10-KPeriod: FY2020

COGNIZANT TECHNOLOGY SOLUTIONS CORP Annual Report, Year Ended Dec 31, 2020

Filed February 12, 2021For Securities:CTSH

Summary

Cognizant Technology Solutions Corp. (CTSH) reported a slight revenue decline of 0.8% year-over-year to $16.65 billion for the fiscal year ended December 31, 2020. This performance was significantly impacted by the global COVID-19 pandemic, a ransomware attack in April 2020, and the company's strategic decision to exit certain content-related services. Despite these challenges, Cognizant is strategically pivoting towards digital services, focusing on key areas like IoT, AI, experience-driven software engineering, and cloud. The company implemented a 'Fit for Growth' plan to optimize costs and reinvest in digital capabilities. In terms of financial health, Cognizant demonstrated resilience by generating strong operating cash flow of $3.3 billion. The company also returned value to shareholders through $1.55 billion in share repurchases and $480 million in dividend payments. However, net income saw a considerable drop of 24.4% to $1.39 billion, resulting in diluted EPS of $2.57. The company's outlook emphasizes continued investment in digital transformation, global expansion, brand repositioning, and deepening client relevance, while navigating ongoing market uncertainties.

Financial Highlights

51 data points
Beta

Revenue

$16.65B

Net Income

$1.39B

8.4% Net Margin

EPS (Diluted)

$2.57

Total Assets

$16.92B

Cash & Equivalents

$2.68B

Free Cash Flow

$2.90B

Financial Statements
Beta
Revenue$16.65B
SG&A Expenses$3.10B
Operating Income$2.11B
Interest Expense$24.00M
Net Income$1.39B
EPS (Basic)$2.58
EPS (Diluted)$2.57
Shares Outstanding (Basic)540.00M
Shares Outstanding (Diluted)541.00M

Key Highlights

  • 1Revenues for the year ended December 31, 2020, were $16.65 billion, a decrease of 0.8% compared to 2019, impacted by COVID-19 and a ransomware attack.
  • 2Net income decreased by 24.4% to $1.39 billion, with diluted EPS at $2.57.
  • 3Cognizant generated strong net cash provided by operating activities of $3.30 billion.
  • 4The company returned $2.03 billion to stockholders through share repurchases ($1.55 billion) and dividends ($480 million).
  • 5A 'Fit for Growth' plan was implemented in 2020 to optimize costs, with $221 million in charges expected to generate annualized savings of approximately $530 million in 2021.
  • 6The company is strategically investing in four key digital areas: IoT, AI, experience-driven software engineering, and cloud, to drive future growth.
  • 7The Communications, Media, and Technology segment saw revenues impacted by the exit from certain content-related services, totaling approximately $178 million.

Frequently Asked Questions

The primary factors affecting Cognizant's financial performance in 2020 included the global COVID-19 pandemic, a significant ransomware attack in April 2020, and a strategic decision to exit certain content-related services. These events led to a slight decline in overall revenue and a notable decrease in net income.

Cognizant is focusing on four key digital areas: IoT, AI, experience-driven software engineering, and cloud. They are investing in these capabilities to align with client needs for digital transformation and are implementing a 'Fit for Growth' plan to optimize costs and fund these strategic investments.

Cognizant is committed to returning capital to shareholders through a combination of share repurchases and dividends. In 2020, the company repurchased $1.55 billion of its stock and paid $480 million in dividends, demonstrating its focus on shareholder returns.

Cognizant implemented a 'Fit for Growth' plan that included restructuring charges of $215 million, primarily for severance and facility exits, which is expected to yield significant annualized savings. The company also experienced a slight decrease in overall employee headcount and managed attrition, which saw elevated involuntary levels due to restructuring but a decrease in voluntary attrition early in the pandemic.