COGNIZANT TECHNOLOGY SOLUTIONS CORP
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
CTSH$64.72-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001058290-24-000242
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001058290-24-000327
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 145 current paragraphs.
88 unchanged; 48 reworded; 8 added; 7 removed; 6 previous and 1 current paragraphs rearranged.
Tables are not compared: 44 previous and 44 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
During the quarter ended September 30, 2024, revenues increased by $147 million as compared to the quarter ended September 30, 2023, representing growth of 3.0%, or 2.7% on a constant currency 1 basis. Our recently completed acquisitions contributed approximately 200 basis points to revenue growth. Additionally, revenues were positively impacted by growth in
Current report
our Health Sciences segment, partially offset by weakness in our Products and Resources (excluding the impact of our recently completed acquisitions) and Communications, Media and Technology segments.
Current report
During the three months ended September 30, 2024, we completed the acquisition of Belcan. See Note 3 to our unaudited consolidated financial statements. This acquisition is expected to have a modest near-term dilutive impact to operating margin, primarily due to transaction and integration-related expenses and amortization of acquired intangibles.
Current report
•Revenue growth in the Financial Services segment was positively impacted by growth among banking clients, while being negatively impacted by lower resales of third-party products in connection with our integrated offerings strategy in the current period; and
Current report
•Communications, Media and Technology revenues, in our North America and Europe regions, were negatively impacted by weakness from technology customers.
Current report
Depreciation and amortization expense, as well as depreciation and amortization expense as a percentage of revenues, remained flat during the third quarter of 2024 as compared to the third quarter of 2023. The decline of depreciation expense, which was driven by actions taken under our NextGen program, was offset by an increase in amortization expense driven by intangible assets related to our recently completed acquisitions.
Current report
The effective income tax rate for the three months ended September 30, 2024, reflects the benefit of the recognition of a $40 million deferred tax asset related to foreign tax credits.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Removed paragraphs (7)
Previous report
During the quarter ended June 30, 2024, revenues decreased by $36 million as compared to the quarter ended June 30, 2023, representing a decrease of 0.7%, or a decrease of 0.5% on a constant currency 1 basis. Revenues were negatively impacted by weakness in our Products and Resources and Financial Services segments, partially offset by revenue growth in our Health Sciences and Communications, Media and Technology segments.
Previous report
On June 10, 2024, we announced the signing of a definitive agreement to acquire Belcan, a portfolio company of AE Industrial Partners and a leading global supplier of engineering research & development services, for a preliminary purchase price of approximately $1.3 billion in cash and stock. The transaction is anticipated to close in the quarter ending September 30, 2024, subject to the receipt of required regulatory approvals and other closing conditions. This acquisition is expected to significantly expand our engineering research & development and Internet of Things capabilities. Belcan’s customers are primarily in the aerospace and defense, space and marine sectors. We expect to include these customers in our Products and Resources segment. The acquisition is expected to result in modest near-term margin dilution primarily due to transaction and integration related expenses and amortization of acquired intangibles.
Previous report
N/A Not applicable
Previous report
•Revenue declines in our Europe and Rest of World regions were primarily driven by weakness in the Financial Services and Products and Resources segments.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
N/A Not applicable
Previous report
On June 10, 2024 we announced the signing of a definitive agreement to acquire Belcan for a preliminary purchase price of approximately $1.3 billion in cash and stock (1,470,589 shares of Class A Common Stock). Cash consideration is expected to be funded through a mix of cash on hand and debt. The transaction is anticipated to close in the quarter ending September 30, 2024, subject to the receipt of required regulatory approvals and other closing conditions.
Reworded paragraphs (48)
Previous wording
In connection with the NextGen program, in the second quarter of 2024 we incurred $29 million of employee separation, facility exit and other costs. Since the inception of the program, we incurred $281 million in total costs. See Note 4 to our unaudited consolidated financial statements. We currently expect to incur costs of approximately $95 million for the full year 2024, which is expected to bring the total charges under the program to approximately $325 million. The estimates of the charges and expenditures that we expect to incur in connection with the NextGen program, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen program.
Current wording
In connection with the NextGen program, in the third quarter of 2024 we incurred $33 million of employee separation, facility exit and other costs. Since the inception of the program, we incurred $314 million in total costs. See Note 4 to our unaudited consolidated financial statements. We currently expect to incur costs of approximately $105 million for the full year 2024, which is expected to bring the total charges under the program to approximately $335 million. The estimates of the charges and expenditures that we expect to incur in connection with the NextGen program, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen program.
Previous wording
Our operating margin increased to 14.6% and Adjusted Operating Margin 2 increased to 15.2% for the quarter ended June 30, 2024, from operating margin of 11.8% and Adjusted Operating Margin of 14.2% for the quarter ended June 30, 2023. The increase in our GAAP and Adjusted Operating Margins for the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by the insurance recovery benefit of 60 basis points during the second quarter of 2023 related to a previously disclosed 2020 cyber incident and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our GAAP operating margins for the quarters ended June 30, 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Current wording
Our operating margin increased to 14.6% for the quarter ended September 30, 2024, from 14.0% for the quarter ended September 30, 2023. Our Adjusted Operating Margin 2 decreased to 15.3% for the quarter ended September 30, 2024, from 15.5% for the quarter ended September 30, 2023. Our GAAP and Adjusted Operating Margins for the quarter ended September 30, 2024, as compared to the quarter ended September 30, 2023 were positively impacted by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, while being negatively impacted by increased compensation costs, primarily as a result of a merit increase cycle completed during the quarter, and the dilutive impact of recently completed acquisitions, primarily driven by transaction and integration related expenses and amortization of acquired intangibles. In addition, our GAAP operating margins for the quarters ended September 30, 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Previous wording
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business. This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice. For the trailing twelve months ended June 30, 2024 our Voluntary Attrition - Tech Services was 13.6% as compared to 19.9% for the trailing twelve months ended June 30, 2023. We finished the second quarter of 2024 with approximately 336,300 employees as compared to 345,600 employees at the end of the second quarter of 2023.
Current wording
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business. This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice. For the trailing twelve months ended September 30, 2024 our Voluntary Attrition - Tech Services was 14.6% as compared to 16.2% for the trailing twelve months ended September 30, 2023. We finished the third quarter of 2024 with approximately 340,100 employees, inclusive of Belcan employees, as compared to 346,600 employees at the end of the third quarter of 2023.
Previous wording
We currently expect to incur total costs of approximately $325 million in connection with the NextGen program, which started in the second quarter of 2023, with approximately $95 million of such costs anticipated in 2024. See "Executive Summary." In addition to the NextGen program, potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, may impact our future results. We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We are currently evaluating the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity.
Current wording
We currently expect to incur total costs of approximately $335 million in connection with the NextGen program, which started in the second quarter of 2023, with approximately $105 million of such costs anticipated in 2024. See "Executive Summary". In addition to the NextGen program, potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, may impact our future results. We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We are currently evaluating the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity.
Previous wording
During the quarter ended June 30, 2024, revenues decreased by $36 million as compared to the quarter ended June 30, 2023, representing a decrease of 0.7%, or a decrease of 0.5% on a constant currency basis 3. Our recently completed acquisitions contributed 60 basis points to the change in revenue.
Current wording
During the quarter ended September 30, 2024, revenues increased by $147 million as compared to the quarter ended September 30, 2023, representing growth of 3.0%, or 2.7% on a constant currency basis 3. Our recently completed acquisitions contributed approximately 200 basis points to revenue growth.
Previous wording
Revenues of $4,850 million across our business segments and geographies were as follows for the three months ended June 30, 2024:
Current wording
Revenues of $5,044 million across our business segments and geographies were as follows for the three months ended September 30, 2024:
Previous wording
•Reduced demand for discretionary work negatively impacted revenues across all segments. Clients in our Products and Resources and our Financial Services segments were particularly affected;
Current wording
•Reduced demand for discretionary work negatively impacted revenues across all segments. Clients in our Communications, Media and Technology, Products and Resources and Financial Services segments were particularly affected;
Previous wording
•Recently completed acquisitions contributed 60 basis points of growth to the overall change in revenues, including 140 basis points of growth to our Communications, Media and Technology segment (primarily in North America) and 70 basis points of growth to our Products and Resources segment (primarily in North America);
Current wording
•Recently completed acquisitions contributed approximately 200 basis points of growth to the overall change in revenues, including approximately 750 basis points of growth to our Products and Resources segment (primarily in North America) and approximately 100 basis points of growth to our Communications, Media and Technology segment (primarily in North America);
Previous wording
•North America revenues in the Health Sciences and Communications, Media and Technology segments were positively impacted by the ramp up of several recently won large deals; and
Current wording
•Health Sciences revenues in the North America were positively impacted by the ramp up of several recently won large deals and the resale of third-party products in connection with our integrated offerings strategy;
Previous wording
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. Cost of revenues, as a percentage of revenues, was positively impacted by foreign currency exchange rate movements, offset by the resale of third-party products in connection with our integrated offerings strategy.
Current wording
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was primarily driven by increased compensation costs, primarily as a result of a merit increase cycle completed in the quarter, partially offset by foreign currency exchange rate movements.
Previous wording
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by net savings generated from our NextGen program, partially offset by the Q2 2023 insurance recovery benefit of 60 basis points related to a previously disclosed 2020 cyber incident.
Current wording
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The increase, as a percentage of revenues, was primarily attributed to the impact of recently completed acquisitions, driven by transaction and integration-related expenses, and increased compensation costs, primarily as a result of a merit increase cycle completed in the quarter, partially offset by net savings generated from our NextGen program.
Previous wording
Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $29 million, or 0.6% as a percentage of revenue, for the three months ended June 30, 2024, as compared to $117 million, or 2.4% as a percentage of revenue, for the three months ended June 30, 2023. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Current wording
Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $33 million, or 0.7% as a percentage of revenue, for the three months ended September 30, 2024, as compared to $72 million, or 1.5% as a percentage of revenue, for the three months ended September 30, 2023. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Previous wording
The increase in our GAAP operating margin and Adjusted Operating Margin 5 for the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign exchange rate movements, partially offset by the insurance recovery benefit of 60 basis points in the second quarter of 2023 related to a previously disclosed 2020 cyber incident and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our GAAP operating margins for the quarters ended June 30, 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Current wording
Our GAAP and Adjusted Operating Margins 5 for the quarter ended September 30, 2024, as compared to the quarter ended September 30, 2023 were positively impacted by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, while being negatively impacted by increased compensation costs, primarily as a result of a merit increase cycle completed in the quarter, and the dilutive impact of recently completed acquisitions, primarily driven by transaction and integration-related expenses and amortization of acquired intangibles. In addition, our GAAP operating margins for the quarters ended September 30, 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Previous wording
A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 24% of our global operating costs duringthe three months ended June 30, 2024. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended June 30, 2024 by 47 basis points as compared to the three months ended June 30, 2023.
Current wording
A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 24% of our global operating costs duringthe three months ended September 30, 2024. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended September 30, 2024 by 45 basis points as compared to the three months ended September 30, 2023.
Previous wording
Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 29 basis points during the three months ended June 30, 2024. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by 19 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had a positive impact of 8 basis points on our operating margin during the three months ended June 30, 2024, compared to a negative impact of 10 basis points during the three months ended June 30, 2023.
Current wording
Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 25 basis points during the three months ended September 30, 2024. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by 18 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had a positive impact of 10 basis points on our operating margin during the three months ended September 30, 2024, compared to a negative impact of 10 basis points during the three months ended September 30, 2023.
Previous wording
In the second quarter of 2024, segment operating margins across all our segments were positively impacted by savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements. Segment operating profit in the Health Sciences segment was negatively impacted by resales of third-party products in connection with our integrated offerings strategy and by higher costs typical to the initial phases of several recently won large deals in this segment.
Current wording
In the third quarter of 2024, segment operating margins across all our segments were positively impacted by savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, primarily as a result of a merit increase cycle. Segment operating profit in the Financial Services segment in the third quarter of 2023 was negatively impacted by resales of third-party products in connection with our integrated offerings strategy. Segment operating profit in the Health Sciences segment in the third quarter of 2024 was negatively impacted by resales of third-party products in connection with our integrated offerings strategy and by higher costs typical to the initial phases of several recently won large deals in this segment. Segment operating profit in the Products and Resources segment in the third quarter of 2024 was negatively impacted by the dilutive impact of the Belcan acquisition.
Previous wording
The losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. As of June 30, 2024, the notional value of our undesignated hedges was$930 million. Interest income for the three months ended June 30, 2024 remained flat as compared to the same period in 2023. While our invested balances during the three months ended June 30, 2024 were lower as compared to the three months ended June 30, 2023 due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements), we benefited from higher interest rates compared to the three months ended June 30, 2023.
Current wording
The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. As of September 30, 2024, the notional value of our undesignated hedges was$1,026 million. Interest income for the three months ended September 30, 2024 decreased $1 million as compared to the same period in 2023. While our invested balances during the three months ended September 30, 2024 were lower as compared to the three months ended September 30, 2023, due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements) and the Belcan acquisition in August 2024, we benefited from higher interest rates compared to the three months ended September 30, 2023.
Previous wording
The increase in net income was primarily driven by an increase in income from operations, partially offset by a higher effective tax rate.
Current wording
The increase in net income was primarily driven by an increase in income from operations and a lower effective tax rate.
Previous wording
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations excludes unusual items, such as NextGen charges. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. For further detail on the NextGen charges, see Note 4 to our unaudited consolidated financial statements. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues.
Current wording
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as NextGen charges. Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. For further detail on the NextGen charges, see Note 4 to our unaudited consolidated financial statements. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred. Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues.
Previous wording
non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
Current wording
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
Previous wording
The following table sets forth, for the periods indicated, certain financial data for the six months ended June 30:
Current wording
The following table sets forth, for the periods indicated, certain financial data for the nine months ended September 30:
Previous wording
During the six months ended June 30, 2024, revenues decreased by $88 million as compared to the six months ended June 30, 2023, a decrease of 0.9% on both a reported and a constant currency basis 6. Our recently completed acquisitions contributed 70 basis points to revenue growth.
Current wording
During the nine months ended September 30, 2024, revenues increased by $59 million as compared to the nine months ended September 30, 2023, representing growth of 0.4%, or 0.3% on a constant currency basis 6. Our recently completed acquisitions contributed approximately 100 basis points to revenue growth.
Previous wording
Revenues of $9,610 million across our business segments and geographies were as follows for the six months ended June 30, 2024:
Current wording
Revenues of $14,654 million across our business segments and geographies were as follows for the nine months ended September 30, 2024:
Previous wording
•Recently completed acquisitions contributed 70 basis points of growth to the overall change in revenues, including 190 basis points of growth to our Communications, Media and Technology segment (primarily in North America and Continental Europe) and 70 basis points of growth to our Products and Resources segment (primarily in North America);
Current wording
•Recently completed acquisitions contributed approximately 100 basis points to the overall revenue growth, including approximately 300 basis points of growth to our Products and Resources segment (primarily in North America) and approximately 150 basis points of growth to our Communications, Media and Technology segment (primarily in North America and Continental Europe);
Previous wording
•The resale of third-party products primarily in the Financial Services and Health Sciences segments in North America, in connection with our integrated offerings strategy, contributed 100 basis points of growth to the overall change in revenue;
Current wording
•The resale of third-party products, primarily in the Health Sciences segment in North America, in connection with our integrated offerings strategy, contributed approximately 100 basis points of growth to the overall change in revenue;
Previous wording
•Health Sciences revenues were positively impacted by pharmaceutical clients in our Europe region, which was offset by the negative impact of the renegotiation of a large contract with a payer client in 2023 in our North America region, which reduced the scope of services but improved the profitability of the contract;
Current wording
•Health Sciences revenues were negatively impacted by the renegotiation of a large contract with a payer client in 2023 in our North America region, which reduced the scope of services but improved the profitability of the contract;
Previous wording
•Revenue decline in our Rest of World region was primarily driven by weakness in the Financial Services and Products and Resources segments.
Current wording
•Revenue decline in our Rest of World region was primarily driven by weakness in the Products and Resources and Financial Services segments.
Previous wording
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was due to higher compensation costs for delivery personnel and the impact of the resale of third-party products in connection with our integrated offerings strategy, partially offset by the beneficial impact of foreign currency exchange rate movements.
Current wording
Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was due to higher compensation costs, primarily as a result of a merit increase cycle, and the impact of the resale of third-party products in connection with our integrated offerings strategy, partially offset by the beneficial impact of foreign currency exchange rate movements.
Previous wording
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program.
Current wording
SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program, partially offset by the impact of recently completed acquisitions, primarily driven by transaction and integration related expenses.
Previous wording
Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $52 million, or 0.5% as a percentage of revenue, for the six months ended June 30, 2024, as compared to $117 million, or 1.2% as a percentage of revenue, for the six months ended June 30, 2023. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Current wording
Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $85 million, or 0.6% as a percentage of revenue, for the nine months ended September 30, 2024, as compared to $189 million, or 1.3% as a percentage of revenue, for the nine months ended September 30, 2023. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.
Previous wording
Depreciation and amortization expense decreased by 2.3% and decreased by 0.1%as a percentage of revenues, during the second quarter of 2024 as compared to the second quarter of 2023.
Current wording
Depreciation and amortization expense decreased by 1.0%, and decreased by 0.1% asa percentage of revenues, during the nine months ended September 30, 2024 as compared to the 2023 period. The decline of depreciation expense, which was driven by actions taken under our NextGen program, was partially offset by an increase in amortization expense driven by an increase in intangible assets related to our recently completed acquisitions.
Previous wording
The increase in our 2024 GAAP operating margin and Adjusted Operating Margin 8 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our 2023 and 2024 GAAP operating margins were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Current wording
The increase in our 2024 GAAP operating margin and Adjusted Operating Margin 8 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, primarily as a result of a merit increase cycle, and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our 2023 and 2024 GAAP operating margins were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.
Previous wording
Net of the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee positively impacted our operating margin for the six months ended June 30, 2024 by 46 basis points as compared to the six months ended June 30, 2023. Excluding the impactof such hedges, thedepreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 24 basis points for the six months ended June 30, 2024. The settlement of our cash flow hedges had a positive impact of 4 basis points on our operating margin during the six months ended June 30, 2024, compared to a negative impact of 18 basis points during the 2023 period.
Current wording
Net of the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee positively impacted our operating margin for the nine months ended September 30, 2024 by 43 basis points as compared to the nine months ended September 30, 2023. Excluding the impact of such hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 22 basis points for the nine months ended September 30, 2024. The settlement of our cash flow hedges had a positive impact of 6 basis points on our operating margin during the nine months ended September 30, 2024, compared to a negative impact of 15 basis points during the 2023 period.
Previous wording
Total segment operating profit and margin were as follows for the six months ended June 30:
Current wording
Total segment operating profit and margin were as follows for the nine months ended September 30:
Previous wording
Unallocated costs decreased for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, driven by lower corporate expenses as well as lower NextGen charges of $52 million for the six months ended June 30, 2024 as compared to $117 million for the six months ended June 30, 2023 (see Note 4 to our unaudited consolidated financial statements).
Current wording
Unallocated costs decreased for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, driven by lower corporate expenses as well as lower NextGen charges of $85 million for the nine months ended September 30, 2024 as compared to $189 million for the nine months ended September 30, 2023 (see Note 4 to our unaudited consolidated financial statements).
Previous wording
The following table sets forth total other income (expense), net for the six months ended June 30:
Current wording
The following table sets forth total other income (expense), net for the nine months ended September 30:
Previous wording
The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. Interest income for the six months ended June 30, 2024 remained flat as compared to the same period in 2023. While our invested balances decreased during the six months ended June 30, 2024 due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements), we benefited from higher interest rates compared to the six months ended June 30, 2023.
Current wording
The foreign currency exchange gains and losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. Interest income for the nine months ended September 30, 2024 decreased by $1 million as compared to the same period in 2023. While our invested balances decreased during the nine months ended September 30, 2024, primarily due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements), we benefited from higher interest rates compared to the nine months ended September 30, 2023.
Previous wording
The effective income tax rate in both periods reflects the benefits of discrete items related to U.S. state income taxes. The effective income tax rate in 2023 additionally benefited from the effective settlement of the IRS examination for tax years 2017 and 2018.
Current wording
The effective income tax rate in both periods reflects the benefits of discrete items related to U.S. state income taxes. The effective tax rate in 2024 additionally benefited from the recognition of a $40 million deferred tax asset related to foreign tax credits. The effective income tax rate in 2023 additionally benefited from the effective settlement of the IRS examination for tax years 2017 and 2018.
Previous wording
In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with an effective date of January 1, 2024. Although management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, there was no material impact for the six months ended June 30, 2024 and we believe that our net income, cash flows, or financial condition will not be materially impacted in the future by Pillar Two.
Current wording
In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with an effective date of January 1, 2024. Although management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, there was no material impact for the nine months ended September 30, 2024 and we believe that our net income, cash flows, or financial condition will not be materially impacted in the future by Pillar Two.
Previous wording
The increase in net income was driven by an increase in income from operations, partially offset by a higher effective tax rate.
Current wording
The increase in net income was driven by an increase in income from operations.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
See Note 1 to our unaudited consolidated financial statements.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Unallocated costs decreased for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily driven by lower NextGen charges of $29 million for the three months ended June 30, 2024 as compared to $117 million for the three months ended June 30, 2023 (see Note 4 to our unaudited consolidated financial statements) as well as lower corporate expenses.
Previous report — wording carried elsewhere
The effective income tax rate in both periods reflects the benefits of discrete items related to U.S. state income taxes.
Previous report — wording carried elsewhere
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and
Previous report — wording carried elsewhere
•The resale of third-party products, primarily in the Health Sciences and Financial Services segments in North America, in connection with our integrated offerings strategy, contributed 110 basis points of growth to the overall change in revenue;
Previous report — wording carried elsewhere
Depreciation and amortization expense decreased by 1.5%, and remained flat asa percentage of revenues, during the six months ended June 30, 2024 as compared to the 2023 period.
Previous report — wording carried elsewhere
There have been no changes in the information provided regarding recently adopted and new accounting pronouncements in our Annual Report on Form 10-K for the year ended December 31, 2023.