Ladies and gentlemen, welcome to Cognizant Technology Solutions’ First Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn the conference over to David Nelson, Vice President of Investor Relations and Treasury at Cognizant. Please go ahead, sir.

Thank you, Rob, and good morning, everyone. By now you should have received a copy of the earnings release for the company's first quarter 2014 results. If you have not, a copy is available on our website, cognizant.com. The speakers we have on today's call are Francisco D'Souza, Chief Executive Officer; Gordon Coburn, President; and Karen McLoughlin, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. I would now like to turn the call over to Francisco D'Souza. Please go ahead, Francisco.

Thank you, David, and good morning, everyone. Thanks for joining us today. Cognizant's first quarter revenue came in right where we guided at $2.42 billion, a sequential increase of 2.8% and an increase of 19.9% year-over-year. Our non-GAAP operating margin at 20.8% was higher than our target range for the quarter. So, this morning, I will provide an overview of our performance, the demand environment and the long-term outlook before turning the call over to Gordon and Karen to provide further details on the quarter and our outlook for the rest of the year. We remained confident in the overall demand environment and in our revenue guidance of at least $10.3 billion, which translates to growth of at least 16.5% for the year and we are increasing our non-GAAP EPS outlook for the full year 2014. Our Q1 performance reflected the strength of our portfolio across industries, services and geographies. Our investments in Europe and SMAC yielded good results and counted some softness in parts of the North American market, which Gordon will address in his comment in a few minute. Based on our client discussions and our sales pipeline, we expect to have a strong year. We have ramped up hiring across many of our service lines and we continue to invest in growth. I am optimistic because the fundamentals of the business remains strong, an increasing number of CEOs around the world are asking questions about how new technologies can be leveraged to build competitive advantage. Technology is clearly a CEO level agenda item today. You know we have spoken to you before about being in the midst of once in a decade shift in the technology landscape, driven by things like social, mobile, analytics, cloud and other digital technologies. That technologies are redefining industries and their prevalence…

Thank you and good morning. We had a solid start to 2014. During the quarter, we accelerated our recruitment with 7,200 net hires. The strongest hiring we’ve experienced in any quarter during the last two and a half years. This strong hiring is a testament to our continued confidence in the demand environment and our ability to continue to post industry-leading revenue growth. We are also pleased with our annualized attrition during the quarter, including BPO and trainees continued to trend down to 14.1 annualized. As mentioned in our prior earnings calls, we put in place a series of employee engagement programs that are paying off nicely. We achieved our Q1 growth and prior guidance despite facing some headwinds in North America. There is no single cause for these headwinds. Rather it was a confluence of several factors, none of which are particularly impactful or concerning on their own. There were major structural changes that took affect for many of our healthcare related clients at the beginning of the year. This contributed to a slow start in spending for the sector as they adjusted to changes, occurring both in the commercial market and through the Affordable Care Act. As an example, true consumption of healthcare services was down in January and February as people adjusted to the evolving healthcare reimbursement structure. In addition, a few of our clients experienced leadership transitions. When companies go to such transitions, they typically conduct a review of their strategic priorities and associated spending, which can delay some programs or cause a shift in balance of outsourcing and development work. And finally, there were some general economic and weather-related disruptions in the U.S. as we started the year that had some minor impact. Despite of this sluggishness in North America, we are generally pleased with…

Thank you, Gordon and good morning everyone. First quarter revenue of $2.42 billion represented growth of 2.8% sequentially and 19.9% over last year. Non-GAAP operating margins, which excludes stock-based compensation expense and acquisition-related expenses was 20.8%, above our target range of 19% to 20%, while our GAAP operating margin was 19% for the quarter. Our non-GAAP operating margin was up 90 basis points year-over-year in part due to improvements and utilization executed over the past years, which bodes well for our ability to continue hiring and building capacity throughout 2014. In the quarter, we generated $0.62 of non-GAAP EPS. Consulting and technology services and outsourcing services represented 51% and 49% of revenue respectfully for the quarter. Outsourcing, consulting and technology services was up 5.5% sequentially and 23.7% year-over-year. Outsourcing services was essentially flat sequentially and up 16.1% from Q1 a year ago. As we have said, clients are facing a dual mandate as how to run better and simultaneously run different. This was particularly true in Q1, where we observed certain customers optimizing their run better spend to further invest in their run different initiatives. Additionally, during Q1, we continued to see expansion of application development work in our public sector services business. During the first quarter, 36% of our revenue came from fixed price contracts. As expected, pricing was essentially favorable during the quarter. We closed the quarter with 1,223 active clients, and added seven strategic customers bringing our total number of strategic clients to 150. Adjusting for the two-for-one stock split that was completed in March, our fully diluted share count for the quarter was 612.9 million shares, an increase of approximately 2 million shares from Q4. In Q1, we repurchased 600,000 shares for total cost of $29.3 million. We expect to accelerate the opportunistic repurchase of shares…

Thank you. (Operator Instructions) Thank you. Our first question comes from the line of Ed Caso of Wells Fargo. Please go ahead with your question.

Hi. Good morning. There has been a series of acquisition announcements in the pharmaceutical industries, has that or do you expect that could have an impact on your outlook and I think pharma is about 10% of total revenue, is that right? Thanks

Hey, Ed. That is Gordon. Historically, acquisition has been fine for us because we tend to -- because we work for most pharmaceutical companies. We tend to be on both sides of the transaction. We pick up the integration work. We tend to displaces others. So we’ve got, obviously, we did very well as all the acquisitions happened in banking industry, acquisitions have happened to date in the pharmaceutical industry have been positive for us. So based on what we are seeing, we are not particularly concern about acquisitions at this point, that may actually be an opportunity but longer term.

Thank you

The next question is from the line of Jason Kupferberg with Jefferies. Please go ahead with your question.

Thanks, guys. Just two-part question. First off, just on the second quarter guidance, you are calling for sequential growth of about 4% maybe not much better than that, kind of limited acceleration versus the Q1 sequential growth? So if you can just comment on the reasons for that? And then just relating question, do you feel that the probability you are delivering upside to the full year revenue outlook is any less than it would have been a quarter ago when you first issued the full year outlook?

Sure. This is Karen. I will take the first part of that question and Gordon will answer the second part. In terms of the Q2 guidance, as you said, the middle of the range will be about 4% growth. That’s primarily driven by the fact that we saw such strong discretionary spending or consulting and technology services growth in Q1. Typically we wouldn’t have seen that pattern until later towards the end of Q1 going into Q2. But this year in fact we saw some early discretionary spending which obviously then didn’t lead to as big an increase as we move into Q2. So that’s really what’s driving the shift in the seasonal pattern from that perspective and right now just talked about, we see a very strong pipeline as we move into the back half of the year and some recovery in the outsourcing growth.

And let me hit there. This is Gordon. Let me hit the second part of your question. Q1 clearly started little softer than we want it. Obviously, we still hit our guidance. We still feel very comfortable with our full year guidance. But, the math, the simple math is, it does takeaway some of the upside opportunity for the year given we started a little bit slower.

Thank you.

The next question is from line of Tien-tsin Huang with JP Morgan. Please go ahead with your question.

Okay. Thanks. Good morning. I was glad to hear that pricing is stable. But I’m curious, a lot of your peers, I guess, pricing in the quarter thinking about IBM and Accenture and others. What’s the delta there? What do you seeing on pricing globally amongst your peers? Thanks.

I think you have to be careful with the pricing question. Customers want to lower their cost of ownership. They are far less concern about what is the rate card. So if we through operational excellence, through productivity, through automation, can provide the services for less without impacting our rate card, customers are very happy. So, as a result, we are seeing relatively stable pricing. Clearly, we are reducing cost of ownership and what’s happening is and you saw that our numbers even Q1, people are taking the savings coming from the outsourcing work. But and the lower cost of ownership there and taking those dollars and spending on running -- what we refer to as the running different the innovation topline growth. So the key is to make sure that, for us, make sure we have capabilities to deliver on where customers are shifting their spend and that’s a meaningful -- it won’t be a steady shift every quarter, obviously. But it’s a meaningful shift that’s happening. So you be sure to separate rate card from cost of ownership.

Thank you.

Next question is from the line of Steven Milunovich of UBS. Please go ahead with your question.

Hi. This is Peter Christiansen filling for Steve. Thanks for taking my question. I was just wondering if you could talk a little bit about any pattern changes that you are seeing in the decision-making process outside of healthcare and also talk about how -- you talked about how discretionary spending is a bit early this year. Is that going to affect the normal spending cycle on the discretionary side?

Hey, Peter, it’s Franc. Look, I think, we have covered the changes that we saw in the quarter. There was some slowdown as we said in healthcare as our client adjusted to the structural changes in that industry. We had some seasonal stuff related to the economy, the weather in the Northeast, nothing that I would be overly concern about for in a structural way. And then, I think, the one that Gordon alluded to a minute ago is, probably, the most important is that, we are seeing this balancing that we talked about as client redeploy dollars from what we think of as the run better initiatives to the run different initiatives, right. So kind of optimizing on core operations and using those savings to invest in these digital technologies and new capabilities that we have been talking for sometime. That shift is happening. We saw that happened in the first quarter, which is why we saw what we call consulting and technology services grow faster than outsourcing in the quarter. It’s also not a typical Q1 pattern for us and typical Q1 we tend to see outsourcing grow a little faster than consulting and technology services. So I think that’s probably the most interesting change, or, now we saw it in one quarter, I am not sure that, one quarter makes a long-term trend, but that’s something to keep an eye on there as we go forward.

Thanks.

Our next question is from the line of Bryan Keane of Deutsche Bank. Please go ahead with your question.

Yeah. Hi, guys. Just kind of a two-part question here. I guess, first on headcount growth, good to see that accelerated a little over, I think, it was 4.2%, sequentially? Year-over-year, I think the number is still had about 10%. So just trying to make sure I understand the delta sequential headcount and year-over-year, and is that continuing to ramp up to match closer to the year-over-year revenue guidance of 16.5%. And then, secondly, just on the EPS raise of a few pennies, I think, it was about $0.03, what cause that raising guidance? Thanks.

Let me touch first on headcount. The reason that year-over-year number looks odd is last year we took our utilization up quite significantly, so we were able to deliver revenue with slow headcount growth. Obviously, you saw us accelerate our headcount growth in Q1. We don’t provide future looking headcount guidance, but you certainly would not see a bigger delta between revenue growth and headcount growth that you did last year, because last year was the year where we materially increased our utilization. There is still some tweaking we will do and it will be variable quarter-to-quarter. But we are more in a stabilized range of utilization now. Karen, you want to touch base on EPS?

Sure. Bryan, it is Karen. Regarding the EPS guidance, the raise by $0.03 is really due to the over performance in Q1. So you remember our original full year guidance on a non-GAAP basis with $2.51, we exceeded our Q1 guidance by $0.03 and so we’ve added that to the full year.

Thank you. The next question comes from the line of Sara Gubins with Bank of America. Please proceed with your question.

Sure. This is David Ridley-Lane in for Sara. Could we get an update on Cognizant’s expansion into data centers? A little over year ago, you announced $25 million investment build I think about for data centers. How many do you have up and running today, how is the client’s perception been and most importantly, do you feel that owning the data centers is a competitive advantage in winning cloud services work? Thank you.

So, infrastructure services, I’ll refer to as ITIS, is a very important strategic area for us and as I mentioned in my prepared comments, we are making really good progress. A component of infrastructure services is to have some data center capacity for clients where they want that capacity along with other services within infrastructure management. So we’ve brought four data centers on line. They are up and running. Clients are utilizing them as part of broader ITIS deal. So the strategy is generally working. We will continue to tweak a little bit. Obviously the market is shifting quickly in some of those areas. The investment I think we emphasized for people before is not massive. I think it was $25 million, $30 million. That investment is essentially all done at this point.

Thank you. Our next question comes from the line of Moshe Katri, Cowen and Company. Please go ahead with your question.

Hey, thanks. Another two-part question. Going back to your Q2 guidance, it’s definitely softer than usual in terms of the sequential uptick you usually see from March to June. I think some color on there will be helpful in terms of what’s embedded in that? Is that further weakness in North America healthcare, discretionary or all of the above and then the U.K. had a huge sequential uptick in growth, can you comment on that? Thanks.

Sure. So, Moshe, I mean, I think as we’ve talked about consulting and technology services which is typically the driver of growth going from Q1 to Q2, actually kicked in a little earlier than we expected. So we saw strong sequential growth there in Q1 and so to some extent that limits the ramp up as we move into Q2 and that’s really what’s driving the change there. And then as we talked about, we do think there is a little bit of shift in the way outsourcing is performing this year where it had a slow Q1 relatively speaking, 1% sequential growth. But we expect to see increasing growth there, as we move into the back half of the year. So that was really the only change there.

And Europe, at a macro level, Europe is embracing our model a lot more. The catalysts in the economic crisis in Continental Europe served as a catalyst for people to think very differently about how they acquire and utilize technology and business process services. In the U.K., our brand has become very strong. Obviously, I don’t think we are going to have this sort of sequential growth in Europe every quarter going forward. But clearly we are feeling good about our position in Europe, our customers in Europe and I think Europe, particularly Continental Europe is ready to embrace a global delivery model.

And, Moshe, you will get -- three of us answering your question here. Let me just jump in as well. I think one of things about this quarter is it just speaks of the strength of the portfolio, right. We’ve got a really good portfolio of -- that we’ve been investing and we have been talking to you over many years about the investments we were making across the industries, geographies and services. And I think you saw that play out this quarter. Yeah, we had some softness in some parts of North America. It was offset very nicely by things like discretionary spending in SMAC, social mobile analytics and cloud. It was offset nicely by the performance in Europe, both in the continent and the U.K. As we mentioned in the prepared comments, the U.K. hit a $1 billion run rate in the quarter which is terrific and we have several other businesses including the SMAC business, Continental Europe and really all of the H2 services, BPO, IT infrastructure services and consulting. All of those are, in general, growing faster than company average and are well on their way to becoming billion dollar businesses in the coming year. So we feel good about the portfolio that we built.

Thank you. The next question is from the line of Glenn Greene of Oppenheimer. Please go ahead with your question.

Good morning. I wanted to go back to the headcount ramp in the quarter. And if I heard Karen right, it sounded like it happened right at the tail end of the quarter and it seemed to be skewed toward the laterals as well. Is that -- was that sort of a suggestion of sort of a pick up in demand that maybe takes a little bit of a while to sort of build on and convert, or is there any way to sort of read into that?

So let me start first of all with the laterals versus ELTs. Not heavily skewed towards, that’s actually kind of a normal mix. So I wouldn’t view that as in anyway unusual, the mix that’s exactly what we want. In terms of the timing, when people join, what I wouldn’t read a whole lot into that either that part of that is when the college students want to come in and so forth. I think the key to read here is one, last year we took utilization up quite a bit and now it’s -- we are kind of at the right level where we want to be, so you will see it more stabilize. We are able to attract or recruit just absolutely great talent. Our brand is probably the strongest it’s ever been, not just in India but in North America and Europe as well. So we are getting the people and they are staying, so the attrition has come down nicely. So we are feeling very good in terms of our resource and capability. In fact, we added 7200 people, obviously means we think there are growth opportunities for us.

Thank you. The next question is from the line of Joe Foresi with Janney Montgomery Scott. Please go ahead with your question.

Hi. Can you quantify the headwinds in 1Q? I know you talked about them, are they fully behind us? And can you give us update on the SMAC stack as a percentage of revenue and expectations for this year?

Sure. So I am not sure I would say the headwinds are fully behind us. When you think about what’s happened, clearly the weather is behind us, but once again I don’t want to point to the weather as a material. There still people are worried about the economy, no question about that. Healthcare, there is still uncertainty, but I think the uncertainty has settled down a little bit from where it was in Q1 and the leadership changes for the ones that happened, those are largely behind us. I am sorry, Joe, what’s the second part of your question?

I just want to get an update on the SMAC stack as a percentage of revenue and your expectations for this year? I want to see if that changed at all.

Sure. So as you know, we did about $500 million of SMAC revenue last year. We’ve not given -- we don’t give guidance on what it will be for this year, but certainly SMAC is a growing area.

Thank you. The next question is from the line of Keith Bachman with Bank of Montreal. Please go ahead with your question.

I want to ask about how do you get there for calendar year ’14, given guidance for the June quarter and for the March quarter, and it calls for some -- September to be, called it 5.5% to 5.7% and maybe December to be 2.5% to 2.7% sequential growth. It seems like a little bit -- calling for a little bit of a revenue acceleration compared to what you’ve just delivered and guided to for June. Is the assumption that the U.S. which had very weak sequential growth that that comes back to more normal sequential patterns? I was wondering if you could speak specifically to the U.S. and what you’re assuming there. And then also if you could just provide any dimensions around what Horizon 2, what you anticipate particularly in the consulting and BPO areas on how you see it filling or providing the guidance for the balance of 2014? Thank you.

Sure. So at a macroeconomic level, it assumes no improvements, basically things stay the same. A lot of the seasonality is based on stuff we won last year and stuff we recently won that takes a little while to check it, so it’s more the parent tends to be a little bit more client specific, but it is not based on miraculously GDP growth will increase. We are assuming status quo from a macroeconomic environment. And the second part of your question?

Well, just to come back, you are assuming that North America specifically returns to more for Cognizant more normal growth patterns as you look at the second half of the year, so those headwinds are gone you think in North America specifically for Cognizant?

Yes. So specifically for Cognizant, we would expect the sequential growth to be better in the second half of year than first and some of that’s related to specific stuff that we won and will be ramping up.

Thank you. Our next question is from the line of Ashwin Shirvaikar with Citigroup. Please go ask your question.

Thank you. So I guess two part question also. On the run better side, when you talk of flattish outsourcing and you just mentioned some of the leadership issues transitions are behind you. Can you talk about vendor consolidation, how much of an impact that is? And typically you guys do tend to have either 2Q or 3Q or both and obviously in this 3Q should be a good ramp. Is that based on the wins that you had that you can start ramping, so if you could talk about the ramps as well? And then separately on the run different side, is that more inherent quarter-over-quarter volatility in this part of the business?

So, Ashwin, it’s Franc. I’ll try to address several of the points you made. And if I omit some, come back. Look, in terms of the broad sort of vendor landscape, vendor consolidation and so on, clearly we’re seeing a little bit of that going on. We’ve talked about this for a while. In general, we tend to be the beneficiaries in those situations. And the reason for that, Ashwin, is that, as you may know, historically, we’ve had a very explicit and deliberate strategy with our clients, focusing on small number of clients, small number of industries and serving our clients very deeply. And so we tend to have strong positions with our clients. We tend to be, in general, after -- obviously after client has reached some level of maturity, we tend to be one of the larger providers in a client’s ecosystem. And so when there is a vendor consolidation exercise that takes place, we tend to generally benefit from a consolidation exercise. So overall, I think that when vendor consolidation is taking place, there is a little bit of a benefit to that. In terms of looking at the pattern of outsourcing for this year, as Gordon said, a lot of our outlook is based on stuff that we’ve won and we expect to ramp. I think that you’re starting to see, you’re seeing -- we’re seeing and we’ve seen this for about the last year or so is that outsourcing deals are also becoming a little bit larger, as clients tend to bundle things together. We’re starting to see the bundled applications and infrastructure deals happening out there. Those take a little bit of time to win. The sales cycles are a little bit longer, but obviously revenues are also larger and so it has that dynamic. As opposed to say five years ago when our outsourcing contracts were more sort of penetrate and expand kind of contracts where we win a small deal with the client and then expand from there. And then on your third point, yeah, I think, you will see that on the digital work or more generally the discretionary work in the consulting and technology services area, that has always been and will continue to be somewhat more volatile quarter-to-quarter because it is more discretionary, it is more subject to client annual budgeting process, annual budgeting cycle. And I think that volatility might be a little bit more pronounced this year and next year because you have this period when clients are really adjusting to these new digital technologies. And you’ll see starts and stop in spending related to that, perhaps a little bit more than you would have seen, say five years ago when technology was a little bit more stable. Gordon, do you want to add anything?

I think you covered the key things.

Thank you. The next question is from the line of Darrin Peller of Barclays. Please go ahead with your question.

Thanks, guys. You mentioned that you saw structural changes around the healthcare as there’s a pause from both companies and consumers adjusting to the change, the legislative changes and obviously there’s also patent cliffs remaining. However, Obamacare does seem to be still in the early stages of rolling out across states. And I guess as the market is accustomed to these changes, should we expect to see this still become a more meaningful tailwind maybe in the second half of the year, given that the insurance payers still need to get connected to the news feed coming on? And I guess just a follow on that point, I mean if -- before you’re saying about the management changes as one of the headwinds in the US also was completed and healthcare were to come back. I mean, is that just upside to what you’re incorporating year in your outlook now?

Let me start with the management changes and Franc can touch on healthcare. On the management changes, those are pretty much flushing out the system at this point, so we understand where those are and that’s part of the reason why we’ve got into the timing. So that’s built into the guidance because their comments level on that’s quite high. Franc, do you to mention on healthcare?

Look, I think you’re potentially right. I think as you long-term, healthcare is going through -- healthcare is going through a period of structural change. And I am referring -- we’ve talked about the structural change going on in life sciences for many quarters now. I am referring more to, sort, of the payer provider ecosystem now. If you look at that space, there is clearly the Affordable Care Act. There are other changes going on as well. If you look at the commercial market for example in the United States, we are seeing more and more employers moving to high deductible plans and so on, which is changing consumption patterns for healthcare in the United States. In the first quarter, if you look at consumption -- true consumption metrics for healthcare services in January and February, they were down. True healthcare consumption in the United States came down in many places in the first month of the first quarter. So you are seeing the sort of structural adjustment at. My guess is that what will happen is it will take sometime for us to reach somewhat of a new normal in healthcare, and through that there will be opportunities for us at Cognizant to capitalize on opportunities. But I don’t want to be too bullish on this because the reality is I don’t know how long this industry takes to adjust, and that’s hard to predict at this point. So we are watching it very carefully. As you know, we are extraordinarily well-positioned in the healthcare. We feel like we’ve got the leading franchise out there serving healthcare, payers providers and the global pharma companies and the medical device companies. So we feel like we’ve got a very, very strong play in healthcare. Our position is strong. Competitiveness is great. Our teams are out there everyday talking to our clients. And so as these opportunities arise, I feel very good about how we are positioned to capitalize on them. But as industries go through these periods of change, it’s hard to get a good fix on exactly how things play out quarter-by-quarter. So we watch it very carefully and obviously keep updating you as our views change.

Thank you. Our next question is from the line of Katy Huberty of Morgan Stanley. Please go ahead with your question.

Hi. Good morning. It’s Brian Essex for Katy. Thanks for taking the question. I was wondering if maybe you could dig into Europe a little bit, 52% growth on a trailing 12-months basis year-over-year. How much of that is organic and what is your outlook in terms of how you think about the sector, where you are investing for headcounts, is there any concentration with vertical or product line that would give us some kind of read into the sustainability of growth, although that’s pretty impressive growth, both in Continental Europe as well as the U.K.?

Sure. Let me take the second part of the question. We are trying to see if we have handy the first part and if not, we’ll get back to you with it offline. We feel good about Europe quite simply. Part of it is our execution and part of it is the market. In terms of our execution, we’ve really build out our teams in the continent, both through some acquisitions that we’ve done as well as organically. We now have the model that works in terms of the combination of local presence and multi-national capability so. And the type of services that we are providing, the combination of run better, run different are resonating. So that happened at the same time that the market is becoming more open to global delivery, to outsourcing in general. So the combination of those two factors, together make us feel good. When you look at it by industry, obviously the one big difference from North America is you don’t have the same spend levels in the payer sectors due to nationalized healthcare over there. But certainly our financial services, insurance, pharma, retail, manufacturing, telecom, we are feeling quite good about it. Obviously, continent is going off a small base which makes the percentage growth numbers a little bit easier to tackle. But even when you look at in terms of dollar growth and as an increase in percentage of revenue, clearly we think there is continued opportunities both in U.K. but more importantly in the continent and the Nordics. So we will keep investing there. The strategy is working out. Part of what we are doing is we are expanding our investment strategy. We are increasing our investment in markets in Asia. We’re starting our investments now in the markets down in Latin America, so similar to what we did in Europe. We’re now going to other parts of the world and the good news is as we do that, we now better understand the model between local and foreign nationals and how they act locally while at the same time having global delivery. So, I think we’ve got the model down pretty well and we’ll continue to roll that out.

And this is Karen. Regarding the organic growth in Europe so and the continent for the quarter grew about 46% year-over-year on a reported basis and about 30% growth was organic growth. About 15 points was due to the C1 and the Equinox acquisitions that we closed last year.

Thank you. Our next question comes from Dan Perlin of RBC. Please go ahead with your question.

Thanks. I wanted to just go back to this comment earlier about the rate card versus cost of ownership. But I also wanted to add mix a bit into that discussion and as you’ve talked a lot about these investments going into run better and run different from your clients budgeting side but reconciling that with the margin profile of 19% to 20% in the back half of the year. So, is the message here that it really is a function of incremental investments as you were somewhat highlighting in Europe, or is there a mix issue as well that we need to be mindful of as you go into these other markets and technologies? Thanks.

So there is a mix issue but the mix takes you both ways. So as we are shifting more to run different, people are less price sensitive and billing rates tend to be a little bit better. But at the same time, I’m growing my BPO business, where just the nature is more heavily offshore and obviously rates in general are lower for that because the costs are lower. So when you mix it all together and you look at the average blended rate across the company, you have a couple of things taking in opposite directions, which is the way it should work.

Thank you. Our next question comes from the line of David Togut with Evercore. Please go ahead with your question.

Thank you. Financial services put up pretty solid 20% year-over-year growth in the quarter but that’s below the trend we’ve seen actually over the last two to three years, which has been materially higher. Can you flush out some of the underlying drivers, the financial services growth in the quarter and in particular did anything change significantly versus what we’ve seen over the last six to 12 months?

The main change during the -- last year insurance was a bit stronger than banking, we actually -- in parts of last year. This in Q1 banking -- core banking did quite well and for some of the reasons I articulated in terms of spend that they have to do on compliance, on regulatory, on risk management, while at the same time, they are investing to run things different and interact different with the customers. So you will see some back and forth. Obviously, the financial services segment is our biggest segment. So the law of large numbers says, it should, it should not grow materially faster than the overall company and I certainly would not have that expectation. So it will be a little different quarter-to-quarter. But core banking in Q1 did nicely. I think, Operator, we have time for one more question.

Yeah. Thank you. That question is coming from line of Mayank Tandon of Needham & Company. Please go ahead with your question. Mayank Tandon - Needham & Company: Thank you. Good morning. Franc, you talked about some of the large multiyear type outsourcing contracts where you are competing. I just wanted to get a sense, are you seeing different players then you have seen in the past on some of these opportunities and also would it require you to change your capital intensity, but if you want to be competitive on some of these large infrastructure type engagements?

Yeah. Mayank, let me answer the last part of your question first then I will come back to the beginning. So, clearly not, we are not playing and in fact candidly the market generally moving away from the traditional large scale capital intensive, what I think of is more traditional hardware and asset-heavy infrastructure deals. So, I think, that somewhat the model of the past at this point. We are playing in, what I think of is bundled outsourcing deals, where you are seeing clients bundling together, applications and infrastructure management quite common to see that bundle happen. But we are also starting to see BPO and apps and infrastructure or some combination of all three of those being bundled together and so that’s really the bundling I am talking about. When we look at those bundles, I think, we’ve proven out time and time again at this point that there are true synergies that you can drive, that we can drive on behalf of our clients, when we combine those things together. When you are combining BPO and IT, for example, you do get technology and operations synergies, when you combine infrastructure management and application you do get technology synergies that you can leverage a so those are the kinds of transactions that I’m talking about when I refer to these bundle deals. Having said that, we continue to work on the traditional single tower deals as well and that’s a very healthy part of the business. So we are competing across all of those. I think in terms of competitive set, I don’t think its changed, we compete against, the usual suspects here in the space, including the folks that who traditionally have been the -- done the bigger -- what you might think of as bigger outsourcing deals and of course, also the global services player. So that competitive set hasn’t changed meaningfully. I think that was really all we had time for. So let me just close by thanking you all for joining us today and for your questions. We are looking forward to a good 2014 and we look forward to seeing you next quarter to discuss our results. Thank you.

This concludes today's Cognizant Technology Solutions First Quarter 2014 Earnings Conference Call. You may now disconnect.