Revenue of $4.9 billion grew 2.4% year-over-year, or 5.6% in constant currency1.

Operating Margin and Adjusted Operating Margin of 16.4%, an increase of 100 and 60 basis points year-over-year, respectively

Operating cash flow of $1,032 million and free cash flow[1] of $953 million

Over $1.5 billion deployed on share repurchases and dividends year-to-date

Board of Directors approved an increase of $2 billion to the share repurchase authorization

Revised full-year 2022 revenue growth guidance to 4.5%, or 7.0% in constant currency

Cognizant (Nasdaq: CTSH), one of the world's leading professional services companies, today 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.'

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[Cognizant Q3 2022 Earnings Infographic]

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Cognizant Q3 2022 Earnings Infographic

Q3 2022

Q3 2021

Revenue (in billions)

$4.9

$4.7

Y/Y Growth

2.4 %

11.8 %

Y/Y Growth CC1

5.6 %

11.0 %

GAAP Operating Margin

16.4 %

15.4 %

Adjusted Operating Margin1

16.4 %

15.8 %

GAAP Diluted EPS

$1.22

$1.03

Adjusted Diluted EPS1

$1.17

$1.06

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.

Conference Call

Cognizant will host a conference call on November 2, 2022, at 5:00 p.m. (Eastern) to discuss the Company's third quarter 2022 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 13732397 beginning two hours after the end of the call until 11:59 p.m. (Eastern) on Wednesday, November 16, 2022. 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.

Forward-Looking Statements

This press release 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, our strategy, competitive position and opportunities in the marketplace, investment in and growth of our business, the effectiveness of our recruiting and talent efforts and related costs, trends in demand for digital solutions and services, labor market trends, the anticipated amount of capital to be returned to shareholders 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, the competitive and rapidly changing nature of the markets we compete in, the competitive marketplace for talent and its impact on employee recruitment and retention, legal, reputational and financial risks resulting from cyberattacks, the impact of and effectiveness of business continuity plans during the COVID-19 pandemic, risks related to the invasion of Ukraine by Russia, 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 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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