Conduent(CNDT) - 2025 Q1 - Quarterly Results

Key Q1 2025 Highlights and CEO Commentary Conduent started 2025 strongly, meeting Adjusted Revenue and exceeding Adjusted EBITDA margin expectations, with improved new business signings and Net ARR Activity Metric indicating future growth - CEO Cliff Skelton noted a good start to 2025, with results in line with the 2025 outlook for Adjusted Revenue and exceeding expectations for Adjusted EBITDA margins[3] - Key indicators of future growth, New Business Signings and the Net ARR Activity Metric, both showed year-over-year improvement[3] - Portfolio rationalization efforts are on track to achieve over $1 billion in deployable capital[3] Q1 2025 Key Metrics | Metric | Value | | :--- | :--- | | Revenue and Adj. Revenue | $751 million | | Pre-tax Income (Loss) | $(56) million | | Adj. EBITDA Margin | 4.9% | | New Business Signings ACV | $109 million | | Net ARR Activity Metric (TTM) | $116 million | Key Financial Q1 2025 Results and Performance Commentary Conduent's Q1 2025 saw GAAP Revenue decline 18.5% and a net loss of $(51) million, while Adjusted EBITDA and its margin improved, and liquidity remained strong Q1 2025 Financial Performance vs. Q1 2024 ($ in millions, except margin and per share data) | Metric | Q1 2025 | Q1 2024 | Y/Y Change | | :--- | :--- | :--- | :--- | | Revenue | $751 | $921 | (18.5)% | | Adjusted Revenue | $751 | $821 | (8.5)% | | GAAP Net Income (Loss) | $(51) | $99 | n/m | | Adjusted EBITDA | $37 | $36 | 2.8% | | Adjusted EBITDA Margin | 4.9% | 4.4% | 50 bps | | GAAP Diluted EPS | $(0.33) | $0.46 | n/m | | Adjusted Diluted EPS | $(0.13) | $(0.09) | (44.4)% | | Cash Flow from Operating Activities | $(58) | $(37) | (56.8)% | | Adjusted Free Cash Flow | $(74) | $(60) | (23.3)% | - The decrease in Pre-tax income from $127 million in Q1 2024 to $(56) million in Q1 2025 was primarily driven by the gain on the transfer of the BenefitWallet portfolio in the prior year[6] - The company maintained a strong liquidity position with $293 million of cash and a largely undrawn $550 million revolving credit facility[6] - Adjusted EBITDA and Adjusted EBITDA Margin were ahead of expectations and increased year-over-year[7] Additional Q1 2025 Performance Highlights Conduent achieved key operational and technological milestones in Q1 2025, including new GenAI tools, the NYC Congestion Relief Zone, and significant contract wins - Implemented the Congestion Relief Zone in New York City, managing toll transactions and payment processing[8] - Launched a fraud prevention tool using traditional and GenAI to prevent account take-over fraud in government benefits payments[8] - Introduced 'Conni,' an innovative GenAI virtual assistant to improve customer experience across Conduent platforms[8] - Secured major contracts, including a $92 million contract with the Alaska Department of Health, a new fare collection system for Lima, Peru, and deployments of its Maven system in Oklahoma and Ireland[8] FY 2025 Outlook Conduent projects full-year 2025 Adjusted Revenue between $3,100 million and $3,250 million, with an Adjusted EBITDA Margin of 4.5% to 5.5% Full-Year 2025 Financial Outlook (in millions, except margin) | Metric | FY 2024 Actuals | FY 2025 Outlook | | :--- | :--- | :--- | | Adj. Revenue | $3,176 | $3,100 - $3,250 | | Adj. EBITDA Margin | 3.9% | 4.5% - 5.5% | Condensed Consolidated Financial Statements (Unaudited) The unaudited Q1 2025 financial statements present the company's net loss, balance sheet changes, and cash flow from operations Condensed Consolidated Statements of Income (Loss) Conduent reported Q1 2025 revenues of $751 million and a net loss of $(51) million, a significant shift from Q1 2024 due to a prior-year divestiture gain Q1 2025 Income Statement Highlights (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $751 | $921 | | Total Operating Costs and Expenses | $807 | $794 | | (Gain) loss on divestitures, net | $3 | $(161) | | Income (Loss) Before Income Taxes | $(56) | $127 | | Net Income (Loss) | $(51) | $99 | | Diluted EPS | $(0.33) | $0.46 | Condensed Consolidated Balance Sheets As of March 31, 2025, Conduent's balance sheet reported total assets of $2,532 million, total liabilities of $1,586 million, and total equity of $804 million Balance Sheet Summary (in millions) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $277 | $366 | | Total current assets | $1,185 | $1,252 | | Total Assets | $2,532 | $2,599 | | Total current liabilities | $723 | $744 | | Long-term debt | $625 | $615 | | Total Liabilities | $1,586 | $1,614 | | Total Equity | $804 | $843 | Condensed Consolidated Statements of Cash Flows Q1 2025 saw net cash used in operating activities of $(58) million, with investing activities using $(17) million and financing activities using $(10) million, leading to an $84 million decrease in cash Cash Flow Summary (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(58) | $(37) | | Net cash provided by (used in) investing activities | $(17) | $143 | | Net cash provided by (used in) financing activities | $(10) | $(199) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(84) | $(95) | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles non-GAAP financial measures like Adjusted Revenue, Adjusted EBITDA, and Adjusted Free Cash Flow, providing a clearer view of business trends - The company uses non-GAAP measures to help investors understand business trends by excluding items such as amortization, restructuring costs, divestiture impacts, and litigation settlements[14][30] - Key non-GAAP measures include Adjusted Revenue, Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Free Cash Flow[33][37][42] Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $(51) | $99 | | Income tax expense (benefit) | (5) | 28 | | Depreciation and amortization | 48 | 62 | | Interest expense | 12 | 27 | | Restructuring and related costs | 4 | 9 | | (Gain) loss on divestitures, net | 3 | (161) | | Direct response costs - cyber event | 25 | — | | Other Adjustments & Divestitures | (3) | (28) | | Adjusted EBITDA | $37 | $36 | Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Cash Flow | $(58) | $(37) | | Capital Expenditures | (18) | (21) | | Free Cash Flow | $(76) | $(58) | | Adjustments (Transaction costs, cyber event payments, etc.) | 2 | (2) | | Adjusted Free Cash Flow | $(74) | $(60) |