Core Insights - Cognizant Technology Solutions reported strong Q3 2024 earnings, with non-GAAP earnings of $1.25 per share, exceeding estimates by 9.65% and showing a year-over-year increase of 7.8% [2] - Revenues reached $5 billion, surpassing consensus estimates by 0.82%, with a year-over-year growth of 3% and 2.7% at constant currency [2] - The company is heavily investing in AI, committing $1 billion to enhance its platforms and capabilities [4] Financial Performance - Bookings declined 2% year over year to $26.2 billion, with a book-to-bill ratio of approximately 1.3 times [3] - Financial services revenues increased by 0.7% year over year to $1.486 billion, while Health Sciences revenues rose by 7.8% to $1.514 billion [5] - Products and Resources revenues grew by 5% to $1.22 billion, while Communications, Media and Technology revenues decreased by 3.7% to $816 million [6] Regional Performance - North America revenues increased by 3.8% year over year, contributing 74% to total revenues [6] - Europe revenues fell by 0.3%, with the U.K. declining by 0.8% and Continental Europe increasing by 0.2% [7] - Revenues from the Rest of the World increased by 4.3% year over year, contributing 6.8% to total revenues [7] Operating Metrics - GAAP operating margin was reported at 14.6%, expanding by 60 basis points year over year [10] - Non-GAAP operating margin, adjusted for NextGen charges, was 15.3%, contracting by 20 basis points year over year [13] - Selling, general & administrative expenses as a percentage of revenues increased by 20 basis points to 16.5% [8] Balance Sheet and Cash Flow - Cash and short-term investments totaled $2.02 billion, down from $2.2 billion in the previous quarter [14] - Total debt increased to $1.2 billion from $623 million [14] - Cash generated from operations was $847 million, significantly up from $262 million in the previous quarter [15] - Free cash flow was reported at $791 million, compared to $183 million in the prior quarter [16] Guidance and Outlook - For Q4 2024, revenues are expected to be between $5 billion and $5.1 billion, indicating growth of 5.1-7.1% [17] - Full-year 2024 revenues are projected to be in the range of $19.7-$19.8 billion, reflecting an increase of 1.6-2.1% [17] - Adjusted operating margin for 2024 is expected to be approximately 15.1%, unchanged year over year [19] - Adjusted earnings per share for 2024 are anticipated to be between $4.63 and $4.67 [20] Market Position - Cognizant has a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [23] - The stock has an average Growth Score of C, a Momentum Score of F, and a Value Score of B, resulting in an aggregate VGM Score of C [22]

Core Viewpoint - Cognizant Technology Solutions (CTSH) is experiencing positive momentum driven by expanding clientele, strong partnerships, and robust financial performance in Q3 2024, with a focus on AI and cybersecurity solutions [1][2][7]. Financial Performance - In Q3 2024, Cognizant reported revenues of $5 billion, reflecting a 3.5% sequential growth in constant currency and a 2.7% year-over-year growth, supported by strong demand in health sciences and financial services [2]. - Health Sciences revenue increased by 7.6% year-over-year in constant currency, while Financial Services saw a slight growth of 0.5% in constant currency and 0.7% year-over-year [2][3]. Strategic Partnerships - Cognizant's expanding partner base includes notable companies like NVIDIA, ServiceNow, and Palo Alto Networks, with six deals exceeding $100 million signed in Q3 2024, totaling 19 large deals year-to-date [4][5]. - A new collaboration with NVIDIA aims to enhance data modernization offerings, while the partnership with ServiceNow focuses on unifying business and technology data for AI applications [5][6]. AI and Cybersecurity Initiatives - The company is investing $1 billion in AI to enhance its platforms and capabilities, with significant progress in AI and automation through various initiatives [7][8]. - The launch of Cognizant Neuro Cybersecurity aims to improve cybersecurity resilience by integrating various solutions for better decision-making and threat management [9]. Acquisitions Impact - Recent acquisitions, including Belcan, contributed approximately 150 basis points to revenue growth in Q3 2024, enhancing Cognizant's presence in aerospace and defense [10]. Future Guidance - For Q4 2024, Cognizant expects revenues between $5 billion and $5.1 billion, indicating growth of 5.1-7.1%, with a consensus estimate of $5.07 billion [11]. - For the full year 2024, revenues are projected to be in the range of $19.7-$19.8 billion, reflecting an increase of 1.6-2.1% on a reported basis [12]. - Adjusted earnings per share for 2024 are expected to be between $4.63 and $4.67, with a consensus mark of $4.66 per share, indicating a year-over-year increase of 2.42% [13]. Valuation Metrics - Cognizant's shares are considered undervalued with a Value Score of B, and the forward 12-month Price/Sales ratio stands at 2.03, lower than the industry's 12.16 [14][15].

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market engagement and confidence [1][2] Zacks Style Scores - Zacks Style Scores are indicators that assist investors in selecting stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [4][5][6][7] Value Score - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [4] Growth Score - The Growth Score evaluates a company's financial health and future potential by analyzing projected and historical earnings, sales, and cash flow [5] Momentum Score - The Momentum Score capitalizes on stock price trends, utilizing factors like one-week price changes and monthly earnings estimate changes to identify high-momentum stocks [6] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors who utilize multiple investing strategies [7] Zacks Rank - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8][9] Stock Selection Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [11] - Stocks with a 3 (Hold) rank should also have A or B Scores to ensure potential upside [11] Company Spotlight: Cognizant Technology Solutions Corporation - Cognizant (CTSH) is a leading professional services company with a Zacks Rank of 2 (Buy) and a VGM Score of B [14] - CTSH has a Momentum Style Score of B, with shares increasing by 5.3% over the past four weeks, and upward revisions in earnings estimates by six analysts [15] - The Zacks Consensus Estimate for CTSH has risen by $0.04 to $4.66 per share, with an average earnings surprise of 7.1% [15][16]

Core Insights - Cognizant's shares have increased by 5.8% over the past month, reaching a 52-week high of $81.75, with a year-to-date gain of 6.3% compared to the Zacks Computer and Technology sector's 31.4% and the Zacks Business - Software Services industry's 21.9% [1] Financial Performance - Cognizant has consistently exceeded earnings expectations, reporting an EPS of $1.25 against a consensus estimate of $1.14 in its latest earnings report on October 30, 2024, and beating revenue estimates by 0.82% [2] - For the current fiscal year, Cognizant is projected to achieve earnings of $4.66 per share on revenues of $19.72 billion, reflecting a 2.42% increase in EPS and a 1.88% increase in revenues. For the next fiscal year, earnings are expected to rise to $4.97 per share on $21.02 billion in revenues, indicating year-over-year changes of 6.71% and 6.62%, respectively [3] Valuation Metrics - Cognizant's current valuation metrics show a Price-to-Earnings (P/E) ratio of 17.2X for the current fiscal year, significantly lower than the peer industry average of 32.7X. The trailing cash flow basis shows a ratio of 14X compared to the peer group's average of 30.9X, and the PEG ratio stands at 2.21, indicating it is not among the top value stocks [7] - The company has a Value Score of B, a Growth Score of C, and a Momentum Score of D, resulting in a combined VGM Score of B [6] Zacks Rank - Cognizant holds a Zacks Rank of 2 (Buy), supported by favorable earnings estimate revisions from analysts, suggesting potential for further gains [8][9]

Core Viewpoint - The article compares Cognizant (CTSH) and Wipro Limited (WIT) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Estimates - Cognizant has a Zacks Rank of 2 (Buy), while Wipro has a Zacks Rank of 3 (Hold), indicating that CTSH is likely experiencing a more favorable earnings outlook [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that CTSH is in a better position for value investors [2][3] Group 2: Valuation Metrics - CTSH has a forward P/E ratio of 16.11, significantly lower than WIT's forward P/E of 24.22, indicating that CTSH may be undervalued [5] - The PEG ratio for CTSH is 2.09, while WIT's PEG ratio is 4.38, suggesting that CTSH has a more favorable growth outlook relative to its valuation [5] - CTSH's P/B ratio is 2.56 compared to WIT's P/B of 3.46, further supporting the argument that CTSH is more attractively valued [6] Group 3: Overall Conclusion - Based on stronger estimate revision activity and more attractive valuation metrics, CTSH is deemed the superior option for value investors at this time [7]

Core Insights - Cognizant Technology Solutions (CTSH) reported non-GAAP earnings of $1.25 per share for Q3 2024, exceeding the Zacks Consensus Estimate by 9.65% and reflecting a year-over-year increase of 7.8% [1][2] - The company's revenues reached $5 billion, surpassing the consensus mark by 0.82%, with a year-over-year growth of 3% and a 2.7% increase at constant currency [2] Financial Performance - Bookings on a trailing 12-month basis declined by 2% year over year to $26.2 billion, with a book-to-bill ratio of approximately 1.3 times [3] - Financial services revenues, accounting for 29.5% of total revenues, increased by 0.7% year over year to $1.486 billion, driven by improved discretionary spending [5] - Health Sciences revenues, making up 30% of total revenues, rose by 7.8% year over year to $1.514 billion, supported by strong offerings and large deal wins [5] - Products and Resources revenues increased by 5% year over year to $1.22 billion, while Communications, Media and Technology revenues decreased by 3.7% to $816 million [6] Regional Performance - North America revenues grew by 3.8% year over year, contributing 74% to total revenues [6] - Revenues from Europe fell by 0.3% year over year, with the U.K. declining by 0.8% and Continental Europe increasing by 0.2% [7] - The Rest of the World saw a revenue increase of 4.3% year over year, contributing 6.8% to total revenues [7] Operating Metrics - Selling, general & administrative expenses as a percentage of revenues increased by 20 basis points year over year to 16.5% [8] - The company reported a GAAP operating margin of 14.6%, expanding by 60 basis points year over year [8] - Non-GAAP operating margin, adjusted for NextGen charges, was 15.3%, contracting by 20 basis points year over year [10] Balance Sheet - As of September 30, 2024, CTSH had cash and short-term investments of $2.02 billion, down from $2.2 billion as of June 30, 2024 [11] - Total debt increased to $1.2 billion from $623 million reported as of June 30, 2024 [11] - The company generated $847 million in cash from operations, compared to $262 million in the previous quarter [11] Future Guidance - For Q4 2024, Cognizant expects revenues between $5 billion and $5.1 billion, indicating growth of 5.1-7.1% [12] - For the full year 2024, revenues are projected to be in the range of $19.7-$19.8 billion, reflecting an increase of 1.6-2.1% [12] - Adjusted operating margin for 2024 is expected to be approximately 15.1%, unchanged year over year [13]

| --- | --- | |----------------------------------|--------------| | | | | | Exhibit 99.3 | | | | | | | | Third Quarter 2024 | | | Financial Results and Highlights | | | October 30, 2024 | | | © 2024 Cognizant | | © 2024 Cognizant 1 Forward-looking statements This earnings supplement includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which is necessarily subject to risks, uncer ...

Financial Data and Key Metrics Changes - Third quarter revenue was $5 billion, growing 3.5% sequentially in constant currency, with approximately 150 basis points of inorganic contribution from recent acquisitions [8][36] - Year-over-year revenue grew by approximately 2.7% in constant currency, including about 200 basis points of inorganic contribution [8][36] - Adjusted operating margin improved to 15.3%, driven by strong cost discipline, despite investments in Belcan and the impact from the annual merit cycle [9][35] - Adjusted EPS grew approximately 7% year-over-year, marking the fourth consecutive quarter of year-over-year growth [9] Business Line Data and Key Metrics Changes - Health Sciences segment grew 7.6% year-over-year in constant currency, supported by strong differentiated offerings [10][37] - Financial Services returned to year-over-year growth, increasing 0.5% year-over-year in constant currency, driven by improved execution and discretionary spending [38] - Products and Resources revenue grew 4.6% year-over-year in constant currency, aided by Belcan's contribution [39] - Communications, Media, and Technology (CMT) declined 4% year-over-year in constant currency due to tight discretionary spending [40] Market Data and Key Metrics Changes - Americas geography saw growth of about 4%, driven by strength in Financial Services and Health Sciences [40] - Europe declined about 2%, impacted by software discretionary spending, but recent wins supported positive sequential growth [41] - Rest of the World region grew about 4%, driven by large deals in communications, media, technology, and financial services [41] Company Strategy and Development Direction - The company is focused on accelerating growth, becoming an employer of choice, and modernizing operations [6][34] - Significant investments in AI initiatives, with plans to invest $1 billion into AI capabilities [12] - Strategic acquisitions, including Belcan, are aimed at broadening access to the ER&D services market and enhancing capabilities in aerospace and defense [24][25] - Partnerships with companies like Palo Alto Networks and NVIDIA are intended to enhance AI-driven cybersecurity and data modernization offerings [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted a gradual rebound in spending cycles, particularly in financial services, and emphasized the importance of AI in driving productivity and operational efficiency [7][12] - The company expects revenue growth of 4.8% to 6.8% in constant currency for Q4, reflecting the full quarter impact of Belcan [51] - For the full year, revenue is projected to grow 1.4% to 1.9% in constant currency, with an adjusted operating margin expected to be approximately 15.1% [53] Other Important Information - The company returned $391 million to shareholders in Q3, including $242 million through share repurchases and $149 million in dividends [49] - Year-to-date free cash flow reached approximately $1 billion, with expectations to maintain a conversion rate of about 80% of net income [48] Q&A Session Summary Question: Is the organic growth expected to be around 2% for Q4, and can this be a floor for acceleration in 2025? - Management confirmed that the midpoint for Q4 organic growth is around 2%, indicating a positive trajectory into 2025 [56][57] Question: What productivity improvements are seen from AI-enabled coding efforts, and how is revenue cannibalization avoided? - Management explained that productivity gains from AI allow for fixed-price business models, enabling cost reductions and increased competitiveness [58][59] Question: Confidence in replenishing the large deal pipeline? - Management expressed confidence in sustaining large deal momentum, noting an increase in large deals signed compared to the previous year [62][63] Question: Which verticals are expected to outperform or lag in 2025? - Financial services and healthcare are expected to lead growth, while CMT and manufacturing may lag [73][74] Question: Durability of the Health Sciences recovery and its impact on payer demand? - Management highlighted strong capabilities in Life Sciences and the need for technology to reduce costs in the payer segment, indicating a positive outlook [90][94]

Core Insights - Cognizant reported revenue of $5.04 billion for the quarter ended September 2024, reflecting a 3% increase year-over-year and a surprise of +0.82% over the Zacks Consensus Estimate of $5 billion [1] - Earnings per share (EPS) for the quarter was $1.25, compared to $1.16 in the same quarter last year, resulting in an EPS surprise of +9.65% against the consensus estimate of $1.14 [1] Revenue Performance by Segment - Financial Services revenue was $1.49 billion, matching the two-analyst average estimate, with a year-over-year change of +0.8% [3] - Communications, Media and Technology revenue was $816 million, below the average estimate of $843 million, representing a year-over-year decline of -3.7% [3] - Products and Resources revenue reached $1.23 billion, exceeding the average estimate of $1.21 billion, with a year-over-year increase of +5% [3] - Health Sciences revenue was $1.51 billion, surpassing the estimated $1.46 billion, showing a year-over-year growth of +7.8% [3] Stock Performance - Cognizant's shares have returned -0.8% over the past month, while the Zacks S&P 500 composite has increased by +1.8% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [4]

Core Insights - Cognizant (CTSH) reported quarterly earnings of $1.25 per share, exceeding the Zacks Consensus Estimate of $1.14 per share, and showing an increase from $1.16 per share a year ago, resulting in an earnings surprise of 9.65% [1] - The company achieved revenues of $5.04 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.82% and up from $4.9 billion year-over-year [2] - Cognizant has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance in earnings [2] Earnings Outlook - The future performance of Cognizant's stock will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings numbers [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.18 on revenues of $5.09 billion, while for the current fiscal year, the estimate is $4.62 on revenues of $19.7 billion [7] Industry Context - The Business - Software Services industry, to which Cognizant belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - The performance of Cognizant's stock may also be influenced by the overall industry outlook, as empirical research indicates a strong correlation between stock movements and earnings estimate revisions [5][8]