Thank you, operator, and good afternoon, everyone. By now, you should have received a copy of the earnings release and investor supplement for the company's first quarter 2021 results.

If you have not, copies are available on our website, cognizant.com. The speakers we have on today's call are Brian Humphries, Chief Executive Officer; and Jan Siegmund, Chief Financial Officer.

Thank you, Tyler. Good afternoon, everybody.

I would like to start today's call by addressing the humanitarian crisis in India. As many of you know, India is the heart of Cognizant, and home to more than 200,000 of our associates.

I would like to express my support and solidarity for our Indian associates wherever they are in the world. My sympathy for any who have suffered a loss during the pandemic.

In addition to the ongoing support of our associates, which includes homecare and hospitalization assistance, vaccination cost reimbursement for our associates and their families, and making vaccine availability easier for those with disabilities. Cognizant is making a multi million dollar investment to assist India through the crisis.

This is focused on covering operational expenses at hospitals throughout India that are caring for COVID-19 patients. Funding the efforts of UNICEF in India to deploy oxygen generation plants, COVID diagnostic testing and medical supplies and partnering with one of India's leading hospital chains to set up vaccination centers in locations across the country, including some of Cognizant's own facilities.

The impact of the pandemic on industry attrition rates, absenteeism and client delivery remains somewhat uncertain. We monitor our situation daily, and we'll continue to prioritize the health and safety of our associates while serving our clients who've been particularly supportive in recent weeks.

As the COVID situation differs throughout the world, our return to office strategy remains country driven. Currently, almost all of our associates are working from home, and business travel remains on an exception only basis.

Let's turn now to the first quarter. First quarter revenue was $4.4 billion representing growth of 2.4% year-over-year in constant currency.

Although, we executed well in the quarter and delivered against our expectations, revenue upside was limited by elevated attrition, reflecting the intensely competitive market for digital talent that we spoke about in our last earnings call. This put some pressure on salaries as rows were filled by lateral hires or contingent workforce.

And in some cases, commercial opportunities were forgone due to an inability to source talent. To address retention challenges, we've been executing a multi part plan that includes stepping up our internal engagement efforts and increasing investments in our people through training and job rotations to provide opportunities for career growth.

Shifting to a quarterly promotion cycle for billable associates, and implementing further salary increases and promotions for high demand skills and critical positions and ramping our hiring capacity by adding hundreds of recruiters and making 28,000 plus offers to new graduates in India. A new record.

Daily resignations increased through the first quarter peaking in March.

Thank you, Brian, and good afternoon, everyone. Our Q1 revenue was $4.4 billion, representing growth of 4.2% year-over-year, or 2.4% in constant currency, compared with the prior year period.

This includes approximately 300 basis points of growth from our acquisitions, and 90 basis points of negative impact from the exit of certain content services. Digital revenue in Q1 grew approximately 15% and represented 44% of total revenue versus 39% in the prior year period.

We were pleased with this growth acceleration compared to Q4 particularly in light of a competitive hiring environment for digital talent. Now moving on to segment results, where all growth rates provided will be year-over-year in constant currency.

Financial Services declined 1.7% reflecting more moderate declines in both banking and insurance, in line with our expectations, we are seeing early signs that the investments and repositioning of both businesses are resonating with our clients. This includes financial services bookings growth, outpacing total company bookings growth in Q1 and a solid pipeline growth.

We continue to expect a phased recovery for this segment over the next several quarters and anticipate that we will see positive momentum throughout the year. Healthcare growth was 7% and accelerated from last quarter, driven by strong performance in both our healthcare payer and life sciences businesses.

Following strong performance in last quarter in Q1, our healthcare business had its best year-over-year growth quarter since 2018 benefiting from increased demand for our integrated payer software solutions, and improving fundamentals in our provider business. Life sciences revenue continued to benefit from strong demand for our digital services among both pharmaceutical and medical device companies.

Products and resources increased 2.4% driven by the fourth consecutive quarter of double digit growth in manufacturing, logistics, energy and utilities. This growth was partially offset by mid single digit declines in retail consumer goods and double digit declines in travel and hospitality.

Hi, good afternoon. Thank you.

I wanted to ask on the situation in India. Can you just frame how you're thinking about the potential impact this may have on the business in the near term?

And I wanted to confirm is there -- there's nothing built into the outlook right now on a potential revenue disruption? And on the margin front same kind of question.

Is there anything built in as far as those incremental costs that you may have framed here to support the workforce in the broader population? Thanks.

Hey, Bryan, it's Brian here. So let me just touch upon this.

First of all, I think it's really important for us to acknowledge it is a humanitarian crisis. And we've been prioritizing the health and safety of our associates and of course, their dependents and hoping that they stay safe as they work essentially from home at this moment in time.

And as I said, in my script, we're doing a series of things to help in terms of medical expense support, pre vaccinations, covering the expenses in hospitals, working with UNICEF, et cetera. To the question around in terms of how I think about the impact on the business, I think about the humanitarian side as being relevant.

But candidly, the business side of the hot market is in some regard more meaningful in the sense that most of our attrition, and the resignations we talked about were happening in prior months, which are leading indicators of Q2 attrition, and the end of Q1 attrition. And all of that was happening in a period when the COVID situation in India was substantially less severe than it is at this moment in time.

So we're working through obviously, our business operations working with our teams who are working remotely. It's a challenging environment.

Of course, it's a stressful and emotional time for associates and their families. The impact Bryan on attrition rates and absenteeism, and client delivery remain somewhat uncertain.

We look at it on a daily basis, we have a crisis management teams involved. We've created a COVID delivery risk management process which allows us to initiate remediation actions.

We're required to review the status of our delivery portfolio project by project where possible to ship work between offshore or nearshore and on site teams. But I will say clients have been incredibly supportive as we go through this.

I've received a series of emails from clients who are wishing us the best of luck and certainly not putting a lot of pressure in the system at this moment in time. The financial impact of our actions is assumed in our guidance.

And that is assumed off of what we know today, which is today's rates of absenteeism and today's resignations that we've seen, it is unclear whether attrition will actually slow because of this, or whether attrition will go up or stay stable but it will potentially go up because of -- because of absenteeism. But to date in our guidance includes what we know today.

To date, we feel as though our guidance is appropriate.

Okay, great. So, Brian, you're a very full two years into your leadership role at Cognizant.

When you started at Cognizant there were some meaningful management challenges there waiting for you? You're now navigating a pandemic with multiple ways across regions.

So it's definitely been an eventful two years. In that context, I'd like to ask if you can grade Cognizant's underlying progress, the progress that you've made over the last couple years.

And if there's a way to decipher between internal progress, market progress, financial progress I'm assuming those dimensions may be progressing at a different stages. But overall, it would be helpful to hear how you grade Cognizant's last two years and its progress.

Thank you, Rod. It's a comprehensive question in nature.

But yes, I would echo the word an eventful first two years, given the transformation agenda, the leadership changes required as part of that. Global pandemics and ransomware attack, of course, and now, a war on talent that is happening in the midst of the humanitarian crisis in India.

And I would say, first of all, it's a team sport. This is about 300,000 associates pulling in one direction.

I'm truly pleased with the executives I've got around me these days, we're all eager to show what we can do, and hopefully, I believe can become an iconic leadership team together in the years ahead. And I've also been supported by a terrific board who've been 100% behind our vision and our strategy of the company.

As I'm answering your question, I will start by saying I inherited a great company and a company of great pedigree, and a company with a growth DNA and a company with pride, proud employees. But it is clear that the company had not been hitting its stride in recent years.

So I asked our organization to pull together to help me operationalize a broad transformation agenda, which included strategy structure, commercial transformation, delivery, optimization, cultural elements. I also asked the company to help me with a restructuring program that we weren't used to.

But it would allow us to free up capacity to make investments in growth in our systems and in our people. And this is a growth company, and we needed to restart the engine.

And of course, as part of that, you have to go through the corporate strategy. Who are we?

Who do we want to be? That leads to portfolio adjustments, both exits, such as content moderation, as well as meaningful M&A aligned to the corporate strategy.

And of course, within that vein, we've also doubled down on partnerships, including hyper scalars. And all of this was just a means to an end, to set out to build a pipeline to accelerate bookings.

And ultimately, to get the company back to the industry leading growth. Because I think growth will ultimately make the P&L work again.

So we're certainly in the middle of a lot of this. I will say I'm more confident now than ever, that we can do this.

And I believe we're on track. We made great progress internally, to go to your framework.

Look, we've got a clear purpose vision, a set of values, we got a clear strategy, and we've got a more competitive portfolio that is aligned to our strategy. We've got a better talent philosophy, including DNI which is critical in a knowledge based business.

We progress on important things like sustainability, cybersecurity; I think we're getting our belief back. And test them to that is the notion of employee engagement, it multi year highs in 2020.

Although, we are fully aware that we got more work to do on our employee value proposition, and indeed, of course on attrition. Commercially and when I'm answering your question on markets, I'm not talking about Wall Street, I'm going to talk about commercial markets as in our clients, we've overhauled our commercial team, we've increased the sophistication of the team, I think we went back to our tuna box model where we got tight alignment between commercial and delivery, we've refined our customer segmentation strategy.

So we know who are the clients that we need to partner with deeply, we've implemented a more refined variable compensation program, we've refreshed our talent to ensure we can represent the entire portfolio and address client pain points beyond the CTO or CIO. And I'm excited as to how we're now being seen by clients, Rod, to be honest, where we're no longer necessarily just being viewed and to build or operate space.

We got growing reputation and recognition in digital and cloud following our M&A strategy. And that is now showing up in sustained book-to-bill ratios in excess of 1.1, which I feel is critical to drive the revenue growth rate that I'm aspiring to drive and our qualified pipeline and win rates are as healthy as they have ever been.

Now all of that leads ultimately to financial outcomes. And I don't think the true benefits of this are yet visible.

We have seen the margin dilution of the investments, commercial hiring, IT security, modernization, M&A dilutions, and some brand investments we are making. Of course, we continue to review the trade offs between revenue growth and margin expansion.

But I will say we expect to see revenue benefits on the back of the bookings, momentum, and margin should improve each year for the foreseeable future, albeit with a balanced approach to trade offs between revenue growth, and further investments to drive a sustained outperformance versus the competition. So in short, a lot of work and I look was a great years ahead.

Great. And just a quick follow up that kind of dovetails with some of the things you mentioned.

It seems attrition is a top of the list of things to address at this stage. Can you just speak to what you see as the root factors causing the attrition and your confidence in being able to fix that?

Look, it's a two edged sword. We've seen a V shaped recovery as an industry and Cognizant is certainly as after a weak March and April last year, we snapped back immediately.

And that leads with a skill shortage. So it's an industry problem.

I think you've seen that in the earning cycle to date. Of course, I caution people to compare attrition rates between various competitors, we include BPO.

And our calculation is current quarter annualized, which is the worst of all worlds at this moment in time versus some peers exclude BPO. And look at attrition on a rolling on the last 12 months, which includes some lower levels of attrition because of COVID.

But Rod, I think about our attrition, which went up 200 basis points sequentially, against two parameters, one is macro considerations. The market is extremely competitive at this moment in time.

There are supply demand imbalances across cloud, across digital engineering, across data. I sense that the work from home environment has given people let's say less sense of community.

And I also see obviously, the build out of captives which tend to pressurize salaries. And then on top of that macro backdrop, I think we have some Cognizant considerations as we continue to transform the company.

We're driving towards a culture of meritocracy and a performance culture. And we're evolving more towards a global or sometimes local workforce, which is in line with client expectations, but also in line with regulatory policy around the world.

And in some regards, we're late to some of those elements. And so we're dealing with some of the pain that others have dealt with previously.

I will say I'm 100% confident we're actively managing attrition as best we can. I'm pleased to say that attrition peaked in March, slowed in April and continues to slow in May, albeit early days in May.

We got a lot of work streams around employee engagements, training, job rotations, we've taken the decision to invest more in targeted salary increases and promotions and shifting to quarterly promotion cycles for billable associates. And we've added hundreds of recruiters in the last four months.

And we're making a record number of 28,000 offers to new graduates in India, which is up from 17,000 hired in 2020. I think in 2018, we may have actually not even hired any Gen Z graduates into Cognizant and so we're doing the right thing to address attrition.

And of course, in the meantime, we're working to manage the salary inflationary elements of this as Jan pointed out, P&A expectations in the second half of the year are lower than previously anticipated. So that will temper some of the downsides.

But in the same vein, these are investments that I think will help stem attrition which will give us more productive hours and our employees. And in the same vein, of course, we got other levers at our disposal to manage salary inflation, be that on offshore or nearshore mix pyramid optimization, delivery industrialization, including automation methodologies, templates and the like.

Procurement leverage for subcontractors, we get a new chief procurement officer coming on board soon. And of course, everything else we're doing as we evolve the company against the line of work that we actually sell and deliver as we shift from staff augmentation towards managed services and project based delivery transformation.

That brings different considerations as well. So we know what we need to do and we're honest.

And as I said, I think we'll see sequential increases in attrition based on the resignations in the last few months because there is a two month notice period in India. So we have a strong understanding as to what attrition will be in Q2.

But that's been factored into our model and into our guidance. And in the meantime, we've been hiring at record pace, given the extra recruiters we put to work.

Thank you. Hi, Brian.

Hi, Jan. So a couple of things I guess.

I might have missed this. But can you quantify the revenue growth you were not able to get solely because of the talent shortage?

And then when I think of headcount growth, in spite of the hiring, headcount growth still at relatively low sequential levels, is it a question of these folks have not yet joined or is that the net number because of the attrition and could you separate out what is digital headcount growth versus overall headcount growth?

Well, headcount grew about 5,000 people year-over-year, but Ashwin that excludes subcontractors and contingent labor, and they have been increased sequentially and year-over-year materially, it's not a number we disclose. But we have turned to, obviously, external sources, both lateral hires on subcontractors and contingent labor as we've been working through the attrition situation internally, nor do we break out digital versus non digital headcount.

I mean to be very clear, you can have somebody working in a test with testing capabilities, and they can work on what could be viewed as legacy projects. But in the same vein, as part of an agile squad, they could be working on something around something as familiar as a frequent flyer website, which some of the work we do around experience and software product engineering there, it's not viewed as legacy, it's certainly viewed as digital.

So it's very hard to classify workforce between legacy and digital. With regards to the opportunity cost, look, we're not quantifying that.

But certainly it's material enough that talked about when I review countries there's hundreds of basis points of growth, in some cases that we could have had, in other cases less. But it's been a pain point for us throughout the quarter, we talked about attrition being a worry in our last quarter, because we could see resignation rates, and we can see what's happening in the industry as people are doing their best to put in counter offers to stop resignation.

And I'm glad we anticipated instead and we set appropriate guidance. And we're doing the same this time around.

Could you comment also on the potential for greater use of technology to decouple revenue and headcount growth?

Well, that's the holy grail, of course, in some regards, but a lot depends on the way you're running your business and the businesses you're winning, whether you're in a BPO type business or a tech services centric project, we have a huge effort underway around automation, not just in delivery, but also some very exciting IP that we have been developing, that hopefully we'll be able to talk about in the next quarter or so that I think will completely set us apart in the industry. So it is a holy grail.

Of course, you've also got to think about the pyramids. I told earlier about adding 28,000 offers for fresher into the bottom of the pyramid this year, the bill rates of those will be very different than the rates of onshore delivery.

So it's very difficult in a succinct way to decouple revenue growth from headcount growth, because there are so many factors at play. But rest assured that the industrialization of delivery including automation is top of mind for use

Hi, guys, Brian, I wanted to direct this to you if I could; I want to understand how you're thinking about growth. You've obviously given guidance for the year, but I wanted to see if you could put some context and maybe even some philosophical views on longer term, you're guiding to basically 3% to 4% organic constant currency growth, maybe a little bit closer to the 4% we take out or normalize for the Facebook business.

And how should investors be thinking about that growth potential longer term and a, if you could talk a little bit about how the pipeline growth looks now. What are some metrics that you can provide us also in terms of, b, the capacity that you see for incremental M&A from here, whether it's the ability to the financial resources and or the management resources to keep driving M&A?

And then finally, c, I was hoping you could touch on financial, it's still candidly serving as an anchor to your growth rate, not in a positive way, but limiting your consolidated growth. And so if you could just, again, touch on how you're thinking about growth pipeline, M&A capacity, and then financial, thank you.

Okay, so M&A, first of all, I think let's go back to the Capital Framework we've set forth in recent quarters. We plan to deploy approximately 100% of our annual free cash flow through a balanced capital allocation program.

I will say these are our guiding principles and we will continue to be opportunistic, approximately 50% towards M&A in areas wholly aligned to our strategic priorities and of course of the remaining 50% towards dividend and share repurchases targeting a consistent dividend payout ratio in the range of about of -- at about -- sorry 25% on that, the rest for repurchases. So M&A will continue to be a priority for us.

And as I said earlier, we announced three acquisitions in the first quarter, and indeed signed an agreement to acquire ESG Mobility. And it's not that -- it's not that M&A is something we wake up every morning and feel we have to do.

It's just; it's an enabler for us to achieve our strategy. Now, our strategy is built around accelerating digital which are our higher growth categories.

And our strategy is also built around globalizing the company, both from a global Delivery Network, but also getting after exponential growth overseas. And digital as well as our overseas opportunity, I think puts us in a position to have ambitions, well in excess of the 3% to 4% organic growth rate Keith that you mentioned.

However, I will refrain from getting into long-term financial statements here. But I would be very, very disappointed in the years ahead if we do not significantly exceed those growth rates.

And I would say we have been doing what was needed in the last year, to start replenishing our backlog to consistently drive a book-to-bill ratio in excess of 1.1. That puts us in a position that organically coupled with the accretive nature of the acquisitions we've done, we should have continued upward pressure on revenue and a go forward basis.

Now, that being said, I will caution everybody, we're in somewhat of an unpredictable world at this moment in time with the humanitarian crisis in India. So that's how I think about organic possibilities, as well as the fact that we have an M&A lever that is exposing us to higher growth categories.

And all of this, of course, is against the context where, from my perspective, we are substantially more operationally inclined and more sophisticated in terms of how we think about delivery and commercial leverage going forward. On financial services, look, it is critical, we turn around financial services, I'm proud with the progress we made in healthcare, which is catching up on financial services as almost being our single biggest industry sector.

The financial services are 1/3 of our revenue and in dollar terms, it modestly grew, but in the constant currency terms it declined 1.7%. And Keith within that we ultimately have two groups, we have banking and financial services business that is more than half of the business and we have insurance, which is kind of less than the half.

And it's a tale of two cities in insurance North America was weaker than the international business with North American insurance is the vast majority of the insurance business. So that weakness hurt us in banking and financial services.

Actually, North America was modestly up, but our international business was down. Within banking and financial services, there are relatively consistent trends, what we talked about previously, capital markets declined, retail banking grew modestly, but it was offset by declines in commercial banks and cards and payments.

And if I think about things differently, the global banks, as we call them, have continued to in-source. And that business continues to decline for us, offset somewhat by good momentum we have with some of the regional banks.

Now all of this comes back to what are we doing about it? I would say we have a plan of attack.

We have had healthy bookings, throughout financial services, both banking and insurance in 2020. We've added extra commercial coverage, we've actually changed out and refreshed a significant amount of our commercial teams, we've been embracing digital, and we've had strong digital bookings in those areas in 2020.

And we've been working more with our partners who are very interested in our strength in healthcare, and indeed financial services. So as Jan pointed out it is a business that is under repair.

And we expect to see gradual recovery in 2021. We should see strong, stronger growth in Q2, obviously, for easy compare reasons as well as COVID and ransomware attack.

But I'd like to think in the course of the year we can get this thing shaped up to be in better shape than it is today.

Thanks. And any comments on pipeline, Brian.

Look, pipelines are very healthy overall. It's as healthy as I have seen it and pipeline, candidly for Financial Services is also healthy.

So from my perspective, Keith, we don't have a demand issue in an industry. I'm actually quite bullish on the industry for 2020 and indeed for 2021.

And that's based on client conversations and I speak with clients every day, as well as obviously we keep an eye on what industry analysts are saying, I think talent shortages and attrition are a greater concern for the entire industry. But clients are making investments, they are decisive.

And indecision is the enemy of people like myself. So, clients being decisive are good.

They are talking about more strategic partners; we are in the mix more than ever in that vendor consolidation. So I'm quite excited about that.

And fundamentally, the things we see driving the pipeline, a lot around business model innovation, customer experience, technology, modernization, risk mitigation, and efficiency initiatives. And kind of the one of the reasons I was so adamant in doubling down with the hyper scalars, two years ago is because these companies I don't think you should underestimate the sheer power and scale of hyper scale companies, and that they are investing massively by commercial teams, commercial terms, aligning with companies like Cognizant around industries, massively accelerating cloud migrations.

And if you believe in platform economics, which opens up the possibilities of micro services and APIs, I think this is going to be the future. So we stood up to business groups or business groups are in the hyperscalers in the last few years, and I think we're reaping the benefits of that.

Hey, guys, this is Kathy for Jason. So I mean the spring time frame is when enterprises typically make decisions on ramping up and moving forward with some of the discretionary projects.

Can you just talk a little bit about what you're seeing on that front? Is there any hesitancy or are there any challenges in terms of meeting demand in that regard?

Well, it's very consistent with my last answer, Kathy, to be honest; I am expecting a robust environment. Clients are being decisive, discretionary projects are being funded.

I think we've all grown used to the new world. And kind of we're getting at bats more often than ever before.

Beyond bill, run, and more in the innovation and transformation agenda. So I feel very good and optimistic about the macro demand picture.

But as I said earlier, talent shortages and attrition are a much bigger concern for me at this moment in time than macro demand.

Terrific. Thanks for taking my question.

The first one just on M&A just to follow up there. Your Cognizant pace of M&A has increased quite a bit in the last few quarters.

Can you just comment a bit on how you're building that muscle? So that it's becomes more of a strategic differentiator for Cognizant like what changes have you made to how you're doing sourcing or integration of these companies?

Thank you.

Jan do you want to address that?

Yes, look, the M&A activity had been healthy in the first quarter. So we spent approximately $300 million and announced four acquisitions.

But I wouldn't read too much to it as an accelerated pace, I think we're executing against the plan and trying to spend in the framework of the capital that we strategically want to allocate towards M&A and we are executing that. The team has done really a fantastic job in aligning our deal sourcing across industries and across the globe.

So you see this, for example. We talked in the last quarter about a slight shift towards more geographic expansion.

And we have two deals, this and Australian deal, and, of course, very close to my heart of German deal, also part of the transactions that we could announce and some of them closed. So we executing really, in a classic manner, the team is very focused partnering with our markets and with our service lines on identifying the strategic areas of growth that we want to do.

And it's been very diligent and creative of identifying acquisition opportunities. It has really worked really well.

And I think the natural spacing of these things will lead us to kind of execute against our allocated capital against it. Now it's what we have been lumpy in and out, but a consistent way to do so.

The focus in the company is clearly on integration, because the synergies that these companies deliver are at the heart of the viability of all M&A strategy. And we are pleased with the ability to generate synergies.

Our business plans are generally pretty close to the reality on the revenue synergies, and as we now have a larger portfolios of companies that we have acquired, we have increased our focus, like naturally on integration and efficiencies so that these companies can fit into the fabric of Cognizant and benefit from the scale that we can bring to the table. You see, we have still dilution from acquisitions, putting pressure on our margin.

And so you'll see us continuing working on driving integration and reaping also some of the cost efficiencies that might be available to us in the future.

Terrific, thank you. And then just a quick follow up.

I know, Brian, you mentioned that now you've had a 1.1, or greater book-to-bill for, I think, more than a year now on a very sustained basis. Can you just kind of comment on how you're feeling about the backlog at this point, your confidence level, whether it's improved in kind of your visibility into the sales pipeline and sales forecasting?

Thanks.

Yes, actually, I should thank Jan for this when he came in, he did a tremendous job, really decomposing down prior bookings, and tracing them to follow the breadcrumbs into revenue. And so at this moment in time, we have much better visibility into that than we had this time last year.

I really feel good about our bookings momentum, to your point, really, since the last, if you think about it, throughout 2020, we had an exceptionally strong Q1. And then through the course of the year, we had strength with mid teams for the course of the year.

But really, in 2019, it starts you don't get bookings until you start building a pipeline. So we really put a lot of efforts in the second half of 2022 to pipeline build that started showing up in terms of bookings momentum in 2020.

And then, of course, into 2021. We don't have the same easy compares now as we had last year, which is why I want you to really contextualize Q1 bookings growth of 5%.

I actually am delighted with that, because our December was really outstanding. It was an excellent month for us.

And April has been an excellent month. So the Q1 period has been sandwiched between that.

And it's really important to me that people think about bookings on a on a rolling four quarter basis, because something stepping from the Friday to a Monday, or vice versa, could take a deal from Q1 to Q2, or Q1 to Q4. So it's important to contextualize that.

So book-to-bill is the right way to also think about it. I think once you're north of 1.1x, it creates a backlog of opportunity to go execute against and hopefully accelerate revenue on from here.

So we're confident of in our numbers. And we're also confident we'll have a very strong Q2 bookings number on the back not just of excellent April results, but also let's face it the compare wasn't exactly stellar in May, this time last year for many other reasons.

Hey, thanks so much. I know you're at the bottom of the hour here.

I just want to get a clarification here on the margin side and just ask it at a high level is just a cost of doing business is going up? I mean, I see your gross margin in the first quarter was pretty good.

But I know you move into the lower end on the margins side, you said to Lisa, that some of the M&A integration costs are going up. I understand that.

But is the rest of it just people and again, is the cost of doing business overall, just maybe gone higher than you expected 90 days ago.

Tien-Tsin, thank you for the question. I was wondering if it wouldn't come actually so appreciate it as well, because there's a lot of momentum and movement in our margins that I think is important to put our eyes on.

When you compare our margins, overall operating margin, we kind of roughly flat slightly improved year-over-year and on the gross margin side you see the benefits of our Fit for Growth. And you can see also the benefits of the lower T&E that helped us to expand the growth margins.

Utilization helped a little bit and also we had obviously a little bit help in the rupee that all help on the margin side. But then we had on the SG&A side, you see an accelerated growth, but we're really laser focused on directing that SG&A growth to our strategic initiatives that we think will yield.

We view them as investments will yield accelerating revenue growth rates, and you pointed out the two biggest items M&A is and its dilutive element in its initial years, as well as our investments into sales and account management and growth, in essence, those are two offsetting factors that we have seen in the past quarters, but also, this quarter, when we now outlook, you're pointing out, we are basically down taking our margin guidance a tiny bit. I think that is reflective of a balance that we're trying to strike here, reflecting what we anticipate could be some increase in our compensation costs due to the measures in order to lower attrition attract and retain our talent.

And we're planning to offset that partially with some changes assumptions, I think the crisis in India illustrates that maybe T&E is not coming back as fast as we had anticipated. And we'll also carefully and surgically monitoring our future SG&A growth to tie it all so that we keep the overall margin equation together for the full year.

But the second quarter will be kind of in line or similar to our first quarter margin expectation, and particularly since we're anticipating the SG&A moderation to accelerate basically in the third and fourth quarter, but some of the compensation measures will be probably visible already in the second quarter.

Thank you for going through that. That was very clear, Jan, so maybe it's a quick follow up.

Just you didn't mention contract execution and performance. So I'm assuming things are going well there any update on contract execution?

And risk management has identified any changes since last quarter on the portfolio?

Yes. I presume you refer to our management of escalations, deals, et cetera.

I think we have had a very usual quarter; we made progress on our implementation of improvements for deal reviews and deal acceptance and pricing. As we rolled out, those initiatives are gaining momentum.

And on the delivery side, I think the issues that we're hearing the most and Brian mentioned it is obviously our ability to fulfill and to have talent available is a primary concern of our clients. But overall, I would say it's a -- was a very solid quarter relative to execution.

All right. I think with that, we'll end today's call.

Thank you all for the questions and we look forward to speaking with you next quarter.