Conduent(US:CNDT)2026-02-12 15:02Financial Data and Key Metrics Changes - Adjusted revenue for full year 2025 was $3.04 billion, down 4.2% from $3.18 billion in 2024 [15] - Adjusted EBITDA for the year was $164 million, compared to $124 million in 2024, with an adjusted EBITDA margin of 5.4%, up 150 basis points year-over-year [15][16] - Adjusted free cash flow was -$130 million for the year, with Q4 adjusted free cash flow being positive at $28 million [19][20] Business Line Data and Key Metrics Changes - Government segment adjusted revenue was $922 million, down 6.3% from 2024, but grew 1.8% in Q4 [17][18] - Transportation segment adjusted revenue was $609 million, an increase of 3.9%, with adjusted EBITDA margin at 3%, up 300 basis points from 2024 [18] - Commercial segment adjusted revenue was $1.5 billion, down 5.9% from 2024, with adjusted EBITDA margin at 10.2%, down 30 basis points year-over-year [16][18] Market Data and Key Metrics Changes - New business annual contract value (ACV) for Q4 was $152 million, up 11% from Q4 2024, with full year 2025 new business ACV at $517 million, up 6% from 2024 [12][14] - Government segment new business ACV increased by 50%, while transportation segment was up 14% compared to 2024 [12] - Commercial segment new capability ACV increased by 60% year-over-year [13] Company Strategy and Development Direction - The company aims for consistent year-over-year revenue and EBITDA growth, supported by strong free cash flow generation [5][6] - Key priorities include faster decision-making, financial discipline, lowering cost structure, and rationalizing the portfolio [9][10] - The company is focusing on organic revenue growth and improving conversion rates from the qualified ACV pipeline, which stands at $3.2 billion [10][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current environment as a turnaround story, emphasizing the need for transparency and accountability [7][22] - The company is committed to executing its strategy and improving financial performance, with a focus on sustainable revenue growth and margin expansion [22][23] - Management is optimistic about the government and transportation segments, while acknowledging challenges in the commercial segment [43][44] Other Important Information - The company plans to host an Analyst Day in New York City to discuss strategy and execution plans [7] - Management is reviewing each business unit to categorize them as fix, sell, or grow, with clear accountability for results [10][26] Q&A Session Summary Question: Metrics for evaluating business units - Management will consider growth metrics, EBITDA margins, capital allocation needs, and competitive moats when evaluating business units [26][27] Question: Philosophy on business unit overlap - The company aims to focus on core competencies and avoid being everything to everyone, emphasizing the importance of client relationships [34][35] Question: Evidence of improved commercial performance - Management sees good momentum in public sector businesses but acknowledges the need for improvement in the commercial segment [42][43] Question: AI disruptors and revenue exposure - Approximately 15%-20% of the business may be exposed to AI disruptors, with a focus on partnering with technology providers [64][67] Question: Free cash flow expectations for 2026 - Management is focused on improving free cash flow and expects to provide more precise goals in future guidance [75] Question: Portfolio rationalization status - Portfolio rationalization is a high priority, with efforts to accelerate the process and focus on core business operations [76][77]