Slide 1: Conduent Q4 and Full Year 2022 Earnings Results
February 14, 2023 Conduent Q4 and Full Year 2022 Earnings Results
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: Q4 & Full Year 2022 Highlights
Q4 & Full Year 2022 Highlights • Adj.Revenue(1): $986M / $3,851M • Adj. EBITDA(1): $95M / $394M Q4 & Full Year • Adj. EBITDA Margin(1): 9.6% / 10.2% Results / Metrics • New business signings ACV(2): $194M / $732M • Net ARR Activity Impact (TTM)(2,3): $114M • Revenue and EBITDA were within prior guid
Slide 5: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1,3) New Business TCV(1,3) $1,000M $600M $2,000M $1,887 $1,705 $8 $726 $732 $106 $402 $403 $106 $8 $400M $500M $1,000M $1,879 $680 $1,599 $724 $200M $194 $620 $108 $106 $159 $293 $0M $0M $0M Q4'21 Q4'22 FY'21 FY'22 Q4'21 Q4'22 FY'21 FY'22 Q4' 21
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 293 180 191 194 159 167 3 1 1 3 464 $150M — $1,000M 347 680 166 177 188 193 159 396 $0M 1,461 936 302 658 580 Q4' 21 Q1' 22 Q2' 22 Q3' 22 Q4' 22 $0M Q4' 21 Q1' 22 Q2' 22 Q3' 22 Q4' 22 ACV PSNAP R
Slide 7: Full Year 2022 P&L Metrics
Full Year 2022 P&L Metrics Adj. Revenue (1) Adj. Revenue (1) Trend (Y/Y Compare) $6,000M (5.4)% Y/Y (4.4)% in CC $4,070M $3,851M $4,000M (0.5)% (4.1)% (4.5)% $2,000M (5.0)% (8.0)% $—M 2021 2022 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Adj. EBITDA(1) / Adj. EBITDA Margin(1) • Adj. Revenue(1): Decline
Slide 8: Full Year 2022 P&L by Segment
Full Year 2022 P&L by Segment Adj. Revenue (1) Adj. EBITDA(1) Contributions (20.8)% Y/Y Transportation, $709M (24.3)% Y/Y $84M (5.0)% Y/Y $331M (12.1)% Y/Y $394M 17.1% Y/Y $(247)M $226M 14.5% Y/Y Commercial, $1,992M Government, $1,150M (1.2)% Y/Y (12.0)% Y/Y Commercial Government Transportation Unal
Slide 9: Q4 & FY 2022 Cash Flow and Balance Sheet
Q4 & FY 2022 Cash Flow and Balance Sheet Balance Sheet • Adj. Free Cash Flow(1): Q4 $24M / FY $6M ($ in millions) 12/31/2021 12/31/2022 Total Cash(2) $420 $598 • Capex(6) as % of revenue: Q4 4.4% / FY 4.0% Total Debt(4) 1,400 1,282 • Net adjusted leverage ratio(7): 1.8x Term Loan A(3) due 2026 265 2
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 Modelling Considerations Government Stimulu
Slide 11: Appendix
Appendix CONDUENT ss
Slide 12: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend 2.2% 1.0% 0.0% (2.8)% (3.7)% (3.4)% (5.5)% (8.9)% (17.0)% (15.9)% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Transportation • Commercial: Revenue Trend ◦ New business ramp, better client rete
Slide 13: Q4 Awards and Recognition
Q4 Awards and Recognition A collaborative, team-oriented culture laser-focused on driving valuable outcomes for clients 13
Slide 14: 2022 Operational Highlights & Recognition
2022 Operational Highlights & Recognition Industry Client Culture ◦ 30-point Increase in Client NPS Scores ◦ Newsweek: Top 100 Most Loved Workplaces Recognized as a leader by the following: Past 3 Years ◦ India Workplace Equality Index (IWEI): ◦ GM Supplier of the Year Award 2 Years in Top Employer
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022 FY 2021 Revenue $ 986 $ 977 $ 928 $ 967 $ 1,048 $ 3,858 $ 4,140 Adjustmen
Slide 21: Continued
CONTINUED (in millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022 FY 2021 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ (365) $ 23 $ 5 $ 210 $ (54) $ (127) $ (25) Adjustment: Total Non-GAAP Adjustments 374 7 13 (175) 96 219 239 Adjusted PBT Before Adjustment for Divestitures 9 30
Slide 22: Continued
CONTINUED (in millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022 FY 2021 ADJUSTED EBITDA Net Income (Loss) $ (333) $ 15 $ — $ 136 $ (40) $ (182) $ (28) Income tax expense (benefit) (32) 8 5 74 (14) 55 3 Depreciation and amortization 62 54 53 61 87 230 352 Contract inducement amortization 1 1
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations 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 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022
Slide 24: Continued
CONTINUED (Margins are in %) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022 FY 2021 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin (37.0)% 2.4 % 0.5 % 21.7 % (5.2)% (3.3)% (0.6)% Adjustments: Total non-GAAP adjustments 37.9 0.6 1.5 (18.1) 9.2 5.7 5.8 Interest expense 2.5 2.3 1.9
Slide 25: Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow (in millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 FY 2022 FY 2021 Operating Cash Flow $ 51 $ 98 $ (16) $ 11 $ 85 $ 144 $ 243 Cost of additions to land, buildings and equipment (30) (11) (17) (34) (28) (92) (80) Cost of additions to
Slide 26: © 2020 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks
© 2020 Conduent Inc. All rights reserved. Conduent and Conduent Agile Star are trademarks of Conduent Inc. in the United States and/or other countries.