Conduent (CNDT) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $751M, with adjusted revenue also at $751M, down 8.5%–18.5% year-over-year due to divestitures and lower volumes, partially offset by new business ramp-up.

• Adjusted EBITDA was $37M, margin improved to 4.9% (up 50 bps), driven by cost efficiencies and legal recoveries.

• New business signings ACV reached $109M, TCV up 96% to $280M, and Net ARR Activity (TTM) was $116M, reflecting a strong pipeline and improved retention.

• Portfolio rationalization continued with three divestitures in 2024, generating nearly $800M in net proceeds, reducing debt by $639M, and repurchasing 61M shares.

• The company remains insulated from most macroeconomic and tariff headwinds, with minimal exposure in transportation and strong liquidity.

Financial highlights

• Adjusted revenue declined 8.5% year-over-year, mainly due to government segment and divestitures.

• Adjusted EBITDA margin improved to 4.9% from 4.4% in Q1 2024; adjusted EBITDA was $37M.

• Adjusted free cash flow was negative $74M, a significant improvement over Q1 2024 when normalized for one-time items.

• Net leverage ratio rose to 2.7x due to divestitures, with $293M cash at quarter end and $540M–$550M available under revolver.

• GAAP net loss was $51M, with diluted EPS of $(0.33); adjusted diluted EPS was $(0.13).

Outlook and guidance

• FY 2025 adjusted revenue expected between $3,100M and $3,250M; adjusted EBITDA margin guided to 4.5%–5.5%.

• Q2 2025 revenue is expected to be sequentially higher than Q1 but below Q2 2024, with margin projected at 4%–4.5%.

• Management remains confident in achieving 2025 exit rate targets and expects margin expansion in the second half.

• Guidance does not include potential impacts from further divestitures planned for 2025.