COGNIZANT REPORTS FIRST QUARTER 2024 RESULTS

Revenue of $4.8 billion declined 1.1% year-over-year, or declined 1.2% in constant currency1, which was above the high-end of our guidance range.

Operating margin of 14.6%, flat year-over-year, and Adjusted Operating Margin1 of 15.1%, which expanded 50 basis points year-over-year

Trailing 12-month bookings of $25.9 billion; book-to-bill of 1.3x

$284 million returned to shareholders through share repurchases and dividends

2024 revenue guidance unchanged at (2.0%) to 2.0% in constant currency

2024 Adjusted Operating Margin guidance unchanged at 15.3-15.5%, representing year-over-year expansion of 20 to 40 basis points

Cognizant (Nasdaq: CTSH), one of the world's leading professional services companies, today announced its first quarter 2024 financial results.

'During the first quarter, we delivered revenue above the high-end of our guidance range and continued to make progress against our strategic priorities,' said Ravi Kumar S, Chief Executive Officer. 'We have built upon our large deal momentum of 2023, signing eight deals during the quarter, each with a total contract value of at least $100 million. As our clients navigate an uncertain economic environment, we are adapting to the market dynamics by helping them achieve operational efficiencies, supporting their innovation agendas, and preparing them for AI-driven transformation across their businesses.'

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$ in billions, except per share data

Q1 2024

Q1 2023

Revenue

$4.76

$4.81

Y/Y Change

(1.1 %)

(0.3 %)

Y/Y Change CC1

(1.2 %)

1.5 %

GAAP Operating Margin

14.6	%

14.6 %

Adjusted Operating Margin1

15.1	%

14.6 %

GAAP Diluted EPS

$1.10

$1.14

Adjusted Diluted EPS1

$1.12

$1.11

1 Constant currency ('CC') revenue growth, Adjusted Operating Margin, and Adjusted Diluted Earnings Per Share ('Adjusted Diluted EPS') are not measures of financial performance prepared in accordance with GAAP. A full reconciliation of Adjusted Operating Margin guidance to the corresponding GAAP measure on a forward-looking basis cannot be provided without unreasonable efforts. See 'About Non-GAAP Financial Measures and Performance Metrics' for more information and, as applicable, reconciliations to the most directly comparable GAAP financial measures.

'The first quarter's adjusted operating margin of 15.1% expanded by 50 basis points year-over-year, driven by our NextGen program. We remain focused on operational excellence and cost discipline as our clients continue to limit discretionary spending,' said Jatin Dalal, Chief Financial Officer. 'Our recently completed acquisition of Thirdera, an industry-leading ServiceNow partner, is already opening new growth opportunities and expanding our pipeline. As part of our balanced capital allocation strategy, we continue to seek organic and inorganic investment opportunities to accelerate our growth profile, expand our capabilities, and diversify our portfolio mix.'

Bookings

Bookings in the first quarter declined 6% year-over-year. On a trailing-twelve-month basis, bookings grew 1% year-over-year to $25.9 billion, which represented a book-to-bill of approximately 1.3x.

Employee Metrics

Total headcount at the end of the first quarter was 344,400, a decrease of 3,300 from Q4 2023 and a decrease of 7,100 from Q1 2023. Voluntary attrition - Tech Services on a trailing-twelve months basis was 13.1% as compared to 23.1% for the period ended March 31, 2023.

Return of Capital to Shareholders

The Company repurchased 1.4 million shares for $110 million during the first quarter under its share repurchase program. As of March 31, 2024, there was $1.7 billion remaining under the share repurchase authorization. In April 2024, the Company declared a quarterly cash dividend of $0.30 per share for shareholders of record on May 20, 2024. This dividend will be payable on May 29, 2024.

Second Quarter and Full-Year 2024 Guidance2 (all growth rates year-over-year)

Second quarter revenue is expected to be $4.75 - $4.82 billion, a decline of 2.9% to a decline of 1.4%, or a decline of 2.5% to a decline of 1.0% in constant currency.

Full-year 2024 revenue is expected to be $18.9 - $19.7 billion, a decline of 2.2% to growth of 1.8% as reported, or a decline of 2.0% to growth of 2.0% in constant currency. This assumes up to 100 basis points of inorganic contribution.

Full-year 2024 Adjusted Operating Margin3 is expected to be in the range of 15.3% to 15.5%, or 20 to 40 basis points of expansion.

Full-year 2024 Adjusted EPS3 is expected to be in the range of $4.50 to $4.68.

2 Guidance as of May 1, 2024

3 A full reconciliation of Adjusted Operating Margin and Adjusted Diluted EPS guidance to the corresponding GAAP measures on a forward-looking basis cannot be provided without unreasonable efforts. See 'About Non-GAAP Financial Measures and Performance Metrics' for more information and a partial reconciliation at the end of this release.

Select Client and Partnership Announcements

Signed agreement with Telstra, Australia's leading telecommunications and technology company, to elevate their software engineering capabilities and enhance their customers' experience. We will leverage our AI tools to drive innovation, enable more efficient software engineering and IT operations and decommission legacy systems to improve operational efficiency and support their employee experience.

Expanded partnership with Microsoft that will leverage Microsoft Copilot and Cognizant's advisory and digital transformation services to help employees and enterprise customers operationalize generative AI and realize strategic business transformation. The partnership aims to make Microsoft's generative AI and Copilots available to millions of users, to transform enterprise business operations, enhance employee experiences and accelerate cross-industry innovation. As part of the partnership, Cognizant purchased 25,000 Microsoft 365 Copilot seats for Cognizant associates, along with 500 Sales Copilot seats and 500 Services Copilot seats to enhance productivity, streamline workflows and transform customer experiences.

Announced a collaboration with Microsoft to infuse generative AI into healthcare administration. The TriZetto Assistant on Facets will leverage Azure OpenAI Service and Semantic Kernel to provide access to generative AI within the TriZetto user interface. This new collaboration aims to increase productivity and efficiency for healthcare payers and providers, while ensuring timely responses and improved care for patients.

Announced a planned collaboration with FICO, a leading analytics software company, to launch a cloud-based real-time payment fraud prevention solution powered by FICO Falcon Fraud Manager. The joint offering would leverage both firms' artificial intelligence and machine learning (ML) capabilities to help banks and other payment service providers in North America protect their customers from fraud in the growing world of instant digital payments.

Announced a strategic alliance with Shopify and Google Cloud to drive digital transformation and platform modernization for global retailers and brands. By utilizing Shopify's commerce operating system, built on Google Cloud, along with the expansive suite of Google Cloud offerings, retailers are expected to have the foundational technology needed to enable Cognizant to execute impactful digital transformation services and deliver benefits across a range of retail scenarios.

Signed a new agreement to transform and manage the global technology infrastructure of McCormick & Company, Inc., a global leader in flavor with a portfolio of category-leading brands. The new agreement is expected to deliver predictable business outcomes powered by AI automated tools. Cognizant is expected to deliver several key capabilities for McCormick over the next five years, including new self-service capabilities, improved service productivity and significant cost savings.

Extended strategic agreement with LexisNexis Legal & Professional, a leading global provider of information and analytics. Cognizant will provide cloud and digital engineering services to enhance customer experience on LexisNexis' next-gen legal research solution in the U.S. and Canada.

Extended a strategic partnership with CNO Financial Group, Inc., a leading provider of insurance, financial services and workforce benefits solutions to middle-income America. Cognizant will leverage generative AI technologies designed to deliver improvements and drive efficiencies for CNO's technology landscape across infrastructure, applications, enterprise software, and engineering.

Announced the combination of Cognizant's generative AI technology with the NVIDIA BioNeMo gen AI platform to solve complex challenges of drug discovery in the life sciences industry, such as improving productivity in the development process and increasing the speed at which new, life-saving treatments can be brought to market.

Unveiled an Advanced Artificial Intelligence Lab based in San Francisco that will focus on advancing the science and practice of AI through innovation and development of intellectual property and AI-enablement technologies. Staffed by a team of researchers and developers, including AI pioneers and PhDs, the lab will collaborate with research institutions, customers, and startups.

Renewed Cognizant's long-standing relationship with Pon IT, which is part of the Dutch family-owned multinational Pon Holdings. The collaboration will enable Cognizant to continue providing cloud managed services for Pon IT across its suite of operating companies. During the next phase of the collaboration, Cognizant will continue to implement further optimizations that are expected to enable Pon IT to benefit from an agile, intuitive, and integrated cloud platform.

Selected by Clario, a healthcare research technology company that delivers leading endpoint technology solutions for clinical trials, to support its global IT infrastructure and applications. Cognizant services will provide automation and digital technologies that can reduce cost of service and speed time to market.

Renewed Cognizant's collaboration with Cermaq Group AS, a leading global salmon producer driving the transition of systems towards healthier and more climate-friendly foods. The renewal comes after an existing ten-year relationship between the two companies that has enabled Cognizant to reliably act as a strategic ally on Cermaq's path towards digital modernization.

Select Analyst Ratings, Company Recognition and Announcements

Announced our Bluebolt grassroots innovation program, which launched a year ago in April 2023, has driven more than $150 million in estimated annualized client cost savings across more than 1,100 client implementations. We introduced Bluebolt to empower our global associates to devise and submit ideas - large and small - with the goal of advancing clients' success. Cognizant associates have submitted more than 130,000 ideas to date, of which more than 23,000 ideas have been implemented.

Named as one of 'America's Most Innovative Companies 2024' by Fortune Magazine, the world-leading statistics portal and industry ranking provider. Cognizant was recognized for its innovative products and services, processes, and culture for the second consecutive year.

Secured a number three ranking on the LinkedIn Top Companies in India 2024 list, which spotlights 25 leading workplaces with more than 5,000 employees globally. The recognition acknowledges our commitment to prioritizing associate experience, fostering skilling, facilitating career growth and championing gender diversity.

Recognized as a Leader by Everest Group in:

Retail IT Services PEAK Matrix Assessment, 2024

Pega Services PEAK Matrix Assessment, 2024

Financial Crime and Compliance (FCC) Operations Services PEAK Matrix Assessment, 2024

CPG IT Services PEAK Matrix Assessment, 2024

Intelligent Process Automation Services PEAK Matrix Assessment, 2024

Marketing Services PEAK Matrix Assessment, 2024

A Leader in IDC MarketScape:

Worldwide Professional Services in Railways and Airlines 2024 Vendor Assessment, doc #US51421623, February 2024

Market Leader in HFS Horizon 3:

Assuring the Generative Enterprise, 2024

Customer Experience Service Providers, 2024

Leadership in ISG Provider Lens:

Intelligent Automation Services and Solutions, 2023

Sustainability and ESG Services, 2024

Mainframe Services, 2024

Salesforce Ecosystem Partners, 2024 - US & UK

Leadership in Avasant RadarViewTM:

Life Sciences Digital Services, 2024

Airlines and Airports Digital Services, 2024

Hybrid Enterprise Cloud Services, 2024

Intelligent Automation Services, 2024

Healthcare Payor Digital Services, 2024

Retail Digital Services, 2024

Manufacturing Digital Services, 2024

Leadership in NelsonHall NEAT Reports:

Salesforce Services, 2024

Conference Call

Cognizant will host a conference call on May 1, 2024, at 5:00 p.m. (Eastern) to discuss the Company's first quarter 2024 results. To listen to the conference call, please dial (877) 810-9510 (domestic) or +1 (201) 493-6778 (international) and provide the following conference passcode: 'Cognizant Call.'

The conference call will also be available live on the Investor Relations section of the Cognizant website at http://investors.cognizant.com. An earnings supplement will also be available on the Cognizant website at the time of the conference call. For those who cannot access the live broadcast, a replay will be available. To listen to the replay, please dial (877) 660-6853 (domestically) or +1 (201) 612-7415 (internationally) and enter 13744823 beginning two hours after the end of the call until 11:59 p.m. (Eastern) on Tuesday, May 15, 2024. The replay will also be available at Cognizant's website www.cognizant.com for 60 days following the call.

About Cognizant

Cognizant (Nasdaq: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we're improving everyday life. See how at www.cognizant.com or @cognizant.