Slide 1: Conduent Q1 2024 Financial Results
Conduent Q1 2024 Financial Results May 01, 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: Q1 2024 Highlights
Q1 2024 Highlights • Revenue: $921M • Adj. EBITDA(1): $69M Q1 Results / • Adj. EBITDA Margin(1): 7.5% Metrics • New business signings ACV(2): $99M • Net ARR Activity Impact (TTM)(2,3): $17M • Q1 Puts and Takes • Strong revenue quarter, exceeding expectations and flat YOY • Adj. EBITDA/EBITDA margin
Slide 5: Divestiture Update
Divestiture Update 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 $303M (30%) Capital deployed against 30%* prepayment of debt and the share $519M rep
Slide 6: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $150M $75M $300M $125 $61 $244 $99 $100M $50M $200M $153 $33 $50M $25M $100M $0M $0M $0M Q1'23 Q1'24 Q1'23 Q1'24 Q1'23 Q1'24 Net ARR Activity (TTM)(1,2) Q1 New Business ACV(1) by Segment $150M $137 $32M $35M $108 $103 $100
Slide 7: 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 $200M $154 $152 $1,000M $336 $125 $99 $316 $100M $244 $153 $668 $390 $454 $829 $417 $0M Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 $0M Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Renewal NB New Busine
Slide 8: Q1 2024 P&L Metrics
Q1 2024 P&L Metrics Revenue Revenue Trend (Y/Y Compare) (0.1)% Y/Y (0.3)% in CC $1,000M $922M $921M (0.1)% (1.4)% (4.0)% (3.3)% (4.6)% $500M $0M Q1 2023 Q1 2024 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Adj. EBITDA(1) / Adj. EBITDA Margin(1) • Revenue: Substantially unchanged. New business (23.3)% Y/Y ramp
Slide 9: Q1 2024 P&L by Segment
Q1 2024 P&L by Segment Revenue Adj. EBITDA(1) Contributions 166.7% Y/Y (33.7)% Y/Y Transportation, $180M $8M $55M 20.0% Y/Y 7.7% Y/Y (23.3)% Y/Y $70M $69M $(64)M 4.9% Y/Y Commercial, $483M Government, $258M (4.9)% Y/Y (2.3)% Y/Y Commercial Government Transportation Unallocated Adjusted Costs EBITDA
Slide 10: Q1 2024 Cash Flow and Balance Sheet
Q1 2024 Cash Flow and Balance Sheet • Adj. Free Cash Flow(1): $(60)M Balance Sheet ($ in millions) 12/31/2023 3/31/2024 • Capex(6) as % of revenue: 2.6% Total Cash (2) $519 $424 (7) • Net adjusted leverage ratio : 2.0x Total Debt(4) 1,263 1,094 • $424M of cash(2) at end of Q1 2024 Term Loan A(3) due
Slide 11: FY 2023 Actuals and FY 2024 Outlook
FY 2023 Actuals and FY 2024 Outlook(2,3) FY 2023 FY 2024 Actuals Outlook (2,3) Revenue $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 $62M App
Slide 12: 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 13: Appendix
Appendix
Slide 14: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend (0.8)% 0.2% (3.6)% (4.9)% (7.7)% (0.3)% (3.2)% (2.3)% (7.7)% (8.2)% Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Q1' 23 Q2' 23 Q3' 23 Q4' 23 Q1' 24 Transportation Revenue Growth Rates (2025 Exit Rate): Revenue Trend 20.0% As communicated
Slide 15: Q1 Highlights and Recognition
Q1 Highlights and Recognition A collaborative, team-oriented culture laser-focused on driving valuable outcomes for clients 15
Slide 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 REVENUE Revenue $ 921 $ 3,722 $ 953 $ 932 $ 915 $ 922 Adjustment: Foreign
Slide 22: Non-GAAP Reconciliations (continued)
CONTINUED (in millions) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ 127 $ (332) $ (4) $ (313) $ (7) $ (8) Adjustment: Total Non-GAAP Adjustments (147) 339 15 296 17 11 Adjusted PBT $ (20) $ 7 $ 11 $ (17) $ 10 $ 3 Income tax expense (bene
Slide 23: Adjusted EBITDA reconciliation (continued)
CONTINUED (in millions) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EBITDA Net Income (Loss) $ 99 $ (296) $ 6 $ (289) $ (7) $ (6) Income tax expense (benefit) 28 (36) (10) (24) — (2) Depreciation and amortization 62 264 65 81 57 61 Contract inducement amortization 1 3 — 1 1 1 Interest e
Slide 24: Adjusted Diluted EPS reconciliation (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 %) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 (3) ADJUSTED D
Slide 25: Adjusted Margin reconciliation (continued)
CONTINUED (Margins are in %) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin 13.8 % (8.9)% (0.4)% (33.6)% (0.8)% (0.9)% Adjustments: Total non-GAAP adjustments (15.9) 9.1 1.6 31.8 1.8 1.3 Interest expense 2.9 3.0 3.0 3.0 3.0 2.9 Marg
Slide 26: Free Cash Flow and Adj. Free Cash Flow
CONTINUED Free Cash Flow and Adj. Free Cash Flow (in millions) Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Operating Cash Flow $ (37) $ 89 $ 122 $ (11) $ (10) $ (12) Cost of additions to land, buildings and equipment (13) (51) (18) (13) (9) (11) Cost of additions to internal use software (8) (42
Slide 27: © 2024 Conduent, Inc. All rights reserved
© 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.