Conduent Incorporated

Greetings. Welcome to the Conduent Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, David Chen, VP of Investor Relations. Thank you. You may begin.

Thank you, Operator, and thanks everyone for joining us today to discuss Conduent's first quarter 2025 earnings. I am joined today by Cliff Skelton, our President and CEO, and Giles Goodburn, our CFO. This call is being webcast, and a copy of the slides used during this call, as well as the press release, were filed with the SEC this morning on Form 8-K. This information, as well as the detailed financial metrics package, are available on the Investor Relations section of the Conduit website. During this call, we may make statements that are forward-looking. These forward-looking statements reflect management's current beliefs, assumptions, and expectations, and are subject to a number of factors that may cause actual results to differ materially from those statements. Information concerning these factors is included in Conduit's annual report on Form 10-K filed with the SEC. We do not intend to update these forward-looking statements as a result of new information or future events or developments, except as required by law. The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with U.S. GAAP, they should be viewed in addition to and not as a substitute for the company's reported results. For more information regarding definitions of our non-GAAP measures and how we use them, as well as the limitations to their usefulness for comparative purposes, please see our press release. And now, I would like to turn the call over to Cliff.

Thank you, David. You've just heard a new voice in David Chen, our new head of investor relations. David has been with the company for a few years and also heads up our mergers and acquisitions team. Given the continuation of our portfolio rationalization efforts, we thought a strong connection between M&A and IR was important. So welcome, David. Now, as you can tell already, you'll also hear the voice of Giles Goodburn, our former head of IR and FP&A, who now succeeds Steve Wood as our chief financial officer. Steve has done a great work over the last four years, has been a critical confidant to me, and has been preparing Giles for this position along the way as his successor. I'd like to thank Steve for his hard work, wise counsel, and strong leadership as he moves on to another phase in his career. As always, I'll preamble the quarter, turn it over to Giles for the detailed numbers, and I'll close with some strategic thinking on why we feel optimistic in what some may call uncertain times. Let me start by saying Q1 represented a strong start to the year for us. We feel good about the adjusted revenue print of $751 million. and particularly good about adjusted EBITDA and EBITDA margin of 37 million and 4.9% respectively. Nevertheless, we need to keep the pedal down in Q2 to meet those first half revenue expectations we laid out last quarter. We remain optimistic and still see Condo in achieving those guidance numbers and our 2025 exit rate metrics. New business signings were improved year on year, and we're expecting a relatively strong Q2 in sales. The good news is that while many suffer through macroeconomic uncertainty and the known and unknown effects of tariffs, we feel somewhat fortunate not to feel most of those headwinds. We only have one business, transportation, where we have very slight exposure to tariffs regarding equipment sales and implementations. But for the most part, we are insulated. Of equal or more importance is the fact that while government efficiency efforts may create headwinds for some, despite what may be the perception in the market, we see far more opportunity on the horizon, given that nearly all of our government business is conducted to the state and local level, and some of the federal entitlement pushdown efforts like Medicaid and SNAP fraud reduction expectations play well for us as we roll out new and improved fraud prevention capabilities. We'll talk about that here in just a few minutes. Now, for the past two years, we've discussed the character of the company, as one of significant breadth. With breadth of products, services, industries, and public versus commercial segments comes higher cost in the center, management bandwidth consumption, and higher technology costs. We've consistently stated that a comparison of scarcity value on the outside versus synergy and growth opportunities on the inside will help us craft our portfolio rationalization plan. We've said that the rationalization efforts will allow for accelerated growth and use of proceeds that can reduce debt, increase profitability, and or free up cash and capital for other efforts, such as share buybacks, and in our case, buying out our activist shareholder. Over the past six months, we've considered where we are on the journey and concluded there are more assets to adjudicate, and the cost in the center can come down coincident with running the company in a more segmented way. Let's turn to slide five and talk about what we have done. We completed three divestitures in 2024, generating nearly $800 million of net proceeds. We said we would deploy roughly $1 billion, and 85% of that target is complete, resulting in $639 million less debt and 61 million shares repurchased. Yet still, We believe there's more to do in 2025. We've targeted assets we think will generate another $350 million in proceeds, then surpassing our $1 billion target. Importantly, it's the capital deployment and the reduction in growth impediments that will add real value. While these potential rationalized assets would benefit greatly from the scale and synergies outside a conduit, when the dust settles, we'll be in a far more opportunistic place. Slide six depicts that transformation journey where we land on an optimized portfolio, two operating units serving different markets, a thin center with a strong balance sheet, and positive growth. Meanwhile, in a minute, I'll describe why I'm excited about where we're doubling down with respect to talent, portfolio growth opportunities, and proof points for the future. But first, let me turn it over to Giles for the numbers. Giles?