Cognizant Technology Solutions (CTSH) 3 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, welcome to the Cognizant Technology Solutions Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. Thank you. I would now like to turn the conference over to Mr. Tyler Scott, Vice President, Investor Relations. sir. ahead, go Please

and a everyone. release copy the XXXX supplement operator, should and now, have for results. quarter third received of company's good you, By afternoon, you investor Thank the earnings

are copies have Officer; we call and not, have Siegmund, today's you available our Financial The on Chief website, Humphries, Brian Chief on are Jan speakers cognizant.com. Executive If Officer.

on questions the would that These subject some company's contain comments described filings made SEC. other Before responses statements. you of of with in and some your remind we today's like begin, statements and to to may and I forward-looking the the to call uncertainties the release the are earnings risks as

provide financial our earnings Brian Reconciliations in we the over Additionally, call now be to useful found SEC. where measures non-GAAP go measures will that, for today, the turn financial I'd With our with to can of and certain to Humphries. GAAP investors. Brian. ahead, the like we company's other filings corresponding call Please the release non-GAAP during reference information appropriate believe measures that

Thank you, everyone. Tyler. Good afternoon,

XX XX.X% Third points basis quarter billion, up grew short of and X.X% sequentially $X.X of to our revenue. expectations. revenue points operating margin in year-over-year constant XX Adjusted year-over-year was currency, basis

elevated on population. centers. already and While resources and offshore billable that U.S. hires in and intended a the and bookings programs. accelerated non-certain and a magnified to targeted a travel highest is series of the of trend, compensation focus resources, we COVID-induced increase Financial subcontractors, lateral near macroeconomic driver given have our reduction initiated in in revenue this this margin to billable enhanced head dollar backdrop per reverse a impact is shift reduction and U.S. onshore visa including a To onshore recent action of are headcount revenue, of a period primary the attrition, impacted delivery visa revenue in following reduction shortfall travel relates quarters, this

While these are gaining it is clear fourth traction, therefore, than expect to somewhat headwinds in QX. of these the slower We, in ahead actions continue progress previously anticipated. quarter,

to the employee attrition Let last voluntary We've points in Voluntary X have engagement of backdrop, initiatives, and was global XX% sequentially third me basis basis. expected resignations, indicator over actions a your sequentially X an XX-month the to turn and higher X the past attrition little which fell quarter. daily than across fell leading a reduced increase on led annualized the now attrition, taken to attention points in trailing quarter year. with months. reduce extensive a an globe uncertain to coupled These attrition voluntary macroeconomic on

attract, in meaningful positive reductions maintain attrition refined focused and to We in continuing benefits momentum and to remain fourth our quarter. retain are comprehensive sequential voluntary expect promotion effort on strategy, employees. initiative, the rally enhanced and To compensation our programs. on be our people we includes development, resignations, and We more which learning

is we showing digital cycles or client and has strategy exposed projects. we seeing especially backdrop international year-over-year return X.Xx We're X to instance, environment, macroeconomic investment. In longer furloughs to These merit lower-priority to business, we've outcomes, the guidance. point their solid, bookings deal now address of our a more U.K. meaning we which quarter the Jan months ratio We weakness. from to Continental cycles in the discuss in the contributed will basis. solution quarter. quarter, a our material a the engagement most to of ratio we communicated economic factors this impact our a I are We've all but in retail. discretionary projects sciences for in and associates we deliver clients weakness signs will across have industries. remains Europe From recently the X.Xx second would sell like trailing remain that X a quarter in curtailing despite our uncertain decisions on closely early year's will mortgage accelerate the time banking, in those an book-to-bill decline For signs fourth also spending, of of the expect been of fourth to of seen slowing, XXXX, in segment, see commercial of associates. a reduced Industry-wise, with Health view, seen representing in-period slowing while book-to-bill space and and X% [indiscernible] clients XX-month to third investment on and slowing of and of of scrutinizing next some conditions. on

business our driven by year-over-year insurance to of digital currency, are improved industry This experience. grew of from lines demand X.X% led includes insurance in performance. impact all of now the Financial growth capabilities by Services their insurance, carriers constant negative user in XXX of and In points exit for enhancing products segment our business. Turning new basis Samlink. a

platform, transformation and book For several also large-scale We us migrations. were to efficiencies initiatives cloud example, digital US to data We're include drive portfolio. to its more sustainable. partners technology travel significant revenue operational helping through products. speed in the their users develop biotechnology I'm that of grew and manage in pharmaceutical goods a X.X% is data them clinical worldwide. analysis across our operations. and solution Japanese Health grew analytics was driven partner services streamlines reactions modern year-over-year to and has to and patient a a SaaS revenue selected capabilities secure digital Resolution companies scale logistics, care turned Growth pharmaceutical the to application agreement [indiscernible], and improve by surpassed that multiyear ecosystem advanced demand digital countries year-over-year and discovery, X.X% pleased execute among currency. enabled and as that note company, by services clients. environment for our has its across payer Ireland a digitally hospitality in health XXX,XXX constant XXX Resources, with currency, to and to Products agile pharmaceutical Life and in clients. global drug closed provide transforming driven in and shared trials help constant automotive, consolidate, core by improve AXA for create that's modernize among U.K. our health data-rich, Sciences technology signed investigator modernization and AXA IT [indiscernible] Cognizant help adverse and consumer In a of

map. desk. our and extended service edge our and support relationship AI client deliver operations infrastructure selected be and year-over-year well ambitious in During and has revenue also XX.X% solutions. as grew We'll Centrica, the infrastructure digital define connectivity Freshfields to services. supplier U.K.'s transformation IT application of outsourcing Media their substantial a had the management. infrastructure services, road the first with we testing, quarter, services intelligent devices, by IT collaboration encompassing energy legal its managed energy We're largest Qualcomm's their clients. XG the us digital sector, to collaboration which long-standing business-critical IoT, technology center Technology our XG, Qualcomm our driven manage Freshfields expertise managing currency, in and strength among data help new Atlanta. We've global and constant support The as transformation with a applications native global digital cloud experience with and deep in combines in through will XG analytics of also Communications, expanding accelerate Cognizant win service plans. providing to IT traditionally firmed expansion been XX/X latecomer

earnings As I call, an mentioned remains in last our competitiveness. tool M&A important our targeted for enhancing

and our the M&A targets in in have strategy with pipeline We capital line framework. several allocation

finance by align satisfaction acquisition services As our anticipated Cloud HR in always, Virtual, stage, complement management strategic the partner on and which These announced with closing existing continue new and nearly Workday are based which to to At an strategy. opportunities, shareholders Platform. Workday we year-end services Yesterday, will XXX we our expect conditions. we close Dallas. welcome agreement practices acquire XXXX, is focus professional to and practice. among our to application of a to to its the of advisory employees OneSource The Workday on practices value-accretive subject

where leadership Last centricity of [indiscernible] team. believe we revenue growth our will the that a our Kumar, improve past help us He President strengthen client for X [indiscernible], month, Americas. and Ravi served President will U.S. to continue from Ravi mindset he years. we join in brings mid-January trajectory. Importantly, Cognizant as

Practice. We Engineering us also he of with Both was strategic and Accenture. in in announced Prasad the that, from Global highly talent speak ability world-class Cognizant, XX announcements Sankaran where and Bain, Software Prasad X as transformation. the key leading he and Platform enterprise joined leadership new to firm's Technology region of support Practice. Head Americas technology the Vice Senior areas our President attract our spent for senior roles years Prior to Enterprise yesterday a

things the Jan, must in offshore to like period while we mix a knows leadership entire call our we including and in globally and team the economic of passing Before environment. would control, better getting dynamic right that can a that stress on uncertainty, the to demand on resources we're I optimizing execute

to and changes. is our which to operational quickly to hone We continue enable focus to discipline, on adapt will intended us demand

our uncertain on it. in we're market we opportunity an While macroeconomic optimistic within the environment, key services highly and remain

in to our to quarter Jan, in from attrition the voluntary to who growth. reducing our and be fourth voluntary questions. and repivot we fourth us outlook transformation we quarter turn of to conversations will Finally, sustained progress quarter, strategic cover client before rates, innovation, With meaningful following in allowing take sequential over resignation reductions more details that, the your fulfillment expect financial the I'll call

was lower An SG&A with maintain year-over-year North to in in it the staffing for industries. pockets everyone. meet discipline, of weaker-than-expected from commercial headcount below by weaknesses Thank you, revenue in and rupee certain driven The talent afternoon, the billable North performance backdrop was guidance bookings attrition, to for the Indian offset leverage, revenue operating and Brian, resulted to forecast. revenue levels and margin our which in depreciation made challenging us uncertain benefit of America. range, QX strong primarily sequential competition Higher-than-expected required and by macroeconomic expansion. good revenue our America, coupled led

grew was quarter. acquisitions currency. details of points of X% revenue at the the revenue XX Now from moving an year-over-year or growth a currency. reported digital X.X% for year. the and quarter, represented year on approximately QX includes basis Year-over-year basis year-over-year for negative XX% X.X% at of Samlink impact total from to from representing or the of constant increase growth period. revenue constant QX, the billion, points this approximately up Digital as our sale points prior $X.X XX% of in beginning In XX X completed the

the taken slowed Within unchanged Financial us seeing but spend discussing QX. expected of our softening Brian of and clients. book-to-bill factors in a in in-period growth expectations. demand headcount the X.Xx, higher bookings largest revenue performance slower emerge digital our more and through of Our which growth to a lower revenue discussed X X% across banking also and This segments. material bookings million we earlier. North segment XX-month portfolio environment a $XX.X has year-over-year QX I reflected the trailing time inorganic last vulnerable several our mix to of These and from mentioned an contribution Xx. of believe below is This this will billable lower and outlook changes already business, declined the trends quarter approximately are resulted we in minute quarter. America Services, we a bookings has represented book-to-bill approximately a economic contributed performance,

negative care portfolio was services services trajectory Within companies. the our the the consistent and financial pharmaceutical again These improve carriers. of a payer growth middle and and and insurance, within traction have has clients we have results. software we driven was good demand strengthen to impacted year. services We're continued property seen were last invest Science, our rising among for quarter, with our to and earlier banking the ramp-up by this casualty, Health on global medium mortgage interest growth growth integration-related market large growth been Additionally, seeing are within impact term. which headwinds by particularly following over continuing both revenue Health where digital by offset in rates, product

Sciences. industry uncertainty we seen spending as not payer care by to and has greater demand slowing macro await sciences. softer discretionary However, driven health they life the as the been Clients health care pressures the immune constant both have from are across and CMT QX, increasingly America growth North Continuing revenue geographic clarity on Health was in a with the X%. Growth environment. led grew complex economy revenue navigate in an perspective currency, by and regulatory year-over-year

U.K., Growth consists Our up growth by including growth XX%, of negative was global clients. the which North GGM, approximately public XX%, led strong the basis again markets, point Financial of a sector America, Samlink. all outside revenue or sale double-digit including grew which impact of from XXX Services, within a had

XX.X% and pressure to by the from operating on margins. points. basis, margin were Year-over-year, points, operating partially year-over-year increased GAAP by was increased margin basis costs while margins our as adjusted XXX margin GAAP On and primarily operating margin delivering Now gross in was by offset were disciplined there In by SG&A efficiencies a adjusted and no QX, driven basis expansion quarter. adjustments non-GAAP moving leverage, pricing. compensation increased

from experienced also We Indian the of XX an basis rupee, meaningful a of hedges benefit, of approximate tailwind depreciation points delivering the year-over-year. net

$X.XX, GAAP up the tax was quarter. benefit XX% rate $X.XX, the the in XX.X%, was tax from adjusted QX quarter and was a Our respectively. included discrete Adjusted EPS the GAAP tax QX year-over-year, which item XX% rate and XX.X%. was quarter diluted in EPS in

expectation. ended days of income, year-over-year. line to flow billion with We net billion. cash of was Free with of $XXX flat sequentially was or QX or income. net XX in of quarter sheet. billion brings days XXX% by cash balance net approximately $X.X flow in free the X our year-to-date short-term of the DSO to increased $X.X and and XX% turning million, This representing cash investments cash $X.X Now

XXXX. $XXX During This repurchase dividends return repurchases to million through returned we X $X.X shareholders our dividend. the approximately billion the to brings shareholders months capital and through for repurchased regular total quarter, our million X shares million first to $XXX under share through program and of share

Turning to our forward outlook.

currency, downward, and factors lower and for revising improve, attrition tailwinds, sustained reductions these several growth. America billable our softer-than-expected from which headwinds to guidance Offsetting our year are globally several to the which full take headcount, North fourth reflects expect we expectation quarters We bookings lower in quarter. in including resignations are

X% revenue year-over-year X.X% $X.XX X% we currency. range in billion, in or to QX, to $X.XX representing the of of of billion For X.X% expect decline constant to growth

points inorganic guidance of Our X% or currency impact $XX.X This XX factors as points revised guidance of X.X% of basis in as a will well basis representing assumes approximately Together, these have approximately revenue approximately year-over-year points. constant assumes an XXX of our to year negative XXX inorganic basis contribute contribution approximately growth currency. full billion, contribution.

year billion of growth now X.X% outlook constant which versus impact guidance revenue This assumes prior to $XX.X basis of currency. negative billion, currency Our points reported X.X% revenue a compares in previously. basis XXX $XX.X of points from or to to to our represented X.X% full X.X%

expect low operating at at We that revenue full for outlook employees annual October reduced reflecting be our our implies and range. to range, prior the around of of margin the margin year X. most This adjusted XX.X% approximately the merit end of the effective cycle XX.X% midpoint operating is our EPS QX

full higher $XX outstanding We Our of outlook million, approximately assumes versus still average year $XX reflecting shares approximately unchanged. interest $XXX million expect previously, interest million income rates. of

to is XX% of guidance tax Our XX% unchanged.

to prior guidance of X%. $X.XX $X.XX approximately X% to full $X.XX. our guidance Finally, compares growth This of revised of adjusted to $X.XX year EPS represents to

remains Our longer-term unchanged. allocation capital framework

agreement announce professional active. to to OneSource acquisition application Virtual of our acquire and to management we our pipelines the pleased services expect and remain practices are yesterday, We

repurchase full assumption year is at share the unchanged $X.X Our billion. for

of total this repurchase As to brings remaining our has market subject deployment a support share of over factors. authorization, Board and as in always, to increase In other today. billion our strategy, billion conditions our $X the which balanced $X also remains approved capital authorization

We income. are XXX% flow cash also still of targeting full free conversion of year approximately net

the focused I impacting our team results. Before for recent is to the call challenges opening reinforce want on that addressing the operational questions, leadership

to confident the our Longer in to term, your the for macroeconomic changes that, in market call questions. With factors open We demand we will help remain enable are respond monitoring to we opportunity. quickly environment. us also closely

first Ellis [Operator Instructions]. MoffettNathanson. And the with Lisa the question from comes of line

in bookings. past, seems initiatives I'll India undertaking on the point having in at that of time and to, guess, you're start attrition as on revenue of like be lot In a to challenges America. Have raised causing you related some specifically elaborate on that elevated time the taking bit cause and frame attrition the both much haven't elaborate and you're America? going what's to on the the steps spent North the it? North Can of I on this on happening focused a root on maybe attrition what's the Is just and you've exactly a bit dynamics recent? in is the you've you're pinpointed what on the you address

Brian. it's Lisa,

similar weighted would we're had look, the Clearly, on in So I at doing North as level, attrition our impact America say a India global historically. we're a in on basis, biggest doing things India.

there. and we in Asia, a for well down efforts rooms as now. in our international So months and resignations inordinate to X we seen and put much over Europe as war North pretty come frankly, India in America in place X in And have business row

So those broad-based, merit, X efforts on process obvious are path there's are But promotion as and announced, we increase top second overall, in And those there learning elements. development efforts months. of and career kicking merit announced including in, our et the a initiatives, just we compensation progression, cetera. is comp,

And what are so similar the we're America globally. North to somewhat efforts doing

market say, recruit where coupled are obviously America, North we I to with X us led to obviously, and talent North suffering definition, we through magnitude North years offshore we've And visa factors, it order in the reduce A onshore difference premium, you dollar versus in process dependency. simultaneously. material billable the our as have a and the last a COVID revenue digital by as different. to think I a, pretty shift was scales in effectively a we've environment of up visa, level happened would gone margin per quickly head of at across no ours, in would terms because and India. in I what's out fast has as America of going those and in with suboptimal resources say, of North during in catches industry the been a of in America, and tough nearshore But attrition can America,

So it's a of question rebalancing that.

behind major a a effort quarter. attrition goodness anticipated, make we're have would I it. to QX. to we're months correct it's all a of more little the We that of than rigor slower progress initiatives the It's had At We in, X putting behind fourth last but the it. of lot we underway, operational global in factors And The into we will voluntary kick above. quarter. the mentioned now expecting, significant say, going level, reductions hoped in

it. Got

Okay.

Okay. challenges I bookings attrition of And the some then actions were relationship of kind had that know quarter, issues kind and commented you linkage. the sort last you bookings, of and or the between address on taking to

I of your challenges a some were concerned be perhaps you're wouldn't able or staff having think salespeople project that something. to they

it -- -- delaying right? into So then quarter. it we're And I persisted so this or but guess

you also yes. can just So --

with Yes. what last X% be important, I'd of bookings a with on the half mean, honest. facts XX% say, year-over-year, to were Look, plus the is I below hoped in let little we It tough comparison down second bookings. quarter, growth. the for me start had first They the to recognize year

on in-quarter X.X, X.X. still a bookings So leads book-to-bill even XX-month to and trailing basis, at that an of

with as addressing of approval stories, as been has think, being strong macroeconomic we're to somewhat of were now the hesitant, the dialoguing go think, challenges, as pipeline news healthy lost and We've in definition, success expenses. seen quite commercial what QX said, I judicious slipped what therefore, vocal attrition terms uncertain as in will of around a people our made bit although, be meaningfully one needs to helping as resignation to levels, their an voluntary attrition mild in more in QX our somewhat it's quarter of And should in purchase increasing as bookings. clients of price a of So team it deals accelerating the fulfillment out which impact seeing commercial is cycles anticipating which, to by Lisa, levels. be terms get from that's, view, demand environment. and be specific frankly, we're down then with The of I But increases, team little they well terms of quarters. to margin enough, clients lengthening full from I the good some and point we indicative momentum that attrition, in

now we're effort in confidence the I to team attrition the starting So get place we around commercial will resignations that put and in. think in kick

is of on happening terms the I concerned in where, we're macro ago this more X now call, we environment. the Of little than months demand as a were in period course, a said

been C-suite a probably and me that's quarter impact budget concern furloughs bookings this their spends, as a the that the whole to year end anticipate not end year, So relative we'll bigger the clear at of scrutinizing amongst certainly we'll at this on previously, this and the they're see flush than it's year. to of last

to seen, So we remains factor our it that guidance. be into and

question of the is from DeepDive line next Rod Our Equity. with Bourgeois

Yes, guys.

essentially XX% So X% in America and constant have North America. growth you of North outside currency

challenges feel in So you your outlook North wanted international that in presence would helpful. your ask America are on efforts your and really are to America, in efforts detracting but revenue be just perhaps ask progress that talent it's your also pronounced North more from and doing that in color how your I some or if ramping about

internationally. last their M&A Germany to examples the around the a U.K., the the of start coming part the going the [indiscernible] I'm the around with And with which things I've large we good recruited, world, We've very and international of our years over include No. senior spent And expect some people pretty added We've potential there. and added that I'll we've there. Australia. year capabilities. business, optimistic we've in leadership refreshed complement of

right. India capabilities net increased -- in the but candidly, basis, our headcount North to has a America away year-over-year a materially taken more India in there we We've around shift that on world same years we're disciplined balance -- America, I has before. really internationally we the optimistic, right happened we capacity in as building what's it's the Canada. land America. to get not COVID have been at North to is that and out pretty were ago, just level. Canada consulates in we Candidly, been trying are We're over shiftwards the North and been are In So from Three a the at offshore visa-dependent has functioning don't focus. But that think happening nearshore. as

but we've way, saw that our news, So gone the far a little than in X believe That's the little to that too I in subject be hurt as turning rebalance available attrition in as bit consulates help that. by in capacity help less will of that not to previously, people and of last tap a actually onshore reversing terms but actually we're headcount, now good X, the morale India because a for that only years that that our has attrition opportunity attrition on well. bit

positivity international onshore So I have, the optimistic the potential of is very I'm years in and around independent the come. situation U.S. I that there to think our

And in Great. let me about We see happening changes the a follow-up market. cloud that services market. some definitely ask

be just in to not what about wanted position It'd great market. much. the challenges the cloud impact your to there, maybe hear market, on I some of in some or you're thoughts recent cloud ask are extent to So seeing so having an and that competitive what macro particularly

got yesterday. He's background as in us Well, out first Sankaran, actually joined very of strong a all, well. who I'll cloud call Prasad

like the client that is some talking deal where our than discussion a players was years. of stronger going. market and it's ironically, clients, he is for would topic great in position application too. [indiscernible] many, Board of Workday last spent with time I Advisory about amongst . I many packaged of say And week, it great the been a Salesforce, So

interesting. And announcements strengthen accelerate of so Vis-a-vis to And the OneSource path Virtual, hyperscalers, good continue yesterday's Workday our we'll I'm seeing we the of cloud. their clearly about it's the practice. clients to feel there. progress kind

amongst or to cloud [indiscernible] lifting they your your transforming another a clients optimize efficiencies dialogue doesn't in I applications vein, Within of how always position It the the the of same the anticipated. way them growing current that Rod, necessarily in around suite and give transition. ahead see have would refactoring as shifting

more how your there's optimize cloud around So dialogue journey. to

as is so behind business do as modernization well to well. cloud we anticipate more us add what that, in both in and the see there our you'll capabilities us journeys And stand do advisory tech as or continue and up generally, cloud you'll see resources capabilities as practice more consulting

Our next Citi. of Shirvaikar question the is Ashwin from line with

companies spoken talk since spend? in you Could specifically thing positional seeing of about to more digital digital what with discretionary mentioned a that have because Is slowing specific company-specific especially down? yet you anything regards you're other have to not mentioned slowing

outlook we difficult a first be it is the macroeconomic the concerning it's X macroeconomic environment, more little look, what a And than determine certainly So back if you to ago comments say dogmatic go moment environment. conclusive my broader now I'd thing on to uncertain months or at was this then. in It's back time.

ROI in are projects selectively discretionary prepared lower seeing priority reduced. or are longer being spend I remarks, in cloud as projects, periods. reduced We And with my even referenced being those

lot have capabilities. So still in of digital our we confidence a

know, of Our some the we've onshore are applicable XX%, acquisition macro demand U.S. this. points is now you portfolio And done about, the yesterday's situation year-over-year. acquisition we year. as X challenges well digital first the of But picture then equally announcement as this up to talked as the --

series portfolio that did. That extending the our year we a the pipeline as of we series are haven't the with momentum said, digital framework out, acquisitions last our we line digital have from speak. in strategy, being of pointed our Jan tailwind of we had in had committed we that we and deals So as in to our

current digital be So expect get us. back will But projects over time course immune I economic believe for don't climate. the that more normal ultimately all from I'd a to in that

M&A, in maybe contribution framework you full of from half basis addition, And little of assumes our on to what a bit guidance XXX side, year we see. approximately give approximately M&A points Ashwin, typically more the the

revenues, And aside market fulfillment in quarter, on -- also digital challenges North of on you'll are the growth. our an demand business. demand as as share that fueling we lack of the Brian America, mentioned, types obviously, is digital experienced that multiply see which that you M&A of affected in mathematically from digital well if impact by affected then we our So our non-digital the just business proportionately there

combination a all factors of it's these together. So

And that the And you're targets? it. Got helpful. achieving it. medium-term have, greatly appreciate means next year this Got planning how would we I uncertainty high terms lower rate of of be for exit any level completely granular growth but thoughts what the sort for in macro year does of your

Yes.

the So question thought that somehow come up. would I

number our we one a discussed revenue year we few growth a the basically X-year ago, more still a referring CAGR bit framework to, of with much sees over -- in little which growth, overall. it's than year intact you're you a So is a Maybe ago growth in really light pretty the feel our pointers, horizon. time that framework

for earnings point will January. we next from but we're then year economic anticipate growth. uncertainty that perspective is facing we give guidance, framework a it's So And obviously, we obviously, think our the didn't our call And in fourth that quarter quite today, compounding at in the intact.

is from question next with Bryan line Deutsche Keane Bank. of the The

and know maybe the then that caused guidance, I got Just of to an that this bit. challenges. like you fulfillment on miss quarter, pushed a last it it's economy into quarter. and little was And seems the the kind issue it

have Just lowering with fourth -- of how quarter Or could lingering trying some push is are expectations that numbers? these those comfortable into again? out, could us the issues you fulfillment to we still figure

think and factors our in in it, mix, I'll on talked of had with of we If and a about fairly logical. number start I'll the then Brian we as Maybe it. as as let call, jump mentioned top Brian fulfillment Yes. it on

misjudged we we of or bit attrition So our the had little a improvement faster -- a third anticipated. in quarter

-- to a also place And miss have in And made and X/X of expectations. then revenue of miss travel in so particular, we and in accelerating focusing grow obviously guidance. North hiring that available that, North increasing And our place of miss about inflow, on relative to our subcontractors number utilization of the fledge hiring to saw in we product. accelerate visa to and capacity improvement us, full of And headcount employee have in from our X/X the here, including about of that represents the place our of full ensuring initiatives to we America approximately initiatives. referral challenge attrition American and initiatives resources our and funding the to

So place. than have in were momentum, shown a initiatives These they set have scaling we anticipated. initial we initiatives but of slower

new our think have So our revenue now appropriately risk-adjusted and we have guidance. trajectory, we we

keenly interested in we're meet to own expectations So it. our

clearer levels we And we we improvement initiatives the that assumed have so in see than can an we attrition of trajectories these the yes, in also had now some third of see. But quarter.

through different and in the that, the in come the have and have, different. first visibility America is for a plateau fact, And indeed had build prior on if lower slightly resignations was earnings down, the we months at those because in of But X of X than the notification mentioned North to X Europe, India in Yes. on July course, and just continued prior low, America resignations quarter, this North and last month look you and India I Certainly, differs it's August versus in months. be September, call months. vis-a-vis to India period quarter's it

this give hit. Bryan, make to So that pointed out, very, that. confident at rightly guidance we can about very stage, as wanted we we Jan we want And to sure feel,

zone. the in we're So right

the then year? quarter? by that we linger first half it. Or the of time first will could get North the it challenges, be in the into the Got did fixed fulfillment into And America, especially

aiming. We're

working in as in that on by give make we're to by the can, QX, we QX. of an said remarks, clear aim prepared a as update call, and we progress the we -- get the we'll in through think through I you earnings that come we time progress but into be on quickly it'll my hope and walk hope still quarter's to headwind QX, QX out next We As time clearly in with QX. we I

from is of Bryan with question line Next Bergin the Cowen.

on [indiscernible] for is Brian. This

repositioning you're the the here? Could real-time of kind and transformation thinking with that has reassure just to partner you you us the are are clients about a rebranding And you that clients doing done Another of give some insight the of that years, nature all what having one recent on conversations issues. fulfillment into choice? company in digital

honest, different stories, see across to our more let's to different of actually Brian, evolution towards be We are, time we exposed industries in heavily terms and banking digital, even materials. where say,

and points our on more doing in clients. another with a and then the the we've force to increase and to a in nature mix, that which successfully To some example recent fundamentally, good proof who's is to try is able been complement journey. that that. a consultative journey we've anybody multiyear extend is digital But as is more certain client-facing we've announcement yesterday's of knows been overseen been years, team got sales portfolio, have We portfolio that with

and can aware our the in Last extent example studies the a just and was truly more takes it that Cognizant watch awareness we leaders to that, around clients portfolio. that good should we there. brand behind the references en of very we've the that's get strong invest showcase. the then increasing sure make with have more continue case in days in week and that certain To so we been not complement force we're Board there's time of Client and then capacity industry-aligned and will consultative to So of route, but because a sales got to Advisory consulting these capabilities we business, space really

we some pleased with see way digital ourself. working of to up teams low the we've starts capabilities So few back a of certainly been mix, but we're work in would but application in our [Technical it's we is awareness Difficulty] our I we getting of And But as stronger. journey, of Digital like to multiyear terms do. SAP, that. to increasing, say middle awareness growing our in recognition have and and partners there's with client-facing that more the delivery quite our ever, I years But are is were our and packaged and And key ago, of cross, we're partnerships. company all it up. a and Salesforce brand dialogue, XX%, which

follow-up. helpful. Got attrition forward-looking a encouraging. is just commentary The And That's it.

you normal and can to You've more share line higher been time it updated being is for [indiscernible] attrition. new as pre-COVID the Perhaps relates in vocal attrition when mode views for about a here the than levels. steady state

I period just demand environment today's of We've be -- a digital labor disconnect between pretty gone going We're And as engaged are less laid with recruiters now in slowing. it's key through key hybrid to think precise on in as that uncertain, through the a seeing have supply really been hard people on companies a the that, people economy on off. arguably, companies, certain society are much And so a significant off work remotely. world. different globe. gone Bryan. are entrenched very skills. they through work very going being is scenario people There's laid where, We're across -- we've or

voluntary attrition an market the resignations impact on less immediate than previously. is in so that And and And it have trends was hot particular. perhaps also can suddenly

our I water and find by built specific that have its actions also financial So own time. Jan we encouraged will where plan. I'm level that over we've into our taken. see

around want slowing, peers. we our and employee markets, in value that doing come, into have, and increase factored we development our I will in relative that notwithstanding help we we're And years basis that everything on the sustainable compensation vis-a-vis So multiyear our path employees would proposition. and financial framework, career to simultaneously, say, training know we invest and and labor we to a can a

large, there in attrition probably So and a normalizes and industry we new won't think to see a But time back I'm go it we'll the be beyond. historical as will norm. across QX slow I And new not sure norm, a I believe still will when to tell. levels. at society

Our line with Morgan next Faucette of the is Stanley. question from James

skills kind appropriate complicated them and fulfillment looking seeing fulfillment, you itself of most Kind that terms terms getting wondering of a question, I'm capabilities hopefully, are solving In impacts of the the of it pyramid are your -- and that finding you how about relates challenges thinking And And as to the now? at just as right where guidance? the people into think clear. relates that's that? for how you but financial to about in then

Yes. it's of materially has headcount mean but there's the in first our India. because, nuanced -- most of all, has been increase quite increased year-over-year, actually I

market both in to key heavily imbalance the the supply things and the related that QX margin increases went year, probably many and helped momentum lack year, behavior, last been of narrow period they've a And there's us few Within QX. but sequentially India, hottest the engineers. because [indiscernible] irrational last parts We demand the were actually back We've the previously. that. element better in argue, related have bill in, the months bring too word had XX,XXX XX,XXX opportunity where the think, economic of year like a So is in and done as hyperscalers, would good the pyramid different year, XX,XXX lower last of been fundamental digital the about before, which factors with us been in to year-over-year that hottest we've XX,XXX that graduates, one that's I XX,XXX. I we'll to scales in about I more by than the rates. skills years. afforded a expansion terms definition, the that. drive full levels addressing over James, than our the XX you mean company, then was of job, challenges. upward And you in stack less have comp for if are Salesforce, actually has fatter and glove very That's seen of a this terms in go they -- And all of

the of In attrition, fundamentally been levels lower of and it's absolute the India terms pyramid. the at in

question, we're -- to going guess actual the I cycles those accelerating? Are to a we be through make they I permanent? P&L and looking that appropriately. at And specifically trying And then year? Are talk us Got changes? contemplating how flows expect help impact, somewhat that sure X just can it. should that and Got but related P&L you it. of kind of mechanics more impacts guess merit the the through cycle a margin

Yes. answer. to That's me for maybe

fourth So better processes, to it main second our the quarter effectively, reason just together. cycle experiencing that align quarter our has reward -- moving our a evaluation and processes it to acceleration for HR up is typical of really merit we're and the processes in

to from management a So have quarter. merit our perspective in benefit a it second increase the talent is

by effect important to So X by driver of we're going we -- second be the because forward. merit onetime a process. driver accelerating compensation important to merit quarters, we're X staying cycle very our is And onetime will that's by annual because a that's only shift quarters incur with really this of increase an a And it. -- obviously increase second merit

in cycle normal second year. the XXXX, the quarter quarters again later will in X the be So of

but though think even will competitive that send on positive measure, a a have are processes, we to compensation capturing and talent our we positive drive that, be compensation anticipate also commitment here we improve and our because it us attrition, associates, allows on our to think, of focused will So want basically, on but be opportunity allows associates which our really increase impact to to which we attrition, faster to benefits. I signal management we an -- think hard to timely a also do is to

next question the is Huang JPMorgan.. with from Tien-Tsin of line The

thinking the effects Just the about attrition. plus knock-on the of fatter pyramid

you're that Just to ability understand there competitive that. Just -- new your trying of impact pursuing work or is the to sort capture sort of because collateral be on there on an bookings, even of seeing price impact thing? some

we bit what good. see, but been relative the focusing a of gross [indiscernible] our has So compared I overall overall margin to we I'll performance relatively what did talk you're the -- think a is little Tien-Tsin, on, here decline, kind obviously, about maybe maybe development,

those the our we out. slow to a think think regular And while, about I in increases them start as have for we we a I have in few price need pricing, with a impact want of about both now seen initiatives. point pricing steady have little been these we kind appropriately particular, factors When now improvement increase, fiscal with a -- And we to so of our year. to clients, also in things, market. that contractual And talk seen discipline and but compounding business of the added

getting has the helped and performance. been relative margin our been in has Also, to on -- pyramid that has the shift the So gross us positive. better

our benefit offset on price couple We positive positive, and have the degree, I impact the opportunities, of maturing, next slimmer impact associates, a by to, pyramid large as which promotion think, we and that and over scaling streamlining been permit, our a this focusing we'll are mentioned, as on we a to of comp still increases how and is years, win and have that how paired able deals.

we're process. So It of we're It's actually opportunities. how forward. feeling, feeling our I improvements manage allows business the think, good good -- we making well, the about best a thoughtful moving strategic make we're also us to

go solid shape, is I to want strategic opportunities and offer bets today. a base than more our margin much faster us we make we profile are revenues grow where good think our to that on and should in

pyramid led thing only would is years, folks prior work correcting in And because doing the doing up were in contrary, what canceled add don't on Tien-Tsin, I the were think there, the somewhat at except college was it I The overly back billable we having optimal. further think anything we us I an narrow Yes. day. pyramid intake had the lower rates than

as other in It's based onshore still. with where better college the line America, a in are on do adequately after North So I from getting there graduates, have with is on well companies. India there. opportunity campus think, we think those obviously, more have and job a as war appropriate, and is Where and what to in not we've -- dialogue we in I the I done Europe market it's rates is on talent Asia both industry

have. just not at to area So that's as well, of vocational an look have we'll and the we and colleges classic places focus

can over feel in our generally, pyramid. help a coming in to board that he previously, I we Ravi there our play aim about our which America, with good replicate has run skills And obviously Fortunately, will North here. But on pyramid.

was where worried about in good feel anybody corrected I I I off and want set skill something mis-skewed. call got pyramid talented And the about to think we've very that. that our don't we get our employees,

quick quickly, question. capital on you follow-up, the to if don't Just front. a mind, just allocation allocation ask I a have capital

your at buyback buyback talked I authorization you the with Just announced. stock. appetite just here, in to the just back acquisition this the the about just know point cycle. But about you of thinking here

Yes.

we cash been see build number last And you that year, M&A general our fiscal anticipated shareholders. philosophy balance our basically with this sheet. to the basically the billion. intent have of return redirected been no we quarters gave as that cash our few lacking excess For following we activities on That's up over to we've you $X.X to

so in is that flexibility And model. the

We are seeing pipeline, M&A good activity. of a though, our

the market I in really announced needle deal, with little quarter, on compared relative talented we moved we to the realistic very this also, -- our think, activity to business last it's opportunities. forward but development a team. see And acquisition So we bit more behavior the

long for So we the for to that for allocation to I the goal framework going capital the would normal to a time. going us, back be be It's us mindset to have talking about forward. think get been

is of Wolfe Next line Darrin Peller from question the Research. with

for two, bookings; else headcount parse but on maybe, Financial any really I'm in your there you driving think or story stack can like, and your maybe bit of what capability into sense. us versus three, makes what's or vertical just tech more a doing -- help and own and you is the improved other detail what outlook, number on whether maybe driving trying be either we to just the demand change -- little Really, macro the simple anything Services, number billable Can that's one, dynamics? is number some understand and the with macro. headcount go just one available; specifically pure it's, believe competitive starting out and

disclosed slowdown growth. of I of tune points normalize, start by business, say, previously which was about the basis let's with of X.X bigger XXX in good Yes. I'm that's also in X the XX% is the mortgage the but they the to We've their ones, segment points a lot industry. fourth was to Samlink segments upon the currency, the to got . There there particular. belts of certain Look, beyond. a company. Financial talking as about, remarks, there, as there go of prepared low tightening it's say, points Services, mean X.X the a cited work is touched of about the impacted It previously. constant we've And and I'll question. which quarter the exit do that in grew into we've seeing C-suite some in let's

well. yet. pleased or often say provider material them and very is trained to our mix I'm as Services will in of from, as us -- think staff We've of but that we're that for the sector is to mix not bigger those improving clients enough Financial not think evolving But a resources. just the be I we folks and how that front fundamentally, us. digital have also time improving, tougher in So our issue clients, of think a it's there others our of

So position on Services, we obviously have business we're about payer grew the area got constant basis say, basis better our we've relative provider That's to our X.X% core of we business. It's well in franchises, get I or company. Health and in of our a as come. competitive year-over-year. one about very right than would that's XX% sciences. to that doing both currency The banking period in as a feel Insurance, to fix. In good as balance life banking, a go in

in on up overall. had few [indiscernible] last business catching the good Services years. We've Financial it's So the momentum in

growth. business relative is X X So years, I of feel X been we And there, in indeed, double of currency a Products our do the Resources, or there. last room continue digits, is well sciences, penetrated other had story heavily into accounts about the if the of have pretty talk position then We've are to in of good growing have good lower actually business lot penetration historically client CMT where example ours. a than payer there the an portions the about I life is years, good where I success acquisition there large players. as major and we because it we constant to think our good

indeed, I segments, upon So that situation the all of permeated that's today, touched permeated how and and well. the elevated Cognizant, attrition The the industry across onshore think within factors as we about industry framework. U.S. kind across all across

those. So nothing specific of either to

right. All

Just It one is relatively for mean follow-up the also quick in on I And margin. your well. side. margin did guidance come unchanged

a little bit, just So of to terms than seem fair more that that the should forward calms you about a that in thinking maintain be if wage level. a Is assumption? quarter, would fourth inflation able going that down it just

The -- refer mention in third is -- and we quarter, but well, say to and the But I have that I margin gave quarter. to only it multiyear intact, the framework that to feel expectations. did in our revenue, also we guidance refers our overall fourth our answer didn't the framework

on go consider want as think the So factors. important as that's analyze to I I far of for the when number results a today. We kind it's of you to -- margin,

having expansion SG&A by the We have control discipline. driven margin and

gross on support of We effect the we margin then about SG&A our So already activity drive the the margin. moderated of in could actions depreciation it company And our had from I but helped bigger as that what at lot a gross margin business. that rupee on was under to even. think grew. us also talked had a the have that been had leverage and impact Gross meaningful I pressure,

balance quarter So in third to -- place -- third have and quarter, we quarter process now feel you in relatively in a the out. heard have the good and we second me we business continue and that continues a

our is biggest accelerate that and is that opportunity driving the discipline, a That obviously, revenue really -- maintain this because So profile to the great and our then main foundation focus that. on for use that's margin we're focus as growth.

you. will portion the Q&A conclude today's This Thank call. of

joining. quarter. for catching forward next Thank to Great. Look you up all

Thank for This you will your conclude today's participation. conference.

at You your lines now disconnect may time. this