First Quarter 2022 - cognizant.q4cdn.com

[Pages:18]First Quarter 2022

Financial Results and Highlights

May 4, 2022

? 2022 Cognizant

Exhibit 99.3

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, 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, our and our clients' shift to digital solutions and services, labor market trends 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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? 2022 Cognizant

Results Summary: Q1 2022

Revenue

Up 9.7% Y/Y as reported, or 10.9% Y/Y in constant currency1

$4,401M

$4,826M

GAAP and Adjusted Operating Margin1

15.2%

15.0%

Q1 '21

Diluted Earnings Per Share (EPS)

Q1 '22

Q1 '21

Cash Flow

Q1 '22

$0.95

$1.07

$0.97

$1.08

$181M

$306M

$93M

$186M

Q1 '21

Q1 '22

GAAP Diluted EPS

Q1 '21

Q1 '22

Adjusted Diluted EPS1

Q1 '21

Q1 '22

Operating Cash Flow

Q1 '21

Q1 '22

Free Cash Flow1

1 See "About Non-GAAP Financial Measures and Performance Metrics" at the end of this earnings supplement for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

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? 2022 Cognizant

Revenue, Operating Margin and EPS

$ in millions except per share amounts

$4,225 $0.96

$4,000 $0.82

$4,243 $0.97

$4,184 $0.67

$4,401 $0.97

$4,585 $0.99

$4,744

$4,777

$1.06

$1.10

$4,826 $1.08

Q1 '20

Q2 '20

Q3 '20

Q4 '20 1

Q1 '21

Q2 '21

Q3 '21

Q4 '21 1

Q1 '22

Revenue

Adjusted Diluted EPS

Revenue Growth, Operating Margin and EPS

Q1 '20

Q2 '20

Q3 '20

Q4 '201

Q1 '21

Q2 '21

Q3 '21

Q4 '211

Q1 '22

Y/Y

2.8%

(3.4%)

(0.1%)

(2.3%)

4.2%

14.6%

11.8%

14.2%

9.7%

Y/Y CC

3.5%

(2.5%)

(0.7%)

(3.0%)

2.4%

12.0%

11.0%

14.5%

10.9%

GAAP Operating Margin 13.7%

11.7%

14.2%

11.1%

15.2%

15.2%

15.4%

15.3%

15.0%

Adjusted Operating Margin 15.1%

14.1%

15.9%

12.3%

15.2%

15.2%

15.8%

15.3%

15.0%

GAAP Diluted EPS

$0.67

$0.67

$0.64

$0.59

$0.95

$0.97

$1.03

$1.10

$1.07

Adjusted Diluted EPS

$0.96

$0.82

$0.97

$0.67

$0.97

$0.99

$1.06

$1.10

$1.08

1 Samlink Impact on Q4 2020 was a reduction of revenue of $107 million, or -2.5 percentage points impact on Q4 2020 Y/Y growth. Q4 2021 revenue growth included +2.8 percentage points of Samlink

Impact Y/Y. Q4 2020 Samlink Impact on GAAP / Adjusted Operating Margin was ~3.0 percentage points and $0.25 on GAAP / Adjusted Diluted EPS.

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? 2022 Cognizant

Revenue Performance: Q1 2022

Segments

$ in millions

Communications, Media & Technology

+18.1% Y/Y +19.9% Y/Y CC

$776

Products & Resources

+13.2% Y/Y +14.9% Y/Y CC

$1,130

$1,528

Financial Services1

+4.8% Y/Y +6.0% Y/Y CC

$1,392

Geography

$ in millions

Rest of World

+18.2% Y/Y +22.1% Y/Y CC

Europe1

+10.4% Y/Y +15.6% Y/Y CC

$912

$345

$3,569

North America

+8.7% Y/Y and CC

Healthcare

+8.1% Y/Y +8.8% Y/Y CC

1 The sale of the Samlink subsidiary, which was completed on February 1, 2022, negatively impacted Y/Y revenue growth in Financial Services and Europe by 1.3 and 2.3 percentage points, respectively.

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? 2022 Cognizant

Financial Services

Revenue

$ in millions

$1,451

$1,396

$1,469

$1,305

$1,458

$1,502

$1,544

$1,547

$1,528

Q1 2022 Geography

$ in millions Rest of World +9.4% Y/Y +13.2% Y/Y CC

Europe1

(2.8%) Y/Y +1.1% Y/Y CC

$308

$140

Q1 '20

Q2 '20

Q3 '20

Q4 '201

Q1 '21

Q2 '21

Revenue growth

Q1 '20 Y/Y 1.0% Y/Y CC 1.8%

Q2 '20 (5.2%) (4.3%)

Q3 '20 (1.5%) (2.2%)

Q4 '20 1 (11.1%) (11.4%)

Q1 '21 0.5% (1.7%)

Q2 '21 7.6% 4.8%

Q3 '21

Q3 '21 5.1% 4.3%

Q4 '21 1

Q1 '221

Q4 '21 1 18.5% 18.8%

Q1 '22 1 4.8% 6.0%

$1,080

North America

+6.6% Y/Y and CC

Growth reflects demand for digital services, partially offset by clients' continued focus on cost optimization. In February 2022 the sale of the Samlink subsidiary was completed, which negatively impacted segment revenue growth by approximately 130 basis points.

1 Samlink Impact on Q4 2020 Financial Services was a reduction of revenue of $107 million, or -7.3 percentage points impact Y/Y. Q4 2021 Y/Y revenue growth included Samlink Impact of +9.0

percentage points on Financial Services. The sale of the Samlink subsidiary, which was completed on February 1, 2022, impacted our Q1 2022 Y/Y revenue growth in total Financial Services and

Financial Services in Europe by -1.3 and -6.0 percentage points, respectively.

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Healthcare

Revenue

$ in millions

$1,194

$1,157

$1,231

$1,270

$1,288

$1,325

$1,354

$1,370

$1,392

Q1 2022 Geography

$ in millions

Europe

$33

Rest of World

+13.8% Y/Y +18.2% Y/Y CC

+3.8% Y/Y +8.7% Y/Y CC

$164

Q1 '20

Q2 '20

Q3 '20

Q4 '20

Q1 '21

Revenue growth

Q1 '20

YY//YY 2.5% CC 2.7%

Q2 '20 2.0% 2.2%

Q3 '20 4.8% 4.2%

Q4 '20 4.0% 3.3%

Q1 '21 7.9% 7.0%

Q2 '21

Q2 '21 14.5% 13.4%

Q3 '21

Q3 '21 10.0% 9.8%

Q4 '21

Q1 '22

Q4 '21 7.9% 8.2%

Q1 '22 8.1% 8.8%

$1,195

North America

+8.5% Y/Y and CC

Growth was driven by increased demand for digital services among life sciences clients, including digitization of clinical trial processes and investments in manufacturing operations modernization.

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? 2022 Cognizant

Products & Resources

Revenue

$ in millions

$954

$867

$927

$948

$998

$1,055

$1,107

$1,116

$1,130

Q1 2022 Geography

$ in millions

Rest of World

+29.6% Y/Y +32.7% Y/Y CC

Europe

+32.5% Y/Y +39.1% Y/Y CC

$277

$92

Q1 '20

Q2 '20

Q3 '20

Q4 '20

Q1 '21

Revenue growth

Q1 '20

YY//YY 4.4% CC 5.3%

Q2 '20 (6.5%) (5.0%)

Q3 '20 (4.0%) (4.6%)

Q4 '20 (1.6%) (2.4%)

Q1 '21 4.6% 2.4%

Q2 '21

Q2 '21 21.7% 17.8%

Q3 '21

Q3 '21 19.4% 18.1%

Q4 '21

Q1 '22

Q4 '21 17.7% 18.0%

Q1 '22 13.2% 14.9%

$761

North America

+6.0% Y/Y +6.1% Y/Y CC

Growth was driven by strong client demand for digital services across all industries and included the benefit from recently completed acquisitions.

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? 2022 Cognizant

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