Cognizant Technology Solutions Corporation · NASDAQ:CTSH
Cognizant Technology Solutions — Investor Day (November 2021)
48 slides from Cognizant Technology Solutions's investor day presentation, Nov 18, 2021
Slide 1: Investor briefing
Investor briefing November 18, 2021 Brian Humphries, Chief Executive Officer Jan Siegmund, Chief Financial Officer
Slide 2: Forward-looking statements, non-GAAP financial measures and additional information
Forward-looking statements, non-GAAP financial measures and additional information This investor presentation contains forward looking statements and non-GAAP financial measures. For important details with respect to such statements and measures, as well as a reconciliation of the non-GAAP financial
Slide 3: Strategic update
Strategic update Brian Humphries, Chief Executive Officer 3 2021 Investor briefing
Slide 4: Capturing the growth opportunity
Capturing the growth opportunity A large, growing We’ve invested in the Fueling our growth Our installed base is addressable market1 shift to digital acceleration a huge asset Cognizant revenue ($B) Number of practices each customer works with ~500 commercial hires 7-8% ~$2.0T $18.5 5+ 25% ~$1.5T ~$
Slide 5: Executing against a comprehensive program
Executing against a comprehensive program Refine Strategy Expand Align Margins Portfolio Our purpose Our vision Our values Invest to Supercharge Re-ignite growth Talent Strengthen Partnerships 5 2021 Investor briefing
Slide 6: The Cognizant agenda
The Cognizant agenda Our purpose Why we exist We engineer modern businesses to improve everyday life Our vision To become the preeminent technology services What we aspire to achieve partner to the Global 2000 C-Suite Our values How we work Start with Seek Always Work Do the right Create a point of
Slide 7: Executing a growth strategy
Executing a growth strategy Accelerate Globalize Increase relevance Reposition digital Cognizant to clients our brand Shift our portfolio towards Scale internationally Invest in industry expertise Strengthen our high-growth digital to help our clients be brand credentials services successful Execute
Slide 8: Aligned portfolio to growth strategy
Aligned portfolio to growth strategy Strengthened our digital portfolio with Repositioned for growth by exiting non-core ~$2.5B of digital acquisitions since 2019, parts of the portfolio and investing in strategic organic investments, and partnerships areas Refocused Digital Business Operations (DBO
Slide 9: Supercharged talent
Supercharged talent Talent actions Rebuilding the base of the delivery pyramid • Clarified vision and purpose underpinned by company Freshers onboarded ~50K values, including meritocracy, and diversity and inclusion • Established compelling employee value proposition • Refreshed leadership team with
Slide 10: Strengthened partnerships
Strengthened partnerships Established hyperscaler business groups Complemented our traditional ISV partners with next-gen software / platform vendors Embraced industry-specific partners 10 2021 Investor briefing
Slide 11: Investing to accelerate growth
Investing to accelerate growth ~$2.5B in M&A across cloud, data, IoT, and digital engineering since 2019 Our digital portfolio and Compensation and revised promotions cycle talent 100k+ associates reskilled Resulting in accelerated ~500 commercial resources commercial momentum Our Branding and digit
Slide 12: Accelerate digital
Globalize Increase relevance Reposition Cognizant to clients our brand Accelerate digital Execute our people strategy 12 2021 Investor briefing
Slide 13: Digital is a critical component of Cognizant's strategy
Digital is a critical component of Cognizant’s strategy Clients Talent Financial Helping clients with Cutting-edge, impactful Double-digit their most strategic work that allows us to growth and initiatives attract and retain talent margin accretion 13 2021 Investor briefing
Slide 14: We have strengthened our digital credentials
We have strengthened our digital credentials Actions Results Enhanced our digital capacity Growing businesses Internet of Digital Data Cloud Digital engineering: ~30% CAGR 1H19 – 1H21 Things (IoT) Engineering IoT: ~35% CAGR 1H19 – 1H21 Digital Cognizant Intelligent Business Process Experience Consul
Slide 15: Industry analysts are recognizing our progress
Industry analysts are recognizing our progress “Leader” rankings 2020 Leader in Cloud Services, Digital Workplace, & Salesforce Healthcare 2020 Leader in Intelligent Automation in Business Processes % of analyst reports rank CTSH as a “Leader” vs. Other1 2020 Leader in Agile Software Development 202
Slide 16: Addressing client needs across the entire stack
Addressing client needs across the entire stack With our breadth of technical capabilities and skill sets, we can win by scaling from any number of “on-ramps” along our clients’ journeys Modernizing Shifting to technology platforms agile workflows Eliminating technology debt creates Implementing agi
Slide 17: Globalize Cognizant
Accelerate Increase relevance Reposition digital to clients our brand Globalize Cognizant Execute our people strategy 17 2021 Investor briefing
Slide 18: We've only begun to capitalize on our global opportunity
We’ve only begun to capitalize on our global opportunity Opportunity Actions Results Addressable international Increased international International market $900B1 marketing spend bookings % of revenue outside North America 2020 10% of marketing spend in 2019 to 30% in 2021 up over 30% year-to-date ~
Slide 19: Increase relevance to clients
Accelerate Globalize Reposition digital Cognizant our brand Increase relevance to clients Execute our people strategy 19 2021 Investor briefing
Slide 20: Growing client momentum
Growing client momentum Banking & Financial Services Healthcare & Life Sciences Products & Resources Communications, Media & Tech Globally enabled platform Customer relationship Digital transformation and Cloud-agnostic connected accelerating time to market management customer experience vehicle man
Slide 21: Strategically positioned in Healthcare
Strategically positioned in Healthcare Opportunity Actions Results Healthcare is a $210B market1 Invested in digital solutions, Improved analyst recognition growing at 10% CAGR domain expertise, and 2017 2020-2021 partnerships “Monolithic “Next-gen on-premises app” Modernized core platforms to core-
Slide 22: Financial Services recovery ongoing
Financial Services recovery ongoing Opportunity Actions Results Financial Services & Insurance is a Refreshed commercial and Financial services bookings $370B market1 growing at ~7% CAGR delivery leadership and our growth rate higher than total client-facing teams company YTD in 2021, driven Insuran
Slide 23: Reposition our brand
Accelerate Globalize Increase relevance digital Cognizant to clients Reposition our brand Execute our people strategy 23 2021 Investor briefing
Slide 24: We aim to be a preeminent technology services partner
We aim to be a preeminent technology services partner A rate card An implementation A preferred digital A strategic partner A preeminent work/outsourcing partner with digital and technology and a global leader technology provider capabilities solutions partner in technology services services partner
Slide 25: Repositioning Cognizant as a world-class global, digital brand
Repositioning Cognizant as a world-class global, digital brand A global brand A digital brand An employer of choice Marketing tactics1 (% of campaigns) ~25% Legacy ~80% ~75% Modern ~20% 2019 2021 1 Modern tactics include, among other areas, social, hyper-personalized, and digital campaigns; Legacy t
Slide 26: ESG is part of our business and future
ESG is part of our business and future Hired senior and experienced ESG leader Issued ESG report in June 2021 with assured greenhouse gas emissions data Environmental Exceeded green energy targets (28% of energy from renewable in 2020 in India) Committed in October 2021 to net zero by 2030 Committed
Slide 27: Execute our people strategy
Accelerate Globalize Increase relevance Reposition digital Cognizant to clients our brand Execute our people strategy 27 2021 Investor briefing
Slide 28: At Cognizant, our 318,000+ associates engineer impact
At Cognizant, our 318,000+ associates engineer impact Impact for Impact on Impact on Impact on our clients one another society their lives We’re designing game- We are a high-performing Our associates combine Our people are taking their changing solutions to shape team with heart. Our diverse their
Slide 29: The future looks even brighter
The future looks even brighter High-growth market Digital and international market opportunity Strong financial position Committed to driving shareholder value 29 2021 Investor briefing
Slide 30: Financial outlook
Financial outlook Jan Siegmund, Chief Financial Officer 30 2021 Investor briefing
Slide 31: Q3 results demonstrate growing momentum
Q3 results demonstrate growing momentum 11% 15.8% 18% Constant currency (CC)1 Adjusted operating margin1 Digital revenue growth Y/Y revenue growth Y/Y 44% of total revenue 24% +17,000 ~$18.5B Bookings growth Y/Y Net employees added Q/Q FY2021 revenue guidance2; and +13% YTD +9.8% constant currency r
Slide 32: Executing a growth strategy
Executing a growth strategy Accelerate Globalize Increase relevance Reposition digital Cognizant to clients our brand Shift our portfolio towards Scale internationally Invest in industry expertise Strengthen our high-growth digital to help our clients be brand credentials services successful Execute
Slide 33: 2022–2024 financial outlook
2022–2024 financial outlook Financial goals 8–11% 20–40 bps ~100% total revenue operating margin of net income constant currency CAGR annual expansion free cash flow conversion including ~2 pts. annual inorganic Capital deployment plans1 ~50% acquisitions ~25% share repurchases ~25% dividends to sup
Slide 34: Bookings momentum supports growth outlook
Bookings momentum supports growth outlook Trailing 12-months bookings ($ billion) Bookings strength has been broad-based and led by digital Investments and strong demand have driven year-to-date bookings +13% $21.7 Digital battlegrounds growing $20.6 meaningfully above total company growth $19.8 Win
Slide 35: Digital strengthens financial profile
Digital strengthens financial profile Digital supports revenue growth, margin goals, increases our relevance to clients, and is core to our employee value proposition. Targeted CC growth CAGR 2022–20241 2024 target revenue mix Non-digital Low-to-mid single digits ~45% ~55-60% Digital High-teens to l
Slide 36: A disciplined M&A framework is delivering results
A disciplined M&A framework is delivering results Strategic alignment Revenue synergies supporting International expansion accelerating growth Digital Targeted industry verticals ~$2.5 billion deployed into M&A since 2019 15 acquisitions completed in ’20-’21, 100% Portfolio fit aligned to digital ba
Slide 37: Revenue growth is expected to steadily improve
Revenue growth is expected to steadily improve ~6-9% organic constant currency CAGR ~2 Pts annual inorganic contribution Organic revenue expected to 8-11% C AG R drive +75% of growth ’22-’24 $18.5B Enhanced digital portfolio strengthens $16.7B our growth profile Strong installed base provides ample
Slide 38: Operating margin has reached an inflection point
Operating margin has reached an inflection point Impact from 0.80% anticipated Financial Services contract exit1 Recent operating margin 15.4% performance reflects meaningful Adjusted 14.4% investment to support future operating margin2 revenue growth 2020 2021 guidance 2020 included impact of exoge
Slide 39: Annual adjusted operating margin target expansion of 20-40 bps
Annual adjusted operating margin target expansion of 20-40 bps Targeting annual expansion while maintaining flexibility to manage ~16.5% the business optimally 15.4% Investments SG&A for growth, optimization Gross margin expansion driven by digital Labor costs, T&E, Digital mix, including offset by
Slide 40: Cash flow is healthy and balance sheet is strong
Cash flow is healthy and balance sheet is strong Capital-light model supports free cash flow outlook while strong balance sheet provides financial flexibility $2.3B trailing 12-month free cash flow 1 Annual free cash flow target of approximately 100% of net income 1.2x trailing 12-month free cash fl
Slide 41: Capital allocation is balanced to support future growth
Capital allocation is balanced to support future growth Percentage of total capital deployed Consistent capital deployment $2.7B deployed 120% of free cash flow ~100% of free cash flow framework that balances growth and return of capital to shareholders 25% Programmatic M&A to support strategy Buyba
Slide 42: Management continues to prioritize transparency
Management continues to prioritize transparency Digital Bookings Attrition In Q1 ‘20, we aligned around a In 2020, we began providing growth In 2020, we began providing voluntary consistent, conservative digital rates, further enhanced with book-to-bill attrition. Beginning Q2 ‘21, we began definiti
Slide 43: Investment highlights
Investment highlights 1. Meaningful growth 2. Continued investments in opportunity digital and international markets Supported by a large, growing and fragmented Supporting sustained and consistent revenue industry, and our installed base opportunity growth and margin expansion 3. Strong cash flow 4
Slide 44: Appendix: Forward-looking statements and non-GAAP financial measures
Appendix: Forward-looking statements and non-GAAP financial measures 44 2021 Investor briefing
Slide 45: Forward-looking statements
Forward-looking statements This presentation 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 assumptions
Slide 46: About non-GAAP financial measures
About non-GAAP financial measures To supplement our financial results presented in accordance with GAAP, this investor briefing includes references to the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: Adjusted Operating Margin, net cash, free ca
Slide 47: Reconciliations of non-GAAP financial measures
Reconciliations of non-GAAP financial measures (in millions, except per share amounts) Full Year Three Months Guidance Dec 31, 2020 Sep 30, 2021 FY 2021 GAAP operating margin 12.7% 15.4% (a) Class Action Settlement Loss - 0.4 0.1% (b) Realignment charges 0.3 - - 2020 Fit for Growth Plan restructurin
Slide 48: Reconciliations of non-GAAP financial measures
Reconciliations of non-GAAP financial measures Reconciliation of net cash Reconciliations of free cash flow Sep 30, TTM (in billions) 2021 Sep 30, Cash and cash equivalents $ 1.7 (in billions) 2021 Net cash provided by operating activities $ 2.6 Short-term investments 0.7 Purchases of property and e
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