Q4 2024 Cognizant Technology Solutions Corp Earnings Call

Operator: Ladies and gentlemen, welcome to the Cognizant Technology Solutions fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, welcome to the cognizant technology solutions fourth quarter 2024 earnings Conference call.

All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer If you would like to ask a question at that time, please press star 1 on your telephone key. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

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Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for.

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Tyler Scott: Now, I would like to turn the conference over to Mr. Tyler Scott, Vice President, Investor Relations. Please go ahead.

Speaker Change: Now I would like to turn the conference over to Mr. Tyler Scott Vice President Investor Relations. Please go ahead Sir.

Tyler Scott: Thank you, operator.

Tyler Scott: And good afternoon, everyone. By now, you should have received a copy of the earnings release and investor supplement for the company's fourth quarter and full year 2024 results. If you have not, copies are available on our website, cognizant.com.

Speaker Change: You operator, and good afternoon, everyone by now you Should've received a copy of the earnings release and Investor supplement for the company's fourth quarter and full year 2024 results. If you have not copies are available on our website cognizant dotcom.

Tyler Scott: The speakers we have on today's call are Ravi Kumar, Chief Executive Officer, and Jatin Dalal, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risk and uncertainties as described in the company's earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC.

Speaker Change: Speakers, we have on today's call are Ravi Kumar, Chief Executive Officer, and Jonathan Doyle Chief Financial Officer.

Speaker Change: Before we begin I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide us.

Full information for our investors reconciliations of non-GAAP financial measures, where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC with that I'd now like to turn the call over to Robbie. Please go ahead.

Ravi Kumar: With that, I'd now like to turn the call over to Ravi.

Ravi Kumar: Please go ahead. Thank you, Tyler, and good afternoon, everyone. Thank you for joining our fourth quarter and full year 2024 earnings call.

Robbie: Thank you Tyler and good afternoon, everyone.

Robbie: Thank you for joining our fourth quarter and full year 2024 earnings call.

Ravi Kumar: I joined Cognizant two years ago, drawn by its heritage and unique DNA, along with its extraordinary ability to sense, incubate, and scale new technologies for global enterprises, often ahead of peers and clients. We set out to harness these strengths and reclaim our place in the winner's circle. I am pleased to report solid progress in 2020. We successfully pivoted from stabilization to growth, building momentum throughout the year. Q4 marked a high point for year-over-year revenue growth, large deal signings and bookings. Operationally, we completed our next-gen program, delivering savings reflected in our adjusted operating margin and strengthening our ability to make strategic investments and drive profitable growth.

Speaker Change: I joined cognizant two years ago drawn by its heritage and unique DNA.

Speaker Change: Along with its extraordinary ability to sense incubate and scale new technologies for global enterprises, often ahead of peers and clients.

Speaker Change: We set out to harness this trends and reclaim our place in the Vanessa.

Speaker Change: I'm pleased to report solid progress in 2024, we successfully pivoted from stabilization to growth building momentum throughout the year.

Speaker Change: Q4 marked a high point for you.

Speaker Change: Revenue growth large deal signings and bookings operates.

Speaker Change: Operationally, we completed on next Gen program delivering savings reflected in our adjusted operating margin and strengthening our ability to make strategic investments and drive profitable growth.

Ravi Kumar: Our 2024 results reflect the strong execution of our strategic priorities, accelerating growth, becoming an employer of choice and modernizing our Our North Star remains returning to the winner's circle with top quartile revenue growth while steadily expanding our margins over time. Let's take a moment to reflect on 2024, starting with our growth initiatives, which gained momentum through large deals, platform enhancements, new and strengthened partnerships, and strategic With respect to platforms, our AI labs made significant advancements with our AI capabilities and offerings in 2024. We introduced FlowSource for full-stack engineering, NeuroEdge for real-time AI, NeuroCyberSecurity for AI-enabled proactive defense, and NeuroAI Multi-Agent Accelerator for AI agent We also added multi-agent orchestration capabilities to our NeuroAI platform, and we debuted our AI-powered Cognizant Moment to help clients re-imagine client experience.

Speaker Change: Our 'twenty 'twenty four the results reflect the strong execution of our strategic priorities accelerating growth, becoming an employer of choice and modernizing our operations.

Speaker Change: Our North Star remains returning to the winner circle at the top quartile of a new growth while steadily expanding our margins over time.

Speaker Change: Let's take a moment to reflect on 2024, starting with our growth initiatives, which gained momentum through large deals platform enhancements, new and strengthened partnerships and strategic acquisitions.

Speaker Change: With respect to platform, Saudi I lapsed made significant advancements with our AI capabilities and offerings in 'twenty 'twenty four we introduced flow shorts for full stack in genetics.

Speaker Change: [noise] noodle age for real time, AI Newdow cybersecurity for AI than anybody.

Speaker Change: Proactive defense and euro multi year agenda accelerator for AI agent in development.

Speaker Change: We also added multi agent orchestration capabilities to a noodle AI platform and we debuted our AI powered cognizant woman to help find city imagine client experiences.

Ravi Kumar: In 2024, we expanded our breadth and depth of our global alliances ecosystem and we added two strategic acquisitions to our portfolio, Therdera and Belkos. Tererra made us one of ServiceNow's largest partners. And in the first quarter of 2025, ServiceNow elevated us to global elite status, the highest level of partnership recognition within their ecosystem. Belkan significantly strengthens our opportunity in the $190 billion ER&D market. We believe our integration is on track. We recently completed phase one of the integration focused on commercial integration for clients outside of aerospace and And in the fourth quarter, we signed a multi-year deal valued at several hundred million dollars with an aerospace company.

Speaker Change: In 'twenty 'twenty, four we expanded our breadth and depth of our global alliances ecosystem and we added two strategic acquisitions to our portfolio tornado and Bell Canada.

Speaker Change: But it hasn't made us what off service largest partners and in the first quarter of 2025 service, probably elevated as to global elite status, the highest level of partnership with admission within that ecosystem.

Speaker Change: Belk and significantly strengthens that opportunity and the $190 billion, you've Gotta D market. We believe our integration is on track.

Speaker Change: We recently completed phase one of the integration focused on commercial integration for clients outside of aerospace and defense.

Speaker Change: And in the fourth quarter, we signed a multiyear deal valued at several hundred million dollars within aerospace client.

Ravi Kumar: Finally, one last note about our efforts to accelerate revenue. Our NPS Client Satisfaction Scores improved to a historic high in 2020.

Speaker Change: Finally, one last note about our efforts to accelerate revenue at N P. As client satisfaction scores improved to a historic high in 2024.

Ravi Kumar: Turning to our second strategic priority of becoming an employer of choice, developing and strengthening our associates is key to a We drove AI re-skilling at scale, sustained high employee engagement scores, and maintained low voluntary attrition. I'm also pleased to share we have 13,000 current employees who have returned to Cognizant. These metrics combined with the rising NPS scores are evidence of the high correlation between happy employees and happy clients. Our grassroots innovation initiative, Blue Bolt, continues to generate tangible ideas for clients. Our associates doubled the number of ideas in 2024, submitting nearly 240,000 of which 47,000 were implemented by Our Synapse program equipped more than 400,000 people with skills for future work opportunities, well on our way to a goal of 1 million.

Speaker Change: Turning to our second strategic priority of becoming an employer of choice developing and strengthening that associates is key to our future.

Speaker Change: Drove AI these getting at scale sustained high employee engagement scores and maintain that no one entry attrition.

Speaker Change: Also pleased to share that we have 13000 current employees, who returned to cognizant.

Speaker Change: These metrics combined with a rising NPS scores are evidence of the high correlation between happy employees and happy clients.

Speaker Change: Our grass roots innovation any shade of Blue bold continues to generate tangible ideas for our clients.

Speaker Change: Associates double the number of ideas in 'twenty 'twenty four submitting nearly 240000 of which 47000 were implemented by clients.

Speaker Change: Synapse program equipped more than 400000 people with skills for future work opportunities well on our way to our goal of $1 billion Lucas.

Ravi Kumar: A work in 2024 earned prestigious recognition, including Forbes' World's Best Employers, Newsweek's America's Most Reliable Companies, and ranking number seven on fortunes change the world less.

Speaker Change: Our work in 'twenty 'twenty, four prestigious recognition, including Forbes world's best employers Newsweek's America's most reliable companies and ranking number seven unfortunates change the world.

Ravi Kumar: Turning to our third strategic priority, we took several steps during the year to simplify and modernize our operations. For example, completing a next-gen cost program helped drive sequentially-adjusted operating margin performance throughout the year while supporting a growth in cost. We optimized and diversified our infrastructure in part by directing our India expansion into smaller cities and industries. You have heard me call AI a double engine of transformation because it offers Cognizant the opportunity to accelerate our own progress as much as it does for clients. We are rapidly applying AI across the organization to strengthen our operating agility, while at the same time quickly sharing our learnings with clients.

Speaker Change: Turning to our third strategic priority, we took several steps during the year to simplify and modernize that operations for example.

Speaker Change: Pleading of Nextgen cost program helped drive sequential adjusted operating margin performance throughout the year, while supporting our growth investments.

Speaker Change: Optimized and diversified at infrastructure in part by directing our India expansion into smaller cities in India.

Speaker Change: You have heard me called double engine of transformation because it offers cognizant of the opportunity to accelerate that progress as much as it does for clients. We are rapidly applying AI across the organization to strengthen our operating agility, while at the same time quickly sharing of learnings with clients, we have identified more than 200.

Ravi Kumar: We've identified more than 200 internal AI use cases supplying AI across three major demand associate experience and productivity, enabling business operations and to improve our technology and security landscape. These will remain important priorities in 2020.

Speaker Change: Internally I use cases, applying AI across three major dimensions.

Speaker Change: Associate experience and productivity, enabling business operations and improve our technology and security landscape.

Speaker Change: These will remain important priorities in 2025.

Ravi Kumar: Now let me turn to some highlights from the quarter. We finish the year on a strong note with accelerating momentum as we delivered another quarter of improvement. year-over-year organic revenue growth and expanded our adjusted operating margins sequentially ahead of our expectations. Revenue was $5.1 billion up 6.7% year over year in constant currency. Performance included the contribution of Belkan and improved organic growth driven again by our two largest segments, health sciences and financial services. Organic revenue growth was fueled by recently won deals and improved discretionary spending primarily in financial services. We signed 10 large deals in Q4, up from seven a year ago, reflecting strong momentum across service lines and industries, including digital engineering, financial services, and cloud.

Speaker Change: Now, let me turn to some highlights from the quarter.

Speaker Change: We finished the year on a strong note with accelerating momentum as we delivered another quarter of improved.

Speaker Change: Year over year organic revenue growth and expanded our adjusted operating margin sequentially it'll sort of expectations.

Speaker Change: Revenue was $5 1 billion up six 7% year over year in constant currency.

Speaker Change: Performance included the contribution of Bell, Canada improved organic growth driven again by our two largest segments health Sciences and financial services.

Speaker Change: Organic revenue growth was fueled by recently won deals and improved discretionary spending, but I imagine even financial services.

Speaker Change: We signed 10 large deals in Q4 up from a seven eight year ago, reflecting strong momentum across service lines and industries, including digital engineering financial services and cloud services.

Ravi Kumar: This brought our large deal total to 29 in 2024 compared to 17 in 2020. health sciences led with over 10% revenue growth. This included continued strength in TriZet, our differentiated software platform that is used to process about two-thirds of U.S. healthcare claims. As a recent example, we entered an agreement in 2024 to enhance healthcare operations for Blue Shield of California with a Triseto Facets platform as a service solution. And our financial services segment delivered another quarter of year-over-year growth, supported by increased demand for cloud data and modernization services. Adjusted operating margin improved sequentially to 15.7%, driving fullier performance that exceeded our expectations while we continue to make investments in AI and M&A.

Speaker Change: This brought our large deal totaled 229 in 2024 compared to 17 in 2023.

Speaker Change: Health Sciences led with over 10% revenue growth.

Speaker Change: This included continued strength in trials that all our differentiated software platform that is used to process about two thirds of U S health care claims.

Speaker Change: As a recent example, we entered an agreement in 'twenty 'twenty four to enhance health care operations for Blue Blue Shield of California without price that all facets platform as a service solution.

Speaker Change: And our financial services segment delivered another quarter of year over year growth supported by increased demand for cloud data and modernization services.

Speaker Change: It just it operating margin improved sequentially to 15.7% driving full year performance that exceeded our expectations, while we continue to make investments in AI and M&A.

Ravi Kumar: Taking a step back, we believe our expanding Gen AI capabilities are gaining momentum in the marketplace. For example, we now have over 1,200 early Gen AI engagements compared to 1,000 at the end of third quarter. We see demand for AI services expanding across industries as use cases proliferate. This includes predictive analytics for patient outcomes, drug discovery, and virtual health assistance in healthcare. Credit Scoring and Analysis, Customer Service and Automation, and Fraud Detection and Financial Services. Productive Maintenance, Quality Control and Supply Chain Optimization and Manufacturing. content personalization and targeted advertising in media, just to name a few.

Speaker Change: Taking a step back we believe our expanding gen AI capabilities are gaining momentum in the market place. For example, we now have over 1200, let me Jenny I engagements compared to 1000 at the end of third quarter.

Speaker Change: We see demand for AI services expanding across industries as used cases proliferate.

Speaker Change: This includes predictive analytics for patient outcomes drug discovery, and what you will help assistance in health care.

Speaker Change: Craig's coding analysis customer service automation and fraud detection and financial services.

Speaker Change: Predictive maintenance quality control and supply chain optimization and manufacturing.

Speaker Change: Content personalization and targeted advertising and media just to name a few.

Ravi Kumar: Another great application of our AI capabilities is Store360, recently launched for the retail industry with a strategic partner service. Store360 aims to help retailers streamline store operations, enhance employee productivity, and improve their customer experience with integrated, automated, and predictive Gen AI capabilities. We are already seeing early interest and excitement. We also signed a five-year agreement with Toyota during the quarter to infuse GenAI across its software development cycles by leveraging hyper-automation AI and process re-engineering. It is a great example of proactive solutioning, allowing us to deliver significant productivity for the customer that can be redeployed to cover new services under an extended contract tenure.

Speaker Change: Another great application of AI capabilities, Historically, 60 recently launched for the retail industry with a strategic partner service now.

Speaker Change: 360 aims to help retailers streamline stood operations enhance employee productivity and improve the customer experience with integrated automated and predictive Gen. AI capabilities, we are already seeing early interest and excitement.

Speaker Change: We also signed a five year agreement with Toyota during the quarter to infuse Jenny I across its software development cycles by leveraging hyper automation AI and process reengineering.

Speaker Change: It is a great example of proactive solutions, allowing us to deliver significant productivity for the customer that can be redeployed to cover new services under an extended contract anyway.

Ravi Kumar: And we renewed our strategic partnership with McDonald's to streamline operations and support its delivery of exceptional customer experience. Our multi-year agreement aims to transform McDonald's legacy infrastructure into modern cloud-based systems using the Neuro IT operations and SkyGrid platforms to improve system observability, reliability, and agility. Lastly, we expanded our partnership with Gilead Sciences, our collaboration will engage our expertise in machine learning and Gen AI with an agentic framework to improve productivity and generate cost savings. A new agreement accelerates Gilead's digital transformation allowing Gilead to focus on its core mission of discovering and delivering critical medicine.

Speaker Change: And we renewed our strategic partnership with Mcdonald's to streamline operations and support its delivery of exceptional customer experiences.

Speaker Change: They might aims to transform Mcdonald's legacy infrastructure into a modern cloud based systems using the noodle 80 operations in skylake platforms to improve system reliability and reliability and agility.

Speaker Change: Lastly, we expanded our partnership with Gilead Sciences collaboration with will engage our expertise in machine learning and Jenny I have with an agent take framework to improve productivity and generate cost savings.

Speaker Change: Our new agreement accelerates Gilead.

Speaker Change: Digital transformation, allowing <unk> to focus on its core mission of discovering and delivering critical medicines.

Ravi Kumar: And we are also seeing traction with global capability centers or GCCs. Earlier this year, we were notified that we won a new strategic partnership with a leading insurance provider to establish the GCC in India. We will work to enhance their operational efficiency, accelerate digital transformation, and expand their global talent footprint, leveraging their deep expertise in building and scaling these. This partnership reinforces our position as a trusted transformation partner and marks a significant milestone in our continued growth in the GCC space. These are just a few recent examples illustrating how our innovative solutions and strategic partnerships powered by cutting-edge technologies are delivering significant value to our clients in addition to helping accelerate our commercial movement.

Speaker Change: And we are also seeing traction with global capability centers on D. C. CS earlier. This year, we were notified that we won a new strategic partnership with a leading insurance provider.

Speaker Change: Tablets the D C C in India we've.

Speaker Change: We've been working to enhance the operational efficiency accelerating digital transformation and expanded global talent footprint, leveraging our deep expertise in building and scaling D cities.

Speaker Change: This partnership reinforces our position as a trusted transformation partner and marks a significant milestone in our continued growth in the D. C C space.

Speaker Change: These are just a few recent examples illustrating how our innovative solutions and strategic partnerships powered by cutting edge technology is delivering significant value to our clients. In addition to helping accelerate our commercial momentum.

Ravi Kumar: As we think about AI-enabled enterprise landscapes, I'm very excited about the role Cognizant can play in reimagining businesses, reshaping operating models, co-creating new products and services, and redefining work, workforces, and the workplaces of our clients. The recent advances in democratizing foundation models are efficiently diffusing value to the front end of the AI value chain. We can play a big role for our clients in unlocking newer efficiency and innovation value levers and we think it will be a force multiplier. We believe our industry domain strength at the intersection of design, deep engineering and operations will allow us to stay differentiated and be a front runner as we see a proliferation of AI-led services.

Speaker Change: As we think about AI enabled enterprise landscapes I'm very excited about the role of cognizant can play and re imagining business is reshaping our operating models co, creating new products and services and redefining work Workforces in the work places of our clients.

Speaker Change: The recent advances in Democratizing Foundation models.

Speaker Change: It efficiently diffusing value to the front end of the value chain, we can play a big role for our clients and unlocking new what efficiency and innovation value and there was a lot and we think it's it can be a force multiplier.

Speaker Change: We believe our industrial domain strength at the intersection of design deep engineering and operations will allow us to stay differentiated and be a front runner as we see a proliferation of hey, I led services.

Speaker Change: Yeah.

Ravi Kumar: We see the AI-enabled opportunity playing out in three distinct vectors, with the first already here. The most mainstream use case of AI is tech-for-tech, or its application in software development cycles with the help of code-assist platforms. We have our own developer workbench on the FlowSource platform. In the fourth quarter, we estimated that 20% of our code accepted by developers was generated by AI, allowing us to do more for less and unleash a wave of hyper productivity. Our belief is with this level of hypoproductivity. There will be an opportunity for partners like us to help clients unlock the estimated trillions of dollars of technical debt, find viable ways to modernize legacy systems and applications, automate infrastructure and operations, and eliminate the backlog of workloads.

Speaker Change: We see the AI enabled opportunity playing out in three distinct like this with the first already here.

Speaker Change: First.

Speaker Change: The most mainstream use cancel Fei I use tech for Tech Hot its application and software development cycles with the help of CT assist platforms.

Speaker Change: We have our own develop a work bench on the flow source platform in the fourth quarter, we estimated that 20% of our court accepted by the developers will degenerate anybody I allowed.

Speaker Change: Allowing us to do more for less and unleash available hypo productivity.

Speaker Change: Our belief is with this level of hyper productivity, there will be an opportunity for partners like us to help clients unlock the estimated trillions of dollars of technical debt find viable ways to modernize their legacy systems and applications automate infrastructure and operations and eliminate the backlog of workloads.

Ravi Kumar: The Vector 2 opportunity will be about modernizing the data and cloud foundation for integrating AI into enterprise landscapes. We believe this opportunity will require building last mile infrastructure related to domain-specific cognitive and reasoning frameworks, explainability and traceability, agentification, and multi-agent orchestration and platforms. It also involves ensuring that AI's use is ethical and responsible, and the output is optimized for accuracy. Our belief is that this process of identification will drive significant innovation cycles leading to new AI-enabled products and services work that is being advanced by our AI lab. And finally, Vector 3 is about untapped and newer service pools that we believe will be unlocked by identification.

Speaker Change: So better to opportunity and it will be about modernizing the data and cloud foundation for integrating <unk> into enterprise.

Speaker Change: Landscapes, we believe this opportunity will require building last mile infrastructure related to the.

Speaker Change: Domain specific cognitive and reasoning frameworks explain ability and traceability agent to vacation and multi isn't orchestration and platforms. It also involves ensuring that there is usually the pickle and responsible and the output is optimized for accuracy and costs.

Speaker Change: Believe me that is that this process of identification will drive significant innovation cycles, leading to new AI enabled products and services work that is being and wants to weigh out AI lapse.

Speaker Change: And finally, what the themes about untapped and newer service pools that we believe will unlocked by identification.

Ravi Kumar: Our view is that software may no longer be merely a tool for organizing work, but can become the worker itself, capable of understanding, executing, and improving services traditionally delivered by humans. We expect the most transformative applications of AI will be those that collaborate with human teams with the potential to unlock new and previously unimaginable categories of work. We see a future where a system of agents can inject autonomous intelligence into workflows by grasping context, applying reasoning, and building a team of experts that each contribute unique knowledge and abilities. This evolution of services as a software, as we call it, is expected to dramatically expand our addressable spend through new access to our clients' expansive business operations budget.

Speaker Change: Our view is that software may no longer be mainly a tool for organizing work, but can become the worker itself capable of understanding executing and improving services traditionally delivered by humans.

Speaker Change: We expect the most transformative applications of AI, even with those that collaborated with human teams with the potential to unlock new and previously unimaginable categories of work.

Speaker Change: We see a future where the system off agents can inject autonomous intelligence into workflows like grasping context, applying seasoning and building a team of experts that each contribute unique knowledge and abilities.

Speaker Change: This evolution of services as a software as we call. It is expected to dramatically expand our addressable spend through new access to our clients expansive business operations budgets.

Ravi Kumar: rather than the technology budgets alone. Early use case opportunities for many of our clients are to identify horizontal business functions like sales and marketing, human resources functions, and customer service, as well as vertical functions like clinical operations, retail operations, and connected care, to name a few.

Speaker Change: Rather than the technology, because it's a little.

Speaker Change: Early use case opportunities for many of our clients are doing agent defy horizontal business functions like sales and marketing human resources functions and customer service as well as what do you call functions like clinical operations, our retail operations in connected care to name a few.

Ravi Kumar: I will close by saying that 2024 accomplishments have strengthened Cognizant operationally and strategically by broadening our portfolio while increasing our agility. We believe we are now transitioning from a phase of stabilization to a phase of growth. Our early investments in AI, practical tooling, thought leadership, and unique capabilities at the intersection of design, tech-led engineering, and operations gives us confidence that we have the right to win in this dynamically changing IT services market. We believe we are well positioned to capitalize on the growth opportunities ahead and confident that our strategic focus will help us deliver improved revenue growth to get us back to the winner's circle and gradual margin expansion over time.

Speaker Change: I will close by saying that 'twenty 'twenty four accomplishments have strengthened cognizant operationally and strategically by broadening our portfolio, while increasing our agility.

Speaker Change: We believe we are now transitioning from a phase of stabilization to a phase of growth.

Speaker Change: Early investments in the eye tactical tooling thought leadership and unique capabilities at the intersection of design.

Speaker Change: Led engineering and operations gives us confidence that we have the right to win in this dynamically changing I do services market.

Speaker Change: We believe we are well positioned to capitalize on the growth opportunities ahead, and confident that our strategic focus will help us deliver improved revenue growth to get us back to the winner circle and gradual margin expansion over time.

Ravi Kumar: Before I turn to Jatin to review our financials in greater depth, I would like to thank our clients and partners for their trust and our associates worldwide for their steadfast dedication and daily drive to deliver. We look forward to updating you in more detail at our March 25th Investor Day in New York.

Justin: Before I turn to Justin to review, our financials in greater depth I would like to thank our clients and partners for their trust and their associates worldwide for their steadfast dedication and daily drive to deliver.

Jonathan Doyle: We look forward to updating you in more detail at our March 25th Investor Day in New York with that I'll turn the call over to Jonathan.

Jatin Dalal: With that, I'll turn the call over to Jatin.

Jatin Dalal: Thank you, Ravi, and thank you all for joining us. Our fourth quarter results underscore the progress we have made against our strategic priorities to improve commercial momentum and enhance operational excellence. Fourth quarter revenue of $5.1 billion grew 6.7% year-over-year in constant current.

Jonathan Doyle: Thank you Debbie and thank you all for joining us our fourth quarter results underscore the progress we have made against our strategic priorities to improve commercial momentum and enhance operational excellence.

Jonathan Doyle: Fourth quarter revenue of $5.1 billion grew six 7% yoga, where you're in constant currency.

Jatin Dalal: at the high end of our guidance range. Organic revenue growth was driven by health sciences, which grew more than 10% year-over-year. and Financial Services, which grew approximately 3%. Our acquisitions of Third Era and Belkin have supported our entry into new end markets with attractive long-term growth profiles. Fourth quarter revenue included approximately 450 basis points of year-over-year growth from this exercise. For the full year, revenue of $19.7 billion increased 1.9% year-over-year in constant currency and included approximately 200 basis points of growth from 3rd Era and Belkan. We were very pleased with our fourth quarter adjusted operating margin of 15.7%.

Jonathan Doyle: At the high end of our guidance range.

Jonathan Doyle: Organic revenue growth was driven by a health sciences, which grew more than 10% year over year.

Jonathan Doyle: And financial services, which grew approximately 3%.

Jonathan Doyle: Our acquisitions of Toyota and Belkin have supported our entry into new end markets with attractive long term growth profile.

Jonathan Doyle: Fourth quarter revenue included approximately 450 basis points of Yoda woodyard growth from these acquisitions.

Jonathan Doyle: For the full year revenue of $19 $7 billion increased one 9% Euro audio in constant currency and included approximately 200 basis points of growth from third data and broken.

Jonathan Doyle: We were very pleased with our fourth quarter adjusted operating margin of 15, 7%. This.

Jatin Dalal: This performance, driven by completion of our next-gen program and our rigorous actions to strengthen operations, drove a fully-adjusted operating margin of 15.3%.

Jonathan Doyle: This performance driven by completion of our next Gen program and rigorous actions to strengthen operations drove full year adjusted operating margin of 15, 3%.

Jatin Dalal: This was 20 business points ahead of our guide. This also represents 20 basis points of margin expansion year-over-year, net of significant investments we have made to accelerate growth, such as Belkin and our AI platform.

Jonathan Doyle: This was 20 basis points ahead of our guidance.

Jonathan Doyle: This also represents 20 basis points of margin expansion year over year net of significant investments, we have made to accelerate growth such as Belton N E platforms.

Jatin Dalal: Now, let's turn to the details of the quadrant. By segment, health sciences show broad-based strength across payer, provider, and life sciences and market. Clients continue to prioritize cost optimization, cloud migration, and legacy modernization projects. which are helping to more than offset the muted discretionary spending environment. Within financial services, growth was balanced with positive trends across capital markets, cards and payments, fintech, and commercial banking clients. We saw further Albert's gradual pickup in discretionary spending. In North America, we are seeing an improved pipeline of opportunities for transformation and modernization projects across both insurance and select areas of banking and financial services clients.

Jonathan Doyle: Now, let's turn to the details of the quarter.

Jonathan Doyle: By segment here.

Jonathan Doyle: Since it's so broad based strength across payer provider and life Sciences end markets.

Jonathan Doyle: Clients continue to prioritize cost optimization cloud migration and legacy modernization projects.

Jonathan Doyle: Which are helping to more than offset the music discretionary spending environment.

Jonathan Doyle: Within financial services growth was balanced with positive trends across capital markets God's than payments Fintech and commercial banking clients.

Jonathan Doyle: We saw further edberg gradual pickup in discretionary spending.

Jonathan Doyle: In North America, we are seeing an improved pipeline of opportunities for transformation and modernization projects across both insurance in select areas of banking and financial services clients.

Jatin Dalal: In addition, we have continued to see healthy growth in Canada. Driven by the recent new book.

Jonathan Doyle: In addition, we have continued to see healthy growth in Canada dry.

Jonathan Doyle: Even by the recent new bookings.

Jatin Dalal: Production Resources or PNR. Growth was driven by wealth. As we noted last quarter, the segment has been pressured by cautious discretionary environment across Denmark. This includes automotive, aerospace, manufacturing and logistics, among others. We signed three large deals in this segment in the fourth quarter. Despite the near-term pressure, we are excited about the opportunities we see across PNR where the convergence of information technology and operational technology is rapidly accelerating. Communication, media and technology performance was consistent with last quarter as clients remain focused on cost optimization and discretionary spending budgets have been pressured. From geographic perspective, growth was led by North America, which increased more than 8% year-over-year.

Jonathan Doyle: Products and resources or b or not.

Jonathan Doyle: Growth was driven by wilken.

Jonathan Doyle: As we noted last quarter. The segment has been pressured by cautious discretionary environment across our end markets. This includes automotive aerospace manufacturing and logistics amongst others.

Jonathan Doyle: We signed three large deals in this segment in the fourth quarter.

Despite the near term pressure, we are excited about the opportunities we see across beer, not where the convergence of information technology and operational technology is rapidly accelerating.

Jonathan Doyle: Communication media and technology performance was consistent with last quarter as clients remain focused on cost optimization and discretionary spending but there have been pressure.

Jonathan Doyle: From a geography perspective growth was led by North America, which increased more than 8% year over year.

Jatin Dalal: Health Sciences, Belkin, and Banking and Financial Services all supported the growth. Europe grew by about 1% year-over-year. By segment, strength in health sciences and financial services were offset by softness in products and resources. And finally, the rest of the world increased about 4% year over year.

Jonathan Doyle: <unk> Sciences, Belkin, and banking and financial services all supported.

Jonathan Doyle: Europe grew by about 1% year over year by segment strength in Health Sciences, and financial services was offset by softness in products and resources.

Jonathan Doyle: And finally rest of the world increased about 4% year over year.

Jatin Dalal: This reflected solid growth across most segments.

Jonathan Doyle: This reflected solid growth across most segments.

Jatin Dalal: Now turning to book Fourth quarter bookings increased 11% year over year. Driven by Lodge. On a trailing 12-month basis, bookings grew 3% year-over-year and represented a 1.4x book-to-bill. Trends in smaller deals improved, which supported a low-to-mid single-digit increase in our trailing 12-month annual contract value. both sequentially and year over year.

Jonathan Doyle: Now turning to bookings.

Jonathan Doyle: Fourth quarter bookings increased 11% year to with you.

Jonathan Doyle: Driven by large deals.

Jonathan Doyle: On a trailing 12 month basis bookings grew 3% year over year and represented a 1.46 book to Bill.

Jonathan Doyle: Trends in smaller deals improve which supported a low to mid single digit increase in our trailing 12 month.

Jonathan Doyle: Annual contract value.

Jonathan Doyle: Sequentially and you Gotta with you.

Jatin Dalal: Turning to Expenses Quarter 4 marked the end of the next-gen program, and we incurred about $49 million of costs related to the program in the quarter. Excluding the impact of these costs, adjusted operating margin was 15.7%, significantly above our expectations. Year over year, margins declined by 40 basis points, primarily reflecting the impact of Belkin and increased compensation costs. This was partially offset by savings from next-gen, high utilization, and a favorable currency exchange rate.

Jonathan Doyle: Turning to expenses.

Jonathan Doyle: For a full month the end of the next Gen program, and we incurred about $49 million of costs related to the program in the quarter.

Jonathan Doyle: Excluding the impact of these costs adjusted operating margin was 15, 7% significantly above our expectations.

Yona Ovadia: Yona Ovadia.

Yona Ovadia: Margin declined by 40 basis points, primarily reflecting the impact of Belgian and increased compensation costs.

Yona Ovadia: This was partially offset by savings from Nextgen, our utilization and a favorable currency exchange rates.

Jatin Dalal: We are pleased to be exiting the year with an improved cost base and more resilient operating model.

Yona Ovadia: We are pleased to be exiting the year with an improved cost base and more resilient operating model.

Jatin Dalal: Now moving to Cashflow and Capital Allo. Fourth quarter free cash flow was $837 million. This brought full year free cash flow to $1.8 billion or 82% of our net income. This is in line with our guidance.

Yona Ovadia: Now moving to cash flow and capital allocation.

Yona Ovadia: Fourth quarter free cash flow was $837 million.

Yona Ovadia: This brought full year free cash flow to $1 $8 billion or 82 person all found that didn't go through.

Yona Ovadia: This is in line with all of that.

Jatin Dalal: As a reminder, free cash flow was negatively impacted by the previously disclosed impact from a $360 million payment made to Indian tax authorities in relation to our ongoing dispute of a 2016 tax matter. We ended the year with cash and short-term investments of $2.2 billion or net cash of $1.3 billion. DSO of 78 days decreased by 3 days from 3rd quarter and increased by 1 day versus the prior year. For the full year, we return $1.2 billion of capital to shareholders through share repurchases and dividends, including $300 million in the fourth quarter.

Yona Ovadia: As a reminder, free cash flow was negatively impacted by the previously disclosed impact from a $360 million payment made to Indian tax authorities in relation to our ongoing dispute off our 2016 tax matter.

Yona Ovadia: We ended the year with cash and short term investments of $2 $2 billion or net cash of $1 $3 billion.

Yona Ovadia: DSO of 78 days decreased by three days from third quarter and increased by one day versus the prior year.

Yona Ovadia: For the full year be redone $1.2 billion of capital to shareholders through share repurchases and dividends, including $300 million in the fourth quarter.

Jatin Dalal: And we invested $1.6 billion into strategic acquisition.

Yona Ovadia: And we invested $1 $6 billion in two strategic acquisitions.

Jatin Dalal: turning to our forward outcome. Before I start, I would like to reiterate that our strategy is built around driving long-term EPS growth through revenue growth and modest operating margin expansion, which we believe will support enduring shareholder value creation. For the first quarter of 2025, we expect revenue to grow 5.6% to 7.1% year over year, or 6.5% to 8% in constant currency. Sequentially, this represents a range of negative 0.5% to positive 1% growth in constant currency basis. For the full year 2025, we expect revenue to increase 2.6% to 5.1% or 3.5% to 6% in constant current.

Yona Ovadia: Turning to our forward outlook now.

Yona Ovadia: Before I start I would like to reiterate our strategy that our strategy is built around driving long term EPS growth through revenue growth and modest operating margin expansion, which we believe will support enduring shareholder value creation.

Yona Ovadia: For the first quarter of 2025, we expect revenue to grow five 6% to 7.1 person yoga, where you all six 5% to 8% in constant currency.

Yona Ovadia: Sequentially. This represents a range of negative 0.5 per se.

Yona Ovadia: Positive, 1% growth in constant currency basis.

Yona Ovadia: For the full year 2025, we expect revenue to increase 2.6 person two 5.1 person.

Yona Ovadia: At 3.5 person.

Yona Ovadia: 6% in constant currency.

Jatin Dalal: Details of revenue in dollars are available in our press release and supplementary. We expect Belkin will contribute a little more than 250 basis points of growth in 2025. with a greater contribution in the first half of the year compared with the second half. As a reminder, we closed the acquisition of Belkin at the end of August 2024, and it contributed approximately $300 million to our 2024 revenue. For the full year, we expect adjusted operating margins will be 15.5% to 15.7%. This represents a 20 to 40 basis points of expansion of our strong performance in 2024.

Yona Ovadia: Details of revenue and I are available in our press release and supplement.

Yona Ovadia: We expect both of those will contribute a little more than 250 basis points of growth in 2025.

Yona Ovadia: With a greater contribution in the first half of the year compared with the second half.

Yona Ovadia: As a reminder, we closed the acquisition of Belton at the end of August 'twenty 'twenty, four and it contributed approximately $300 million to our 2020 for revenue.

Yona Ovadia: Wonderful.

Yona Ovadia: We expect adjusted operating margins will be 15.5 person to 15, 7%.

Yona Ovadia: This represents a 20 to 40 basis points of expansion of our strong performance in 2024.

Jatin Dalal: Over time, we expect our growing adoption of automation and AI to drive better productivity and higher margins.

Yona Ovadia: Overtime, we expect our growing adoption of automation and AI to drive better productivity and higher margins with it.

Jatin Dalal: We remind you that in the first quarter, seasonality typically drives a modest sequential margin decline. We expect our full year adjusted tax rate to be between 24% and 25%.

Yona Ovadia: Remind you that in the first quarter seasonality typically drive a modest sequential margin decline.

Yona Ovadia: We expect our full year adjusted tax rate to be between 24 and 25%.

Jatin Dalal: Some of you may have noticed that we are no longer providing net interest income guidance. We made this change to align our guidance metrics more closely with the industry. For the full year, we expect our net interest income will decline modestly given lower cash balances exiting the year. This leads to full year 2025 earnings per share guidance of $4.90 to $5.06. This represents three to 7% growth compared to our 2024 adjusted EPS. This growth includes more than 2% points of expected headwind from unfavorable foreign currency exchange rates impacting reported revenue and other below-the-line items, including slightly higher tax.

Yona Ovadia: Some of you may have noticed that we are no longer providing net interest income guidance. We made this change to our lineup guidance metrics more closely with the industry.

Yona Ovadia: For the full year, we expect our net interest income will decline modestly.

Speaker Change: Lower cash balances exiting the year.

Speaker Change: This leaves to full year 2025 earnings per share guidance of $4 90 to 5.0 $6.

Speaker Change: This represents 3% to 7% growth compared to our 2024 adjusted EPS.

This growth includes more than two percentage points of expected headwind from unfavorable foreign currency exchange rates impacting reported revenue and other below the line item, including slightly higher tax rate.

Jatin Dalal: For the full year, we expect free cash flow will represent more than 90% of the net income. In 2025, we do not expect material changes to our capital allocation strategy. We plan to balance the return of capital to shareholders with inorganic growth investments that strengthen our capabilities and support our growth ambition. For the full year, we expect to return approximately $1.2 billion to shareholders, including about $600 million in share repurchases and remainder towards our regular quarterly dividends. We expect a weighted average dilutive share count of about $493 million for 2025.

Speaker Change: For the full year, we expect free cash flow.

Speaker Change: More than 90% of the night.

Speaker Change: In 2025, we do not expect material changes to our capital allocation strategy.

Speaker Change: We plan to balance the return of capital to shareholders with inorganic growth investments that strengthen our capabilities and support our growth ambitions.

Speaker Change: For the full year.

Speaker Change: We expect to return approximately $1.2 billion to shareholders, including about $600 million in share repurchases and remainder who was our regular quarterly dividend.

Speaker Change: We expect a weighted average diluted share count of about 493 million for 2025.

Jatin Dalal: And during the year, we plan to repay the $300 million outstanding under our credit system.

Speaker Change: And during the year, we plan to repay the $300 million outstanding under our credit facility.

Operator: With that, we will open the call for your questions.

Speaker Change: With that we will open the call for your questions.

Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question.

Speaker Change: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information Tom will dictate your line is in the question queue you may.

Speaker Change: Press Star two if you'd like to remove your question from Mikael.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start In the interest of time, we ask that you limit yourself to one question and one follow-up. One moment, please, while we poll for questions.

Speaker Change: For participants using speaker equipment may be necessary to pick up your handset before pressing this marquis.

Speaker Change: Interest of time, when I say, you limit yourself to one question and one follow up.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Yeah.

Bryan Bergin: Our first question is from Bryan Bergin with TD Cowan. Please proceed with your question.

Speaker Change: Our first question is from Bryan Bergin with TD Cowen. Please proceed with your question.

Bryan Bergin: Hi all. Good afternoon. Thank you. I wanted to start with bookings here. So you exited with building momentum on the larger deal front. Do you feel like you're reaching a rhythm now where you'll have more consistent quarterly bookings performance?

Speaker Change: Tayo, but afternoon. Thank you wanted to start with bookings here. So you exited with building momentum on the larger deal front do you feel like you're reaching a rhythm now where you you'll have more consistent quarterly bookings performance Robbie maybe talk about go to market and just the large scale engine now versus where you've been as you've gone through 'twenty four.

Ravi Kumar: Ravi, maybe talk about go-to-market and just the large deal engine now versus where you've been as you've gone through 24.

Ravi Kumar: Yeah, thank you for that question. Yes. I mean, you know, we've got some phenomenal momentum on large deals. We did 29 of them, 100 million plus in 2024 versus 17 in 2023.

Speaker Change: Yeah. Thank you for that question, Yes, I mean, you know you've got.

Speaker Change: Got some phenomenal momentum in large deals.

Speaker Change: We did 29 of them 100 million plus in.

Speaker Change: 'twenty 'twenty four was 17 and in 2023.

Ravi Kumar: So there are multiple things which I believe are gonna help us in 2025. First, we have tail velocity of deal-making. Second, you know, we have a book to build now of 1.4. Third, I would say is the small deals are starting to come back. So we are excited about it because it has monetization in the same year. In fact, our ACV numbers, you know, we track that internally, are higher than before, which gives me, again, great confidence that it's a combination of ACV and TCV. We also do a bid versus bid inside the company, and we are looking pretty good on the deals we...

Speaker Change: So there are multiple things, which are I believe I don't know help us in 2025 first we havent been velocity of.

Speaker Change: We've been making.

Speaker Change: And you know.

Speaker Change: We have a book to Bill now of 1.4.

Speaker Change: Third I would say is the small deals are starting to come back. So we're excited about it because it has monetization in the same year.

Speaker Change: In fact, I E V them, but you know we track that internally.

Speaker Change: And higher than before which gives me again, great confidence that it's a combination of ACB in the T V.

Speaker Change: We also do a bit versus did inside the company.

Speaker Change: And we're looking pretty good on the deals we.

Ravi Kumar: signed in 24, the deals we signed in 23, we are executing to pretty good, you know, pretty good track. So I would say we are now in a rhythm. We are accessing the deals well. Our win rates are significantly higher. It has spread.

Speaker Change: Kind of in 'twenty for the deals we signed in 'twenty three we are executing too.

Speaker Change: Pretty good a you know a pretty good track so.

I would say we are now into other than we are accessing the deals well and win rates are significantly higher it's a spread and in fact over the two years.

Ravi Kumar: In fact, over the two years, we have moved from application services to infrastructure services. to now engineering services, which is a combination of the organic engineering strength we had and the stuff we got from Belcan. We also got a breadth of the industries, from healthcare to... From health care to financial services to products and resources to now progressively moving from America to other parts of the world. So, this is a great rhythm for us, good tail velocity to getting into 25, and it is a. very good spread.

Speaker Change: Mood from application services for infrastructure services to.

Speaker Change: Two now engineering services.

Speaker Change: Which is a combination of the organic engineering strength, we had and the stuff we got from Bell Ken.

Speaker Change: We also got a breadth of industries from healthcare to.

Speaker Change:

Speaker Change: From health care to.

Speaker Change: Financial services to products and resources to now progressively moving from America to other parts of the world.

Speaker Change: So this is a great rhythm for us a good tail the lost city to getting into 'twenty five.

Speaker Change: And it is.

Speaker Change: Very good spread so it is resilient and sustainable for the future.

Bryan Bergin: So it is resilient and sustainable for the Okay, that's good to hear.

Speaker Change: Okay. That's good to hear and then the follow up on just the growth outlook is as you build the plan here the organic growth plan for 25 can you comment on you know potentially how some of these industries unfold relative to what you saw in 'twenty four as it relates to health care versus financial solutions versus you know PNR.

Ravi Kumar: And then the follow-up on just the growth outlook is, as you built the plan here, the organic growth plan for 25, can you comment on, you know, potentially how some of these industries unfold relative to what you saw in 24 as it relates to healthcare versus financial solutions versus, you know, PNR and Commedia Tech? Yeah, so you know, because we have the breadth and the resilience now, I mean, you know, our growth is going to be very broad based and all round. You've seen healthcare. We have done 10% YNY, which is pretty healthy on a good big base.

Speaker Change: Mediatek.

Speaker Change: Yeah. So you know because we have the breadth and the resilience now are I mean, you know our growth is going to be very broad based and all around.

Speaker Change: You've seen health care, we have done 10% Y on Y, which is a pretty healthy on a good big base.

Ravi Kumar: you know we are we are having pretty all-round growth all the way from payer provider to life sciences. On financial services, where I started last year to where I am today, we have now created a rhythm of why and why growth. for subsequent quarters. And we're very, very excited about the fact that financial services, we're seeing discretionary coming back, and we are actually capturing a lot of that. Now we are starting to, with the muscle we have created on a broader capability, we are starting to see communications and technology, which is a muscle we created in the last two years, is doing well.

Speaker Change: You know we are we are having pretty all round growth all the way from payer and provider to a life sciences.

Speaker Change: On financial services, when I started last year to where I am today, we have Scott you know we have now created a rhythm of Y on y growth.

Speaker Change: For the subsequent quarters.

Speaker Change: And we are really excited about the fact that financial services, we are seeing discretionary coming back and we are actually capturing a lot of that.

Now we are starting to win with the muscle we have created on a broader capability, we are starting to see a communications, which and the technology.

Speaker Change: <unk>, which which is M, which is a muscle we created in the last two years is doing well products and resources are you know with retail and consumer goods was otherwise doing well and now we have strength in manufacturing.

Ravi Kumar: Products and resources, you know, with retail and consumer goods was otherwise doing well, and now we have strength in manufacturing with the power of the Belcan capability we built. So, you know, I'd say I'm It's an all-round comprehensive organic growth we are looking at. And I'm also excited about the fact that while America is actually a principal market and it is leading the way, the international markets are starting to contribute to this process. Our first quarter guidance is pretty strong. I mean, you know, this is one of those quarters. which is, you know, normally seasonally weak, but if you see the midpoint of that guidance range, we are positive.

Speaker Change: With the power of the Falcon capability with Baird.

Speaker Change: So you know I'd say.

Speaker Change: I'd say all around comprehensive organic growth we're looking at.

Speaker Change: And I'm also excited about the fact that Oh, well America, there's actually a principal market and it is leading the way the international markets are starting to contribute to this process.

Speaker Change: First quarter guidance is pretty strong I mean, you know this is one of those photos are.

Speaker Change: Just you know normally seasonally weak, but if youll see the midpoint of the guidance range, we had positive.

Bryan Bergin: So it is tail velocity from quarter four cutting into quarter one, plus all the momentum we have.

Speaker Change: It is tailed velocity from quarter four carrying into quarter one.

Speaker Change: I saw the momentum we have.

Bryan Bergin: All right, thank you.

Speaker Change: Alright, thank you.

Speaker Change: Okay.

Jason Kupferberg: Our next question is from Jason Kupferberg with Bank of America.

Speaker Change: Our next question is from Jason Cooper Byrne with Bank of America. Please proceed with your question.

Jason Kupferberg: Please proceed with your question. Good morning, guys, or good afternoon, I should say. Thanks for taking the question. I wanted to just start on the organic growth for the year. It looks like we're targeting 1 to 3.5% organic constant currency. The midpoint of that, I guess, would be pretty consistent with how you exited 2024 on the same basis. So, just wondering, you know, in terms of acceleration, it sounds like, you know, there's more discretionary spending going on, and you have some bookings momentum exiting the year. So, it doesn't seem like we've built much acceleration into the guide on an underlying basis.

Speaker Change: Good morning, guys or good afternoon, I should say Ah. Thanks for taking the question I wanted to just start on the organic growth for the year. It looks like we're targeting 1% to 3.5% organic constant currency I'm. The mid point of that I guess would be pretty consistent with how you exited 2024 on the same basis. So.

Speaker Change: I'm just wondering you know in terms of acceleration it sounds like you know theres more discretionary spending going on and you have some bookings momentum exiting the year. So it doesn't seem like we've built much acceleration into the guide on an underlying basis, but is that just conservatism or are there other considerations there.

Jatin Dalal: But is that just conservatism, or are there other considerations there?

Jatin Dalal: Yeah, so, you know, it's the start of the year, the visibility into the second half. You know, you kind of build it in the next few weeks. We are hoping there is continued buoyancy into the second half so that, you know, the upper end of the range is doable. So the way I constructed it is, you know, there is a tail velocity into the first half of the year. And that is constructed into the middle of the guidance range. And then we are hoping we continue to execute well. We continue to see the same buoyancy we're seeing now.

Yeah, So you know what.

Speaker Change: It's the start of the the visibility into the second half.

Speaker Change: You know you kind of build it in the next few weeks.

Speaker Change: We we are hoping that as continued buoyancy into the second half so that.

Speaker Change: You know the the upper end of the range is doable.

Speaker Change: So the way I constructed. It is you know there is a train velocity through the first half of the year.

Speaker Change: And that as you know that is constructed until the middle of the guidance range and then we are hoping we continue to execute well we continue to see.

Speaker Change: See the same way and see we are seeing now I mean distribution of that starting to come back.

Jatin Dalal: I mean, discretionary is starting to come back. And as the visibility builds in, we do our best to outperform. If you look at the last four quarters. We got to the upper end of the guidance range in the last four quarters. including the one we just concluded. So I would say, I mean, that's how I'm seeing it. I mean, there is, you know. when I spoke to all of you one quarter ago to where we are today. I'm more optimistic about the future.

Speaker Change: And as the visibility bills and we are you know we do our best to outperform if you look at the last four quarters, we got to the upper end of the guidance range in the last four quarters.

Speaker Change: Including the one we just concluded.

Speaker Change: So I would say I mean, that's how I'm seeing it I mean, there is a you know when I spoke to all of you one quarter ago to where we are today.

Speaker Change: I'm more optimistic about the future.

Jason Kupferberg: Okay, that's very helpful.

Speaker Change: Okay. That's very helpful and I know you touched on our agenda. Okay. I earlier wondering if clients are starting to talk more about it and what's cognizant doing to invest to prepare for that.

Ravi Kumar: And I know you touched on agentic AI earlier, wondering if clients are starting to talk more about it and what Cognizant is doing to invest to prepare for that. that opportunity, and then just any views on how DeepSeek could ultimately impact the IT services industry. Thank you.

Speaker Change:

Speaker Change: That opportunity and then just any views on how deep seek could ultimately impact the I T services industry. Thank.

Speaker Change: Thank you.

Ravi Kumar: Yeah, so I spoke in detail in the just a few minutes ago. Yes, I think.

Speaker Change: Yeah, So I spoke in detail in the just a few minutes ago.

Speaker Change: Yes, I think.

Ravi Kumar: I put this in three vectors. The first vector is writing code. I'm a strong believer that writing code with machines amplifying humans is only going to get us to write more. We will unlock billions of dollars of legacy debt. you know, legacy technology that's sitting on corporate landscapes, backlogs. And we are seeing that in our deals now. I mean, one of the reasons why we are winning large deals is productivity is baked into it. And the early investments we made is helping us to win because the productivity assumptions between providers is very different. I mean, we've done now 29 plus 17 deals in the last two years.

Speaker Change: I put this in three vectors. The first vector is writing called.

Speaker Change: I'm, a strong believer that I'm, writing code with machines amplifying human is only going to get us to write more.

Speaker Change: We will unlock billions of dollars of legacy debt.

Speaker Change: You know legacy technology and exiting on a corporate landscapes.

Speaker Change: Backlog.

Speaker Change: And we are seeing that in our deals now I mean, one of the reasons why we are winning large deals is productivity.

Speaker Change: Is baked into it and the early investments we made is helping us to win because the productivity assumptions between providers is that any different I mean, we have done now 29, plus 17 deals in the last two years a lot of that productivity, we have baked in as you say I know it. So we are excited about the efficiency part of this process.

Ravi Kumar: A lot of that productivity we have baked in is AI. So we are excited about the efficiency part of this process.

Ravi Kumar: The second lever is, you know, how does it help on innovation and growth? I mean, our clients are starting to invest on us. We have 1,200 projects running now. and a lot of heavy lift, you know, cloud migration. data modernization, the last mile infrastructure. We have platforms to help our clients. That helps us to create a thickness and helps us to accelerate the journey and helps us to make the journey of agentification predictable. In fact, we have our own agentification platform, which is an orchestration layer. If you have existing software which has agents, this can orchestrate between the software pools.

Speaker Change: The second lever is our you know how does it help on innovation and grow up I mean, our clients are starting to invest in US we have 1200 projects running now.

Speaker Change: And a lot of heavy lift.

Speaker Change: Cloud migration.

Speaker Change: Data modernization the last night infrastructure, we have platforms to help our clients that.

Speaker Change: That helps us to create a stickiness and helps us to accelerate their journey.

Speaker Change: To make the journey of our agent definition predictable in fact, we have our own agent application platform, which is the orchestration layer if you.

Speaker Change: Have a existing software, which has agents this kind of orchestrate between you know.

Speaker Change: Between the software pools, if you do not have any identification led this can actually act doesn't identification. There. So we think we have a very hard off most of our peers and this is a.

Ravi Kumar: If you do not have an agentification layer, this can actually act as an agentification layer.

Ravi Kumar: So we think we are way ahead of most of our peers and this is probably an opportunity of a lifetime. It is also unlocking new pools of addressable spend, which we didn't earlier address, which is, you know, things I spoke about, which is, say, connected care, or retail operations, or, you know, drug discovery. So the service pools, which we didn't capture before are now available to us. So we are now seeing. opportunities which are not just at the CIO, it's actually across the business operations of the company. So I think the addressable pool of work is going to be multifold to where we are where we were before and that that gives me confidence that this is a force multiplier for companies like ours.

Speaker Change: Probably the opportunity of a lifetime.

Speaker Change: It is also unlocking new pools of new pools of.

Speaker Change: Addressable spend which we did.

Earlier address which is you know things I spoke about which is say connected care of them.

Speaker Change: Retail operations.

Speaker Change: Oh drug discovery, so the the salaries pools, which we didn't capture before.

Speaker Change: I'm now are available to us. So we are now seeing.

Speaker Change: Opportunities, which are not just from the CIO, it's actually across the business operations of the company. So I think the addressable pool of our work is gonna be multifold, two will be out maybe they had before and that that gives me a call.

Speaker Change: Confidence that this is a force multiplier for companies like us.

Ravi Kumar: In context to DeepSeek, it's a simple, quick summary. DeepSeek is uniquely. democratized a layer at the back end, which is the foundation model. and it has commoditized that layer. A lot of that money will now flow into the front end. and it will accelerate the adoption of AI into enterprise landscapes. And as it does so, we will be in the middle of it, heavy lifting and helping our clients. So the deep-seek opportunity uniquely is a moment, is an inflection point on transferring that value from the back end to the front.

Speaker Change: In context too deep seek a simple quick somebody is deep sea is uniquely.

Speaker Change: And what kind of ties in there at the back end, which is T Foundation models.

Speaker Change: And it is commoditized outlet so.

A lot of that money will now flow into the front end.

Speaker Change: And it will accelerate the adoption of AI to enterprise landscapes.

Speaker Change: And as it does so we wouldn't be in the middle of it.

Speaker Change: Heavy lifting and and are helping our clients. So the deep seek opportunity uniquely as a moment as an inflection point on transferring the value from the backend of the funding.

Hum.

Ravi Kumar: Thank you, Ravi.

Bobby: Thank you Bobby.

Surinder Thind: Thank you. Our next question is from Surinder Thind with Jeffries.

Speaker Change: Thank you. Our next question is from surrenders and with Jefferies. Please proceed with your question.

Surinder Thind: Please proceed with your question. Thank you. Ravi, just kind of building up on the last part, if you think about... the proprietary solutions that you're building within the AI landscape and all of the changing demand. Can you provide a bit more color there in terms of the sustainability of those types of solutions that you're building? Or is this one of those things where, as you go to a client, you build a solution? And then somebody follows you really quickly.

Speaker Change: Thank you.

Speaker Change: Rami just kind of building up on the last part if you think about.

Speaker Change: The proprietary solutions that you're building within the eight months keeping all of the the changing demand can you provide a bit more color. There in terms of the sustainability of those types of solutions that you're building or is this one of those things where if you go to a client you build a solution.

Speaker Change: And then somebody falls you really quickly I just wanted to better understand that the shifting model of.

Ravi Kumar: I just wanted to better understand that the shifting model of Before it was all about services, but now we're injecting what sounds like a bit more of a software layer into the solution itself, if that's sustainable. Thank you, Surinder. If you remember, in the London conference, I started talking about this, and we've come a long way from there. the lair of software, I call it fast software. practical tooling needed by a client. to either accelerate the journey. or two. you know, or to bridge a gap. or potentially. to build micro-industry vertical templates, which the existing software doesn't contain.

Speaker Change: Before it was all about services, but now we're injecting what sounds like a bit more of a software there into the solution itself if that's sustainable.

Speaker Change: Thank you, Sir and that if you remember in the London Conference I started talking about this and we've come a long way from that.

Speaker Change:

You know.

Speaker Change: The latter.

Speaker Change: Software and when I call it fast software.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Practical tooling needed by our clients.

Speaker Change: To either accelerate the journey.

Speaker Change: Or two.

Speaker Change: You know all to bridge a gap.

Speaker Change: Or potentially.

Speaker Change: To build micro industry vertical templates, which the existing software doesn't contain them very similar to how enterprise software and was built many years ago, how the clarification of our technology.

Ravi Kumar: I mean, very similar to how enterprise software was built many years ago, how the cloudification of technology, you know, in some ways, changed the role of system integrators. Now, I would say all of this is helping our clients. I'll give you one example. We have a platform called FlowSource, which is an orchestration layer. top of code assist platforms like GitHub. Now that orchestration layer is something we built practically because we figured out that as You bring. code written by machines and you bring code written by humans and you bring it together, you need a worker, a developer workbench.

Speaker Change: And somebody has changed at all or system integrators.

Speaker Change: Now I would say all of this is helping our clients I'll give you. One example.

Speaker Change: We have a platform called flow source, which is an orchestration layer.

On top of court assisted platforms like Github.

Speaker Change: Oh that orchestration layer.

Speaker Change: Is something we built practically because we figured out that as.

Speaker Change: You bring.

Speaker Change: All driven by machines and you bring quoted by humans and you'd think it together you need a worker and develop a work bench.

Ravi Kumar: which will synchronize that effort and improve productivity. And will some of the existing platforms replicate that functionality over a period of time? Maybe yes. But by then, we will start to look at advanced problems to solve. Some of the problems we have today, some of the gaps we have today, will remain gaps. And it's the job of a system integrator to fix them. And some of them will productize. And as they get productized, we move to the next endeavor, the next problem-solving endeavor. You know. There is work between efficiency of the output and cost efficiencies needed for making AI enterprise-grade.

Speaker Change: Which will synchronize that effort and improve productivity.

Speaker Change: And well some of the existing platforms replicate that functionality over a period of time, maybe yes, but by then we will start to look at once to problems to solve some of the some of the problems. We have today is some of the gaps we have today will demand gaps and it's the job of a system integrator.

Speaker Change: Fix them and some of them are prototypes and I was thinking of product is we move to the next endeavor. The next problem solving endeavor.

Speaker Change: You know that.

Speaker Change: That is work between efficiency of the output.

Speaker Change: And you know cost.

Speaker Change: <unk> needed for making our AI enterprise gig.

Ravi Kumar: Some of that optimization will automatically happen with software and some of it will not. So I would say it's an evolving role of a system integrator. The heavy lift will remain.

Speaker Change: Some of that optimization, but automatically happened with software and some of it but not so I would say, it's an evolving the role of a system integrator the heavy lift will remain.

Ravi Kumar: I am now venturing not just into agentifying landscapes, I'm venturing one step further. which is identifying news, new. Service Pools which we did not capture. I'll give you one example. If you take sales and marketing function. all the data. sitting in Software Structured Data. If I actually tap into unstructured data in a sales cycle, I mean, there is data sitting in chat messages, data sitting in emails, data sitting in, you know, minutes of meetings. of salespeople who are actually working on. And if you want to find the momentum of a company, the sales momentum of a company, you could identify that pool and then transfer that into value, which means that was a labor pool we didn't touch.

Speaker Change: I am now venturing not just agent defying agent defying landscapes I'm mentioning one step further.

Speaker Change: Which is identifying news new.

Speaker Change: Service pools, which we did not capture I'll give you. One example.

Speaker Change: Sales and marketing function all the data.

Speaker Change: Sitting in software is structured data.

Speaker Change: If I actually tapping to unstructured data and in a sales cycle I mean that is data sitting in a chat messages that are sitting in emails that are sitting in a minutes of meetings.

Speaker Change: Off salespeople, who are actually working on and if you want to find the momentum of the company.

Speaker Change: Sales momentum of the company you can relate it to fight that pool.

Speaker Change: And then transfer that into value, which means that was the labor pool, we didn't touch either.

Ravi Kumar: People were doing it and we didn't capture it, or new sets of work which people were not doing, which is unstructured data, I mean, it was not getting packed. So I see this as an opportunity for not just technology spend of enterprises. I see this as an opportunity to go into the operations of companies. and identify it and create service pools which we can address. And we do believe our strength at that intersection of deep engineering, operations, and industry domain will help us. And this is no longer theoretical. This is real life projects we are now implementing for our clients.

Speaker Change: You know people, who are doing it and we didn't you know we didnt capture it or new sets of work, which people were not doing which is unstructured data and then it was not getting fat. So I see this as an opportunity for.

Speaker Change: Not just technology spend of enterprises I see this as an opportunity to go into the operations of companies.

Speaker Change: And and agent defy it and create.

Speaker Change: You know create service pools, which we can address and we do believe we have a strength.

This section of deepen genetic operations and.

Speaker Change: The industry demand will help us.

Speaker Change: And this is no longer a theoretical this is real life projects. We are now implementing for our clients and some of those examples I've already stated in my in my in my remarks.

Surinder Thind: And some of those examples I've already stated in my remarks. That's helpful.

Speaker Change: That's helpful.

Surinder Thind: And then when I think about, as I look ahead, and I think about all of the large deals you've signed, the ramp, the managed services win.

Speaker Change: And then when I think about it.

Speaker Change: As I look ahead and think about all of the large deals you've signed the ramp the managed services wins.

Surinder Thind: Is that where most of the growth should come from in 2025 as we wait? discretionary spend to improve on the consulting side? Or how should we think about the two segments? And maybe how much integration is there when we think about the large deals in terms of the sharing of work between consulting and managed services with the Yeah, so I'll take that, Surinder. I think the texture of the work is changing a little bit between 2024 and 2025. In 2024, we saw that it was essentially the large deals and the volumes led by large deals were driving the growth.

Speaker Change: Is that where most of the growth should come from in 2025, because we wait discretionary spend to improve on the consulting side or how should we think about the two segments and maybe how much integration is there when we think about the large deals in terms of the sharing of work between consulting and managed services with a large deal.

Yeah. So I'll take that this is oh I think the texture of the book is changing a little bit between 24 and 25 in 'twenty four we sold out because essentially the large deals and the volumes led by large deals.

Speaker Change: What's driving the growth, but 25, as we exit particularly quarter four we have seen some improvement.

Surinder Thind: But 2025, as we exit, particularly quarter four, we have seen some improvement, as I described in my opening comments, in annual contract value terms, which means we are getting some discretionary spend back. And therefore, the volume or the texture of growth will be slightly different for 2025, where you will see both the short-end work as well as the volumes which are being added by the large contracts or large especially in financial services where There is more discretionary, in fact, Surinder, I just mentioned earlier that our ACV numbers have significantly jumped in quarter four, which is an indication of Not just large deals, but also smaller deals coming.

Improvement as I described in my opening comments in annual contract value them, which means we are getting.

Speaker Change: Some discretionary spend back and therefore, the volume or the texture of growth will be slightly different where 25, where you will see both the shortened work as well as the volumes, which are being added by the large a.

Speaker Change: Large contracts or large deals, especially.

Speaker Change: Especially in financial services there.

Speaker Change: But it is more discretionary and factor in that I, just mentioned earlier that you see the numbers.

Speaker Change: A significantly jumped in in quarter, four which is an indication of.

Speaker Change: Not just large deals, but also smaller dealers coming back.

Surinder Thind: Thank you very much. Thank you. That's helpful.

Speaker Change: That's very helpful.

Speaker Change: That's helpful. Thank you.

Speaker Change: Thank you. Our next question is from Jonathan <unk> with Guggenheim Securities. Please proceed with your question.

Jonathan Lee: Our next question is from Jonathan Lee with Guggenheim Securities. Please proceed with your question. Great. Thanks for taking our questions. Tremendous to see the margin of performance here.

Jonathan Doyle: Great. Thanks for taking my questions are tremendous to see the margin outperformance here can you unpack, what drove that especially with softer utilization and perhaps some rupee benefit.

Jatin Dalal: Can you unpack what drove that, especially with software utilization and perhaps some Ruby benefit? And what incremental levers, you know, could you see into Calendar 25? Sure. So, while using numerically, the utilization looks softer in quarter four, but we continue to execute very well on the ground. So, this sort of under-represents the operational improvement on that we have been able to achieve over the last 12 months, the way we run the organization. So, I think that is one big driver that is also reflected in the performance on the gross margin side. We have definitely seen a benefit on the profitability coming through our next-gen program.

Jonathan Doyle: What incremental levers you know could you see into calendar 'twenty five.

Jonathan Doyle: Sure so.

Jonathan Doyle: Why.

Jonathan Doyle: Using a numerical either utilization.

Jonathan Doyle: Look so a softer in quarter four but we.

Jonathan Doyle: We continue to execute very well on the ground. So this is a this this sort of under the present the operational improvement on that we have been able to achieve or or last 12 months there'll be we've done a dog that vision. So I think that is one big driver that is also reflected in the <unk>.

Jonathan Doyle: Performance on the on the gross margin side, Oh, we have definitely seen a benefit on the profitability coming through our next Gen program.

Jatin Dalal: That is another key contributor to the performance for 2024 in general and specifically for quarter So overall... you know, are Our operational rigor has improved. And we have some runway, I mean, we have the pyramid. continuing to sharpen the pyramid. AI led productivity, sharing with our clients and share, you know, part of it accruing to us. Our next gen program, which we started in 23. It had a flow-through into 24 and it will have a flow-through into 25. So we are very excited about it.

Jonathan Doyle: That is a another.

Jonathan Doyle: Key contributor to the performance for 2024 in general and specifically for Vodafone.

Jonathan Doyle: So overall.

Jonathan Doyle: You know odd.

Jonathan Doyle: Our operation operational rigor has improved significantly in the last two years.

Jonathan Doyle: And we have some run rate I mean, we have.

Jonathan Doyle: The pyramid.

Jonathan Doyle: Continuing to sharpen the pyramid, yeah, I led productivity sharing with the clients.

Jonathan Doyle: You know part of it was accruing to us.

Jonathan Doyle: Our next Gen program, which we started in 'twenty three fluid too.

Jonathan Doyle: The flow through into 'twenty, four and you could have a flow through into 'twenty fights.

So we're really excited about it and.

Jatin Dalal: And. The large deals for which we were, you know. We were always budgeting if something goes wrong, but the reality is the bid versus bid on large deals also contributed to the margin growth. I mean, we have really executed our large deals very well. So we are very pleased with where we have landed on the margin and the runway we have for 25.

Jonathan Doyle: The large deals for which we are you know.

Jonathan Doyle: But we're always budgeting.

Jonathan Doyle: Something goes wrong, but the reality is the bid versus did on large deals.

Jonathan Doyle: Also contributed to the margin growth.

Jonathan Doyle: It's really executed on large deals for you Bob. So we are very pleased with where we've landed on the margin and the runway we have for 25.

Jatin Dalal: So, and interestingly... We've also done M&A and we have, you know, absorbed the margin deduction plus. We are investing heavily into AI. We are absorbing that as well. So, I mean, the ability to contribute to margins, create an expansion, and that's going to be my desire. We want to keep an expansive. you know, desire to improve our margins. But continue our investment and stay ahead of our pace.

Jonathan Doyle: So and and and and interestingly.

Jonathan Doyle: We've also done M&A and we have.

Jonathan Doyle: Absorbed.

Jonathan Doyle: The margin dilution plus.

Jonathan Doyle: We are investing heavily into AI, we are absorbing that as well so I mean, the ability to contribute to margins create an expansion and that's going to be my desire.

Jonathan Doyle: Keep in expenses.

Jonathan Doyle: You know designed to improve our margins, but continue our investments and stay ahead of our peers.

Jatin Dalal: Thanks for that detail there.

Jonathan Doyle: Thanks for that detail there and to support your growth in 2025 can you talk through how you're thinking about pace of hiring and perhaps geographic mix talent base, given belk and adds a new dynamic there.

Jatin Dalal: And to support your growth in 2025, can you talk through how you're thinking about pace of hiring and perhaps geographic mix of talent base, given Belkin as a new dynamic there? Sure. So, you know, we continue to hire as we need for our growth, and certainly it's a cycle that you will see panning out in 2025 also. Probably from Q1 and onwards, you should start seeing the addition of headcount versus what you've seen in previous few quarters. Overall, we are well placed in every geography from availability of talent from a bank standpoint, as well as our capacity to hire as we need in each of the geographies.

Jonathan Doyle: Sure so.

Jonathan Doyle: We continue to Ohio, as we need for our growth and so it didn't lead so it's a it's a cycle that you would see panning out in 2025 year old So probably from from Q1 and onwards, you should start seeing the addition of Uh huh.

Jonathan Doyle: Gone towards says what what you've seen in previous few quarters. Overall, we are well placed in every geography from availability of Berlin from a bank standpoint, as well as our our capacity to hire as we need are in each of the geographies. So we feel quite good as we enter 2002.

Jatin Dalal: So, we feel quite good as we enter 2025 from a supply equation set.

Jonathan Doyle: 25 from a from a supply equation standpoint.

Jatin Dalal: Appreciate the call, guys.

Speaker Change: I appreciate the color guys.

Jonathan Doyle: Yeah.

James Faucette: Our next question is from James Faucette with Morgan Stanley. Please proceed with your question. Thanks. Appreciate all the detail and color here today. I just wanted to ask a quick follow-up question on BELC. And I think, if I heard you correctly, that you expect it will contribute roughly 200 basis points in 2025. Does that include both inorganic and the organic period after August? And I guess as part of that, in your growth assumptions, are you building in any other inorganic contribution from maybe deals that haven't been announced or closed yet? Yeah, sure. So essentially, this this provides for the 250 basis point is the number that I mentioned in my opening comments.

Speaker Change: Our next question is from James Faucette with Morgan Stanley. Please proceed with your question.

Thanks, I appreciate all the detail and color here today I just wanted to ask a quick follow up question on Boston I think if I heard you correctly that you expect it will contribute roughly 200 basis points. In 2025 does that include both inorganic and the organic peer.

Speaker Change: <unk> after August and I guess as part of that in your growth assumptions are you building in any other inorganic contribution from maybe deals that haven't been announced or closed yet.

Speaker Change: Yes sure. So essentially this this provides for a 50 basis point is the number that I mentioned in my opening comments and that 50 basis point is essentially for the additional eight months approximately eight months of revel.

Jatin Dalal: And that 250 basis point is essentially for the additional eight months, approximately eight months of revenue that we will get from Belkin in 2025. We have not factored in any additional inorganic in that 250 basis. Oh, that's great.

Speaker Change: That we will get from Belgian in 2025.

Speaker Change: Oh, not factored in any additional inorganic in there to 50 basis points.

Speaker Change: Oh, that's great. Okay. So that's that that's very clear. Thank you. Thank you for that and then I'm wondering as you're like I think your your messaging Ravi it's been really clear and we've seen kind of this.

James Faucette: Okay, so that's very clear. Thank you for that. And then I'm wondering as you're – like, I think your messaging, Ravi, has been really clear, and we've seen kind of this consistent improvement where we're now to this point where it seems like discretionary is improving, and that's great to hear, and on top of that, the large deals, et cetera.

Speaker Change: Consistent improvement, where we're now to the point, where it seems like discretionary is improving and that's great to hear and on top of that the the large deals et cetera.

James Faucette: As we went into the end of this year, and I know it's a little early still on budgeting processes to have a conclusive view, but did you see any budget flush type engagements or bookings, maybe like what we've seen in past years, and what's your early temperature in terms of growth for most people's budgets? It sounds like it's pretty positive, but is that universal?

Speaker Change: We went into the end of this year and I know, it's a little early still on budgeting processes to have a conclusive you, but did you see any.

Speaker Change: Budget flush type engagements or bookings Hum, maybe like what you've seen in past years and what's your early temperature in terms of growth for for most people's budgets. It sounds like it's pretty positive, but it's about universal thanks guys.

James Faucette: Thanks, guys.

Ravi Kumar: Yeah, so I mean, this is sectoral in a way. But I also want to tell you that The mood is very... business favoring right I mean coming down. It's a pro-business environment. The uncertainty around us is starting to settle down. There is lesser uncertainty in general across the world. which means all those dollars will actually trickle down to innovation and discretionary work. I would say financial services, you know, I'm very pleased with where we are at financial services, which is where all the discretionary conversations are. We're very pleased with the progress we've made, how we are seizing the opportunities which are coming our way.

Speaker Change: Yes, so I mean this is totally nevers.

Speaker Change: But I also want to tell you that.

Speaker Change: The more the Moody's Vinnie.

Speaker Change: Business family.

Speaker Change: People are expecting the regulation to be.

Speaker Change: You know.

Speaker Change: Coming down and.

Speaker Change:

Speaker Change: It's a preferred pro business environment and the uncertainty around us is starting to settle down.

Speaker Change: That is lesser uncertainty in general across the world.

Speaker Change: Which means all of those dollars will actually trickle down to our innovation and distribution of the work.

Speaker Change: I would say a financial services.

Speaker Change: I'm very pleased with will be audited financial services, which is where all the discretion of the conversations that we're pleased with the progress. We've made the how we are seizing the opportunities are coming our way.

Ravi Kumar: You would have noticed one other area I spoke about, which is Global Capabilities Center. A lot of our clients are actually saying, oh no, can you help us set up global capability centers? Which is, interestingly, one of our biggest trends. You know, setting up the ID shop for one of our clients, but doing it in a build operator. So a lot of all around opportunities to play with. You know, as the AI wave is hitting, hitting enterprises, the reality check on their data and their and their cloud migration is reopening that journey. I mean, the heavy lift on data modernization and cloud migration is a unique opportunity for us.

Speaker Change: You would've noticed one other area I spoke about which is which is global capability centers.

Speaker Change: A lot of our clients actually saying can you help us set up a global capability centers, which is interestingly one of our biggest strengths.

Speaker Change: Setting up.

Speaker Change: I D shop for for one of our clients, but doing it in a build operate transfer. So lot of you know all around opportunities to play with.

Speaker Change: You know as the IV is hitting hitting the enterprises the reality check on that data in this.

And there's a cloud migration is reopening the journey I mean, I mean, the heavy lift on data monetization and cloud migration is a is a unique opportunity for us.

Ravi Kumar: We are a very different company now in two years. I mean, I would say. We have heterogeneity in our landscape on services. all the way from Experience, Application Services, BPO Ops. to engineering, and we now have more vertical play. I mean, we aren't just a financial services, healthcare company. We now have multiple verticals to play with. So I would say, you know, I'm optimistic. I don't know if things will change in the second half, but I'm optimistic about the fact that you know where we were a year ago, where we were a quarter ago to where we are now.

Speaker Change: We had a very different company now than two years, I mean, I would say it.

Speaker Change: We have.

And heterogeneity in Atlanta cable and services.

Speaker Change: All the way from experience application services VP of ops.

Speaker Change: Two engineering and we now have more vertical play I mean, we ought to just the financial services Healthcare company. We now have multiple verticals to flavor. So I would say.

Speaker Change: The.

Speaker Change: I'm optimistic.

Speaker Change: I don't know if things will change in the second half but.

Speaker Change: I'm optimistic about the fact that Oh, you know where are we there yet.

Speaker Change: A year ago. When we then a quarter ago to where we are now I feel I feel pretty optimistic.

Ravi Kumar: That's great, Kyle. I appreciate that, Ravi.

Speaker Change: That's great color I appreciate that.

Ravi Kumar: Thank you.

Speaker Change: Thank you. Our next question is from Tien Tsin Huang with Jpmorgan.

Luya Yu: Our next question is from Tianxin Huang with JP Morgan. Please proceed with your question. Hi, thanks so much. Just to build on James's question, you mentioned the GCCs here, Ravi. Can you expand on what that means for Cognizant in general? If that is a new theme that you see emerging, and does this change the balance of trade between insourcing and outsourcing? Just trying to understand how to relate to that and how Cognizant is going to seize up. Thank you. So, you know, multiple things. for Cognizant to be a part of that chain. You know, one third of the GCs, one third of the workers, one third of the tech services.

Speaker Change: Please proceed with your question.

Speaker Change: Oh, hi, thanks, so much just to just to build on James's question you mentioned are the.

Ravi Kumar: G C CS here Ravi.

Ravi Kumar: Can you expand on what that means for cognizant in general that is a new theme that you see emerging and does this change the balance of trade between in sourcing and outsourcing just trying to understand how to read into that and how cognizant course he thought thank you.

Ravi Kumar: So you know multiple things to cognizant to them be a part of the chain.

Ravi Kumar: You know one third of did you see one third of the what could one third of the Tech services and.

Ravi Kumar: in offshoring destinations like India is GCCs, so we have a big role to play. They are themselves directly buyers. of Services. So that's why. Second. access to that market because that's a different labor market. We are a sizable, formidable player in India. So it gives us an opportunity to help these companies build, operate, and thrive. In fact, last year I signed a deal, it's in the public domain. where I did build, operate, transform, and transform. Essentially, we are building it for them, we are operating it with them, we are applying AI tooling, and then we are transferring it to them.

Ravi Kumar: In offshore in this nations like India as Gcc's, Oh, we have a big role to play.

Ravi Kumar: Bed themselves directly by us.

Ravi Kumar: So that's why.

Ravi Kumar: Second.

Ravi Kumar: A number of them do not have.

Ravi Kumar: Access to that market, because that's a different labor market, we have a sizable formidable player in.

Ravi Kumar: In India. So it gives us an opportunity to help these companies build operate and transfer in.

Ravi Kumar: In fact last year I signed the deal it's in the public domain.

Ravi Kumar: Where I did build operate transform and transfer.

Ravi Kumar: Essentially we are building it for them to be operating them to them. We are applying AI to lead and then we are transferring it to them and then we underwrote all of the tooling for the next couple of years, which means we are just going to give them they can draw from us.

Ravi Kumar: And then we underwrote all the AI tooling for the next couple of years, which means we are just going to give them, they can draw from. There is a third set of offering which is the micro services around a GCC, which is, you know, you focus on the core and offload the non core to us. and we will set up. I mean, there are a variety of templates on this and companies are reorganizing, I call them 2.0, and they're reorganizing their technology ops and BPO together. You know, my universe is not technology anymore. operations of companies are actually getting offloaded, offloaded to nearshoring and offshoring destinations.

Ravi Kumar: It is a third set of offering which is the micro services around them.

Ravi Kumar: D C C, which as you know.

Ravi Kumar: You focus on the core and offload the noncore to us.

Ravi Kumar: And we will set up for you.

Ravi Kumar: The other the ideal templates on this and companies are reorganizing I call them who'd auto and reorganizing the technology ops and be Peel together I mean.

Speaker Change: No my universe is not technology anymore.

Speaker Change: Operations of companies are actually getting Offloaded offloaded to nearest nearshoring and offloading destinations and that's a new addressable spend and finally engineering of companies I.

Ravi Kumar: And that's a new addressable span. And finally, engineering of I mean, if you are a car company, you would probably outsource your HR applications and CRM applications. riding software to drive to run the car you're probably not going to outsource you want to build it yourself building it is not easy so we can actually give you deep engineering capacity to build your own core.

Speaker Change: I mean, if you're at a car company you would probably outsource your HR applications and CRM applications writings.

Speaker Change: Writing software to drive it because I'm a car you are probably not going to owe to US you want to build it yourself billing. It is not easy. So we can actually give you a deep engineering.

Speaker Change: Our capacity to build your own core.

Ravi Kumar: So, we have, you know, a number of opportunities which we have won and which we have in the pipe and I've actually mentioned about one in my earnings, which is primarily an insurer who just signed up with us, so we are kind of excited about this opportunity. Yeah, that's really interesting and thoughtful. Always appreciate your comments. Just have to ask you, Ravi, as you're talking to clients and you've talked about a lot of themes here, how would you characterize just overall budget and client decision-making with all this news that's happening? You've got tariffs and immigration and tax, all this stuff.

Speaker Change: So we have you know a number of opportunities between one and which we are having the pipe and I've actually mentioned about one in my earnings which is but I'm out of D. A insurers, who just signed up with US. So we are kind of excited about this opportunity.

Speaker Change: Yeah. So it was really interesting in Buffalo always appreciate your comments just have to ask you Ravi I assure you we're talking to clients and you've talked about a lot of themes here. How would you characterize just overall budget and client decision, making with all of the news flow. That's happening you got tariffs in immigration and tax all of this stuff how would you characterize that.

Ravi Kumar: How would you characterize that? Yeah, you know, technology is a very interesting space when, when everybody is growing, you use technology to grow. And if there is uncertainty, you use technology to improve efficiency. So you can win in the terms with technology. So I've seen it in both sides. And I think as a company, we are agile to anchor on both. when when the market is soft. you want, you want to anchor on efficiency when the market is taking off you want to anchor on innovation and I think you know in some ways AI can do both.

Speaker Change: <unk>.

Speaker Change: Yeah.

Technology is a very interesting space.

Speaker Change: Pes then when everybody is growing you use technology to grow.

Speaker Change: And if there is uncertainty you use technology to improve efficiency. So you can win in the tonnes with technology. So I've seen it in both sides and I think as a company where I try to anchor on what sites.

Speaker Change: When when the market is soft.

Speaker Change: You want a.

Speaker Change: You want to anchor on efficiency, but the market is.

Speaker Change: Taking off you want to anchor on innovation and I think you know.

Speaker Change: In some ways I can do bought so I'm anchoring on both sites and that's why I place there's opportunity in those three vectors are because I don't see this as a.

Ravi Kumar: So I'm anchoring on both sides and that's why I placed this opportunity in those three vectors because I do see this as you know a play on both sides which is why it is exciting. Budgets are I mean you know the visibility of budgets are much better than last year. Is it completely up and running? I don't think so. As we move into the into the year we will see more. But, you know, we're in a much better spot than last year.

Speaker Change: You know it play on both sides, which is why it is exciting budgets.

Speaker Change: I mean.

Speaker Change: The visibility on whether it's a much better than last year.

Speaker Change: Is that a completely up and running I don't think so.

Speaker Change: As we move into the into the year, we will see more.

Speaker Change: But.

Speaker Change: Much better spot than last year.

Ravi Kumar: Thank you so much.

Speaker Change: Thank you so much always appreciate it.

Ravi Kumar: Always appreciate it. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question is from Jim Schneider with Goldman Sachs. Please proceed with your question.

Jim Schneider: Our next question is from Jim Schneider with Goldman Sachs. Please proceed with your question. Hi, thanks for taking my question.

Speaker Change: Hi, Thanks for taking my question I'm, just is actually on for Jim Schneider I'm. The question is how do you see any divergence and consumer behavior right now between the UK and Continental Europe.

Luya Yu: This is actually Luya Yu on for James Schneider. My question is, how do you see the divergence in consumer behavior right now between the UK and continental Europe? Is this being driven by geopolitical considerations, or do you think it's being driven by the composition of industries of these clients, such as like banking versus industrial? Is this specific to Europe or otherwise? All right, yes, Europe, so between the UK and. Yeah, so I mean, you know, continental Europe still has uniquely first time outsourcing opportunities. which can manifest itself into not just offshoring, but outsourcing and offshoring.

Speaker Change: It's being driven by geopolitical considerations or do you think that's being driven by the competition of industries of these clients such as like thinking versus industrial Thank you.

Speaker Change: Yeah. This is specific to Europe or otherwise.

Speaker Change: Alright, yes in Europe between the UK and Continental Europe.

Speaker Change: Yeah, So I mean.

Speaker Change: Continental Europe still has a uniquely first time outsourcing opportunities.

Speaker Change: Which can manifest itself into.

Speaker Change: Not just <unk>.

Speaker Change: Offshoring, but outsourcing and offshoring and sometimes in fact in fact continental Europe as well as the one of the most number of Gcc's going back to the old topic.

Ravi Kumar: And sometimes, in fact, continental Europe has one of the most number of GCCs going back to the old topic. So I see that opportunity in some ways a very different, it's in a very different stage of evolution in comparison to the US and UK. and some industries are very mature and some industries are really opening it up for the first time. UK is a much more mature market. We have a big role in UK, I mean, we are strong in financial services. We also do public sector in the UK. We are pretty strong in consumer and comps.

Speaker Change: So I see that opportunity.

Speaker Change: In some ways a very different it's in a very different stage of evolution in comparison to the U S and U K.

Speaker Change: And.

Speaker Change: Some industries are very mature and some industries are really opening opening it up for the first time.

Speaker Change: U K is a much more mature market we have.

Speaker Change: Roland you kept me weird.

Speaker Change: In financial services, we also do public sector in the U K.

Speaker Change: We are pretty strong in consumer and and comps. So you gave us a very different market I think it's a much more ahead in terms of outsourcing offshoring and actually efficiency cycles.

Ravi Kumar: So UK is a very different market. I think it's much more ahead in terms of outsourcing, offshoring, and actually efficiency cycle. But I would say... In continental Europe, if we make the right investments, which we are doing over the last two years. We are unlocking much more than before. Our presence is much.. The proportion of business we do out of Europe and Asia-Pacific is much lower than... The U.S. in comparison to up here. So that's an area for us to capture more and be a challenger in some of these geographies.

Speaker Change: But I would say.

Speaker Change: In Continental Europe, we make the right investments, which we are doing over the last two years.

Speaker Change: We are we are unlocking you know much.

Speaker Change: Much more than before.

Speaker Change: Prisons as much at all.

Speaker Change: The proportional business, we do out of Europe, and Asia Pacific is much lower than the.

Speaker Change: The U S in comparison to our peers. So that's an area for us to capture more and be a be a challenge. It in some of these some of these geographies.

Jatin Dalal: Yeah, you know, I just want to add a point on UK versus Europe. I think UK has really started to show a lot of momentum in the second half of 2024 than what we saw before. The current quarter, there is a there is a delta between UK and Europe. And that's more led by a fact that one of our CMT customers renewed a contract in US versus UK. So there is some movement of revenue between geographies. But otherwise, we continue to see good momentum in Europe.

Speaker Change: You know I just wanted to add a 0.1 you gave us is Europe.

Speaker Change: I think the U K has really started to show a lot of momentum in the second half of 2024 than what we saw before.

Speaker Change: The current quarter that is a that is a delta between UK and Europe and that's more led by the fact that one of our CMT customers renew their contract in the U S versus UK. So there is some movement of revenue between geographies, but otherwise we continue to see good momentum in yoga.

Operator: Great, thank you. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Thank you. This concludes our question and answer session I would now like to hand, the floor back over to management for any closing comments.

Ravi Kumar: This concludes our question and answer session. I would now like to hand the floor back over to management for any closing comments. All right, great.

Ravi Kumar: Well, thank you all for joining us tonight and we look forward to talking to you next quarter.

Alright, great well. Thank you all for joining US Tonight, and we look forward to talking to you next quarter. Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.