Slide 1: Conduent Q2 2024 Financial Results
Conduent Q2 2024 Financial Results August 07, 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 investo
Slide 4: Q2 2024 Highlights
Q2 2024 Highlights • Adj. Revenue(1): $811M • Adj. EBITDA(1): $29M Q2 Results / • Adj. EBITDA Margin(1): 3.6% Metrics • New business signings ACV(2): $142M • Net ARR Activity Impact (TTM)(2,3): $(49)M (1) Refer to Appendix for complete Non-GAAP reconciliations of Adjusted Revenue, Adjusted EBITDA an
Slide 5: Divestiture Update
Divestiture Update Deployed (Target $1B) • Portfolio rationalization on track $600M Approx. to $1B • 66% of $1B capital target deployed $800M 66%* • ~57M shares repurchased • Debt repayment leading to lower ~$100M leverage over time • Line of sight to the $1B of deployable $519M capital Up to $350M
Slide 6: Key Sales Metrics
Key Sales Metrics New Business ACV(1) Signings TCV Signings (incl. ARR(1) + NRR(1)) $300M $2,000M $205 $200M $1,345 $141 $140 $142 $1,000M $266 $97 $268 $100M $146 $276 $601 $447 $822 $402 $330 $0M Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q2' 24 $0M Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Renewal NB New Business (ARR
Slide 7: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $300M $150M $1,500M $1,345 $205 $108 $200M $100M $1,000M $142 $62 $100M $50M $500M $276 $0M $0M $0M Q2'23 Q2'24 Q2'23 Q2'24 Q2'23 Q2'24 Net ARR Activity (TTM)(1,2) Q2 New Business ACV(1) by Segment $29M $200M $141 $91 $100
Slide 8: Q2 2024 P&L Metrics
Q2 2024 P&L Metrics Adj. Revenue(1) Adj. Revenue(1) Trend (Y/Y Compare) (4.7)% Y/Y (4.6)% in CC $1,000M $851M $811M (0.2)% (3.0)% (4.3)% (4.7)% (5.8)% $500M $0M Q2 2023 Q2 2024 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Adj. EBITDA(1) / Adj. EBITDA Margin(1) • Adj. Revenue(1): Decline primary driven by lost
Slide 9: Q2 2024 P&L by Segment
Q2 2024 P&L by Segment Adj. Revenue(1) Adj. EBITDA(1) Contributions $3M 7.2% Y/Y Transportation, $141M $49M 1.4% Y/Y (66.7)% Y/Y (12.8)% Y/Y $41M (54.7)% Y/Y $29M (36.4)% Y/Y $(64)M Government, $245M Commercial, $425M (9.3)% Y/Y (3.8)% Y/Y Commercial Government Transportation Unallocated Adjusted Co
Slide 10: Q2 2024 Cash Flow and Balance Sheet
Q2 2024 Cash Flow and Balance Sheet • Adj. Free Cash Flow(1): $(55)M Balance Sheet ($ in millions) 12/31/2023 6/30/2024 • Capex(6) as % of revenue: 3.6% Total Cash (2) $519 $307 (7) • Net adjusted leverage ratio : 1.7x Total Debt(4) 1,263 790 • $307M of cash(2) at end of Q2 2024 Term Loan A(3) due 2
Slide 11: FY 2023 Actuals and FY 2024 Outlook
FY 2023 Actuals and FY 2024 Outlook(2) FY 2023 FY 2024 Actuals Outlook(2) Adj. Revenue(1) $3,466M $3,325M - $3,375M Adj. EBITDA Margin(1) 7.6% 4% - 5% Other Modeling Considerations Adj. Free Cash Flow(1) as % of Adj. EBITDA(1) (1.9)% Approx 0% Interest Expense $111M Approx. $77M Restructuring $62M A
Slide 12: Mid-Term Outlook
Mid-Term Outlook(2,3) Divestitures FY 2023 Initial FY 2024 Announced Other 2025 2025 Exit Reported Actuals Outlook(2,3) + Others Assumptions Rate $3,600M - $3,000M - Revenue $3,722M ~$450M 2% - 4% Growth $3,700M $3,300M *2% -2.5% Margin Adj. EBITDA Margin(1) 10.2% 8% - 9% *~30% 8% - 9% Expansion Adj
Slide 13: CEO Update
CEO Update
Slide 14: CEO Update
CEO Update Conduent will be a smaller, nimbler technology-led business solutions provider serving Commercial and Public sectors; leveraging its cloud-based and AI-infused technology platforms across its core competencies in: Business Process as a Service – Government Solutions – Transportation Solut
Slide 15: CEO Update - Continuing Our Momentum
CEO Update - Continuing Our Momentum Our People and the Our Processes and Objectives Our Products and Technology Organization • Sales momentum driving investment in • Continued progress on AI initiatives with • Simplified operating model to focus on additional offshore capacity strong results in inc
Slide 16: Appendix
Appendix
Slide 17: Segment Adjusted Revenue Trend
Segment Adjusted Revenue(1) Trend Commercial Government (3.5)% (4.6)% (4.8)% (3.8)% (0.3)% (10.7)% (3.2)% (2.3)% (8.2)% (9.3)% Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Transportation Adj. Revenue(1) Growth Rates (2025 Exit Rate): 23.1% As communicated in the March 2023 I
Slide 18: Q2 Highlights and Recognition
Q2 Highlights and Recognition A collaborative, team-oriented culture laser-focused on driving valuable outcomes for clients 18
Slide 19: 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 20: 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 21: 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 22: 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 23: 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 condensed 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
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Revenue, Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax Rate, Adjusted Operating Income (Loss) and Adjusted EBITDA (see footnotes on last page of Non-GAAP reconciliations) (in millions) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 202
Slide 25: Non-GAAP Reconciliations (Continued)
CONTINUED (in millions) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ 300 $ 127 $ (332) $ (4) $ (313) $ (7) $ (8) Adjustment: Total Non-GAAP Adjustments (333) (147) 339 15 296 17 11 Adjusted PBT Before Adjustment for Divestitures (
Slide 26: Adjusted EBITDA Reconciliation (Continued)
CONTINUED (in millions) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EBITDA Net Income (Loss) $ 216 $ 99 $ (296) $ 6 $ (289) $ (7) $ (6) Income tax expense (benefit) 84 28 (36) (10) (24) — (2) Depreciation and amortization 51 62 264 65 81 57 61 Contract inducement amortization —
Slide 27: Adjusted Diluted EPS (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 %) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 (4) AD
Slide 28: Adjusted Margins (Continued)
CONTINUED (Margins are in %) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin 36.2 % 13.8 % (8.9)% (0.4)% (33.6)% (0.8)% (0.9)% Adjustments: Total non-GAAP adjustments (40.2) (15.9) 9.1 1.6 31.8 1.8 1.3 Interest expense 2.3 2.
Slide 29: Free Cash Flow and Adj. Free Cash Flow
CONTINUED Free Cash Flow and Adj. Free Cash Flow (in millions) Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Operating Cash Flow $ (41) $ (37) $ 89 $ 122 $ (11) $ (10) $ (12) Cost of additions to land, buildings and equipment (18) (13) (51) (18) (13) (9) (11) Cost of additions to internal
Slide 30: Footnotes (Continued)
CONTINUED The below footnotes correspond to the "Q2 2024 Cash Flow and Balance Sheet" slide (1) Refer to Appendix for complete Non-GAAP reconciliations of Adjusted Free Cash Flow. (2) Total Cash includes $7M and $21M of restricted cash as of June 30, 2024 and December 31, 2023, respectively. (3) Rev
Slide 31: © 2024 Conduent, Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks
© 2024 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.