Contract With Customer, Asset, Foreign Currency Translation

[Table of Contents](#i3788981a52d64e719f4aa81d6ab63fcb_7)

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|  |  | Three Months EndedSeptember 30, 2021 |  | Nine Months EndedSeptember 30, 2021 |
|  |  |  |
| (in millions) |  | FS |  | HS |  | P&R |  | CMT |  | Total |  | FS |  | HS |  | P&R |  | CMT |  | Total |
| Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Geography: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| North America |  | $ | 1,075  |  |  | $ | 1,162  |  |  | $ | 749  |  |  | $ | 500  |  |  | $ | 3,486  |  |  | $ | 3,137  |  |  | $ | 3,394  |  |  | $ | 2,190  |  |  | $ | 1,420  |  |  | $ | 10,141  |  |
| United Kingdom |  | 140  |  |  | 44  |  |  | 125  |  |  | 121  |  |  | 430  |  |  | 395  |  |  | 129  |  |  | 347  |  |  | 332  |  |  | 1,203  |  |
| Continental Europe |  | 187  |  |  | 118  |  |  | 145  |  |  | 34  |  |  | 484  |  |  | 565  |  |  | 356  |  |  | 380  |  |  | 121  |  |  | 1,422  |  |
| Europe - Total |  | 327  |  |  | 162  |  |  | 270  |  |  | 155  |  |  | 914  |  |  | 960  |  |  | 485  |  |  | 727  |  |  | 453  |  |  | 2,625  |  |
| Rest of World  |  | 142  |  |  | 30  |  |  | 88  |  |  | 84  |  |  | 344  |  |  | 407  |  |  | 88  |  |  | 243  |  |  | 226  |  |  | 964  |  |
| Total |  | $ | 1,544  |  |  | $ | 1,354  |  |  | $ | 1,107  |  |  | $ | 739  |  |  | $ | 4,744  |  |  | $ | 4,504  |  |  | $ | 3,967  |  |  | $ | 3,160  |  |  | $ | 2,099  |  |  | $ | 13,730  |  |
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| Service line: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Consulting and technology services |  | $ | 1,049  |  |  | $ | 785  |  |  | $ | 715  |  |  | $ | 441  |  |  | $ | 2,990  |  |  | $ | 3,028  |  |  | $ | 2,299  |  |  | $ | 1,999  |  |  | $ | 1,259  |  |  | $ | 8,585  |  |
| Outsourcing services |  | 495  |  |  | 569  |  |  | 392  |  |  | 298  |  |  | 1,754  |  |  | 1,476  |  |  | 1,668  |  |  | 1,161  |  |  | 840  |  |  | 5,145  |  |
| Total |  | $ | 1,544  |  |  | $ | 1,354  |  |  | $ | 1,107  |  |  | $ | 739  |  |  | $ | 4,744  |  |  | $ | 4,504  |  |  | $ | 3,967  |  |  | $ | 3,160  |  |  | $ | 2,099  |  |  | $ | 13,730  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Type of contract: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Time and materials |  | $ | 922  |  |  | $ | 515  |  |  | $ | 468  |  |  | $ | 437  |  |  | $ | 2,342  |  |  | $ | 2,729  |  |  | $ | 1,548  |  |  | $ | 1,332  |  |  | $ | 1,256  |  |  | $ | 6,865  |  |
| Fixed-price |  | 527  |  |  | 554  |  |  | 530  |  |  | 265  |  |  | 1,876  |  |  | 1,498  |  |  | 1,582  |  |  | 1,517  |  |  | 744  |  |  | 5,341  |  |
| Transaction or volume-based |  | 95  |  |  | 285  |  |  | 109  |  |  | 37  |  |  | 526  |  |  | 277  |  |  | 837  |  |  | 311  |  |  | 99  |  |  | 1,524  |  |
| Total |  | $ | 1,544  |  |  | $ | 1,354  |  |  | $ | 1,107  |  |  | $ | 739  |  |  | $ | 4,744  |  |  | $ | 4,504  |  |  | $ | 3,967  |  |  | $ | 3,160  |  |  | $ | 2,099  |  |  | $ | 13,730  |  |
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Costs to FulfillCosts to fulfill, such as setup or transition activities, are recorded in "Other noncurrent assets" in our unaudited consolidated statements of financial position and the amortization expense of costs to fulfill is included in "Cost of revenues" in our unaudited consolidated statements of operations. Costs to obtain contracts were immaterial for the periods disclosed. The following table presents information related to the capitalized costs to fulfill for the nine months ended September 30:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions) |  | 2022 |  | 2021 |
| Beginning balance |  | $ | 394  |  |  | $ | 467  |  |
| Costs capitalized |  | 29  |  |  | 38  |  |
| Amortization expense |  | (82) |  |  | (88) |  |
| Impairment charge |  | —  |  |  | (11) |  |
| Ending balance |  | $ | 341  |  |  | $ | 406  |  |

Contract BalancesA contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in "Other current assets" in our unaudited consolidated statements of financial position and primarily relate to unbilled amounts on fixed-price contracts utilizing the cost-to-cost method of revenue recognition. The table below shows movements in contract assets for the nine months ended September 30:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions) |  | 2022 |  | 2021 |
| Beginning balance |  | $ | 310  |  |  | $ | 315  |  |
| Revenues recognized during the period but not billed |  | 377  |  |  | 298  |  |
| Amounts reclassified to trade accounts receivable |  | (287) |  |  | (264) |  |
| Effect of foreign currency exchange movements |  | (16) |  |  | —  |  |
| Ending balance |  | $ | 384  |  |  | $ | 349  |  |

  
  
  
  
  
  


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| Cognizant Technology Solutions | 9 | September 30, 2022 Form 10-Q |

                         
