8% Y/Y or (1.0%)-1.0% Y/Y CC Adjusted Operating Margin2 14.2% to 14.7% Interest Income ~$85M Adjusted effective tax rate2 24% to 26% 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 Year 2023(1) GAAP operating margin 15.0 % 15.5 % 16.4 % 14.2 % 14.6 % NextGen charges(a) — — — — — ~1.8% Adjusted
Slide 17: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Notes: (a) In connection with the NextGen program, which was initiated in the second quarter of 2023, we expect to record costs of approximately $400 million with approximately $350 million of such costs anticipated in 2023 and approximately $50 million
Slide 18: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Reconciliation of free cash flow Three Months Ended Mar 31, June 30, Sep 30, Dec 31, Mar 31, (in millions) 2022 2022 2022 2022 2023 Net cash provided by operating activities $ 306 $ 528 $ 1,032 $ 702 $ 729 Purchases of property and equipment (120) (43)
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