Conduent Incorporated · NASDAQ:CNDT
Conduent — Q3 2022 Earnings Presentation
25 slides from Conduent's earnings presentation, Nov 1, 2022
Slide 1: Conduent Q3 2022 Earnings Results
November 1, 2022 Conduent Q3 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: Q3 2022 Highlights
Q3 2022 Highlights • Adj.Revenue(1): $977M Q3 Results / • Adj. EBITDA(1) / Adj. EBITDA Margin(1): $105M / 10.7% Metrics • New business signings ACV(2): $191M • Net ARR Activity Impact (TTM)(2,3): $70M • Strong sales quarter with expanded pipeline • ISG named Conduent a leader in Customer Experience
Slide 5: Key Sales Metrics
Key Sales Metrics New Business ACV(1) New Business ARR(1) New Business TCV(1) $300M $100M $86M $89M $500M $191M $339M $348M $200M $6M $5M $6M $150M $342M $5M $50M $250M $100M $185M $334M $145M $—M $0M $—M Q3'21 Q3'22 Q3 Q3' 21 Q3' 22 ACV PSNAP 2021 2022 TCV PSNAP Net ARR Activity (TTM)(1,2) Q3 New B
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 293 180 191 159 167 6 150 1 3 464 $150M 5 0 $1,000M 185 348 159 166 177 145 339 396 $0M 276 1,461 936 302 658 Q3' 21 Q4' 21 Q1' 22 Q2' 22 Q3' 22 $0M Q3' 21 Q4' 21 Q1' 22 Q2' 22 Q3' 22 ACV PSNAP R
Slide 7: Q3 2022 P&L Metrics
Q3 2022 P&L Metrics Adj. Revenue (1) Adj. Revenue (1) Trend (Y/Y Compare) $1,500M (4.1)% Y/Y (2.7)% in CC $1,019M $977M $1,000M (0.4)% (0.5)% (4.1)% $500M (5.0)% $—M (8.0)% Q3 '21 Q3 '22 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Adj. EBITDA(1) / Margin • Adj. Revenue(1): Decline driven by lower non- (
Slide 8: Q3 2022 P&L by Segment
Q3 2022 P&L by Segment Adj. Revenue (1) Adj. EBITDA(1) Contributions 13.6% Y/Y Transportation, $182M (33.8)% Y/Y $25M 1.1% Y/Y $88M (11.8)% Y/Y 70.0% Y/Y $105M $68M $(76)M 1.3% Y/Y Commercial, $504M Government 2.2% Y/Y Services, $291M Commercial Government Transportation Unallocated Adjusted (15.9)%
Slide 9: Q3 2022 Cash Flow and Balance Sheet
Q3 2022 Cash Flow and Balance Sheet Balance Sheet • Adj. Free Cash Flow(1): $78M ($ in millions) 12/31/2021 9/30/2022 Total Cash(2) $420 $587 • Capex(6) as % of revenue: 2.8% Total Debt(4) 1,400 1,286 Term Loan A(3) due 2026 265 255 (7) • Net adjusted leverage ratio : 1.7x 515 511 Term Loan B(3) due
Slide 10: FY 2022 Outlook
FY 2022 Outlook (4) FY 2021 FY 2022 Actuals Outlook (4) Adj. Revenue(1) $4,070M $3,850M - $3,950M Adj. EBITDA(1) / Adj. EBITDA Margin(1) $448M / 11.0% 10.0% - 10.5% Adj. Free Cash Flow(2) as % of Adj. EBITDA(1) Approx. 18% (3) Approx. 15% (3) Other Modelling Considerations Government Stimulus Revenu
Slide 11: Appendix
Appendix CONDUENT ss
Slide 12: Segment Revenue Trend
Segment Revenue Trend Commercial Government Revenue Trend Revenue Trend 2.2% 0.3% 1.0% 0.0% (2.0)% (2.8)% (3.7)% (8.9)% (17.0)% (15.9)% Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Transportation • Commercial: Revenue Trend ◦ New business ramp, better client retent
Slide 13: Operational Highlights & Recognition
Operational Highlights & 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 year 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 busin
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, as applicable, for the following items, for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjus
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) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Revenue $ 977 $ 928 $ 967 $ 4,140 $ 1,048 $ 1,038 $ 1,026
Slide 20: CONTINUED
CONTINUED (in millions) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 ADJUSTED EFFECTIVE TAX Income (Loss) Before Income Taxes $ 23 $ 5 $ 210 $ (25) $ (54) $ 19 $ 19 $ (9) Adjustment: Total Non-GAAP Adjustments 7 13 (175) 239 96 45 42 56 Adjusted PBT Before Adjustment for Divestitu
Slide 21: CONTINUED
CONTINUED (in millions) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 ADJUSTED EBITDA Net Income (Loss) $ 15 $ — $ 136 $ (28) $ (40) $ 11 $ 12 $ (11) Income tax expense (benefit) 8 5 74 3 (14) 8 7 2 Depreciation and amortization 54 53 61 352 87 84 86 95 Contract inducement amortiza
Slide 22: 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 %) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021
Slide 23: CONTINUED
CONTINUED (Margins are in %) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 ADJUSTED OPERATING MARGIN Income (Loss) Before Income Taxes Margin 2.4 % 0.5 % 21.7 % (0.6)% (5.2)% 1.8 % 1.9 % (0.9)% Adjustments: Total non-GAAP adjustments 0.6 1.5 (18.1) 5.8 9.2 4.3 4.0 5.4 Interest expe
Slide 24: Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow
Non-GAAP Reconciliation: Free Cash Flow and Adj. Free Cash Flow (in millions) Q3 2022 Q2 2022 Q1 2022 FY 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Operating Cash Flow $ 98 $ (16) $ 11 $ 243 $ 85 $ 55 $ 105 $ (2) Cost of additions to land, buildings and equipment (11) (17) (34) (80) (28) (13) (25) (14) Co
Slide 25: © 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.