Cognizant’s Revenue of $4.9 billion grew 2.4% year-over-year

22

Cognizant (Nasdaq: CTSH), one of the world’s leading professional services companies, announced its third quarter 2022 financial results.

“Revenue and bookings were below our expectations as company specific fulfillment challenges were compounded by the impact of an uncertain macroeconomic backdrop,” said Brian Humphries, Chief Executive Officer. “We are confident the steps we are taking will return the company to accelerated growth over the medium to long term.”

Third Quarter 2022 Performance by Business Segment

Financial Services revenue declined 1.5% year-over-year, but grew 1.6% in constant currency. Growth was driven by digital services among public sector clients in the United Kingdom and insurance clients. Growth was offset by 180 basis points negative impact related to the previously disclosed sale of the Samlink subsidiary (completed February 1, 2022).

Health Sciences revenue grew 3.8% year-over-year, or 5.5% in constant currency. Growth was driven by digital services among pharmaceutical and healthcare payer clients.

Products and Resources revenue grew 3.7% year-over-year, or 8.2% in constant currency, driven by digital services among logistics, automotive, consumer goods and travel and hospitality clients.

Communications, Media and Technology revenue grew 6.0% year-over-year, or 10.4% in constant currency, driven by strength among digital native companies.

Bookings

Bookings in the quarter declined 2% year-over-year and represented an in-period book-to-bill of approximately 1.0x. This resulted in trailing 12-month bookings of $23.1 billion, which represented a book-to-bill of approximately 1.2x.

Return of Capital to Shareholders

The Company repurchased 4.6 million shares for $300 million during the third quarter and 13.9 million shares for $1.0 billion year-to-date under its share repurchase program. As of September 30, 2022, there was $1.1 billion remaining under the share repurchase authorization. On November 1, 2022, the Company increased its share repurchase authorization by $2 billion. On November 2, 2022, the Company declared a quarterly cash dividend of $0.27 per share for shareholders of record on November 18, 2022. This dividend is payable on November 29, 2022.

“Strong free cash flow conversion and a healthy balance sheet have allowed us to return $1.5 billion to shareholders year-to-date while maintaining flexibility to pursue future acquisitions. Our revised 2022 revenue guidance reflects year-to-date results, currency headwinds and an uncertain macroeconomic environment,” said Jan Siegmund, Chief Financial Officer. “We are carefully monitoring the demand picture while driving operational discipline to better position the company for revenue growth opportunities.”

Fourth Quarter and Full Year 2022 Outlook

The Company provided the following guidance:

• Fourth quarter revenue is expected to be $4.72-$4.77 billion, or a decline of 0.2%-1.2% (growth of 2.0%-3.0% in constant currency).
• Full-year 2022 revenue is expected to be approximately $19.3 billion, or growth of 4.5% (7.0% in constant currency).
• Full-year 2022 Adjusted Operating Margin² is expected to expand 20 basis points to 15.6%.²
• Full-year 2022 Adjusted Diluted EPS² is expected to be in the range of $4.43-$4.46.