Living our purpose Engineering modern businesses to improve everyday life Annual Report 2020 To our shareholders During 2020, we made significant GAAP operating margin was 12.7%. GAAP 2 progress in our effort to strengthen diluted EPS was $2.57, and free cash flow was $2.9 billion. the company’s position for accelerated revenue growth. We intensified our In 2020, Cognizant returned approximately $2.1 billion to shareholders through share client-centricity, refined our strategy, repurchases and dividend payments. and established a healthier cost structure that enabled us to make Moving into a new further investments in growth. growth phase In line with our strategy, we reshaped our We entered 2021 with growing portfolio of services and solutions by exiting non-strategic businesses and investing confidence in our prospects. organically and inorganically. We believe we are in a new phase We complemented our talented teams with of growth propelled by increased the hiring of diverse, highly skilled leaders, commercial momentum, a portfolio among them new executive committee focused on faster-growing market members. We also lifted the engagement and geographic segments, a levels of our associates to new highs. stronger partner ecosystem, a Our strategic, commercial, and operational more robust demand environment, progress is a tribute to the cohesiveness and a better cost structure. We are and energy of our leadership team and the engagement of our nearly 300,000 associates. resolved to reestablish Cognizant as They stepped up to deliver tremendous value an industry leader. to clients, colleagues, and the communities in which we work and live. Cognizant’s full-year 2020 revenue was $16.7 billion, a year-over-year decline of 0.8%, or a decline of 0.7% in constant currency1. 1 Constant currency revenue growth is not a measurement of financial performance prepared in accordance with U.S. GAAP. See “Non-GAAP Financial Measures” on pages 27-29 of the Annual Report on Form 10-K. 2 Free cash flow is not a measurement of financial performance prepared in accordance with U.S. GAAP. See “2020 performance” on page 20 for additional information. Cognizant 2020 Annual Report 1 In our knowledge-intensive business, the We see value in being the trusted advisor road to that future begins with our associates. to our clients’ most senior leaders and in They are the source of our creative problem- increasing the percentage of the Global solving, innovative solutions, and competitive 2000 that rely on us to sharpen their advantage. We are investing in their learning competitiveness. and professional development, and have To achieve this vision, we are now several overhauled our talent management and quarters into executing a strategy with four annual performance evaluation processes related priorities: repositioning the Cognizant to develop a high-performance culture that brand, globalizing the company, accelerating creates conditions for everyone to thrive. digital, and increasing our client relevance. Living our purpose, Building a stronger, improving lives global brand Our associates are united and Our aim is to position Cognizant as energized by the company’s new a preeminent technology services purpose, vision, strategic priorities, leader with world-class digital bold moves, and values, which we call solutions and the talent to deliver the Cognizant Agenda. Cognizant’s transformative business outcomes purpose is to engineer modern to clients. This will enable us to businesses to improve everyday reach beyond the CIO office to the life. This statement explains why we entire C-suite as well as to the next are in business, serves as our North generation of talent we want to Star, and conveys that, although attract to Cognizant. we are a B2B company, the work we do with and for clients, most Accordingly, we are investing substantially in of whom are among the world’s our brand and executing a fully integrated largest corporations, helps improve marketing approach that combines experiential engagement, sponsorships, broad-reach everyday life for people globally. advertising, flagship thought leadership, and an always-on digital presence, along with public To gauge how well we are living our purpose relations, employee communications, and social and clarify our aspirations, we established a media campaigns. vision: to become the preeminent technology services partner to the Global 2000 C-suite. 2 Cognizant 2020 Annual Report Globalizing our business locations to enable deeper collaboration with clients at every stage of their digital Elevating the visibility of our brand transformation journeys. dovetails with further globalizing Cognizant. About three-quarters Accelerating digital, of our annual revenue comes from modernizing businesses North America, creating a substantial The pandemic’s shockwaves opportunity to diversify our revenue have driven digital into the heart mix by scaling our business of clients’ operating models and internationally. processes. Clients are shifting from We are investing for growth in select an industrial to a software-centric countries, including through M&A. For model, transforming their business example, in Australia, we acquired Servian, and IT architectures in parallel, a Sydney-based enterprise transformation and developing agile workflows consultancy that specializes in data analytics, AI, digital services, experience design, and underpinned by AI and data. cloud. In Germany, we signed an agreement in March 2021 to acquire Munich-based ESG In response, we are helping clients deploy Mobility, a digital automotive engineering R&D a new business and technology stack to provider for connected, autonomous, and modernize their businesses. That way they can electric vehicles. innovate faster, become more agile, and stay relevant to their customers. We are also drawing on a new team of international leaders who bring fresh thinking To strengthen our ability to engineer modern along with local expertise and business businesses, we invested more than $1 billion connections, and position us for exponential in acquisitions focused on building our growth in our international business. leadership positions in experience-driven software engineering, data and AI, cloud, and In addition, we are extending our Global IoT. Seven of our recent acquisitions have been Delivery Network with a geographically cloud-related, among them Collaborative diverse footprint that will ensure greater Solutions, a global consultancy specializing robustness and resilience in our capabilities, in Workday enterprise cloud applications for further industrialize and automate our finance and human resources, and Linium, distributed work models, and provide more which broadens our enterprise service access to local talent. This network, which management capabilities and complements will complement our major hub in India, our ServiceNow practice. will include more near-shore and on-shore Cognizant 2020 Annual Report 3 We have also built close relationships with scale and breadth of our skills, and our ability the world’s leading hyperscale and SaaS to develop and deliver industry-specific companies and can help clients run their core solutions that leverage our partner ecosystem. applications and create more agile workflows Cognizant is speeding its pivot from a in the cloud with our dedicated business provider of resources and capabilities to a groups for Microsoft, Amazon Web Services, solution designer and integrator, assisting and Google Cloud Platform. clients in their digital transformations. We expect to be one of the biggest beneficiaries of clients moving digital into the heart of their businesses. Engineering a better world The public health, economic, Increasing our and societal damage wrought client relevance by COVID-19 have caused most We are grateful for our clients. businesses to reflect deeply on They inspire us to learn, grow, and what they owe their stakeholders. In provide increasing value year after keeping with our purpose, we strive year. In return, they count on us to to be a modern corporation that is bring them insights and innovative responsive to the larger contexts thinking. To increase our relevance in which we operate—societal, to clients, we are determined to environmental, technological, present a deeply informed point of economic, and more. view about their business challenges, That is why the principle of sustainability is along with the technology solutions so important to us. It expresses our intent to and partner orchestration required create medium- and long-term shareholder to solve them. value in ways that do not jeopardize the future for other stakeholders. It speaks to our interdependence with local communities and Therefore, we are deepening our industry global ecosystems. and sub-industry knowledge to better serve their business priorities. In keeping with our With that in mind, we joined the United evolution to more outcome-based client Nations Global Compact (UNGC), a network engagements, we are drawing on our rich of more than 12,000 companies that are history in application and data services, the committed to building a sustainable future. 4 Cognizant 2020 Annual Report By signing this compact, we have committed As a global company, we care deeply about Cognizant to integrating the relevant unlocking human potential. Therefore, in principles embodied in the UNGC into our January 2021, we became a founding member company’s strategy, day-to-day operations, of the World Economic Forum’s Partnering and organizational