Slide 1: Conduent Q4 and Full Year 2023 Financial Results
Conduent Q4 and Full Year 2023 Financial Results February 14, 2024
Slide 2: Cautionary Statements: Forward-Looking Statements
Cautionary Statements Forward-Looking Statements This document, any exhibits or attachments to this document, and other public statements we make may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,
Slide 3: Cautionary Statements: Non-GAAP Financial Measures
Cautionary Statements Non-GAAP Financial Measures We have reported our financial results in accordance with accounting principles generally accepted in the U.S.(U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investor
Slide 4: Q4 & Full Year 2023 Highlights
Q4 & Full Year 2023 Highlights • Adj.Revenue(1): $953M / $3,722M Q4 & Full Year • Adj. EBITDA(1): $103M / $378M Results / • Adj. EBITDA Margin(1): 10.8% / 10.2% Metrics • New business signings ACV(2): $152M / $639M • Net ARR Activity Impact (TTM)(2,3): $62M • Q4 and FY 2023 Adj. Revenue, Adj. EBITDA
Slide 5: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $1,000M $600M $3,000M $732 $2,257 $639 $403 $1,887 $400M $2,000M $317 $500M $200M $1,000M $680 $194 $152 $106 $79 $336 $0M $0M $0M Q4'22 Q4'23 FY'22 FY'23 Q4'22 Q4'23 FY'22 FY'23 Q4'22 Q4'23 FY'22 FY'23 Net ARR Activity (T
Slide 6: Key Sales Metrics Trends
Key Sales Metrics Trends New Business ACV(1) Signings TCV Signings (incl. ARR(1) + NRR(1)) $300M $2,000M $208 $194 $1,361 $200M $154 $152 $1,000M $336 $680 $125 $316 $100M $244 $580 $390 $668 $454 $829 $0M Q4' 22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 $0M Q4' 22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Renewal NB New Busin
Slide 7: Full Year 2023 P&L Metrics
Full Year 2023 P&L Metrics Adj. Revenue(1) Adj. Revenue(1) Trend (Y/Y Compare) $6,000M (3.3)% Y/Y (3.6)% in CC $3,851M $3,722M $4,000M (1.4)% (4.0)% (3.3)% (4.5)% (4.6)% $2,000M $—M 2022 2023 Q4' 22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Adj. EBITDA(1) / Adj. EBITDA Margin(1) (4.1)% Y/Y $450M • Adj. Revenue(1)
Slide 8: Full Year 2023 P&L by Segment
Full Year 2023 P&L by Segment Adj. Revenue(1) Adj. EBITDA(1) Contributions (51.2)% Y/Y (1.8)% Y/Y Transportation, $696M $41M $325M (1.8)% Y/Y (4.1)% Y/Y 21.2% Y/Y $378M $274M $(262)M (6.1)% Y/Y Commercial, $1,932M Government, $1,094M (3.0)% Y/Y (4.9)% Y/Y Commercial Government Transportation Unalloc
Slide 9: Q4 & Full Year 2023 Cash Flow and Balance Sheet
Q4 & Full Year 2023 Cash Flow and Balance Sheet Balance Sheet • Adj. Free Cash Flow(1): Q4 $93M / FY $(5)M ($ in millions) 12/31/2022 12/31/2023 (6) • Capex as % of revenue: Q4 3.9% / FY 3.1% Total Cash (2) $598 $519 Total Debt(4) 1,282 1,263 • Net adjusted leverage ratio(7): 2.1x Term Loan A(3) due
Slide 10: FY 2023 Actuals and 2024 Outlook
FY 2023 Actuals and 2024 Outlook(2,3) FY 2023 FY 2024 Actuals Outlook (2,3) Adj. Revenue(1) $3,722M $3,600M - $3,700M Adj. EBITDA Margin(1) 10.2% 8% - 9% Adj. Free Cash Flow(1) as % of Adj. EBITDA(1) (1.3)% 5% - 10% Other Modeling Considerations Interest Expense $111M Approx. $107M Restructuring $62
Slide 11: Portfolio Rationalization Update
Portfolio Rationalization Update
Slide 12: Expectations From Divestiture Activity
Expectations From Divestiture Activity Deployed (Target $1B) $600-800M of potential divestiture proceeds $600M Approx. Enhanced valuation with appropriately to $1B $800M deployed capital A more nimble and faster growing Conduent ~$100M $27M (3%) Capital deployed against the share repurchase program
Slide 13: Mid-Term Outlook
Mid-Term Outlook(2,3) Divestitures FY 2024 Announced Other 2025 2025 Exit Outlook(2,3) + Others Assumptions Rate $3,600M - $3,000M - Adj. Revenue(1) ~$500M 2% - 4% Growth $3,700M $3,300M *2% - 3% Margin Adj. EBITDA Margin(1) 8% - 9% *~27% 9% - 10% Expansion Adj. Free Cash Flow(1) as % of Adj. 5% - 1
Slide 14: Appendix
Appendix
Slide 15: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend (0.8)% 0.2% (3.4)% (3.6)% (7.7)% (0.3)% (3.2)% (5.5)% (7.7)% (8.2)% Q4' 22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q4' 22 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Transportation Revenue Growth Rates (2025 Exit Rate): Revenue Trend As communicated in the
Slide 16: Q4 Highlights and Recognition
Q4 Highlights and Recognition A collaborative, team-oriented culture laser-focused on driving valuable outcomes for clients Industry and Solutions Client Culture Recognized as a 2023 Leader in Implemented BenePath® Self-Service Portal to Improve Access to Medicaid Benefits Administration by Services
Slide 17: 2023 Operational Highlights & Recognition
2023 Operational Highlights & Recognition Industry Client Culture Recognized as a leader • Became first BPS provider to offer U.S. Federal Reserve's by the following: FedNowSM Service for instant payments • Introduced Rapid Assistance Solution to help agencies expedite disbursement of emergency reli
Slide 18: Definitions
Definitions New Business Total Contract Value (TCV): Estimated total future revenues from contracts signed during the period related to new logo, new service line or expansion with existing customers. New Business Non-Recurring Revenue (NRR): Metric measures the non-recurring revenue for any new bus
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures We have reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow i
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Revenue, Adjusted Operating Income and Adjusted Operating Margin. We make adjustments to Revenue, Costs and Expenses and Operating Margin for the following items, as applicable,for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjuste
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA and EBITDA Margin We use Adjusted EBITDA and Adjusted EBITDA Margin as an additional way of assessing certain aspects of our operations that, when viewed with the U.S. GAAP results and the accompanying reconciliations to corresponding U.S. GAAP financial m
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Free Cash Flow Free Cash Flow is defined as cash flows from operating activities as reported on the consolidated statement of cash flows, less cost of additions to land, buildings and equipment, cost of additions to internal use software, and proceeds from sales of land,
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax Rate, Adjusted Operating Income (Loss) and Adjusted EBITDA (in millions) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 Revenue $ 953 $ 932 $ 915 $ 922 $ 986 $ 3,722 $ 3,858 Adjustment:
Slide 24: Non-GAAP Reconciliations Continued
CONTINUED (in millions) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (4) $ (313) $ (7) $ (8) $ (365) $ (332) $ (127) Adjustment: Total Non-GAAP Adjustments 15 296 17 11 374 339 219 Adjusted PBT Before Adjustment for Divestitures 1
Slide 25: Adjusted EBITDA Reconciliation Continued
CONTINUED (in millions) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 ADJUSTED EBITDA Net Income (Loss) $ 6 $ (289) $ (7) $ (6) $ (333) $ (296) $ (182) Income tax expense (benefit) (10) (24) — (2) (32) (36) 55 Depreciation and amortization 65 81 57 61 62 264 230 Contract inducement amortiz
Slide 26: Adjusted Diluted EPS and Margins Continued
CONTINUED Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS, Adjusted Effective Tax Rate, Adjusted Operating Margin, and Adjusted EBITDA Margin (Amounts are in whole dollars, shares are in thousands and margins are in %) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 ADJUST
Slide 27: Adjusted Operating and EBITDA Margin Continued
CONTINUED (Margins are in %) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (0.4)% (33.6)% (0.8)% (0.9)% (37.0)% (8.9)% (3.3)% Adjustments: Total non-GAAP adjustments 1.6 31.8 1.8 1.3 37.9 9.1 5.7 Interest expense 3.0 3.0 3.
Slide 28: Free Cash Flow and Adj. Free Cash Flow
CONTINUED Free Cash Flow and Adj. Free Cash Flow (in millions) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FY 2023 FY 2022 Operating Cash Flow $ 122 $ (11) $ (10) $ (12) $ 51 $ 89 $ 144 Cost of additions to land, buildings and equipment (18) (13) (9) (11) (30) (51) (92) Cost of additions to internal use
Slide 29: © 2023 Conduent, Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks
© 2023 Conduent, Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks of Conduent, Inc. and/or its subsidiaries in the United States and/or other countries.