Cognizant Technology : Third Quarter 2020 Earnings Conference Call
10/28/2020 | 05:10pm EST
Third Quarter 2020
Financial Results and Highlights
October 28, 2020
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 assumptions as to future events that may not prove to be accurate. These statements include, but are not limited to, express or implied forward-looking statements relating to our expectations regarding the impact of the COVID-19 pandemic on our business, opportunities in the marketplace, our cost structure, investment in and growth of our business, our realignment plans, the timing, cost and impact of the 2020 Fit for Growth Plan, our and our clients' shift to digital solutions and services and our anticipated financial performance. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, legal, reputational and financial risks resulting from cyberattacks, including the recent ransomware attack, the effectiveness of business continuity plans following the ransomware attack and during the COVID-19 pandemic, the impact of the COVID-19 pandemic, changes in the regulatory environment, including with respect to immigration and taxes, and the other factors discussed in our most recent Annual Report on Form 10-K, as updated by our most recent Quarterly Report on Form 10-Q, and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.
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Results Summary
REVENUE
OPERATING MARGIN
DILUTED EARNINGS PER SHARE
FREE CASH FLOW & CAPITAL RETURN
$4.2B, declined 0.1% (-0.7% CC1) Y/Y, including a negative ~130bps Y/Y impact from decision to exit certain content-related services
GAAP Operating Margin of 14.2%, declined 150 bps Y/Y
Adjusted Operating Margin1 of 15.9%, declined 140 bps Y/Y
GAAP diluted EPS of $0.64, including a negative one-time tax impact2 of $0.26 per share, declined 28.9% Y/Y,
Adjusted Diluted EPS1 of $0.97, declined 10.2% Y/Y
Free cash flow1 of $821M, an increase of $200M Y/Y
Since the beginning of Q3 through October 27th, returned over $700 million in share repurchases and $120 million in dividends
Constant currency revenue growth ("CC"), Adjusted Operating Margin, Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") and free cash flow are not measures of financial performance prepared in accordance with GAAP. See "About Non-GAAP Financial Measures" at the end of this earnings supplement for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable
During the third quarter of 2020 we reversed our indefinite reinvestment assertion on India earnings accumulated in prior years and recorded $140 million in income tax expense or $0.26 per share. See "About Non-GAAP Financial Measures" at the end of this earnings supplement for more information.
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Revenue and GAAP & Adjusted Diluted EPS
$ In Millions Except Per Share Amounts
$4,248
$4,284
$4,225
$4,243
$4,129
$4,141
$4,078
$4,110
$4,006
$4,000
$3,912
$0.94
$1.05
$1.05
$0.98
$0.91
$0.94
$1.08
$1.07
$0.96
$0.97
$0.82
Q1' 18
Q2' 18
Q3' 18
Q4' 18
Q1' 19
Q2' 19
Q3' 19
Q4' 19
Q1' 20
Q2' 20
Q3' 20
Revenue
Adjusted Diluted EPS
Revenue Growth and EPS
Q1 '18
Q2 '18
Q3 '18
Q4 '18
Q1 '19
Q2 '19
Q3 '19
Q4 '19
Q1 '20
Q2 '20
Q3 '20
Y/Y
10.3%
9.2%
8.3%
7.9%
5.1%
3.4%
4.2%
3.8%
2.8%
(3.4%)
(0.1%)
Y/Y CC
8.2%
8.2%
9.0%
8.8%
6.8%
4.7%
5.1%
4.2%
3.5%
(2.5%)
(0.7%)
GAAP DILUTED EPS
$0.88
$0.78
$0.82
$1.12
$0.77
$0.90
$0.90
$0.72
$0.67
$0.67
$0.64
ADJUSTED DILUTED EPS
$0.94
$1.05
$1.05
$0.98
$0.91
$0.94
$ 1.08
$1.07
$0.96
$0.82
$0.97
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Cognizant Technology Solutions Corporation published this content on 28 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 22:09:03 UTC
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