Sentences and paragraphs of CTSH's Risk Factors and MD&A, 10-K 2026-02-12 against 10-K 2025-02-12.
Each links to the text at sec.gov.
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RewordedRisk Factors
Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, with jurisdictions Authorities around the world are applying, or considering applying, laws and regulations related to IP, cybersecurity, export controls, privacy, data security, security and data protection to AI and automated decision-making, or general legal frameworks on AI, decision-making technologies, as well as adopting AI-specific regulatory frameworks, such as emerging U.S. state AI laws and the EU AI Act, Act which entered into force in 2024 and parts of which apply beginning began applying in 2025.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Security breaches, employee malfeasance, or human or technological error have in the past and could in the future cause shutdowns or disruptions of our, our vendors' or our clients' operations and potential unauthorized access and/or disclosure of our or our clients’ sensitive data, which in turn could jeopardize projects that are critical to our operations or the operations of our clients’ businesses and have other adverse impacts on our business or the business of our clients.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
The uncertainty around the safety and security of new and emerging AI applications requires significant investment to test for security, accuracy, bias, and other variables - These efforts that can be complex, costly, complex and resource intensive, could potentially impact our profit margins, may not sufficiently address risks and may cause decreased demand for our services or harm to our business, results of operations, financial condition, condition or reputation.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Additionally, we benefit from governmental policies in countries that encourage foreign investment and promote the ease of doing business, such as tax incentives, and any change in policy or circumstances that results in the elimination of such benefits or degradation of the rule of law, or imposition of new adverse restrictions or costs on our operations could have a material adverse effect on our business, results of operations and financial condition.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Many of these recent changes have resulted in, and various proposed and enacted changes may result in, increased difficulty in obtaining timely visas, whether as a result of visa application rejections, delays in processing applications, significantly increased costs to obtain visas, prevailing wage requirements for our employees on visas or otherwise, which could in turn impact our ability to staff projects.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making an investment decision. and the other documents and materials we file with the SEC, as well as news releases and other information we publicly disseminate from time to time.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Given the rapid rate pace of change regulatory development and the often uncertain potential for divergent or evolving scope, interpretation, interpretation and application of these laws and regulations, which may be in conflict across jurisdictions, we may not always be able to anticipate how courts and regulators will apply existing laws to AI, predict AI or how new AI-specific legal frameworks will address AI, be implemented, or otherwise ensure compliance with these frameworks.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
If We may be unable to satisfy all of our ESG practices do not meet investor or other stakeholder expectations stakeholders on these matters, and standards, which continue to evolve, as a result our reputation, our ability to attract or retain employees and our business could be negatively affected.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
As a result, we may have to expend resources to adjust our offerings in certain jurisdictions if the legal frameworks on AI are not consistent across jurisdictions, and For example, the EU AI Act may increase costs or impact the operation of our AI services.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Compliance with new or changing laws, regulations, industry standards or ethical requirements and expectations relating to AI may impose significant operational costs requiring us costs, require additional investment in governance, documentation and controls, or necessitate changes to change our service offerings or business practices, particularly as we expand the use of such technologies, or may limit or prevent our ability to develop, deploy, or use AI technologies.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedRisk Factors
Any performance failure on the part of our alliance partners, or the discontinuance by such alliance partners of services technology that we have relied on them to perform provide for our clients, clients or ourselves, could delay or prevent our performance or require us to unless we engage alternative third parties to perform provide the services equivalent technology at our cost or to perform them provide the equivalent technology ourselves, any of which could deprive us of potential revenue or adversely impact our profitability.
Read it in 10-K 2026-02-12 at sec.gov ↗
AddedMD&A
In July 2025, the OBBBA was enacted in the United States, which, among other provisions, repealed the requirement to capitalize U.S. R&E costs. As a result, we do not believe it is more likely than not that we will realize our deferred tax asset of $390 million related to R&E costs capitalized outside the United States. These amounts would have otherwise been available to offset certain future U.S. taxes on our non-U.S. earnings, which, as a result of this repeal, we no longer project to be applicable to us. Therefore, in the third quarter of 2025, we recorded a one-time, non-cash income tax expense of $390 million. This impacted our full year 2025 GAAP diluted EPS by $0.80, which is added back for the calculation of Adjusted EPS. Other than this impact, we do not expect the OBBBA to significantly impact our effective income tax rate. Additionally, as a result of this repeal, our cash taxes during 2025 were reduced by approximately $200 million as compared to our initial cash tax projections prior to the repeal. These assessments are based upon our current interpretation of the OBBBA, which may change as a result of future clarifications or guidance.
Read it in 10-K 2026-02-12 at sec.gov ↗
AddedMD&A
The Government of India implemented labor law reforms effective November 21, 2025, including the Code on Social Security, 2020. As a result, during the fourth quarter of 2025, we recorded a one-time increase to our defined benefit liability for past service of $147 million, in "Other noncurrent liabilities" in our consolidated statement of financial position with a corresponding increase in "Accumulated other comprehensive income (loss)". Additionally, we anticipate a modest increase in our defined benefit costs prospectively. Certain aspects of the Labor Code rely on the issuance of rules and regulations. Additionally, the Government of India is in the process of clarifying certain aspects of the Labor Code. The issuance of rules and regulations as well as the outcome of these clarifications could impact our compensation and benefit expenses in India.
Read it in 10-K 2026-02-12 at sec.gov ↗
AddedMD&A
•Our Communications Media and Technology segment has seen weakness amongst communications and media customers, offset by growth in technology customers.
Read it in 10-K 2026-02-12 at sec.gov ↗
AddedMD&A
In the first quarter of 2025, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of delivery. Specifically, segment operating profit now includes an allocation of corporate costs, which were previously included in "unallocated costs." We have reported 2025 segment operating profits using the new allocation methodology and have recast the 2024 results to conform to the new methodology. While we have recast the 2024 results to conform to the new methodology, it is impracticable for us to recast our 2023 segment operating results as the detailed information required for the allocation of such costs to the segments is not reasonably available.
Read it in 10-K 2026-02-12 at sec.gov ↗
AddedMD&A
The decrease in net income was primarily driven by the one-time, non-cash income tax expense of $390 million related to the enactment of the OBBBA, partially offset by an increase in income from operations, including the $62 million gain on sale of property and equipment.
Read it in 10-K 2026-02-12 at sec.gov ↗
RemovedMD&A
At the end of 2024, we completed our NextGen program, which was aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. The savings generated by the program are funding continued investments in our people, revenue growth opportunities and the modernization of our office space. In 2024, we incurred $134 million of employee separation, facility exit and other costs related to the program, bringing the total costs incurred since inception to $363 million. See Note 4 to our consolidated financial statements.
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
During the third quarter of 2024, we completed the acquisition of Belcan. See Note 3 to our consolidated financial statements. This acquisition is expected to have a modest near-term dilutive impact to our 2025 operating margin, primarily due to integration-related expenses and amortization of acquired intangibles.
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
•The resale of third-party products, primarily in North America, in connection with our integrated offerings strategy, contributed 70 basis points of growth to the overall change in revenue;
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
•Reduced demand for discretionary work negatively impacted revenues across all segments. Clients in our Financial Services, Products and Resources, and Communications, Media and Technology segments were particularly affected;
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
•Revenue decline in our United Kingdom region was primarily driven by weakness in the Communications, Media and Technology and Financial Services segments; and
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
•Revenue decline in our Rest of World region was primarily driven by weakness in the Products and Resources and Financial Services segments.
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with a targeted effective date of January 1, 2024. The OECD has continued and is continuing to issue additional guidance on the operation of the model rules. While the United States has not enacted Pillar Two, certain countries in which we operate have adopted their own version of the Pillar Two model rules. Although Management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, our net income, cash flows, or financial condition has not and will not in the future be materially impacted by Pillar Two.
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
The increase in net income was driven by the increase in income from operations.
Read it in 10-K 2025-02-12 at sec.gov ↗
RemovedMD&A
Revenue Recognition. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost-to-cost method,
Read it in 10-K 2025-02-12 at sec.gov ↗
RewordedMD&A
(Dollars in millions, except per share data) 2024 2025 % of 2023 2024 % of Revenues Revenues GAAP income from operations and operating margin $2,892 $ 3,389 16.1% $ 2,892 14.7% $2,689 13.9% (Gain) on sale of property and equipment(1) (62) (0.3) — — NextGen charges (1) (2) — — 134 0.6 229 1.2 Adjusted Income From Operations and Adjusted Operating Margin $3,026 $ 3,327 15.8% $ 3,026 15.3% $2,918 15.1% GAAP diluted EPS $4.51 $4.21 $ 4.56 $ 4.51 Effect of NextGen charges, above adjustments, pre-tax (0.13) 0.27 0.45 Effect of non-operating foreign currency exchange losses (gains), (gains) losses, pre-tax (2) (3) (0.04) 0.04 — Tax effect of above adjustments (3) (4) 0.09 (0.07) (0.11) One-time income tax expense related to the enactment of the OBBBA (5) 0.80 — Adjusted Diluted EPS $4.75 $4.55 $ 5.28 $ 4.75 Net cash provided by operating activities $2,124 $2,330 $ 2,883 $ 2,124 Purchases of property and equipment (288) (297) (317) Proceeds from sale of property and equipment 70 — Free cash flow $1,827 $2,013 $ 2,665 $ 1,827
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
The decrease increase in cash provided by operating activities in 2024 2025 compared to 2023 2024 was primarily driven by the increase in net income, excluding the one-time, non-cash income tax expense of $390 million we recorded as a result of the enactment of the OBBBA, as well as the $360 million payment we made in January 2024 in relation to our dispute with the ITD in January 2024 (see Note 11 10 to our consolidated financial statements). statements), which reduced cash from operating activities in 2024.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
Our 2024 2025 GAAP and Adjusted Operating Margins were positively impacted by net savings generated from our NextGen program program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, while being negatively impacted partially offset by increased compensation costs, primarily as a result of a merit increase cycle completed during the third quarter of 2024, costs and the dilutive impact of recently completed acquisitions, primarily driven by transaction and integration related expenses and amortization the acquisition of acquired intangibles. Belcan.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
The increase in our 2024 2025 GAAP operating margin and Adjusted Operating Margin5 Margin4 was primarily driven by net savings generated from our NextGen program program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs, primarily as a result of a merit increase cycle, costs and the dilutive impact of recently completed acquisitions, primarily as a result the acquisition of transaction and integration related expenses and amortization of acquired intangibles. Belcan.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
The increase decrease in cash used in investing activities in 2024 2025 compared to 2023 2024 was primarily driven by higher payments for business combinations as well as lower acquisitions in 2024 and the proceeds from the sale of an office complex in India in 2025, partially offset by net maturities of investments in 2024.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
The increase, as a percentage of revenues, was due to higher driven by increased compensation costs, primarily as a result the dilutive impact of a merit increase cycle, the acquisition of Belcan and the resale resales of third-party products in connection with our integrated offerings strategy, partially offset by operational efficiencies and the beneficial impact of foreign currency exchange rate movements and operational efficiencies. movements.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
Our operating margin and Adjusted Operating Margin2 Margin1 increased to 16.1% and 15.8%, respectively, for the year ended December 31, 2025, from 14.7% and 15.3%, respectively, for the year ended December 31, 2024, from 13.9% and 15.1%, respectively, for the year ended December 31, 2023. 2024.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policies policies, including tariffs, and other macroeconomic and geopolitical factors, including the uncertainty related to the global economy, which has affected and may continue to affect their demand for our services. factors.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
Potential tax law and other regulatory and administrative changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, judicial decisions thereon, may impact our future results.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
In 2024, 2025, segment operating margins across all our segments were negatively positively impacted by increased compensation costs, partially offset by net savings generated from our NextGen program program, operational efficiencies and the beneficial impact of foreign currency exchange rate movements. movements, partially offset by increased compensation costs.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program, partially offset by the impact of recently completed acquisitions, primarily as a result of transaction and integration related expenses. program.
Read it in 10-K 2026-02-12 at sec.gov ↗
RewordedMD&A
Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as the one-time income tax expense related to the enactment of the OBBBA, the gain on sale of property and equipment and NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments.
Read it in 10-K 2026-02-12 at sec.gov ↗