ctsh-20240630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended	June 30, 2024
☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to

Commission File Number 0-24429

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware									13-3728359
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

300 Frank W. Burr Blvd.

Teaneck, New Jersey 07666

(Address of Principal Executive Offices including Zip Code)

Registrant’s telephone number, including area code: (201) 801-0233

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	CTSH	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No: ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 26, 2024:


Class						Number of Shares
Class A Common Stock, par value $0.01 per share						495,657,976

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

TABLE OF CONTENTS


		Page
GLOSSARY		1

FORWARD LOOKING STATEMENTS		2

PART I.	FINANCIAL INFORMATION	4

Item 1.	Consolidated Financial Statements (Unaudited)	4

	Consolidated Statements of Financial Position (Unaudited) as of June 30 , 2024 and December 31, 2023	4

	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30 , 2024 and 2023	5

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three an d Six Months Ended June , 2024 and 2023	6

	Consolidated Statements of Stockholders' Equity (Unaudited) for the Three Months Ended March 31, 2024 and 2023 and June 30, 2024 and 2023	7

	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30 , 2024 and 2023	8

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 5.	Other Information	42

Item 6.	Exhibits	43

SIGNATURES		44

Table of Contents

GLOSSARY


Defined Term			Definition
10b5-1 Plan			Trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act
Adjusted Diluted EPS			Adjusted diluted earnings per share
AI			Artificial intelligence
ASC			Accounting Standards Codification
CC			Constant Currency
CE			Continental Europe
CITA			Commissioner of Income Tax (Appeals) in India
CMT			Communications, Media and Technology
CODM			Chief Operating Decision Maker
Credit Agreement			Credit agreement with a commercial bank syndicate dated April 18, 2024, as amended
CTS India			Our principal operating subsidiary in India
DOJ			United States Department of Justice
DSO			Days Sales Outstanding
DTSA			Defend Trade Secrets Act
EPS			Earnings per share
EU			European Union
Exchange Act			Securities Exchange Act of 1934, as amended
FS			Financial Services
GAAP			Generally Accepted Accounting Principles in the United States of America
GenAI			Generative artificial intelligence
HS			Health Sciences
High Court			Madras, India High Court
India Defined Contribution Obligation			Certain statutory defined contribution obligations of employees and employers in India
IRS			Internal Revenue Service
ITAT			Income Tax Appellate Tribunal in India
ITD			Indian Income Tax Department
NA			North America
OECD			Organization for Economic Cooperation and Development
P&R			Products & Resources
RoW			Rest of World
SCI			Supreme Court of India
SEC			United States Securities and Exchange Commission
Second Circuit			United States Court of Appeals for the Second Circuit
SG&A			Selling, general and administrative
Syntel			Syntel Sterling Best Shores Mauritius Ltd.
Tax Reform Act			Tax Cuts and Jobs Act
Term Loan			Unsecured term loan under the Credit Agreement
TriZetto			The TriZetto Group, Inc., now known as Cognizant Technology Software Group, Inc.
UK			United Kingdom
USDC-NJ			United States District Court for the District of New Jersey
USDC-SDNY			United States District Court for the Southern District of New York


Cognizant Technology Solutions			1			June 30, 2024 Form 10-Q

Table of Contents

Forward Looking Statements

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Exchange Act) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,” “would,” “plan,” “intend,” “estimate,” “predict,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing.

Such forward-looking statements may be included in various filings made by us with the SEC, in press releases or in oral statements made by or with the approval of one of our authorized executive officers. These forward-looking statements, such as statements regarding our anticipated future revenues, operating margin, earnings, capital expenditures, impacts to our business, financial results and financial condition as a result of the competitive marketplace for talent and future attrition trends, anticipated effective income tax rate and income tax expense, liquidity, financing strategy, access to capital, capital return strategy, investment strategies, cost management, plans and objectives, including those related to the NextGen program, investment in our business, potential acquisitions, industry trends, client behaviors and trends, the outcome of and costs associated with regulatory and litigation matters, the appropriateness of the accrual related to the India Defined Contribution Obligation, matters related to the acquisition of Belcan and other statements regarding matters that are not historical facts, are based on our current expectations, estimates and projections, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Actual results, performance, achievements and outcomes could differ materially from the results expressed in, or anticipated or implied by, these forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including:

•economic and geopolitical conditions globally, in particular in the markets in which our clients and operations are concentrated;

•our ability to attract, train and retain skilled employees, including highly skilled technical personnel and personnel with experience in key digital areas and senior management to lead our business globally, at an acceptable cost;

•unexpected terminations of client contracts on short notice or reduced spending by clients for reasons beyond our control;

•challenges related to growing our business organically as well as inorganically through acquisitions, and our ability to achieve our targeted growth rates;

•our ability to successfully implement our NextGen program and the amount of costs, timing of incurring costs, and ultimate benefits of such plans;

•our ability to achieve our profitability goals and maintain our capital return strategy;

•fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations;

•our ability to meet specified service levels or milestones required by certain of our contracts;

•intense and evolving competition and significant technological advances that our service offerings must keep pace with in the rapidly changing markets we compete in;

•our ability to successfully use AI-based technologies in our client offerings and our own internal operations;

•legal, reputation and financial risks if we fail to protect client and/or our data from security breaches and/or cyber attacks;

•the impact of future pandemics, epidemics or other outbreaks of disease, on our business, results of operations, liquidity and financial condition;

•the impact of climate change on our business;

•our ability to meet ESG expectations and commitments;

•the effectiveness of our risk management, business continuity and disaster recovery plans and the potential that our global delivery capabilities could be impacted;

•restrictions on visas, in particular in the United States, UK and EU, or immigration more generally or increased costs of such visas or the wages we are required to pay employees on visas, which may affect our ability to compete for and provide services to our clients;

•risks related to anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing, both of which could impair our ability to serve our clients;


Cognizant Technology Solutions			2			June 30, 2024 Form 10-Q

Table of Contents

•risks and costs related to complying with numerous and evolving legal and regulatory requirements and client expectations in the many jurisdictions in which we operate;

•potential changes in tax laws, or in their interpretation or enforcement, failure by us to adapt our corporate structure and intercompany arrangements, or adverse outcomes of tax audits, investigations or proceedings;

•potential exposure to litigation and legal claims in the conduct of our business; and

•the factors set forth in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

You are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC, including this report in the section titled “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part I, Item 1. Business” in our Annual Report on Form 10-K for the year ended December 31, 2023. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.


Cognizant Technology Solutions			3			June 30, 2024 Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)


(in millions, except par values)	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	2,193	$	2,621
Short-term investments	12		14
Trade accounts receivable, net	3,973		3,849
Other current assets	1,067		1,022
Total current assets	7,245		7,506
Property and equipment, net	1,009		1,048
Operating lease assets, net	553		611
Goodwill	6,395		6,085
Intangible assets, net	1,129		1,149
Deferred income tax assets, net	1,095		993
Long-term investments	86		435
Other noncurrent assets	1,068		656
Total assets	$	18,580	$	18,483
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	298	$	337
Deferred revenue	391		385
Short-term debt	33		33
Operating lease liabilities	148		153
Accrued expenses and other current liabilities	2,076		2,425
Total current liabilities	2,946		3,333
Deferred revenue, noncurrent	29		42
Operating lease liabilities, noncurrent	466		523
Deferred income tax liabilities, net	203		226
Long-term debt	590		606
Long-term income taxes payable	—		157
Other noncurrent liabilities	448		369
Total liabilities	4,682		5,256
Commitments and contingencies (See Note 12)
Stockholders’ equity:
Preferred stock, $0.10 par value, 15 shares authorized, none issued	—		—
Class A common stock, $0.01 par value, 1,000 shares authorized, 497 and 498 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	5		5
Additional paid-in capital	15		15
Retained earnings	14,028		13,301
Accumulated other comprehensive income (loss)	(150)		(94)
Total stockholders’ equity	13,898		13,227
Total liabilities and stockholders’ equity	$	18,580	$	18,483

The accompanying notes are an integral part of the unaudited consolidated financial statements.


Cognizant Technology Solutions			4			June 30, 2024 Form 10-Q

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(in millions, except per share data)	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues	$	4,850	$	4,886	$	9,610	$	9,698
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization expense shown separately below)	3,204		3,231		6,350		6,374
Selling, general and administrative expenses	781		830		1,546		1,665
Restructuring charges	29		117		52		117
Depreciation and amortization expense	128		131		259		263
Income from operations	708		577		1,403		1,279
Other income (expense), net:
Interest income	30		30		60		60
Interest expense	(10)		(10)		(21)		(19)
Foreign currency exchange gains (losses), net	1		(9)		7		3
Other, net	(1)		(1)		1		2
Total other income (expense), net	20		10		47		46
Income before provision for income taxes	728		587		1,450		1,325
Provision for income taxes	(165)		(124)		(344)		(282)
Income (loss) from equity method investments	3		—		6		—
Net income	$	566	$	463	$	1,112	$	1,043
Basic earnings per share	$	1.14	$	0.92	$	2.24	$	2.05
Diluted earnings per share	$	1.14	$	0.91	$	2.23	$	2.05
Weighted average number of common shares outstanding - Basic	497		506		497		508
Dilutive effect of shares issuable under stock-based compensation plans	1		1		1		—
Weighted average number of common shares outstanding - Diluted	498		507		498		508

The accompanying notes are an integral part of the unaudited consolidated financial statements.


Cognizant Technology Solutions			5			June 30, 2024 Form 10-Q

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(in millions)	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	566	$	463	$	1,112	$	1,043
Change in Accumulated other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(1)		51		(74)		94
Unrealized gains and losses on cash flow hedges	7		30		18		64

Other comprehensive income (loss)	6		81		(56)		158
Comprehensive income	$	572	$	544	$	1,056	$	1,201

The accompanying notes are an integral part of the unaudited consolidated financial statements.


Cognizant Technology Solutions			6			June 30, 2024 Form 10-Q

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(in millions, except per share data)	Class A Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2023	498	$	5	$	15	$	13,301	$	(94)	$	13,227
Net income	—	—		—		546		—		546
Other comprehensive income (loss)	—	—		—		—		(62)		(62)
Common stock issued, stock-based compensation plans	1	—		20		—		—		20
Stock-based compensation expense	—	—		42		—		—		42
Repurchases of common stock	(2)	—		(57)		(76)		—		(133)
Dividends declared, $0.30 per share	—	—		—		(150)		—		(150)
Balance, March 31, 2024	497	5		20		13,621		(156)		13,490
Net income	—	—		—		566		—		566
Other comprehensive income (loss)	—	—		—		—		6		6
Common stock issued, stock-based compensation plans	1	—		15		—		—		15
Stock-based compensation expense	—	—		48		—		—		48
Repurchases of common stock	(1)	—		(68)		(8)		—		(76)
Dividends declared, $0.30 per share	—	—		—		(151)		—		(151)
Balance, June 30, 2024	497	$	5	$	15	$	14,028	$	(150)	$	13,898


(in millions, except per share data)	Class A Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2022	509	$	5	$	15	$	12,588	$	(299)	$	12,309
Net income	—	—		—		580		—		580
Other comprehensive income (loss)	—	—		—		—		77		77
Common stock issued, stock-based compensation plans	2	—		23		—		—		23
Stock-based compensation expense	—	—		44		—		—		44
Repurchases of common stock	(4)	—		(60)		(163)		—		(223)
Dividends declared, $0.29 per share	—	—		—		(149)		—		(149)
Balance, March 31, 2023	507	5		22		12,856		(222)		12,661
Net income	—	—		—		463		—		463
Other comprehensive income (loss)	—	—		—		—		81		81
Common stock issued, stock-based compensation plans	1	—		18		—		—		18
Stock-based compensation expense	—	—		42		—		—		42
Repurchases of common stock	(3)	—		(65)		(150)		—		(215)
Dividends declared, $0.29 per share	—	—		—		(147)		—		(147)
Balance, June 30, 2023	505	$	5	$	17	$	13,022	$	(141)	$	12,903

The accompanying notes are an integral part of the unaudited consolidated financial statements.


Cognizant Technology Solutions			7			June 30, 2024 Form 10-Q

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(in millions)	For the Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	1,112	$	1,043
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	266		273

Deferred income taxes	(125)		(113)
Stock-based compensation expense	90		86

Other	31		29
Changes in assets and liabilities, net of the effect of business combinations:
Trade accounts receivable, current	(121)		50
Other current and noncurrent assets	(355)		(96)
Accounts payable	(34)		(40)
Deferred revenues, current and noncurrent	(14)		(20)
Other current and noncurrent liabilities	(493)		(447)
Net cash provided by operating activities	357		765
Cash flows from investing activities:
Purchases of property and equipment	(158)		(166)

Proceeds from maturity or sale of available-for-sale investment securities	—		225
Purchases of held-to-maturity investment securities	—		(3)
Proceeds from maturity of held-to-maturity investment securities	3		18
Purchases of other investments	(1)		(199)
Proceeds from maturity or sale of other investments	260		234

Payments for business combinations, net of cash acquired	(421)		(409)
Net cash (used in) investing activities	(317)		(300)
Cash flows from financing activities:
Issuance of common stock under stock-based compensation plans	35		41


Repurchases of common stock	(209)		(436)
Repayment of Term Loan borrowings and earnout and finance lease obligations	(50)		(11)

Dividends paid	(301)		(298)
Net cash (used in) financing activities	(525)		(704)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents	(39)		—
(Decrease) in cash, cash equivalents and restricted cash and cash equivalents	(524)		(239)
Cash, cash equivalents and restricted cash and cash equivalents beginning of year	2,717		2,294
Cash and cash equivalents, end of period	$	2,193	$	2,055

The accompanying notes are an integral part of the unaudited consolidated financial statements.


Cognizant Technology Solutions			8			June 30, 2024 Form 10-Q

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Interim Consolidated Financial Statements

The terms “Cognizant,” “we,” “our,” “us” and “the Company” refer to Cognizant Technology Solutions Corporation and its subsidiaries unless the context indicates otherwise. We have prepared the accompanying unaudited consolidated financial statements included herein in accordance with GAAP and the Exchange Act. The accompanying unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2023. In our opinion, all adjustments considered necessary for a fair statement of the accompanying unaudited consolidated financial statements have been included and all adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year.

New Accounting Pronouncements


Date Issued and Topic	Effective Date	Description	Impact
November 2023 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	Annual period starting in 2024 and interim periods starting in 2025 Retrospective basis	The standard requires enhanced segment disclosures but does not change the definition of a segment or the guidance for determining a reportable segment. The amendments require disclosure of significant segment expenses regularly provided to the CODM included within segment operating profit or loss and a description of how the CODM utilizes segment operating profit or loss to assess segment performance and allocating resources. The new standard also allows companies to disclose multiple measures of segment profit or loss if those measures are used to allocate resources.	The Company is currently evaluating the impact of the new standard on its disclosures.
December 2023 Income Taxes (Topic 740): Improvements to Income Tax Disclosures	Annual period starting in 2025 Prospective basis although retrospective application is permitted	The standard requires enhanced income tax disclosures primarily related to the income tax rate reconciliation and income taxes paid information.	The Company is currently evaluating the impact of the new standard on its disclosures.


Cognizant Technology Solutions			9			June 30, 2024 Form 10-Q

Table of Contents

Note 2 — Revenues and Trade Accounts Receivable

Disaggregation of Revenues

The tables below present disaggregated revenues from contracts with clients by client location, service line and contract type for each of our reportable business segments. We believe this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by industry, market and other economic factors. Our consulting and technology services include consulting, application development, systems integration, quality engineering and assurance services as well as software solutions and related services while our outsourcing services include application maintenance, infrastructure and security as well as business process services. Revenues are attributed to geographic regions based upon client location, which is the client's billing address. Substantially all revenues in the North America region relate to clients in the United States.


	Three Months Ended June 30, 2024										Six Months Ended June 30, 2024

(in millions)	FS		HS		P&R		CMT		Total		FS		HS		P&R		CMT		Total
Revenues
Geography:
North America	$	1,039	$	1,252	$	761	$	568	$	3,620	$	2,016	$	2,461	$	1,534	$	1,130	$	7,141
United Kingdom	138		47		127		132		444		281		91		258		270		900
Continental Europe	150		135		148		37		470		301		270		293		89		953
Europe - Total	288		182		275		169		914		582		361		551		359		1,853
Rest of World	120		27		90		79		316		234		55		174		153		616
Total	$	1,447	$	1,461	$	1,126	$	816	$	4,850	$	2,832	$	2,877	$	2,259	$	1,642	$	9,610

Service line:
Consulting and technology services	$	1,021	$	863	$	728	$	462	$	3,074	$	1,974	$	1,665	$	1,464	$	926	$	6,029
Outsourcing services	426		598		398		354		1,776		858		1,212		795		716		3,581
Total	$	1,447	$	1,461	$	1,126	$	816	$	4,850	$	2,832	$	2,877	$	2,259	$	1,642	$	9,610

Type of contract:
Time and materials	$	805	$	497	$	447	$	430	$	2,179	$	1,588	$	987	$	917	$	897	$	4,389
Fixed-price	597		703		594		339		2,233		1,153		1,373		1,176		667		4,369
Transaction or volume-based	45		261		85		47		438		91		517		166		78		852
Total	$	1,447	$	1,461	$	1,126	$	816	$	4,850	$	2,832	$	2,877	$	2,259	$	1,642	$	9,610


Cognizant Technology Solutions			10			June 30, 2024 Form 10-Q

Table of Contents


	Three Months Ended June 30, 2023										Six Months Ended June 30, 2023

(in millions)	FS		HS		P&R		CMT		Total		FS		HS		P&R		CMT		Total
Revenues
Geography:
North America	$	1,027	$	1,233	$	780	$	549	$	3,589	$	2,060	$	2,481	$	1,521	$	1,072	$	7,134
United Kingdom	155		44		137		137		473		317		81		269		284		951
Continental Europe	155		135		160		44		494		307		259		310		79		955
Europe - Total	310		179		297		181		967		624		340		579		363		1,906
Rest of World	126		28		100		76		330		255		52		195		156		658
Total	$	1,463	$	1,440	$	1,177	$	806	$	4,886	$	2,939	$	2,873	$	2,295	$	1,591	$	9,698

Service line:
Consulting and technology services	$	1,006	$	822	$	763	$	436	$	3,027	$	2,006	$	1,634	$	1,495	$	878	$	6,013
Outsourcing services	457		618		414		370		1,859		933		1,239		800		713		3,685
Total	$	1,463	$	1,440	$	1,177	$	806	$	4,886	$	2,939	$	2,873	$	2,295	$	1,591	$	9,698

Type of contract:
Time and materials	$	811	$	517	$	475	$	460	$	2,263	$	1,672	$	1,007	$	920	$	924	$	4,523
Fixed-price	608		655		612		305		2,180		1,153		1,305		1,197		598		4,253
Transaction or volume-based	44		268		90		41		443		114		561		178		69		922
Total	$	1,463	$	1,440	$	1,177	$	806	$	4,886	$	2,939	$	2,873	$	2,295	$	1,591	$	9,698

Costs to Fulfill

The following table shows significant movements in the capitalized costs to fulfill for the six months ended June 30:


(in millions)	2024		2023
Beginning balance	$	245	$	265
Costs capitalized	35		27
Amortization expense	(46)		(43)

Ending balance	$	234	$	249

Costs to obtain contracts were immaterial for the periods disclosed.

Contract Balances

The table below shows significant movements in contract assets (current and noncurrent) for the six months ended June 30:


(in millions)	2024		2023
Beginning balance	$	316	$	326
Revenues recognized during the period but not billed	304		327
Amounts reclassified to trade accounts receivable	(245)		(296)
Amounts acquired in business combinations	—		9

Ending balance	$	375	$	366


Cognizant Technology Solutions			11			June 30, 2024 Form 10-Q

Table of Contents

The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the six months ended June 30:


(in millions)	2024		2023
Beginning balance	$	427	$	417
Amounts billed but not recognized as revenues	300		277
Revenues recognized related to the beginning balance of deferred revenue	(316)		(299)
Amounts acquired in business combinations	9		13
Effect of foreign currency exchange movements	—		2
Ending balance	$	420	$	410

Revenues recognized during the six months ended June 30, 2024 for performance obligations satisfied or partially satisfied in previous periods were immaterial.

Remaining Performance Obligations

As of June 30, 2024, the aggregate amount of transaction price allocated to remaining performance obligations was $4,442 million, of which approximately 55% is expected to be recognized as revenues within 2 years and approximately 85% is expected to be recognized as revenues within 5 years. Disclosure is not required for performance obligations that meet any of the following criteria:

(1)contracts with a duration of one year or less as determined under ASC Topic 606: "Revenue from Contracts with Customers",

(2)contracts for which we recognize revenues based on the right to invoice for services performed,

(3)variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or

(4)variable consideration in the form of a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

Many of our performance obligations meet one or more of these exemptions and therefore are not included in the remaining performance obligation amount disclosed above.

Trade Accounts Receivable and Allowance for Credit Losses

We calculate expected credit losses for trade accounts receivable based on historical credit loss rates for each aging category as adjusted for the current market conditions and forecasts about future economic conditions. The following table presents the activity in the allowance for credit losses for trade accounts receivable for the six months ended June 30:


(in millions)	2024		2023
Beginning balance	$	32	$	43
Credit loss expense (1)	5		9
Write-offs charged against the allowance	(4)		(15)

Ending balance	$	33	$	37

(1)Reported in "Selling, general and administrative expenses" in our unaudited consolidated statements of operations.

Note 3 — Business Combinations

On January 22, 2024, through the execution of a share purchase agreement, we acquired 100% ownership in Thirdera, an Elite ServiceNow Partner specializing in advisory, implementation and optimization solutions related to the ServiceNow platform.

The acquisition completed during the six months ended June 30, 2024 was not material to our operations. Accordingly, pro forma results have not been presented. We have allocated the purchase price related to this transaction to tangible and intangible assets acquired and liabilities assumed, including goodwill, based on their estimated fair values.


Cognizant Technology Solutions			12			June 30, 2024 Form 10-Q

Table of Contents

The allocations of preliminary purchase price to the fair value of the aggregate assets acquired and liabilities assumed were as follows:


(in millions)	Thirdera		Weighted Average Useful Life
Cash	$	8
Trade accounts receivable	22
Other current assets	10
Property and equipment and other noncurrent assets	2
Non-deductible goodwill	178
Tax-deductible goodwill	167
Customer relationship assets	73		8.0 years
Other intangible assets	1		1.0 year
Current liabilities	(29)
Noncurrent liabilities	(3)
Purchase price	$	429

Goodwill from our acquisition of Thirdera is expected to benefit all of our reportable segments and has been allocated as such. The primary items that generated goodwill are the acquired assembled workforce and synergies between the acquired companies and us, neither of which qualify as identifiable intangible assets. The above allocations are preliminary and will be finalized as soon as practicable within the measurement period, but in no event later than one year following the date of acquisition.

Note 4 — Restructuring Charges

In the second quarter of 2023, we initiated the NextGen program aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. We expect the NextGen program to be completed by the end of 2024.

The total costs related to our NextGen program are reported in "Restructuring charges" in our unaudited consolidated statements of operations. We do not allocate these charges to individual segments in internal management reports used by the CODM. Accordingly, such expenses are separately disclosed in our segment reporting as “unallocated costs”. See Note 13. The costs related to our NextGen program are presented in the table below for the three and six months ended June 30:



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2024		2023		2024		2023
Employee separation costs	$	18	$	78	$	26	$	78
Facility exit costs (1)	11		37		25		37
Third party and other costs (2)	—		2		1		2
Total restructuring charges	$	29	$	117	$	52	$	117

(1)For the three and six months ended June 30, 2024, facility exit costs include accelerated depreciation charges of $5 million and $7 million, respectively. For the three and six months ended June 30, 2023, facility exit costs include accelerated depreciation charges of $10 million for each period.

(2)Third party and other costs include certain non-facility related asset impairments and other professional services fees directly related to the NextGen program.

We expect to record total costs of approximately $325 million in connection with the NextGen program. For the year ended December 31, 2023, we incurred $229 million of costs in connection with the NextGen program.


Cognizant Technology Solutions			13			June 30, 2024 Form 10-Q

Table of Contents

Changes in our accrued employee separation costs included in "Accrued expenses and other current liabilities" in our unaudited consolidated statements of financial position are presented in the table below for the six months ended June 30:


(in millions)	2024		2023

Beginning balance	$	42	$	—
Employee separation costs accrued	26		78
Payments made	(48)		(27)
Ending balance	$	20	$	51

Note 5 — Investments

Our investments were as follows:


(in millions)	June 30, 2024		December 31, 2023
Short-term investments:
Equity investment security	$	11	$	11

Held-to-maturity investment securities	—		3
Time deposits	1		—
Total short-term investments	$	12	$	14


Long-term investments:
Other investments	$	86	$	80
Restricted time deposits(1)	—		355
Total long-term investments	$	86	$	435

(1)As of December 31, 2023 the balance of restricted time deposits contains $96 million of restricted cash equivalents. See Note 8.

Equity Investment Security

Our equity investment security is a U.S. dollar denominated investment in a fixed income mutual fund. Realized and unrealized gains and losses were immaterial for the three and six months ended June 30, 2024 and 2023.

Held-to-Maturity Investment Securities

As of June 30, 2024, we had no held-to-maturity securities. As of December 31, 2023, the amortized cost and fair value of the held-to-maturity investments were each $3 million. Our held-to-maturity investment securities consisted of an Indian rupee denominated investment in commercial paper, which was in an unrealized loss position but had not been in an unrealized loss position for longer than 12 months.

Other Investments

As of June 30, 2024 and December 31, 2023, we had an equity method investment of $80 million and $74 million, respectively, in the technology sector. Additionally, as of each of June 30, 2024 and December 31, 2023, we had equity securities without a readily determinable fair value of $6 million.


Cognizant Technology Solutions			14			June 30, 2024 Form 10-Q

Table of Contents

Note 6 — Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were as follows:


(in millions)	June 30, 2024		December 31, 2023
Compensation and benefits	$	1,163	$	1,511
Customer volume and other incentives	280		241

Income taxes	22		27
Professional fees	146		146
Other	465		500
Total accrued expenses and other current liabilities	$	2,076	$	2,425

Note 7 — Debt

We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit facility, which are each due to mature in October 2027. We are required under the Credit Agreement to make scheduled quarterly principal payments on the Term Loan.

The Credit Agreement requires interest to be paid, at our option, at either the Term Benchmark, Adjusted Daily Simple RFR or the ABR Rate (each as defined in the Credit Agreement), plus, in each case, an Applicable Margin (as defined in the Credit Agreement). Initially, the Applicable Margin is 0.875% with respect to Term Benchmark loans and RFR loans and 0.00% with respect to ABR loans. Subsequently, the Applicable Margin with respect to Term Benchmark loans and RFR loans will be determined quarterly and may range from 0.75% to 1.125%, depending on our public debt ratings or, if we have not received public debt ratings, from 0.875% to 1.125%, depending on our Leverage Ratio, which is the ratio of indebtedness for borrowed money to Consolidated EBITDA, as defined in the Credit Agreement. Since issuance of the Term Loan, the Term Loan has been a Term Benchmark loan. The Credit Agreement contains customary affirmative and negative covenants as well as a financial covenant. We were in compliance with all debt covenants and representations of the Credit Agreement as of June 30, 2024.

In April 2024, we amended the Credit Agreement to replace the Canadian Dollar Offered Rate, which was an option to be used in connection with the Term Benchmark Rate, with the Canadian Overnight Repo Rate Average, as required by the terms of the Credit Agreement due to a Benchmark Transition Event (as defined therein).

Short-term Debt

As of each of June 30, 2024 and December 31, 2023, we had $