In This Article:
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Adjusted Revenue: $751 million, down 8.5% year-over-year from $821 million in Q1 2024.
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Adjusted EBITDA: $37 million, up from $36 million in Q1 2024.
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Adjusted EBITDA Margin: 4.9%, up 50 basis points year-over-year.
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New Business ACV: $109 million, up 14% year-over-year.
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New Business TCV: $280 million, up 96% year-over-year.
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Net ARR Activity: $116 million, sequentially higher.
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Qualified ACV Pipeline: $3.2 billion, up 16% year-over-year.
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Commercial Segment Adjusted Revenue: $402 million, down 4.1% year-over-year.
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Government Segment Adjusted Revenue: $216 million, down 16% year-over-year.
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Transportation Segment Adjusted Revenue: $133 million, down 7.6% year-over-year.
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Unallocated Costs: $47 million, down from $65 million in Q1 2024.
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Adjusted Free Cash Flow: Negative $74 million.
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Total Cash on Balance Sheet: Approximately $293 million.
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Net Leverage Ratio: 2.7 turns, expected to decrease to around 1.5 turns by the end of 2025.
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Capital Expenditure: 2.7% of revenue.
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Conduent Inc (NASDAQ:CNDT) reported a strong start to 2025 with adjusted revenue of $751 million and an adjusted EBITDA margin of 4.9%.
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New business signings improved year-on-year, with a 14% increase in new business ACV and a 96% increase in new business TCV.
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The company completed three divestitures in 2024, generating nearly $800 million in net proceeds, which contributed to reducing debt and share repurchases.
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Conduent Inc (NASDAQ:CNDT) is leveraging AI and Gen AI to enhance fraud prevention capabilities, particularly in government services, which is expected to drive future growth.
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The company is relatively insulated from macroeconomic uncertainties and tariffs, with minimal exposure in its transportation segment.
Negative Points
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Adjusted revenue for Q1 2025 was down 8.5% year-over-year, primarily due to declines in the government segment.
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The commercial segment experienced a 4.1% decline in adjusted revenue, driven by volume degradation in its largest commercial client.
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Government segment adjusted revenue decreased by 16%, impacted by the termination of a large healthcare contract and onetime items.
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Transportation segment revenue fell by 7.6% year-over-year, although operational improvements were noted.
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The company incurred $3 million and accrued $22 million in nonrecurring expenses related to a cyber event, impacting financials.
Q & A Highlights
Q: Can you elaborate on how government efficiency efforts create opportunities for Conduent rather than being detrimental? A: Clifford Skelton, CEO, explained that federal funds for entitlements are distributed through states, and both Congress and the President have indicated they won't touch entitlements. The opportunity for Conduent lies in administrative costs and fraud detection. For example, Conduent helps states manage SNAP programs and detect fraud, such as duplicate payments, which can generate revenue for the company.