Slide 1: Conduent Q3 2024 Financial Results
Conduent Q3 2024 Financial Results November 06, 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: Q3 2024 Highlights
Q3 2024 Highlights • Adj. Revenue(1): $781M • Adj. EBITDA(1): $32M Q3 Results / • Adj. EBITDA Margin(1): 4.1% Metrics • New business signings ACV(2): $111M • Net ARR Activity Impact (TTM)(2,3): $46M (1) Refer to Appendix for complete Non-GAAP reconciliations of Adjusted Revenue, Adjusted EBITDA and
Slide 5: Divestiture Update
Divestiture Update Deployed (Target $1B) • Portfolio rationalization on track, already at top-end of proceeds' $775M Approx. targeted range $1B to 75%* $825M • 75% of $1B capital target deployed • ~61M shares repurchased $50M to • Debt repayment leading to lower $100M leverage over time $519M • Line
Slide 6: Key Sales Metrics
Key Sales Metrics New Business ACV(1) Signings TCV Signings (incl. ARR(1) + NRR(1)) $150M $141 $137 $141 $1,000M $111 $257 $96 $235 $100M $266 $500M $143 $273 $50M $434 $810 $395 $242 $659 $0M Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q3' 24 $0M Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q3' 24 Renewal NB New Business (ARR(1) +
Slide 7: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $150M $141 $75M $300M $266 $63 $111 $235 $53 $100M $50M $200M $50M $25M $100M $0M $0M $0M Q3'23 Q3'24 Q3'23 Q3'24 Q3'23 Q3'24 Net ARR Activity (TTM)(1,2) Q3 New Business ACV(1) by Segment $91 $28M $100M $49 $46 $6 $0M $67M
Slide 8: Q3 2024 P&L Metrics
Q3 2024 P&L Metrics Adj. Revenue(1) Adj. Revenue(1) Trend (Y/Y Compare) (6.0)% Y/Y (6.0)% in CC $1,000M $831M $781M (0.2)% (4.5)% (5.0)% (5.7)% (6.0)% $500M $0M Q3 2023 Q3 2024 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q3' 24 Adj. EBITDA(1) / Adj. EBITDA Margin(1) • Adj. Revenue(1): Decline primarily driven by lo
Slide 9: Q3 2024 P&L by Segment
Q3 2024 P&L by Segment Adj. Revenue(1) Adj. EBITDA(1) Contributions $60M $0M 6.0% Y/Y Transportation, $141M (2.1)% Y/Y (100.0)% Y/Y 20.7% Y/Y (46.7)% Y/Y $35M $32M Commercial, $385M (36.8)% Y/Y $(63)M (3.0)% Y/Y Government, $255M (12.1)% Y/Y Commercial Government Transportation Unallocated Adjusted
Slide 10: Q3 2024 Cash Flow and Balance Sheet
Q3 2024 Cash Flow and Balance Sheet • Adj. Free Cash Flow(1): $(6)M Balance Sheet ($ in millions) 12/31/2023 9/30/2024 • Capex(6) as % of revenue: 2.5% Total Cash (2) $519 $404 (7) • Net adjusted leverage ratio : 1.4x Total Debt(4) 1,263 711 • $404M of cash(2) at end of Q3 2024 Term Loan A(3) due 20
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) $3,320M $3,185M - $3,215M Adj. EBITDA Margin(1) 7.4% 3.75% - 4.0% Other Modeling Considerations(3) Adj. Free Cash Flow(1) $(5)M Approx. ($50M) Interest Expense $111M Approx. $71M Restructuring $62M Approx. $30M
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: Q3 Update
Q3 Update People Solutions Objectives • In line with a focus on • Commercial sales strong, • Divestiture work NelsonHall 2024 NEAT Report growth, recruited and offsetting a slow start in continues: Leader for Healthcare Payer onboarded 3 new and Government sales… ◦ Final stages of Operational Transf
Slide 15: Conduent at-a-Glance
Conduent at-a-Glance Scale Results Outcomes $3.0B - $3.3B 8%-9% +30 points 2025 Exit Rate(1) 2025 Exit Rate(1) (3) NPS improvement since 2017 Adj. Revenue(2) Adj. EBITDA Margin(2) ~50% ~90% 20 years of Fortune 100 are Clients Average Tenure of Recurring Revenue Top 20 Clients 46 of 50 8% CAGR ~40% S
Slide 16: Commercial Solutions
Commercial Solutions Robust portfolio of technology-led solutions driving efficiencies and end-user experience across multiple industries ~$340M ACV(1,2) ~$1.7B Revenue(1) Cross-Industry Solutions Industry-Specific Solutions Transforming end-to-end business processes by automating and Comprehensive
Slide 17: Government and Transportation Solutions
Government and Transportation Solutions Helping governments and agencies deliver high quality programs to their constituents ~$170M Government ACV(1,2) ~$130M Transportation ACV(1,2) Government Solutions (Health, Human Services & Payments) Transportation Solutions Helping state agencies streamline e
Slide 18: Conduent 2025 Exit Profile
Conduent Growing Enhanced Talent Cash Flows Infusion 2025 Exit Profile Expanded Rationalized Margins Portfolio Very Low Debt 18
Slide 19: Appendix
Appendix
Slide 20: 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 21: 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 22: 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 23: 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 24: 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 25: Segment Adjusted Revenue Trend
Segment Adjusted Revenue(1) Trend Commercial Government (4.4)% (3.0)% (4.9)% (5.2)% (0.3)% (11.0)% (2.3)% (8.2)% (9.3)% (12.1)% Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q3' 24 Q3' 23 Q4' 23 Q1' 24 Q2' 24 Q3' 24 Transportation Adj. Revenue(1) Growth Rates (2025 Exit Rate): 23.1% As communicated in the March 2023
Slide 26: 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) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 202
Slide 27: Non-GAAP Reconciliations (continued)
CONTINUED (in millions) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ 159 $ 300 $ 127 $ (332) $ (4) $ (313) $ (7) $ (8) Adjustment: Total Non-GAAP Adjustments (183) (333) (147) 339 15 296 17 11 Adjusted PBT Before Adjustmen
Slide 28: Adjusted EBITDA (continued)
CONTINUED (in millions) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED EBITDA Net Income (Loss) $ 123 $ 216 $ 99 $ (296) $ 6 $ (289) $ (7) $ (6) Income tax expense (benefit) 36 84 28 (36) (10) (24) — (2) Depreciation and amortization 44 51 62 264 65 81 57 61 Contract induce
Slide 29: 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 %) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 202
Slide 30: Adjusted Operating and EBITDA Margin (continued)
CONTINUED (Margins are in %) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin 19.7 % 36.2 % 13.8 % (8.9)% (0.4)% (33.6)% (0.8)% (0.9)% Adjustments: Total non-GAAP adjustments (22.7) (40.2) (15.9) 9.1 1.6 31.8 1.8 1.3 I
Slide 31: Free Cash Flow and Adj. Free Cash Flow
CONTINUED Free Cash Flow and Adj. Free Cash Flow (in millions) Q3 2024 Q2 2024 Q1 2024 FY 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Operating Cash Flow $ (13) $ (41) $ (37) $ 89 $ 122 $ (11) $ (10) $ (12) Cost of additions to land, buildings and equipment (8) (18) (13) (51) (18) (13) (9) (11) Cost of add
Slide 32: Footnotes
CONTINUED The below footnotes correspond to the "Q3 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 $11M and $21M of restricted cash as of September 30, 2024 and December 31, 2023, respectively. (
Slide 33: Conduent trademarks notice
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