Chief Executive Officer at Cognizant Technology Solutions
Thank you, Tyler. Good afternoon, everyone. Third quarter revenue was $4.9 billion, up 5.6% year-over-year in constant currency, short of our expectations. Adjusted operating margin grew 90 basis points sequentially and 60 basis points year-over-year to 16.4% of revenue. While uncertain macroeconomic backdrop impacted bookings and revenue the primary driver of the revenue shortfall relates to reduction in US onshore billable resources in recent quarters, following a period of elevated attrition and reduction in Visa travel and a COVID-induced shift in near and offshore delivery centers. Financial impact of this headcount reduction is magnified, given this is our highest revenue and margin dollars per head population. Reverse this trend, we have already initiated a series of actions that are intended to increase US onshore billable resources including enhanced focus on lateral hires and subcontractors, accelerated Visa travel and targeted compensation programs. While these actions are gaining traction, it is somewhat slower than previously anticipated. We therefore expect these headwinds to continue in the fourth quarter, ahead of clear progress in Q1.
Let me now turn your attention to global third quarter voluntary attrition, which was a little higher than expected in the quarter. Voluntary attrition fell 2 points sequentially to 29% on an annualized basis and fell 3 points sequentially on a trailing 12-month basis. We've taken extensive actions to increase employee engagement and reduce attrition over the past year. These initiatives coupled with an uncertain macroeconomic backdrop have led to reduced daily resignations, a leading indicator of voluntary attrition across the globe in the last four months.
We expect sequential reductions in voluntary attrition to be more meaningful in the fourth quarter. We maintained positive momentum on resignation, we are continuing our comprehensive effort to attract, retain and rally employees. We remain focused on our people strategy, which includes our refined promotion initiatives, learning and development and enhanced compensation and benefits programs. For instance, we recently communicated to our associates that we will accelerate next year's merit cycle to the second quarter of 2023. Meaning, we will have two merit cycles in the space of six months for most of our associates.
I would like to now discuss the macroeconomic environment, which Jan will also address in our fourth quarter guidance. We see clients closely scrutinizing and slowing their investment decisions, faced with a backdrop of uncertain economic conditions. [Indecipherable] has been reduced on lower priority projects or those with a longer return on investment. We're seeing some early signs of slowing in discretionary in digital projects. Industry wise, we've seen weakness in banking, especially in the mortgage segment, health sciences and retail. In our international business, UK remains solid. The deal cycles are slowing while continental Europe is showing signs of weakness. From a commercial point of view, despite strategy to sell solution and deliver client outcomes, we remain exposed to time and material engagements across all industries. We've seen clients curtailing their spending and we expect furloughs to impact the fourth quarter. These factors contributed to a decline in bookings of 2% year-over-year in the third quarter, representing an in-peroid book-to-bill ratio of 1.0 times and a book-to-bill ratio of 1.2 times on a trailing 12-month basis.
Turning now to our industry segment performance, financial services grew 1.6% year-over-year in constant currency, led by growth in our insurance business. This includes a negative impact of 180 basis points from the exit of Samlink. In insurance carriers of all lines of business are enhancing their digital capabilities, driven by demand for new insurance products and improved user experience. For example Resolution Life US, turned to us to execute several digital transformation initiatives. That includes large scale data and application core modernization and cloud migrations. We're also helping them develop and scale advanced capabilities in data and analytics to drive significant operational efficiencies in their close book portfolio. We were selected by AXA UK & Ireland as a technology partner to help consolidate modernize and manage partner their IT operations. AXA is transforming its technology ecosystem to create a more digitally-enabled, modern and agile environment that's data-rich, secure and sustainable.
Health Sciences revenue grew 5.5% year-over-year in constant currency driven by digital services among pharmaceutical and healthcare payer clients. I'm pleased to note that our Shared Investigator Platform as SaaS solution for pharmaceutical companies that streamlines clinical trials to improve the speed of drug discovery has surpassed 250,000 users across 100 countries worldwide. Kyowa Kirin a Japanese pharmaceutical and biotechnology company has signed a multi-year agreement with Cognizant to provide global pharmacovigilance services and help improve patient health through the analysis of adverse reactions across its products.
In Products and Resources, revenue grew 8.2% year-over-year in constant currency. Growth was driven by demand for digital services among logistics, automotive, consumer goods and travel and hospitality clients. During the quarter we extended our long-standing relationship with Centrica. The UK's largest supplier of energy and energy services to deliver business-critical services encompassing application testing, cloud infrastructure supports and IT infrastructure management. Communications Media and Technology, revenue grew 10.4% year-over-year in constant currency driven by strength among digital native clients. We're expanding our collaboration with Qualcomm to accelerate digital transformation through a new 5G experience center in Atlanta. The collaboration combines our deep expertise in 5G, IoT, cloud and data analytics with Qualcomm's Intelligent Edge devices, AI and 5G connectivity solutions. We've also had our first substantial win in the legal sector, which has traditionally been a late comer to ad sourcing and digital services. Freshfields selected us to manage their global IT operations and support their ambitious global expansion plans.
We'll be providing 24/7 managed service of the firm's IT infrastructure and applications as well as managing its service desk. Cognizant will also help define Freshfields technology transformation roadmap. As I mentioned in our last earnings call, targeted M&A remains an important tool for enhancing our competitiveness. We have several M&A targets in the pipeline in-line with our strategy and capital allocation framework. As always, we continue to focus on opportunities which are value-accretive to Cognizant shareholders and aligned with our strategy.
Yesterday, we announced an agreement to acquire the, professional services and application management practices of OneSource Virtual, a workday partner based in Dallas. These practices will complement our existing finance and HR advisory services on the Workday Cloud platform. The acquisition is anticipated to close by year end 2022, subject to satisfaction of closing conditions. At which stage we expect to welcome nearly 400 new employees to our strategic Workday practice.
Importantly we continue to strengthen our leadership team. Last month, we named Ravi Kumar, President of Cognizant Americas, who will join us in mid January from Infosys, where he served as President for the past six years. Ravi brings clients interest being a growth mindset that we believe will help improve our US revenue trajectory. We also announced Prasad Sankaran as the new head of our Software and Platform Engineering Practice. Prasad, joined us yesterday from Bain, where he was a Senior Vice President in the firm's Enterprise Technology Global Practice. Prior to that, he spent 25 years in senior leadership roles with Accenture. Both announcements speak highly of our ability to attract world-class talent and support two key strategic areas for Cognizant, the Americas region and leading enterprise technology transformation.
Before passing the call to Jan, I would like to stress that while we're in a period of economic uncertainty, the entire leadership team knows we must execute better on things that we can control including optimizing resources globally and getting the right mix on an offshore in a dynamic demand environment. We will continue to focus on and hone our operational discipline, which is intended to enable us to adapt quickly to demand changes. While we are in uncertain macroeconomic environment, we remain highly optimistic on the IT services market and our opportunity within it. Finally, following sustained progress in reducing voluntary resignation rates, we expect sequential reductions in voluntary attrition to be more meaningful in the fourth quarter, allowing us to repay the client conversations from fulfillment to innovation, strategic transformation and growth.
With that, I will turn the call over to Jan, who will cover the details of our quarter and our fourth quarter financial outlook before we take your questions.