Conduent (CNDT) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $754M, in line with guidance and slightly higher sequentially, with adjusted EBITDA of $37M and a 4.9% margin, exceeding expectations and up year-over-year.

• Portfolio rationalization and divestitures progressed, with new business sales and ACV up year-over-year and sequentially, and a strong sales pipeline.

• AI initiatives expanded across business areas, focusing on efficiency and quality, with 8 projects in production and a new AI Experience Center.

• Leadership changes included the election of a new Chairman of the Board, signaling a strategic pivot toward growth and portfolio optimization.

• A January 2025 cyber event led to non-recurring costs and ongoing remediation, but did not materially impact operations.

Financial highlights

• Adjusted revenue for Q2 2025 was $754M, down 2.6% year-over-year; GAAP revenue declined 8.9%-9% due to divestitures and lower commercial volumes.

• Adjusted EBITDA was $37M, up 54.2% year-over-year, with a margin of 4.9%, up 180 basis points.

• Net loss for Q2 2025 was $40M, compared to net income of $216M in Q2 2024, mainly due to prior-year divestiture gains.

• Adjusted free cash flow for Q2 2025 was $(30)M; cash flow from operating activities improved to $(15)M from $(41)M year-over-year.

• Ended the quarter with $294M in cash and a net leverage ratio of 2.7x; $540M available under the revolving credit facility.

Outlook and guidance

• Full-year 2025 adjusted revenue guidance is $3,100M–$3,200M, with an exit rate of $3,200M–$3,300M.

• Adjusted EBITDA margin guidance for FY 2025 is 5.0%–5.5%, with an exit rate of approximately 8%.

• Adjusted free cash flow for FY 2025 is expected to range from $0M to $40M.

• Q3 2025 adjusted revenue expected to be higher sequentially but slightly below Q3 2024; adjusted EBITDA margin expected to improve to 5%-5.5%.

• Management remains focused on growth, efficiency, and completing the $1B deployable capital commitment in 2025.