Conduent Incorporated · NASDAQ:CNDT
Conduent — Q2 2023 Earnings Presentation
25 slides from Conduent's earnings presentation, Aug 2, 2023
Slide 1: Conduent Q2 2023 Financial Results
Conduent Q2 2023 Financial Results August 02, 2023
Slide 2: Cautionary Statements: Forward-Looking Statements
Cautionary Statements Forward-Looking Statements This document contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” "plan," “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,”
Slide 3: Cautionary Statements: Non-GAAP Financial Measures
Cautionary Statements Non-GAAP Financial Measures We have reported our financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to b
Slide 4: Q2 2023 Highlights
Q2 2023 Highlights • Adj.Revenue(1): $915M • Adj. EBITDA(1): $93M Q2 Results / • Adj. EBITDA Margin(1): 10.2% Metrics • New business signings ACV(2): $208M • Net ARR Activity Impact (TTM)(2,3): $137M • Strong Q2 performance, exceeding expectations on Revenue and Adj. EBITDA • Very strong sales quart
Slide 5: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $300M $150M $1,500M $1,361 $111 $208 $100 $200M $180 $100M $1,000M $100M $50M $500M $396 $0M $0M $0M Q2' 22 Q2' 23 Q2' 22 Q2' 23 Q2' 22 Q2' 23 Net ARR Activity (TTM)(1,2) Q2 New Business ACV(1) by Segment $54M $150M $137 $
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 $1,361 $191 $194 $200M $180 $1,000M $347 $680 $125 $100M $396 $244 $302 $658 $580 $390 $668 $0M Q2' 22 Q3' 22 Q4' 22 Q1' 23 Q2' 23 $0M Q2' 22 Q3' 22 Q4' 22 Q1' 23 Q2' 23 Renewal NB New Busin
Slide 7: Q2 2023 P&L Metrics
Q2 2023 P&L Metrics Adj. Revenue(1) Adj. Revenue(1) Trend (Y/Y Compare) (1.4)% Y/Y (1.5)% in CC $1,000M $928M $915M (1.4)% (4.5)% (4.0)% $500M (4.1)% (8.0)% $—M Q2 2022 Q2 2023 Q2' 22 Q3' 22 Q4' 22 Q1' 23 Q2' 23 Adj. EBITDA(1) / Adj. EBITDA Margin(1) • Adj. Revenue(1): Slight decrease driven by expe
Slide 8: Q2 2023 P&L by Segment
Q2 2023 P&L by Segment Adj. Revenue(1) Adj. EBITDA(1) Contributions (45.8)% Y/Y Transportation, $174M (1.3)% Y/Y $13M (2.8)% Y/Y $77M 6.9% Y/Y 56.5% Y/Y $93M $72M $(69)M (13.1)% Y/Y Commercial, $471M Government, $270M 0.2% Y/Y (3.2)% Y/Y Commercial Government Transportation Unallocated Adjusted Cost
Slide 9: Q2 2023 Cash Flow and Balance Sheet
Q2 2023 Cash Flow and Balance Sheet Balance Sheet • Adj. Free Cash Flow(1): $(26)M ($ in millions) 12/31/2022 6/30/2023 (6) • Capex as % of revenue: 2.8% Total Cash (2) $598 $505 Total Debt(4) 1,282 1,272 • Net adjusted leverage ratio(7): 2.1x Term Loan A(3) due 2026 252 245 (2) • $505M of cash at e
Slide 10: FY 2022 Actuals and 2023 Outlook
FY 2022 Actuals and 2023 Outlook(4) FY 2022 FY 2023 Actuals Outlook (4) Adj. Revenue(1) $3,851M $3,700M - $3,800M Adj. EBITDA(1) / Adj. EBITDA Margin(1) $394M / 10.2% 10.0% - 10.8% Adj. Free Cash Flow(2) as % of Adj. EBITDA(1) 1.5%(3) 15% - 20%(3) Other Modeling Considerations Actuals (4) Government
Slide 11: Appendix
Appendix
Slide 12: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend 2.2% (0.8)% 0.2% (3.7)% (3.4)% (3.2)% (5.5)% (7.7)% (17.0)% (15.9)% Q2' 22 Q3' 22 Q4' 22 Q1' 23 Q2' 23 Q2' 22 Q3' 22 Q4' 22 Q1' 23 Q2' 23 Transportation • Commercial: Revenue Trend ◦ New business ramp, better client retention an
Slide 13: Q2 Highlights and Recognition
Q2 Highlights and Recognition A collaborative, team-oriented culture laser-focused on driving valuable outcomes for clients 13
Slide 14: 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 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures We have reported our financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non- GAAP measures allow investo
Slide 16: 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 17: 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 18: 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 19: 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) Q2 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Revenue $ 915 $ 922 $ 3,858 $ 986 $ 977 $ 928 $ 967 Adjustment: D
Slide 20: CONTINUED
CONTINUED (in millions) Q2 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (7) $ (8) $ (127) $ (365) $ 23 $ 5 $ 210 Adjustment: Total Non-GAAP Adjustments 17 11 219 374 7 13 (175) Adjusted PBT Before Adjustment for Divestitures 10 3 92
Slide 21: CONTINUED
CONTINUED (in millions) Q2 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 ADJUSTED EBITDA Net Income (Loss) $ (7) $ (6) $ (182) $ (333) $ 15 $ — $ 136 Income tax expense (benefit) — (2) 55 (32) 8 5 74 Depreciation and amortization 57 61 230 62 54 53 61 Contract inducement amortization 1 1 3 1
Slide 22: 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 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 ADJUST
Slide 23: CONTINUED
CONTINUED (Margins are in %) Q2 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (0.8)% (0.9)% (3.3)% (37.0)% 2.4 % 0.5 % 21.7 % Adjustments: Total non-GAAP adjustments 1.8 1.3 5.7 37.9 0.6 1.5 (18.1) Interest expense 3.0 2.9 2.2
Slide 24: CONTINUED
CONTINUED Free Cash Flow and Adj. Free Cash Flow (in millions) Q2 2023 Q1 2023 FY 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Operating Cash Flow $ (10) $ (12) $ 144 $ 51 $ 98 $ (16) $ 11 Cost of additions to land, buildings and equipment (9) (11) (92) (30) (11) (17) (34) Cost of additions to internal use
Slide 25: Trademark notice
© 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.