Cognizant Technology Solutions Corporation

year-over-year in constant currency driven by growth among life sciences and financial services clients including UK public sector which help drive strong constant currency sequential growth of about 4% in the UK. We are encouraged by our momentum in Europe which has been driven by new logos and a more focused sales strategy. The rest of the world increased about 7% year-over-year in constant currency. Growth was driven by recent large deals, particularly within comms, media and technology, and financial services. Turning to bookings. First quarter bookings declined 7% year-over-year, driven by a decline in rest of the world region, which had $200 million plus deals in the prior year period. The mix of new and expansion bookings grew significantly year-over-year and represented more than 50% of our quarterly bookings. On a trailing 12-month basis, bookings grew 3% year-over-year to 26.7 billion and represented a 1.3x book-to-bill. Our pipeline continues to grow particularly for large deals, and we have seen healthy demand in applications, AI, and cybersecurity. Turning to margins. During the quarter, we sold an office complex in India for proceeds of 70 million and recorded a gain on transaction of 62 million. Excluding the positive impact of this transaction, adjusted operating margin was 15.5%. Year over year, margin improved by 40 basis points, primarily reflecting the net savings generated from our NextGen program and the benefit from the depreciation of the Indian rupee. This was partially offset by increased compensation cost. Utilization also increased to approximately 85% driven by operational discipline. Now moving to cash flow and capital allocation. PSO of 81 days increased by three days from both the end of 2024 and the year-ago quarter, driven by business mix. This remains in line with the assumptions in our 2025 cash flow guidance. First quarter free cash flow was $393 million. This includes the $70 million from the sale of an office complex in India, which we plan to redeploy in India over the next several years, including for the development of a new 14-acre learning campus in Chennai that we announced earlier this month. During the quarter, we returned $364 million of capital to shareholders through share repurchases and dividends. In March, we repaid The $300 million outstanding under the credit facility and we ended the quarter with cash and short-term investments of $2 billion or net cash of $1.4 billion. Now turning to our forward outlook. For the second quarter of 2025, we expect revenue to grow 5% to 6.5%. year over year in constant currency. The remaining guidance items I will discuss are for the full year 2025. In 2025, we expect revenue to grow 3.5% to 6% in constant currency. Since we last gave guidance, we have seen certain foreign currencies strengthen considerably versus the US dollar. While our constant currency guidance is unchanged, our reported range has increased by approximately $200 million. As a reminder, our guidance is based on current foreign currency exchange rates. We continue to expect full-year inorganic contribution of a little more than 250 basis points. The low end of the revenue guidance assumes further deterioration in the demand environment. And the midpoint incorporates the deterioration we have seen to date with offsets from pipeline conversion and the large deal TCV growth we saw in the first quarter. The high-end assumes an improvement in the demand environment further supported by our large deals pipeline. As Ravi discussed, the dynamics are shifting in real time and this guidance reflects the visibility we have today. Our adjusted operating margin guidance remains in the range of 15.5% to 15.7%, representing 20 to 40 basis points of expansion. Given the new realities of the macro environment, we expect growth opportunities will continue to be led by larger cost takeout and productivity-led bookings. Based on this dynamic, we now expect margin expansion will be driven primarily by cost discipline and SG&A operating leverage. That said, we remain focused on strengthening our operational rigor through AI-led efficiencies, pyramid optimization, and automation to improve gross margin over the medium term. Our adjusted tax rate guidance is unchanged at 24% to 25%. Our EPS guidance of $4.98 to $5.14 compares to our prior range of $4.90 to $5.06, primarily reflecting the currency tailwind to revenue and a lower share count. This represents 5% to 8% growth. And we continue to expect free cash flow to represent more than 90% of net income. As we discussed at our investor day, we expect to return approximately $1.7 billion to shareholders in 2025, including $1.1 billion in share repurchases and $600 million in dividends. This reflects the incremental $500 million of share repurchases planned for this year that we announced on our investor day. We believe this strategy also gives us flexibility to pursue opportunistic M&A. Therefore, we now expect a weighted average diluted share count of about 491 million compared to 493 million previously. We expect to be active in the market repurchasing shares when our trading window opens. And we remain very confident in our long-term growth opportunities and our leadership team to consistently deliver on our strategy. With that, we will open the call for your questions.

Thank you.

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