Core Viewpoint - Conduent Incorporated is conducting its Q2 2025 earnings conference call, highlighting its financial performance and future outlook [1][2]. Group 1: Company Overview - The conference call is led by key executives including the President and CEO, Clifford A. Skelton, and CFO, Giles Goodburn [1][2]. - The call is being recorded and is available for public access through a webcast, with supporting documents filed with the SEC [2]. Group 2: Financial Reporting - The presentation includes non-GAAP financial measures, which are not calculated in accordance with U.S. GAAP, indicating a focus on alternative financial metrics [4].

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $754 million, slightly up sequentially, with adjusted EBITDA at $37 million and an adjusted EBITDA margin of 4.9%, exceeding expectations and up year on year [6][13][21] - Adjusted revenue decreased by 2.6% year over year from $774 million in Q2 2024 [13] - New business Annual Contract Value (ACV) was $150 million, up 6% year over year and 38% sequentially [11][12] Business Line Data and Key Metrics Changes - Commercial segment adjusted revenue was $365 million, down 5.9% year over year, with adjusted EBITDA of $27 million and a margin of 7.4%, down 190 basis points [14][15] - Government segment adjusted revenue decreased by 2.9% to $238 million, but adjusted EBITDA increased by 22% to $60 million, with a margin of 25.2%, up 520 basis points [16] - Transportation segment adjusted revenue increased by 7.1% to $151 million, with adjusted EBITDA of $8 million and a margin of 5.3%, up 320 basis points [17] Market Data and Key Metrics Changes - The qualified ACV pipeline remains strong at $3.3 billion, up 5% year over year and 6% since the beginning of 2025 [12] - The company expects improved performance in the Commercial segment in Q3 as some deals are pushed from Q2 [7][10] Company Strategy and Development Direction - The company is focused on portfolio rationalization, improving culture, operations, and technology, and leveraging AI to enhance capabilities [9][26] - The new Chairman of the Board, Harsh Agrawdy, is expected to contribute significantly to the company's strategic direction [9][24] - The company aims to achieve high adjusted EBITDA margins and revenue growth in the second half of the year, despite some revenue lumpiness [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market despite uncertainties related to tariffs, AI, and economic conditions [27][28] - The company is confident in achieving year-over-year revenue growth in the second half of 2025, although it may fall slightly short for the full year [20][21] Other Important Information - The company launched a new three-year share buyback program for $50 million and repurchased approximately 2.7 million shares at an average price of $2.7 [19][20] - The net leverage ratio remained at 2.7 turns, with expectations for reduction in Q3 and Q4 [19] Q&A Session Summary Question: Comments on the potential impacts of the big beautiful bill, particularly around the SNAP program - Management indicated that the bill presents more opportunities than impediments, with potential fraud reduction opportunities in SNAP and open loop systems [31][32][34] Question: Drivers of new business signing momentum in the Commercial segment - Management noted consistent performance in new logos and capabilities, with a need for improved performance from account managers [35][36] Question: Timing of rationalization efforts and potential news by year-end - Management confirmed that work is underway and expressed hope for developments by the end of the year [37][39] Question: AI-driven solutions and client expansion into other services - Management confirmed that clients are seeking efficiency and quality improvements through AI, which is being implemented across various initiatives [43][44] Question: Market underestimation of revenue catalysts from regulatory developments - Management acknowledged real opportunities but emphasized that implementation speed by states is crucial [46][47] Question: Talent acquisition and attrition rates - Management reported improved retention and lower attrition rates, with muted wage pressure compared to the previous year [48][51] Question: Strategic shifts under the new Chairman's leadership - Management advised not to overreact to board changes, emphasizing continuity in strategic objectives [52][55]

Financial Performance - Adjusted Revenue for Q2 2025 was $754 million, a decrease of 2.6% year-over-year, or 2.7% in constant currency[5, 23] - Adjusted EBITDA for Q2 2025 was $37 million, resulting in an Adjusted EBITDA Margin of 4.9%[5, 23] - The company projects FY 2025 Adjusted Revenue to be between $3100 million and $3200 million, with an exit rate between $3200 million and $3300 million[40] - The company expects FY 2025 Adjusted EBITDA Margin to be between 50% and 55%, with an exit rate of approximately 8%[40] - Adjusted Free Cash Flow for Q2 2025 was negative $30 million[37, 39] - The company anticipates FY 2025 Adjusted Free Cash Flow to be between $0 million and $40 million, with an exit rate between $60 million and $80 million[41] Sales Metrics - New business signings ACV(Annual Contract Value) for Q2 2025 reached $150 million[5, 8] - New Business TCV(Total Contract Value) was $66 million in Q2 2025[8] - New Business ARR(Annual Recurring Revenue) was $66 million in Q2 2025[8, 18] - Net ARR Activity (TTM) reached $63 million[5, 10] Segment Performance - Commercial segment Adjusted Revenue was $365 million, a decrease of 5.9% year-over-year[28] - Government segment Adjusted Revenue was $238 million, a decrease of 2.9% year-over-year[28] - Transportation segment Adjusted Revenue was $151 million, an increase of 7.1% year-over-year[28] Balance Sheet - Total cash at the end of Q2 2025 was $294 million[34, 39] - Total debt was $602 million[34] - Net adjusted leverage ratio was 2.7x[34, 39] Portfolio Rationalization - The company has executed three divestitures in 2024, generating $778 million of net proceeds[43] - The company has identified additional rationalization opportunities representing up to $350 million of net proceeds[43]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________ FORM 10-Q _______________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37817 CONDUENT INCORPORATED (Exact Name of Registrant as specified in its cha ...

[Company Overview](index=1&type=section&id=Company%20Overview) [Introduction](index=1&type=section&id=Introduction) Conduent Incorporated announced Q2 2025 financial results, exceeding adjusted EBITDA and margin expectations, with improved new business signings - Conduent Incorporated announced its second-quarter financial results on August 6, 2025[2](index=2&type=chunk) - CEO Cliff Skelton stated the company made progress in Q2, with **adjusted EBITDA** and **adjusted EBITDA margin** exceeding expectations, and revenue meeting guidance with slight sequential growth[3](index=3&type=chunk) - New business signings improved both year-over-year and quarter-over-quarter, supported by a strong business pipeline[3](index=3&type=chunk) - Investments in technology platforms and client relationships accelerated performance in the transportation sector[3](index=3&type=chunk) - Government and legislative decisions may create additional opportunities for the government sector, as the company continues portfolio rationalization expected to positively impact margins and cash flow[3](index=3&type=chunk) [About Conduent](index=5&type=section&id=About%20Conduent) Conduent is a global technology-driven business process solutions company, providing digital services for commercial, government, and transportation sectors - Conduent is a global technology-driven business process solutions and services company, providing digital solutions for commercial, government, and transportation sectors[14](index=14&type=chunk) - The company leverages technologies such as cloud, artificial intelligence, machine learning, automation, and advanced analytics to deliver mission-critical solutions[14](index=14&type=chunk) - Conduent has approximately **53,000 employees**, processing about **$85 billion** in government payments, **2.3 billion** customer service interactions annually, and over **13 million** toll transactions daily[14](index=14&type=chunk) [Q2 2025 Financial Performance](index=1&type=section&id=Q2%202025%20Financial%20Performance) [Key Q2 2025 Highlights](index=1&type=section&id=Key%20Q2%202025%20Highlights) Conduent achieved $754 million in revenue and adjusted revenue in Q2 2025, with a pre-tax loss of $38 million, an adjusted EBITDA margin of 4.9%, and new business signed ACV of $150 million | Metric | Amount ($ million) | | :--- | :--- | | Revenue and Adjusted Revenue | $754 | | Pre-tax Income (Loss) | $(38) | | Adjusted EBITDA Margin | 4.9% | | New Business Signed ACV | $150 | | Net ARR Activity Metric (TTM) | $63 | [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Conduent's Q2 2025 saw revenue decline, a GAAP net loss, but improved adjusted EBITDA and cash flow performance year-over-year | Metric ($ million) | Q2 2025 | Q2 2024 | YoY Change B/(W) | | :--- | :--- | :--- | :--- | | Revenue | $754 | $828 | (8.9)% | | Adjusted Revenue | $754 | $774 | (2.6)% | | GAAP Net Income (Loss) | $(40) | $216 | n/m | | Adjusted EBITDA | $37 | $24 | 54.2% | | Adjusted EBITDA Margin | 4.9% | 3.1% | 180 bps | | GAAP Pre-tax Income (Loss) | $(38) | $300 | n/m | | GAAP Diluted EPS | $(0.26) | $1.07 | n/m | | Adjusted Diluted EPS | $(0.13) | $(0.14) | 7.1% | | Operating Cash Flow | $(15) | $(41) | 63.4% | | Adjusted Free Cash Flow | $(30) | $(55) | 45.5% | [Performance Commentary](index=2&type=section&id=Performance%20Commentary) Conduent maintained strong liquidity in Q2 2025, reported a pre-tax loss primarily due to prior-year divestiture gains, and saw adjusted EBITDA and margin exceed expectations - Conduent's liquidity position remained strong at the end of Q2, with the **$550 million** revolving credit facility largely undrawn[6](index=6&type=chunk) - The Q2 2025 pre-tax loss of **$38 million** compares to **$300 million** in the prior year, primarily due to gains from the divestiture of the BenefitWallet portfolio and the sale of Curbside Management and Public Safety businesses in the prior period[6](index=6&type=chunk) - Q2 2025 **adjusted EBITDA** was **$37 million**, with an **adjusted EBITDA margin** of **4.9%**, both higher than the prior year and exceeding expectations[7](index=7&type=chunk) - Conduent repurchased approximately **2.7 million** shares of common stock during Q2 2025[8](index=8&type=chunk) [Operational Highlights](index=3&type=section&id=Operational%20Highlights) Conduent achieved several operational milestones in Q2 2025, including expanding financial and procurement solutions with AI, implementing SNAP EBT account lock/unlock features in 12 states, and receiving supplier awards - Partnered with Fairmarkit to expand financial and procurement solutions using its AI-driven technology, including generative AI, to optimize procurement workflows and complement Conduent's FastCap® financial analytics[9](index=9&type=chunk) - Implemented a technology feature in the **12th U.S. state** allowing SNAP beneficiaries to lock and unlock their EBT accounts using Conduent's ConnectEBT mobile app and cardholder portal to help prevent fraud[9](index=9&type=chunk) - Recognized as a **Supplier of the Year** by General Motors for the fourth time, acknowledging performance in key areas such as safety, innovation, and resilience[9](index=9&type=chunk) - Named a **Leader** in two NelsonHall HR & Talent Transformation Services NEAT evaluations for Benefits Administration and Experience-Led HR Transformation in 2025[9](index=9&type=chunk) - Included in Newsweek's **Top 100 Most Loved Workplaces Globally** for the third consecutive year in 2025[9](index=9&type=chunk) - Deployed new EMV (Europay, Mastercard, and Visa) contactless ticketing systems for Gestione Governativa Navigazione Laghi in Italy, among the first EMV contactless systems for boat transportation in the country[9](index=9&type=chunk) [FY 2025 Outlook](index=4&type=section&id=FY%202025%20Outlook) Conduent projects FY 2025 adjusted revenue between $3.1 billion and $3.2 billion, with an adjusted EBITDA margin expected to be between 5.0% and 5.5%, an increase from the 3.9% actual in FY 2024 | Metric | FY 2024 Actual | FY 2025 Outlook | | :--- | :--- | :--- | | Adjusted Revenue | $3,176M | $3,100M - $3,200M | | Adjusted EBITDA / Adjusted EBITDA Margin | $124M / 3.9% | 5.0% - 5.5% | [Financial Statements (GAAP)](index=10&type=section&id=Financial%20Statements%20(GAAP)) [Condensed Consolidated Statements of Income (Loss)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) In Q2 2025, Conduent reported $754 million in revenue, a net loss of $40 million, and a diluted loss per share of $0.26, reflecting a decline in revenue and a shift from net income to loss year-over-year | ($ million, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $754 | $828 | $1,505 | $1,749 | | Operating Costs and Expenses | $792 | $528 | $1,599 | $1,322 | | Pre-tax Income (Loss) | $(38) | $300 | $(94) | $427 | | Income Tax Expense (Benefit) | $2 | $84 | $(3) | $112 | | Net Income (Loss) | $(40) | $216 | $(91) | $315 | | Diluted Income (Loss) Per Share | $(0.26) | $1.07 | $(0.59) | $1.51 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Conduent reported a net loss of $40 million and other comprehensive income, net of $24 million, resulting in a net comprehensive loss of $16 million for Q2 2025, compared to a net income and comprehensive income in the prior year | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(40) | $216 | $(91) | $315 | | Other Comprehensive Income (Loss), Net of Tax | $24 | $(17) | $35 | $(28) | | Comprehensive Income (Loss), Net of Tax | $(16) | $199 | $(56) | $287 | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Conduent's total assets were $2.488 billion, a decrease from $2.599 billion at December 31, 2024, with total liabilities at $1.569 billion and total equity at $777 million | ($ million, except share data) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | $275 | $366 | | Total Current Assets | $1,147 | $1,252 | | Goodwill | $617 | $609 | | Total Assets | $2,488 | $2,599 | | **Liabilities and Equity** | | | | Total Current Liabilities | $697 | $744 | | Long-Term Debt | $628 | $615 | | Total Liabilities | $1,569 | $1,614 | | Total Equity | $777 | $843 | | Total Shares (Issued and Outstanding) | 159,157 thousand shares | 161,829 thousand shares | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q2 2025, Conduent reported $15 million in cash outflow from operating activities, $32 million in cash inflow from investing activities, and $20 million in cash outflow from financing activities, with cash and cash equivalents at period-end of $294 million | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $(15) | $(41) | $(73) | $(78) | | Net Cash from Investing Activities | $32 | $410 | $15 | $553 | | Net Cash from Financing Activities | $(20) | $(482) | $(30) | $(681) | | Effect of Exchange Rate Changes | $4 | $(4) | $5 | $(6) | | Cash and Cash Equivalents, End of Period | $294 | $307 | $294 | $307 | [Non-GAAP Financial Measures & Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Non-GAAP Definitions and Rationale](index=6&type=section&id=Non-GAAP%20Definitions%20and%20Rationale) Conduent utilizes non-GAAP financial measures, such as adjusted revenue and adjusted EBITDA, to provide investors with a clearer understanding of business trends and performance comparisons by adjusting for certain non-cash or non-recurring items - The company uses non-GAAP financial measures to help investors better understand business trends and to better understand and compare performance[15](index=15&type=chunk)[30](index=30&type=chunk) - Non-GAAP measures adjust certain amounts reported under U.S. GAAP to exclude specific items and their related tax impacts, which may be recurring or non-recurring and do not necessarily reflect ongoing operating performance[15](index=15&type=chunk)[30](index=30&type=chunk)[34](index=34&type=chunk) - Management regularly uses non-GAAP financial measures internally to understand, manage, and evaluate the business and make operating decisions[15](index=15&type=chunk)[30](index=30&type=chunk) - Non-GAAP measures include adjusted revenue, adjusted EBITDA, adjusted diluted earnings per share, free cash flow, and adjusted free cash flow, among others[33](index=33&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - Adjustments typically include amortization of acquired intangible assets, restructuring and related costs, goodwill impairment, divestiture gains/losses and transaction costs, litigation settlements, loss on extinguishment of debt, direct response costs for cyber incidents, and other expenses[37](index=37&type=chunk)[38](index=38&type=chunk)[45](index=45&type=chunk) - Free cash flow is defined as cash flow from operating activities less additions to land, buildings, and equipment and internal use software, plus proceeds from the sale of land, buildings, and equipment[42](index=42&type=chunk) - Adjusted free cash flow further adjusts free cash flow for litigation insurance proceeds, transaction costs, divestiture gains and litigation settlement-related taxes, gains from failed sale-leaseback transactions, and other specific adjustments[43](index=43&type=chunk) [Non-GAAP Outlook](index=18&type=section&id=Non-GAAP%20Outlook) The company provides non-GAAP outlooks for adjusted EBITDA and adjusted EBITDA margin for FY 2025, as the overall or final results of certain adjustment items cannot be reasonably determined without unreasonable effort - The company provides non-GAAP outlooks for **adjusted EBITDA** and **adjusted EBITDA margin** for FY 2025 because the overall or final results of these adjustment items cannot be reasonably determined for the forecast period[46](index=46&type=chunk) - The outlook for adjusted revenue is also provided on a non-GAAP basis, using period-end foreign currency exchange rates, as the impact of foreign currency on revenue cannot be accurately predicted[46](index=46&type=chunk) [Non-GAAP Reconciliations](index=19&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliation tables for non-GAAP financial measures, including adjusted revenue, adjusted net income (loss), adjusted effective tax rate, adjusted operating income (loss), adjusted EBITDA, adjusted diluted EPS, adjusted operating margin, adjusted EBITDA margin, and free cash flow Adjusted Revenue Reconciliation | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $754 | $828 | $1,505 | $1,749 | | Adjustment: Divested Businesses | — | $(54) | — | $(154) | | Adjusted Revenue | $754 | $774 | $1,505 | $1,595 | | Foreign Currency Impact | $(1) | $1 | $3 | $(1) | | Revenue at Constant Currency | $753 | $775 | $1,508 | $1,594 | Adjusted Net Income (Loss) Reconciliation | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(40) | $216 | $(91) | $315 | | Total Non-GAAP Adjustments | $15 | $(333) | $48 | $(480) | | Income Tax Adjustments | $7 | $92 | $7 | $124 | | Adjusted Net Income (Loss) | $(18) | $(33) | $(36) | $(73) | Adjusted EBITDA Reconciliation | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(40) | $216 | $(91) | $315 | | Income Tax Expense (Benefit) | $2 | $84 | $(3) | $112 | | Depreciation and Amortization | $48 | $51 | $96 | $113 | | Contract Inducement Amortization | $1 | — | $1 | $1 | | Interest Expense | $12 | $19 | $24 | $46 | | EBITDA Pre-Divestitures | $23 | $370 | $27 | $587 | | Adjusted EBITDA | $37 | $24 | $74 | $60 | Free Cash Flow and Adjusted Free Cash Flow Reconciliation | ($ million) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating Cash Flow | $(15) | $(41) | $(73) | $(78) | | Additions to Land, Buildings, and Equipment | $(15) | $(18) | $(29) | $(31) | | Additions to Internal Use Software | $(5) | $(7) | $(9) | $(15) | | Free Cash Flow | $(35) | $(66) | $(111) | $(124) | | Transaction Costs | $3 | $8 | $7 | $11 | | Direct Response Payments for Cyber Incident | — | — | $2 | — | | Vendor Finance Lease Payments | $(3) | $(4) | $(7) | $(9) | | Gain from Failed Sale-Leaseback Transaction | $5 | — | $5 | — | | Divestiture and Litigation Settlement Related Tax Payments | — | $7 | — | $7 | | Adjusted Free Cash Flow | $(30) | $(55) | $(104) | $(115) | [Additional Information](index=5&type=section&id=Additional%20Information) [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Conduent will host a conference call and webcast on August 6, 2025, at 9:00 AM ET to discuss financial results, with details provided for accessing the live event and replay - Management will present results via conference call and webcast on **August 6, 2025, at 9:00 AM ET**[11](index=11&type=chunk) - The webcast is available at https://investor.conduent.com/, and the toll-free dial-in is **877-407-4019** with conference ID **13754400**[11](index=11&type=chunk) - A replay of the conference call will be available within three hours after the call by dialing **1-877-660-6853** with replay ID **13754400**, valid until August 20, 2025[12](index=12&type=chunk)[13](index=13&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding the company's future financial performance, operating conditions, and outlook, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations - This press release contains "forward-looking statements" concerning the company's financial performance, condition, and outlook, as well as changes in operating results, market, and economic conditions[16](index=16&type=chunk) - These statements are subject to various risks, uncertainties, and assumptions, many of which are beyond the company's control, that could cause actual results to differ materially from expectations[16](index=16&type=chunk) - Important risks and uncertainties include government contract terms, market competitiveness, reliance on third-party suppliers, geopolitical events, cybersecurity threats (such as the cyber incident in January 2025), risks related to divested businesses, goodwill impairment, significant indebtedness, and failure to comply with laws and regulations[17](index=17&type=chunk)[18](index=18&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements, except as required by law[18](index=18&type=chunk) [Media and Investor Contacts](index=9&type=section&id=Media%20and%20Investor%20Contacts) This section provides contact information for Conduent's media and investor relations - Media Contact: Sean Collins, Phone: **+1-310-497-9205**, Email: sean.collins2@conduent.com[19](index=19&type=chunk) - Investor Contact: David Chen, Email: ir@conduent.com[19](index=19&type=chunk)

Core Insights - Conduent Incorporated reported its Q2 2025 financial results, highlighting progress in Adjusted EBITDA and Adjusted EBITDA margin, with revenue slightly higher sequentially despite an overall year-over-year decline [2][3][4] Financial Performance - Q2 2025 revenue was $754 million, down 8.9% from $828 million in Q2 2024, while Adjusted Revenue decreased by 2.6% to $754 million from $774 million [3][4] - GAAP Net Loss for Q2 2025 was $(40) million compared to a profit of $216 million in Q2 2024, with Adjusted EBITDA increasing by 54.2% to $37 million from $24 million [3][4] - Adjusted EBITDA Margin improved to 4.9%, up 180 basis points from 3.1% in the prior year [3][4] - Cash Flow from Operating Activities improved to $(15) million from $(41) million, and Adjusted Free Cash Flow improved to $(30) million from $(55) million [3][4] Business Developments - New business signings increased year-over-year and sequentially, with an Annual Contract Value (ACV) of $150 million [5][6] - The company is focusing on technology investments and client relationships, particularly in the Transportation segment, which is showing accelerated performance [3][5] - Conduent's liquidity position remains strong, with a $550 million revolving credit facility largely undrawn [5] Strategic Changes - The company is undergoing portfolio rationalization efforts expected to positively impact margins and cash flow, with new leadership bringing industry experience [3][5] - Harsha Agadi has been appointed as the new Chairman of the Board, indicating a strategic pivot towards growth [3][5] Outlook - For FY 2025, Conduent projects Adjusted Revenue between $3.1 billion and $3.2 billion, with an Adjusted EBITDA margin target of 5.0% to 5.5% [8]

Group 1 - The article references a satirical song lyric to illustrate a sentiment about wealth and recognition in the investment community [1] - Robert F. Abbott has been managing his family's investment accounts since 1995 and has incorporated options trading since 2010, focusing on covered calls and collars with long stocks [1] - Abbott is a freelance writer with a project aimed at providing information for new and intermediate-level mutual fund investors [1] Group 2 - Abbott holds a Bachelor of Arts and a Master of Business Administration (MBA) degree [1]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks with recent price momentum may be a safer approach [3] Group 2: Conduent (CNDT) Stock Analysis - Conduent (CNDT) has shown a four-week price change of 20.6%, indicating strong investor interest [4] - CNDT gained 5.5% over the past 12 weeks and has a beta of 1.54, suggesting it moves 54% more than the market [5] - CNDT has a Momentum Score of B, indicating a favorable time to invest [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - CNDT is trading at a Price-to-Sales ratio of 0.14, suggesting it is undervalued at 14 cents for each dollar of sales [7] Group 3: Investment Opportunities - CNDT appears to have significant growth potential and is part of a broader list of stocks that meet the 'Fast-Paced Momentum at a Bargain' criteria [8] - There are over 45 Zacks Premium Screens available for investors to identify winning stock picks based on personal investing styles [9]

Financial Performance - Conduent reported a quarterly loss of $0.13 per share, better than the Zacks Consensus Estimate of a loss of $0.19, but worse than a loss of $0.09 per share a year ago, indicating an earnings surprise of 31.58% [1] - The company posted revenues of $751 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.22%, and down from $921 million in the same quarter last year [2] - Over the last four quarters, Conduent has surpassed consensus EPS estimates three times, but has topped consensus revenue estimates only once [2] Stock Performance - Conduent shares have declined approximately 49.3% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The current Zacks Rank for Conduent is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $780 million, and for the current fiscal year, it is -$0.34 on revenues of $3.19 billion [7] - The estimate revisions trend for Conduent is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Outsourcing industry, to which Conduent belongs, is currently ranked in the top 13% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Hudson Global, another company in the same industry, is expected to report quarterly earnings of $0.06 per share, reflecting a year-over-year change of +108.3% [9]

Financial Data and Key Metrics Changes - Adjusted revenue for Q1 2025 was $751 million, down 8.5% year-over-year from $821 million in Q1 2024, primarily driven by the government segment [15][18] - Adjusted EBITDA for the quarter was $37 million, slightly up from $36 million in Q1 2024, with an adjusted EBITDA margin of 4.9%, an increase of 50 basis points year-over-year [15][18] - The net leverage ratio increased to 2.7 turns, expected to trend down to around 1.5 turns by the end of 2025 as adjusted EBITDA improves [23][26] Business Line Data and Key Metrics Changes - The commercial segment's adjusted revenue was $402 million, down 4.1% year-over-year, with new business outpacing lost business despite volume degradation in the largest client [16][17] - Government segment adjusted revenue decreased by 16% to $216 million, with adjusted EBITDA down 31% year-over-year [17][18] - Transportation segment adjusted revenue was $133 million, down 7.6% year-over-year, but adjusted EBITDA improved to $6 million from $1 million in Q1 2024 [19] Market Data and Key Metrics Changes - New business annual contract value (ACV) increased by 14% year-over-year to $109 million, with total contract value (TCV) up 96% to $280 million [13][14] - The qualified ACV pipeline grew to $3.2 billion, up 16% year-over-year, indicating strong growth potential in both government and commercial segments [14] Company Strategy and Development Direction - The company is focused on portfolio rationalization, having completed three divestitures in 2024 that generated nearly $800 million in net proceeds, with plans for further asset sales in 2025 [11][12] - Investments in AI and fraud prevention are prioritized, with a strong emphasis on government efficiency and cost reduction initiatives [28][36] - The company aims to optimize its portfolio into two operating units, enhancing growth and reducing central costs [12][38] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving revenue guidance despite macroeconomic uncertainties, citing minimal exposure to tariffs and strong government business opportunities [8][24] - The outlook for Q2 2025 is for sequential revenue growth, although slightly below Q2 2024, with adjusted EBITDA margins expected between 4% and 4.5% [26][24] - The company anticipates continued top-line growth in the second half of the year as cost efficiency programs take effect [26] Other Important Information - The company reported a negative adjusted free cash flow of $74 million for the quarter, an improvement compared to Q1 2024 [21] - A cyber event incurred $3 million in expenses and $22 million in accrued nonrecurring expenses, but did not materially impact operations [20][48] Q&A Session Summary Question: How does the push for government efficiency create opportunities for the company? - Management indicated that while federal funds for entitlements are distributed through states, the administrative costs present opportunities for the company to assist in efficiency improvements [41][42][44] Question: Can you elaborate on the cyber event and its impact? - Management confirmed that all costs related to the cyber event are accounted for, with no significant operational impact, although data examination is ongoing [47][48] Question: Have there been any regulatory hurdles in deploying AI solutions? - Management stated that there have been no regulatory hurdles encountered in the deployment of AI, particularly in sensitive government applications [52][53] Question: What criteria are used for asset divestiture? - The company focuses on identifying assets with scarcity value and maximizing returns from divestitures while balancing debt reduction and reinvestment [59][61] Question: What feedback is being received from state and local contacts regarding opportunities? - Management noted a mixed response from states, with some actively seeking efficiency improvements while others are more cautious [71][72]