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Cognizant earnings: The consulting company 'will surpass $20 billion in revenue,' CEO says

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Cognizant CEO Brian Humphries joins Yahoo Finance Live to discuss the company's earnings report, talent retention, digital growth in 2021, and customer labor costs.

Video Transcript

[MUSIC PLAYING]

- Welcome back to "Yahoo Finance." Well, IT services giant Cognizant reported fourth quarter results yesterday. Its stock was higher on their earnings, lower today along with the rest of the market. But capping off a year, the CEO says delivered a series of hits. He joins us now, Brian Humphries. Thanks so much for being here Brian.

So revenue and guidance came in, in line with expectations, profit was a beat. You say Q4 revenue, which came in at 4.8 billion was the highest, the stock recently also hit an all time high, congratulations. That is a lot of firsts. I wonder, what are some of the other firsts and how did you get there? I know you have a strategy of four pillars of growth.

BRIAN HUMPHRIES: Hi, Karina, it's great to see you and thanks for having me here. Yes, we're very excited about where we stand at this moment in time. We had a record quarter, leave revenue in the fourth quarter. Record revenue for full year 2021 will surpass $20 billion in revenue next year for the first time in our history. And as you said, we've been creating shareholder value as we do that. So we've well down our part now of executing against a comprehensive program which started with refining our strategy, aligning our portfolio to higher growth categories.

And, of course, what's important in a knowledge based company like Cognizant is our people. And I'm delighted to say we are a talent magnet these days, we're executing our largest ever recruitment campaign and continue to add tens of thousands of employees per quarter.

- Yeah, Brian, I wanted to ask you about that because you hired over 40,000 employees in 2021. I mean, if that's not a testament to the demand you're seeing for your products right now. Talk to me a little bit, though, about how you are retaining employees, how you're attracting talent. And then we all keep hearing about those higher labor costs, how is that impacting the bottom line? If at all.

BRIAN HUMPHRIES: You know, it's very important, as you said, to be able to attract talent but simultaneously to be able to develop talent. So it's somewhat serendipitous for us. We have been repositioning our brand in recent years. We've always been known is a company that's been values led, built around client centricity, delivery excellence. We're increasingly known as a company that has a high growth profile, a digital transformation partner to global se-- global 2000 c-suite executives.

And so for the talent we brought into Cognizant, we've deployed over 23 million hours of learning and development on that cohort in the last year. Those employees have taken over 130,000 courses. And, of course, we have revitalized the notion of upward mobility in Cognizant. We've had 14,000 job moves or promotions in the last year alone. So we're very excited about the engagement of our employees and very excited about our ability to continue to attract talent.

- And then, Brian, the company's revenue from its most advanced projects known as Digital rose by 20%. Can you tell us more about those projects and what they include?

- Yeah, you know, we're excited about digital. When I joined a company a few years ago, it was less than 30% of our business but it's now about 45% of our business. And that's important for us because it enables us to be in higher growth categories, typically higher margin categories. But in terms of our relationship with our employees, it's really good in terms of engagement because our employees get to work on cutting edge technologies. And in terms of our ability to work with clients, it increases our intimacy with them because we're working on some of the most strategic projects that they have.

And every company in the world has gone through a period when they thought of the COVID environment as being perhaps a temporary environment, but what we found ourselves doing this. They are managing their business now on a go forward basis, leveraging the same lessons as they experienced during the COVID period. And a lot of this is around better leveraging data and analytics, knowing their customer, upselling, cross-selling. The notion of user experience is more important than ever before, both for their employees as well as for their clients.

And ultimately, leveraging modern technologies like cloud to become more agile, better able to scale with the presence, demanded in today's environment. So it's a very exciting period of our business, we're rapidly embracing it, we spend about a billion dollars a year now in M&A to accelerate our digital portfolio. And we're certainly on a roll in that regard.

- Talk to us a little bit about the spending power on the part of clients in this environment, because I'm curious how higher inflation and higher labor costs are impacting your clients to the extent that it then impacts your relationship with your client.

BRIAN HUMPHRIES: Look, that's one of the reasons. I think it's a wonderful time to be CEO of an IT services company. There is no demand issue whatsoever on the country, there is more of a supply issue, which brings you back to that importance of investing in your talent.

We had bookings, growth in the third quarter of 24% and in the fourth quarter of 22%. year over year. Or annual bookings this year were $23 billion. And that tells you, behind each and every one of those dollars there, is a client win. And so at this moment in time I'm very, very bullish on the industry and our position within it.

- All right, we will leave it there. Congratulations on a great quarter,. Brian., Humphries' cognizant CEO., Thank you so much for your time today.