Category: Technology

Release – Conduent Reports Third Quarter 2024 Financial Results

Posted on by aweinsoff@channelchek.com

Research News and Market Data on CNDT

November 06, 2024

Key Q3 2024 Highlights

  • Revenue: $807M
  • Adj. Revenue(1): $781M
  • Pre-tax Income: $159M
  • Adj. EBITDA Margin(1): 4.1%
  • New Business Signings ACV(2): $111M
  • Net ARR Activity Metric(2) (TTM): $46M

FLORHAM PARK, NJ, November 6, 2024 – Conduent Incorporated (Nasdaq: CNDT), a global technology-led business process solutions and services company, today announced its third quarter 2024 financial results.

Cliff Skelton, Conduent President and Chief Executive Officer stated, “All in all, Q3 was a sequentially improved quarter where we met or exceeded Revenue and EBITDA expectations. Our Commercial segment continued to exhibit enhanced performance helping to offset a sales lag in our Government segment. We added several new leaders to our senior team which, when accompanied by continued sequential momentum, will help us finish the year strong.”

“We described a course of action and a set of expectations early in 2023, and we continue to hit our ‘marks’ along the way remaining exactly in line with that previously committed growth trajectory and sequentially expanding margins. Importantly, while our 2024 program of divestitures is complete with transition activities in place, our portfolio remains broad and we continue to see opportunities to further maximize shareholder return.”

Key Financial Q3 2024 Results

($ in millions, except margin and per share data)Q3 2024Q3 2023Current Quarter Y/Y B/(W)
Revenue$807$932(13.4)%
Adjusted Revenue(1)$781$831(6.0)%
GAAP Net Income (Loss)$123$(289)n/m
Adjusted EBITDA(1)$32$60(46.7)%
Adjusted EBITDA Margin (1)4.1%7.2%(310) bps
GAAP Income (Loss) Before Income Tax$159$(313)n/m
GAAP Diluted EPS$0.72$(1.34)n/m
Adjusted Diluted EPS(1)$(0.14)$(0.09)(55.6)%
Cash Flow from Operating Activities$(13)$(11)(18.2)%
Adjusted Free Cash Flow(1)$(6)$(35)82.9%

Performance Commentary

During the third quarter of 2024, the company completed the sale of the Casualty Claims Solutions business, receiving $224 million in cash consideration subject to certain post-closing adjustments.

Also, during the third quarter of 2024, the company used a portion of the proceeds from the divested businesses to voluntarily prepay the entire remaining outstanding balance of $38 million of the Term Loan B and $37 million of the Term Loan A.

Pre-tax income (loss) for the third quarter of 2024 was $159 million versus $(313) million in the prior year period. This increase is primarily driven by the gain on the sale of the Casualty Claims Solutions business and a goodwill impairment in the prior year period.

The third quarter Adjusted EBITDA of $32 million and Adjusted EBITDA Margin of 4.1% exceeded the company’s expectations and was sequentially higher than the prior quarter.

Revenue and Adjusted Revenue for the third quarter of 2024 were also in line with the company’s expectations.

Conduent’s liquidity position remains strong with long-dated debt maturities and a modest net leverage ratio.

In the third quarter of 2024, the company repurchased approximately 3.9 million shares of its common stock in connection with its previously approved $75 million share repurchase program, which has now been completed.

Additional Q3 2024 Performance Highlights

Conduent achieved several milestones in technology-led solutions, operational excellence and culture, including:

  • Appointed a new Group President of the Commercial segment and a new President of Government Solutions;
  • Achieved Leader status across all five categories in the NelsonHall 2024 NEAT Report for Healthcare Payer Operational Transformation;
  • Named “Best Place to Work for Disability Inclusion” for third consecutive year;
  • Recognized by Forbes for fourth consecutive year as one of America’s Best Employers for Diversity;
  • Announced open payments fare collection for Venice and Paris regions allowing transit passengers to pay with contactless credit/debit cards and digital wallets. 22 cities now use Conduent open payments for transit;
  • Received a contract award from the Wisconsin Department of Children and Families to design, develop and implement a modernized child support system to transform service delivery for children and families across the state; and
  • Awarded a new three-year contract with a leading global logistics provider for our FastCap® Finance Analytics solution.

FY 2024 Outlook(2,3)

 FY 2023
Actuals		FY 2024
Outlook(2,3)
   
Adj. Revenue(1)$3,320M $3,185M – $3,215M
   
Adj. EBITDA(1) / Adj. EBITDA Margin(1)$247M / 7.4%3.75% – 4.0%

(1) Refer to Appendix for definition and complete non-GAAP reconciliations of Adjusted Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Diluted EPS and Adjusted Free Cash Flow.
(2) Refer to Appendix for definition.
(3) Refer to Appendix for additional information regarding non-GAAP outlook.

Conference Call

Management will present the results during a conference call and webcast on November 6, 2024 at 9:00 a.m. ET.

The call will be available by live audio webcast along with the news release and online presentation slides at https://investor.conduent.com/.

The conference call will also be available by calling 877-407-4019 toll-free. If requested, the conference ID for this call is 13748951.

The international dial-in is 1-201-689-8337. The international conference ID is also 13748951.

A recording of the conference call will be available by calling 1-877-660-6853 three hours after the conference call concludes. The replay ID is 13748951.

The telephone recording will be available until November 20, 2024.

About Conduent  

Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them. The Company leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 55,000 associates, process expertise and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Conduent adds momentum to its clients’ missions in many ways including disbursing approximately $100 billion in government payments annually, enabling 2.3 billion customer service interactions annually, empowering millions of employees through HR services every year and processing nearly 13 million tolling transactions every day. Learn more at www.conduent.com.

Non-GAAP Financial Measures

We have reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with U.S. GAAP, to exclude the effects of certain items as well as their related tax effects. Management believes that these non-GAAP financial measures provide an additional means of analyzing the results of the current period against the corresponding prior period. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, our reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures and should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with U.S. GAAP. Our management regularly uses our non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. Providing such non-GAAP financial measures to investors allows for a further level of transparency as to how management reviews and evaluates our business results and trends. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on certain of these non-GAAP measures. Refer to the “Non-GAAP Financial Measures” section attached to this release for a discussion of these non-GAAP measures and their reconciliation to the reported U.S. GAAP measures.

Forward-Looking Statements

This press release, any exhibits or attachments to this release, and other public statements we make may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “expectations,” “in front of us,” “plan,” “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” “continue to,” “looking to continue,” “endeavor,” “if,” “growing,” “projected,” “potential,” “likely,” “see,” “ahead,” “further,” “going forward,” “on the horizon,” “as we progress,” “going to,” “path from here forward,” “think,” “path to deliver,” “from here,” and similar expressions (including the negative and plural forms of such words and phrases), as they relate to us, are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact included in this press release or any attachment to this press release are forward-looking statements, including, but not limited to, statements regarding our financial results, condition and outlook; changes in our operating results; general market and economic conditions; our portfolio rationalization plans; our share repurchases; strength of our sales pipeline and balance sheet; our growth strategy; expectations regarding our trajectory toward top line growth, sequential margin improvement, less capital intensity and improved cash flow conversion; statements regarding portfolio divestitures, such as the sale of our Casualty Claims Solutions business; Conduent’s liquidity position remaining strong; progress that we’re making towards our billion dollars of deployable capital; and our projected financial performance for the full year 2024 and 2025, including all statements made under the section captioned “FY 2024 Outlook” within this release. These statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, many of which are outside of our control, that could cause actual results to differ materially from those expected or implied by such forward-looking statements contained in this press release, any exhibits to this press release and other public statements we make.

Important factors and uncertainties that could cause our actual results to differ materially from those in our forward-looking statements include, but are not limited to: risks related to recently completed dispositions including (i) the transfer of our BenefitWallet health savings account, medical savings account, and flexible spending account portfolio, (ii) the sale of our Curbside Management and Public Safety Solutions businesses and (iii) the sale of our Casualty Claims Solutions business, including but not limited to our ability to realize the benefits anticipated from such transactions, unexpected costs, liabilities or delays in connection with such transactions; ; government appropriations and termination rights contained in our government contracts, the competitiveness of the markets in which we operate and the significant transaction costs associated with such transactions; our ability to renew commercial and government contracts, including contracts awarded through competitive bidding processes; our ability to recover capital and other investments in connection with our contracts; our reliance on third-party providers; risk and impact of geopolitical events and increasing geopolitical tensions (such as the wars in Ukraine and the Middle East), macroeconomic conditions, natural disasters and other factors in a particular country or region on our workforce, customers and vendors; our ability to deliver on our contractual obligations properly and on time; changes in interest in outsourced business process services; claims of infringement of third-party intellectual property rights; our ability to estimate the scope of work or the costs of performance in our contracts; the loss of key senior management and our ability to attract and retain necessary technical personnel and qualified subcontractors; our failure to develop new service offerings and protect our intellectual property rights; our ability to modernize our information technology infrastructure and consolidate data centers; expectations relating to environmental, social and governance considerations; utilization of our stock repurchase program; the failure to comply with laws relating to individually identifiable information and personal health information; the failure to comply with laws relating to processing certain financial transactions, including payment card transactions and debit or credit card transactions; breaches of our information systems or security systems or any service interruptions; our ability to comply with data security standards; developments in various contingent liabilities that are not reflected on our balance sheet, including those arising as a result of being involved in a variety of claims, lawsuits, investigations and proceedings; risks related to divestitures and acquisitions; risk and impact of potential goodwill and other asset impairments; our significant indebtedness and the terms of such indebtedness; our failure to obtain or maintain a satisfactory credit rating and financial performance; our ability to obtain adequate pricing for our services and to improve our cost structure; our ability to collect our receivables, including those for unbilled services; a decline in revenues from, or a loss of, or a reduction in business from or failure of significant clients; fluctuations in our non-recurring revenue; increases in the cost of voice and data services or significant interruptions in such services; our ability to receive dividends or other payments from our subsidiaries; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections in our 2023 Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. Any forward-looking statements made by us in this release speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether because of new information, subsequent events or otherwise, except as required by law.

# # #

Media Contacts:
Sean Collins, Conduent, +1-310-497-9205, sean.collins2@conduent.com

Investor Contacts:
Giles Goodburn, Conduent, +1-203-216-3546, ir@conduent.com

Appendix

Definitions

Net ARR Activity Metric (TTM)

Projected Annual Recurring Revenue (ARR) for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the company was notified in that same time period, which could positively or negatively impact results. The metric annualizes the net impact to revenue. Timing of revenue impact varies and may not be realized within the forward 12-month timeframe. The metric is for indicative purposes only. This metric excludes non-recurring revenue signings. This metric is not indicative of any specific 12 month timeframe.

New Business Annual Contract Value (ACV): (New Business TCV / contract term) multiplied by 12.

New Business Total Contract Value (TCV): Estimated total future revenues from contracts signed during the period related to new logo, new service line or expansion with existing customers.

TTM: Trailing twelve months.

PBT: Profit before tax.

Non-GAAP Financial Measures

We have reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). In addition, we have discussed our financial results using non-GAAP measures.

We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with U.S. GAAP, to exclude the effects of certain items as well as their related tax effects. Management believes that these non-GAAP financial measures provide an additional means of analyzing the results of the current period against the corresponding prior period. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the company’s reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures and should be read only in conjunction with our Consolidated Financial Statements prepared in accordance with U.S. GAAP. Our management regularly uses our non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions, and providing such non-GAAP financial measures to investors allows for a further level of transparency as to how management reviews and evaluates our business results and trends. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on certain of these non-GAAP measures.

Management cautions that amounts presented in accordance with Conduent’s definition of non-GAAP financial measures may not be comparable to similar measures disclosed by other companies because not all companies calculate non-GAAP measures in the same manner.

A reconciliation of the following non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP are provided below.

These reconciliations also include the income tax effects for our non-GAAP performance measures in total, to the extent applicable. The income tax effects are calculated under the same accounting principles as applied to our reported pre-tax performance measures under Accounting Standards Codification 740, which employs an annual effective tax rate method. The noted income tax effect for our non-GAAP performance measures is effectively the difference in income taxes for reported and adjusted pre-tax income calculated under the annual effective tax rate method. The tax effect of the non-GAAP adjustments was calculated based upon evaluation of the statutory tax treatment and the applicable statutory tax rate in the jurisdictions in which such charges were incurred.

Adjusted Revenue, Adjusted Profit Before Tax, Adjusted Net Income (Loss), Adjusted Diluted Earnings per Share, Adjusted Weighted Average Common Shares Outstanding, and Adjusted Effective Tax Rate

We make adjustments to Net Income (Loss) before Income Taxes for the following items, as applicable, to the particular financial measure, for the purpose of calculating Adjusted Revenue, Adjusted Profit Before Tax, Adjusted Net Income (Loss), Adjusted Diluted Earnings per Share, Adjusted Weighted Average Common Shares Outstanding, and Adjusted Effective Tax Rate:

  • Amortization of acquired intangible assets. The amortization of acquired intangible assets is driven by acquisition activity, which can vary in size, nature and timing as compared to other companies within our industry and from period to period.
  • Restructuring and related costs. Restructuring and related costs include restructuring and asset impairment charges as well as costs associated with our strategic transformation program.
  • Goodwill impairment. This represents goodwill impairment charges related to entering the agreement to transfer the BenefitWallet portfolio.
  • (Gain) loss on divestitures and transaction costs, net. Represents (gain) loss on divested businesses and transaction costs.
  • Litigation settlements (recoveries), net represents settlements or recoveries for various matters subject to litigation.
  • Loss on extinguishment of debt. This represents write-off related debt issuance costs related to prepayments of debt.
  • Other charges (credits). This includes Other (income) expenses, net on the Condensed Consolidated Statements of Income (loss) and other insignificant (income) expenses and other adjustments.
  • Divestitures. Revenue and Adjusted EBITDA of divested businesses are excluded.

The company provides adjusted net income and adjusted EPS financial measures to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions.

Management believes that the adjusted effective tax rate, provided as supplemental information, facilitates a comparison by investors of our actual effective tax rate with an adjusted effective tax rate which reflects the impact of the items which are excluded in providing adjusted net income and certain other identified items, and may provide added insight into our underlying business results and how effective tax rates impact our ongoing business.

Adjusted Revenue, Adjusted Operating Income and Adjusted Operating Margin

We make adjustments to Costs and Expenses and Operating Margin for the following items, as applicable, for the purpose of calculating Adjusted Revenue, Adjusted Operating Income and Adjusted Operating Margin:

  • Amortization of acquired intangible assets.
  • Restructuring and related costs.
  • Interest expense. Interest expense includes interest on long-term debt and amortization of debt issuance costs.
  • Goodwill impairment.
  • Loss on extinguishment of debt.
  • (Gain) loss on divestitures and transaction costs, net.
  • Litigation settlements (recoveries), net.
  • Other charges (credits).
  • Divestitures.

We provide our investors with adjusted revenue, adjusted operating income and adjusted operating margin information, as supplemental information, because we believe it offers added insight, by itself and for comparability between periods, by adjusting for certain non-cash items as well as certain other identified items which we do not believe are indicative of our ongoing business, and may also provide added insight on trends in our ongoing business.

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 measures, provide a more complete understanding of our on-going business. Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items. Adjusted EBITDA Margin is Adjusted EBITDA divided by revenue or adjusted revenue, as applicable.

  • Restructuring and related costs.
  • Goodwill impairment.
  • Loss on extinguishment of debt.
  • (Gain) loss on divestitures and transaction costs, net.
  • Litigation settlements (recoveries), net.
  • Other charges (credits).
  • Divestitures.

Adjusted EBITDA is not intended to represent cash flows from operations, operating income (loss) or net income (loss) as defined by U.S. GAAP as indicators of operating performance.

Free Cash Flow

Free Cash Flow is defined as cash flows from operating activities as reported on the condensed 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, buildings and equipment. We use the non-GAAP measure of Free Cash Flow as a criterion of liquidity. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions and invest in land, buildings and equipment and internal use software, after required payments on debt. In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow reconciled to cash flow provided by operating activities, which we believe to be the most directly comparable measure under U.S. GAAP.

Adjusted Free Cash Flow

Adjusted Free Cash Flow is defined as Free Cash Flow from above plus adjustments for litigation insurance recoveries, transaction costs, taxes paid on gains from divestitures and litigation recoveries, proceeds from failed sale-leaseback transactions and certain other identified adjustments. We use Adjusted Free Cash Flow, in addition to Free Cash Flow, to provide supplemental information to our investors concerning our ability to generate cash from our ongoing operating activities; by excluding these items, we believe we provide useful additional information to our investors to help them further understand our ability to generate cash period-over-period as well as added information on comparability to our competitors. Such as with Free Cash Flow information, as so adjusted, it is specifically not intended to provide amounts available for discretionary spending. We have added certain adjustments to account for items which we do not believe reflect our core business or operating performance, and we computed all periods with such adjusted costs.

Revenue at Constant Currency

To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in the translation of foreign currencies into U.S. Dollars. We refer to this adjusted revenue as “constant currency.” Currency impact is determined as the difference between actual growth rates and constant currency growth rates. This currency impact is calculated by translating the current period activity in local currency using the comparable prior-year period’s currency translation rate.

Non-GAAP Outlook

In providing the Full Year 2024 outlook for Adjusted EBITDA Margin we exclude certain items which are otherwise included in determining the comparable U.S. GAAP financial measure. A description of the adjustments which historically have been applicable in determining Adjusted EBITDA Margin is reflected in the table below. We are providing such outlook only on a non-GAAP basis because the company is unable without unreasonable efforts to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments for the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to reported results. We have provided an outlook for Adjusted Revenue only on a non-GAAP basis using foreign currency translation rates as of current period end due to the inability to, without unreasonable efforts, accurately predict foreign currency impact on revenues. Full Year 2024 Outlook for Adjusted Free Cash Flow is provided as a factor of expected Adjusted EBITDA, and such outlook is only available on a non-GAAP basis for the reasons described above. For the same reason, we are unable to provide a GAAP expected adjusted tax rate, which adjusts for our non-GAAP adjustments.

Non-GAAP Reconciliations: Adjusted Revenue, Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA were as follows (see footnotes on last page of Non-GAAP reconciliations):

   

Trump Victory Sparks Surge in U.S. Stock Market

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Dow Jones, S&P 500, and Nasdaq post significant gains following Trump’s presidential win.
– S&P Regional Banking ETF jumps over 10%, fueled by expectations of favorable financial policies.
– Tesla shares climb over 10% in response to anticipated business-friendly conditions.

U.S. stocks soared on Wednesday as investors reacted to Donald Trump’s election victory over Kamala Harris, marking his return to the White House. A pivotal call in Wisconsin by the Associated Press early that morning secured Trump the necessary electoral votes, generating a major market response across sectors. With Trump set to be the 47th president, major indices surged. The Dow Jones Industrial Average spiked more than 1,100 points, or 2.7%, leading the rally. Following closely, the S&P 500 gained about 1.5%, while the tech-centric Nasdaq Composite rose approximately 2%.

The small-cap Russell 2000 posted particularly strong gains, jumping over 4.2% at the open, spurred by a surge in regional banks and financials. Many investors interpret Trump’s return as a sign of pro-business policies that could favor financial and industrial sectors, given his history of lower tax policies and financial deregulation during his previous term. The S&P Regional Banking ETF (KRE) rose more than 10% early Wednesday, underscoring this trend. Analysts believe that smaller regional banks are set to benefit from a more relaxed regulatory environment, making financials one of the day’s top-performing sectors.

Beyond financial stocks, the 10-year Treasury yield climbed to 4.46%, reflecting higher confidence in economic growth under the incoming administration. Rising yields often signal investor optimism, though they also reflect anticipated inflation. The dollar also strengthened against major global currencies, and Bitcoin surged to an all-time high, with investors anticipating a favorable climate for cryptocurrency investments. The gains in both the dollar and Bitcoin underscore how investors are re-evaluating asset allocation based on the potential for significant economic and regulatory shifts in the U.S.

Technology stocks, and particularly Tesla, were other standout winners. Tesla’s stock shot up by more than 10%, propelled by CEO Elon Musk’s open support of Trump and the potential for business-friendly policies. Musk has previously praised Trump’s tax and regulatory agenda, and with renewed market optimism, analysts expect Tesla and other growth-driven tech companies to benefit from potentially eased restrictions. The strong performance across tech stocks highlights broader investor enthusiasm for sectors with substantial growth potential under Trump’s policies.

Meanwhile, uncertainty around Congress control remains, as Republicans have flipped the Senate, while the House remains too close to call. Control of both chambers could substantially influence the type and extent of economic policies Trump can implement. As of now, investors are weighing scenarios around tax reform, stimulus packages, and regulatory adjustments that could impact sectors like energy, infrastructure, and finance.

The presidential election outcome is expected to drive market momentum in the near term, particularly in areas like financial services, infrastructure, and industrials. The anticipated mix of fiscal stimulus, tax policy changes, and deregulation, while not fully certain, reflects investor sentiment in favor of economic expansion under Trump’s leadership. How the markets react in the longer term will depend on the clarity of legislative actions and potential shifts in U.S. trade policy.

OpenAI Moves Beyond Software with Robotics-Focused Hire and $400M Investment

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Former Meta AR head Caitlin Kalinowski joins OpenAI to lead its robotics and hardware division.
– OpenAI invests in Physical Intelligence, a $2.4 billion robotics startup, as part of its hardware push.
– Kalinowski’s hire underscores OpenAI’s move to embed AI into consumer-facing, physical devices.

OpenAI has taken a major step in its robotics and hardware ambitions by hiring Caitlin “CK” Kalinowski, former head of Meta’s Orion augmented reality glasses project, to lead the company’s robotics and consumer hardware initiatives. Kalinowski, an experienced hardware engineer and executive, announced her new role on LinkedIn and X on Monday, stating that her initial focus at OpenAI will be “bringing AI into the physical world” through robotics work and strategic partnerships.

The move comes as OpenAI, best known for its chatbot ChatGPT, increasingly signals its intention to expand beyond software into physical technology. Kalinowski’s background includes nearly two and a half years at Meta leading the development of Orion, a pioneering AR glasses project initially known as Project Nazare, as well as nine years working on VR headsets for Meta’s Oculus division. Before her time at Meta, Kalinowski spent nearly six years at Apple, contributing to the design of MacBook Pro and MacBook Air models.

The timing of Kalinowski’s hiring aligns with OpenAI’s recent investment in Physical Intelligence, a robotics startup based in San Francisco that raised $400 million in funding. The investment round also saw contributions from high-profile investors including Amazon founder Jeff Bezos, Thrive Capital, Lux Capital, and Bond Capital, and the startup’s post-money valuation now stands at $2.4 billion. Physical Intelligence aims to bring general-purpose AI into real-world applications, using large-scale AI models and algorithms to power autonomous robots.

This latest move reflects OpenAI’s strategic push to establish itself as a leading force in consumer hardware, with a focus on embedding its AI capabilities into physical devices. This aligns with its recent partnership with Jony Ive, former Apple design chief, to conceptualize and develop an AI-driven consumer device. These developments indicate that OpenAI is not only aiming to develop software but is also working toward integrating its advanced AI capabilities into everyday, tangible products.

With the addition of Kalinowski, OpenAI gains expertise from a seasoned professional with a strong background in both augmented reality and consumer hardware, positioning the company to bring its AI advancements to life in ways that go beyond the digital realm. As OpenAI enters this new territory, Kalinowski’s experience in AR, VR, and consumer technology will likely be instrumental in helping the company transition its AI models from conceptual applications to real-world, user-friendly products.

Kalinowski’s start date at OpenAI is Tuesday, Nov. 5, marking the beginning of a new chapter for OpenAI as it takes significant strides toward expanding its footprint in robotics and consumer hardware.

Release – AI Integrated into Conduent Life@Work® Connect with Jellyvision and TALON to Educate Employees about Open Enrollment and Maximize Healthcare Benefit Spend

Posted on by aweinsoff@channelchek.com

Research News and Market Data on CNDT

November 04, 2024

Benefits Administration Solutions Human Resource Services

51% of U.S. adults find their health insurance plan difficult to understand

Conduent’s enhanced platform now provides a stronger employee experience to create a holistic view of health and wellness benefits and costs

FLORHAM PARK, N.J. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, announced the integration of AI-driven solutions by TALON and Jellyvision’s ALEX with its Life@Work Connect Experience Platform, to elevate employee understanding of their personal health and wellness benefits. With the addition of Jellyvision and TALON, Life@Work Connect integrates additional uses of AI with two new employee resources in its digital portal that help employees navigate open enrollment more easily and maximize their healthcare benefits throughout the year.

Integrated tools for benefits decisions, education and optimization

  • ALEX, Jellyvision’s benefits decision support advisor, engages employees to guide them through their entire benefits package, taking into consideration an individual’s personal level of risk tolerance, their unique health, family, and lifestyle, and then offers personalized benefits recommendations.
  • TALON’s price transparency tool helps employees identify and navigate to low-cost, high quality, in-network providers, with over 10,000 services and procedures searchable for accurate, precise out-of-pocket cost-comparison.

By integrating educational and price-transparency solutions into its Life@Work Connect platform, Conduent’s health and wellness administration solutions:

  • maximize employer investments in health care benefits, which is the second most expensive line item for employers after payroll.
  • increase employee understanding of their benefit plan options and costs.

“When companies improve the employee experience, like helping employees better understand their benefits, companies positively impact business metrics,” said John Larson, Vice President for Total Benefit Solutions at Conduent. “When clients work with Conduent as a health and wellness benefits administrator, we bring together our capabilities and experience with multiple decision tools into a single seamless and digital employee experience that drives engagement and business outcomes.”

“ALEX develops deep trust with users with bits of humor and delight woven into the benefit plan selection. You have to build trust with an individual to encourage them to change behaviors. We know ALEX is having an impact that translates into tangible results. Employee reports show they are making more preventative healthcare appointments, are better able to meet their health goals, and almost 90% say they understand their benefits more after talking with ALEX,” said Brian Meager, President of Jellyvision.

“Once employees have selected their health plan, they are often confused about how to optimize their benefits. TALON’s data shows a huge opportunity to help employees save on out-of-pocket healthcare expenses,” said Mark Galvin, CEO at TALON. “By providing employees with the ability to comparison shop means they are getting real and measurable benefits. For instance, employees who searched and shopped for various blood tests saved as much as 95% off the highest-cost in-network provider and over 25% compared to employees who didn’t shop.”

Health and wellness administration provider Conduent, benefits advisor ALEX from Jellyvision and TALON’s health care price transparency platform can enable better health and wellness outcomes for employees with solutions that align budget, benefits strategy and goals.

About Conduent

Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them. The Company leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 55,000 associates, process expertise and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Conduent adds momentum to its clients’ missions in many ways including disbursing approximately $100 billion in government payments annually, enabling 2.3 billion customer service interactions annually, empowering millions of employees through HR services every year and processing nearly 13 million tolling transactions every day. Learn more at www.conduent.com.

Note: To receive RSS news feeds, visit www.news.conduent.com. For open commentary, industry perspectives and views, visit http://twitter.com/Conduent, http://www.linkedin.com/company/conduent or http://www.facebook.com/Conduent.

Trademarks

Conduent is a trademark of Conduent Incorporated in the United States and/or other countries. Other names may be trademarks of their respective owners.

Media Contacts

Lisa Patterson

Conduent

lisa.patterson@conduent.com

+1-816-305-4421

Giles Goodburn

Conduent

ir@conduent.com

+1-203-216-3546

Jellyvision

press@jellyvision.com

Matthew McCormick

TALON

matthew.mccormick@talonhealthtech.com

Comtech Telecommunications (CMTL) – Releases Full Year Results; Removes “Interim” Tag From CEO

Posted on by cpereira@noblefcm.com


Monday, November 04, 2024

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

4Q24 Results. Revenue totaled $126.2 million, down sequentially and down from $148.8 million in 4Q23. We were at $130 million. Gross margin fell to 21.5% from 32.6% a year ago and was below our 30.8% estimate. Adjusted EBITDA was $0.3 million versus $18.9 million in 4Q23. Driven by $64 million of impairment charges, Comtech reported a 4Q24 net loss of $100.6 million, or a loss of $3.48/sh versus a loss of $5.3 million, or $0.19/sh in 4Q23.

Going Concern Still. Although we were hopeful the “Going Concern” designation would go away following the refinancing, it remains. According to the 10-K, “the Company has suffered recurring losses and negative cash outflows from operations, and may be unable to maintain compliance with financial covenants required by its credit agreement that raise substantial doubt about its ability to continue as a going concern.”


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Release – Comtech Announces Results for its Fourth Quarter of Fiscal 2024

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on CMTL

CHANDLER, Ariz. – Oct. 31, 2024– In a letter to shareholders, Comtech (NASDAQ: CMTL) today announced that its fourth quarter fiscal 2024 financial results are now available.

Investors are invited to access the fourth quarter fiscal 2024 shareholder letter at its website at comtech.com/investors/. A copy of the letter will also be filed with the Securities and Exchange Commission in a Form 8-K.

Comtech also intends to host a previously scheduled earnings conference call at 4:30 p.m. ET today. Individuals can access the conference call by dialing (800) 267-6316 (primary) or (203) 518-9783 (alternate) and using the conference I.D. of “Comtech.” A replay of the conference call will be available for two weeks by dialing (888) 225-1190 or (402) 220-4971. A live webcast of the call is also available at comtech.com/investors/.

About Comtech

Comtech Telecommunications Corp. is a leading global technology company providing terrestrial and wireless network solutions, next-generation 9-1-1 emergency services, satellite and space communications technologies, and cloud native capabilities to commercial and government customers around the world. Our unique culture of innovation and employee empowerment unleashes a relentless passion for customer success. With multiple facilities located in technology corridors throughout the United States and around the world, Comtech leverages our global presence, technology leadership, and decades of experience to create the world’s most innovative communications solutions.For more information, please visit www.comtech.com.

Forward-Looking Statements

Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results and performance could differ materially from such forward-looking information. The Company’s Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings.

Investor Relations

Maria Ceriello

631-962-7115

Maria.Ceriello@comtech.com

Microsoft Stock Drops as AI Spending Weighs on Profits Amid Slower Cloud Growth

Posted on by slightbourne@noblecapitalmarkets.com
Key Points
– Microsoft stock drops over 5% following a cautious Q2 forecast, marking its worst one-day fall in two years.
– Rising AI and cloud investments contribute to a 50% surge in property and equipment spending, raising profitability concerns.
– Azure’s growth slows amid supply chain delays, as Microsoft continues aggressive AI investment with OpenAI.

Microsoft’s shares plummeted over 5% on Thursday following a quarterly forecast that fell short of Wall Street’s expectations, marking its steepest drop since October 2022. Despite better-than-anticipated revenue and earnings for the recent quarter, the software giant’s guidance for the December period led investors to re-evaluate the impact of high spending on artificial intelligence (AI) and cloud infrastructure.

The tech giant reported a 16% revenue increase year-over-year, reaching $65.59 billion, beating the $64.51 billion estimate. Earnings per share also exceeded predictions, landing at $3.30 against an expected $3.10. Net income rose to $24.67 billion, up from $22.29 billion in the same quarter the previous year, indicating robust performance in core business areas, particularly in cloud services.

However, Microsoft’s forecast for its December quarter revenue—projected between $68.1 billion and $69.1 billion—fell slightly below analysts’ expectations of $69.83 billion. While these numbers imply a 10.6% growth in revenue, the miss signals potential challenges ahead as AI and cloud infrastructure investments weigh heavily on profitability. Microsoft’s Azure cloud platform saw a 33% growth this quarter, yet growth projections for the next quarter suggest a slight deceleration, expected between 31% and 32%, according to CFO Amy Hood.

In comparison, Google recently reported 35% growth in its cloud division, and Amazon, the leader in cloud services, is set to release its own earnings, with analysts keenly watching its results for further insights into the competitive cloud landscape. Microsoft has continued to ramp up spending to expand its AI capabilities, particularly through its $14 billion investment in OpenAI, valued at $157 billion. The company expects a significant $1.5 billion loss on this investment in the current quarter due to substantial operational expenses.

CEO Satya Nadella acknowledged supply chain delays in data center infrastructure from external suppliers, which are likely to affect Microsoft’s ability to meet rising demand for its services this quarter. Nadella remains optimistic that these challenges will ease later in the fiscal year as supply and demand align more closely.

Microsoft’s substantial investments in AI and infrastructure have not come without financial strain. Property and equipment expenses surged 50% year-over-year to nearly $14.92 billion, surpassing analyst expectations. This hike reflects Microsoft’s commitment to maintaining a competitive edge in AI and cloud services but also raises questions regarding the sustainability of such high spending levels.

Analysts from BofA Global Research still advise buying Microsoft stock despite the conservative outlook, suggesting that the firm’s core growth engines, like Azure and Office, remain solid. However, they note that the significant AI infrastructure spending may weigh on short-term profitability. Meanwhile, Microsoft’s shares, which were up 9% for the year, trail the Nasdaq’s 21% increase year-to-date, revealing investor caution around Microsoft’s aggressive spending strategy in AI.

As the tech sector continues to pivot towards AI and cloud solutions, Microsoft’s situation exemplifies the challenges of balancing growth with heavy investment costs. While the company’s AI ambitions signal promising long-term growth, the cautious near-term outlook on profitability could lead to further stock volatility as investors navigate the risks and rewards associated with Microsoft’s AI and cloud strategy.

Release – Conduent and AshBritt Team Up to Offer Disaster Recovery Services and Emergency Relief Funds to Those in Need

Posted on by aweinsoff@channelchek.com

Research News and Market Data on CNDT

October 31, 2024

FLORHAM PARK, N.J. & DEERFIELD BEACH, Fla. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, and AshBritt, the nation’s leading rapid-response emergency management, logistics and disaster-response contractor, today announced a collaboration to offer emergency services and instant payments to those in need.

The new offering combines Conduent’s expertise in managing a range of payment services for public sector clients with AshBritt’s experience with various disaster recovery efforts. The companies stand ready to quickly support government agencies or other organizations that help people and communities affected by natural disasters or other crises.

As a U.S. industry leader delivering electronic payments for government services in 37 states, Conduent offers instant or digital payment capabilities to agencies and other entities. Its Rapid Assistance solution can dramatically accelerate agencies’ and non-profits’ ability to securely deliver funds to individuals in minutes, rather than in days or weeks. Conduent can also provide chip-enabled, pre-paid debit cards – helping to ensure that those affected by disasters and crises receive aid quickly regardless of their banking status.

AshBritt is an industry leader in rapid-response logistics, such as base camps and comfort stations set up in communities. These types of facilities usually become points of distribution for those affected by a disaster, and this collaboration further expands the services that can be offered. AshBritt’s senior management and technical consultants have more than 200 years of combined experience and are intimately acquainted with all facets of disaster recovery efforts, including debris removal, management, reduction, processing, recycling and disposal, as well as emergency planning, damage mitigation and risk abatement.

“This innovative new collaboration with AshBritt is a great example of how two companies can combine their unique capabilities and expertise to meet a critical need among communities nationwide,” said Wade Fairey, General Manager, Payments and Child Support Solutions at Conduent. “Many natural disasters require mass distribution of funds as quickly as possible, and Conduent has deep experience in providing secure payment solutions that offer recipients near-immediate assistance. We’re proud to play a role in helping those who need support.”

“AshBritt is a government solutions provider always looking for new and innovative methods for delivering resources and services to communities we serve after an emergency event,” said Gerardo Castillo, President, Management and Logistics at AshBritt. “This novel collaboration with Conduent, a leader in their respective industry, allows us to continue offering the clients we serve with the most effective post-emergency solutions.”

About Conduent
Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them. The company leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 55,000 associates, process expertise and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Conduent adds momentum to its clients’ missions in many ways including disbursing approximately $100 billion in government payments annually, enabling 2.3 billion customer service interactions annually, empowering millions of employees through HR services every year and processing nearly 13 million tolling transactions every day. Learn more at www.conduent.com.

About AshBritt
AshBritt is a national rapid-response emergency management, turn-key logistics, and disaster debris removal contractor. Since its inception in 1992, AshBritt has conducted over 500 disaster response missions and 52 special environmental projects, successfully serving more than 600 clients across the United States. The AshBritt team has been directly involved in the recovery efforts of more than 108 federally declared disasters in over 30 states, responding to major weather events, like Hurricanes Ian, Harvey, Irma, and Michael, wildfires in northern California, historic flooding in Kentucky, and mobilizing during the COVID-19 pandemic to administer more than 1 million vaccines across 20 states. Through the AshBritt Foundation, AshBritt supports communities where our team lives and works, investing more than $15 million across the U.S. Learn more at www.ashbritt.com .

Note: To receive RSS news feeds, visit www.news.conduent.com. For open commentary, industry perspectives and views, visit http://twitter.com/Conduent, http://www.linkedin.com/company/conduent or http://www.facebook.com/Conduent.

Trademarks
Conduent is a trademark of Conduent Incorporated in the United States and/or other countries. Other names may be trademarks of their respective owners.

Media Contacts

Neil Franz

Conduent

neil.franz@conduent.com

+1-240-687-0127

Giles Goodburn

Conduent

ir@conduent.com

+1-203-216-3546

Melissa Perlman

AshBritt

melissa@blueivy.co

561-310-9921

Release – Comtech To Host Fourth Quarter and Fiscal Year 2024 Earnings Conference Call

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on CMTL

CHANDLER, Ariz. – Oct. 31, 2024– Comtech (NASDAQ: CMTL) today announced that it will be hosting an earnings conference call at 4:30 p.m. ET today, to discuss its fourth quarter and fiscal year 2024 operating results. Individuals can access the conference call by dialing (800) 267-6316 (primary) or (203) 518-9783 (alternate) and using the conference I.D. of “Comtech.” A replay of the conference call will be available for two weeks by dialing (888) 225-1190 or (402) 220-4971. A live webcast of the call will also be available at comtech.com/investors/.

About Comtech

Comtech Telecommunications Corp. is a leading global technology company providing terrestrial and wireless network solutions, next-generation 911 emergency services, satellite and space communications technologies, and cloud native capabilities to commercial and government customers around the world. Our unique culture of innovation and employee empowerment unleashes a relentless passion for customer success. With multiple facilities located in technology corridors throughout the United States and around the world, Comtech leverages our global presence, technology leadership, and decades of experience to create the world’s most innovative communications solutions.For more information, please visit www.comtech.com.

Forward-Looking Statements

Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results and performance could differ materially from such forward-looking information. The Company’s Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings.

PCMTL

Investor Relations

Maria Ceriello

631-962-7115

Maria.Ceriello@comtech.com

Release – Comtech Announces Leadership Updates

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on CMTL

Appoints John Ratigan, Satellite Technology Veteran with Extensive Knowledge of Comtech’s Business Operations, as President and Chief Executive Officer

Appoints Kenneth H. Traub to Board of Directors, Adding Deep Experience and Expertise in Corporate Governance, Turnarounds and Strategic Transformations

CHANDLER, Ariz. – October 30, 2024– Comtech (NASDAQ: CMTL) (the “Company”), a global technology leader, today announced that its Board of Directors has appointed John Ratigan as President, Chief Executive Officer and a member of the Board, effective October 28, 2024. Mr. Ratigan has been serving as Comtech’s interim CEO since March 2024. In addition, the Comtech Board appointed Kenneth (Ken) H. Traub as an independent director to the Board, effective October 31, 2024.

Chief Executive Officer Appointment

Mr. Ratigan is an accomplished executive with over three decades of senior leadership experience and expertise in the global satellite technology sector. He joined Comtech in November 2023 as the Company’s first Chief Corporate Development Officer. Mr. Ratigan was previously CEO and President of iDirect Government, LLC, a provider of satellite communications solutions to the U.S. government, and ran East Coast operations for Fairchild Data Corporation and EF Data Corp., in both instances overseeing substantial growth and value creation.

“Over the past several months, John has been an important voice in charting Comtech’s strategy to transform into a pure-play satellite and space communications company,” said Mark Quinlan, Chair of the Comtech Board. “Under his leadership, the Company has initiated several programs designed to improve operations, including an intensive review of Comtech’s Space & Satellite Communications product portfolio to identify the most strategic and high-margin revenue opportunities. The Board is confident that John is the right leader to oversee the execution of our new strategy as we work diligently to unlock value for shareholders.”

Mr. Ratigan’s appointment as CEO follows a comprehensive process conducted by a leading executive search firm.

Mr. Ratigan said, “I am honored to serve as CEO during this important time for Comtech. When I stepped into the interim role in March, I did so with great conviction in the possibilities ahead. I saw then – and still see – great technology, great people and a tremendous opportunity. Comtech has market-leading products, a strong customer base and a compelling path to drive profitable growth in our large and growing end markets. We are acting with urgency to build a stronger, more competitive company focused on providing best-in-class satellite and space communications solutions.”

New Independent Board Director

Mr. Traub brings deep experience as a CEO, independent director, active investor and consultant to numerous companies at times of critical business transition and transformation, with a successful track record of driving strategic, operational, financial and governance improvements to protect and enhance shareholder value.

“I am thrilled to be joining the Comtech Board of Directors at this critically important time for the Company,” said Mr. Traub. “I look forward to working with the Comtech Board of Directors and management team to address current challenges and capitalize on the significant opportunities available to the Company.”

Mr. Quinlan added, “Ken is widely regarded as an expert in overseeing business transformations and has a long history of successfully guiding companies through strategic transitions that benefit shareholders. On behalf of the full Board, we welcome Ken as our newest independent director and look forward to working closely with him as we position Comtech for the future.”

About John Ratigan

Mr. Ratigan has more than 30 years of leadership experience in satellite and space communications. He has served as Comtech’s interim CEO since March 2024 after joining the Company in November 2023 as Chief Corporate Development Officer. He previously served as CEO and President of iDirect Government, LLC and as an Executive Committee Member of ST Engineering iDirect, Inc. During his tenure, he grew iDirect Government to over $100 million in annual revenue and spearheaded the acquisition of GlowLink Communications Technologies, Inc. and its unique interference mitigation technology (CSIR), which helped the company become the largest provider of Time Division Multiple Access (TDMA) SATCOM capabilities.

Earlier in his career, Mr. Ratigan ran East Coast operations for Fairchild Data Corporation and EF Data Corp., which is now a part of Comtech. During his time at EF Data, he was instrumental in helping the company grow from $20 million to $120 million in revenue in under eight years. Prior to that, Mr. Ratigan held the position of Senior Vice President of North and South American sales for the start-up BroadLogic Network Technologies, Inc. He began his career in the United States Senate working for Senator Bill Armstrong (R-Colorado) and held multiple sales positions with the Xerox Corporation as a member of the legal sales team.

Mr. Ratigan holds a Bachelor of Science in Marketing from the University of Maryland.

About Kenneth Traub

Mr. Traub has over 30 years of experience as a CEO, chairman, director, investor and consultant in public companies, with a successful track record of driving strategic, financial, operational and governance improvements to enhance shareholder value. He has served as the Managing Partner of Delta Value Advisors, a strategic consulting and investment advisory firm specializing in corporate governance and turnarounds, since 2019. He was previously Managing Partner of Raging Capital, a registered investment firm, and served as President and CEO of Ethos Management LLC, a private investment and consulting firm. Mr. Traub served as President and Chief Executive Officer of American Bank Note Holographics, Inc., a leading global supplier of optical security devices for the protection of documents and products against counterfeiting from 1999 through 2008. In 1994, he co-founded Voxware, Inc., a pioneer in voice over Internet protocol communication technologies, and served as its Executive Vice President and Chief Financial Officer through 1998.

Mr. Traub currently serves as an independent director on the boards of Tidewater, Inc., the leading global operator of offshore vessels for the energy industry, and Edgio, Inc., a software company providing digital content delivery networks and applications. Mr. Traub previously served as an independent director on the boards of numerous public companies, including DSP Group, Inc., a manufacturer of multimedia chipsets for converged communications (acquired by Synaptics Incorporated); MRV Communications, Inc., a telecommunications company (acquired by ADVA Optical Networking SE); Vitesse Semiconductor, Inc., a fabless semiconductor developer (acquired by Microsemi Corporation); Xyratex Ltd, a data storage company (acquired by Seagate Technology plc); MIPS Technologies, Inc., a semiconductor technology company (acquired by Imagination Technologies Group plc and Allied Security Trust); Intermolecular, Inc., a semiconductor materials supplier (acquired by Merck KGaA); and Phoenix Technologies, Inc., a leading supplier of firmware for computers (acquired by Marlin Equity Partners), among others.

Mr. Traub received the NACD Directorship Certification, which is awarded to directors who meet the highest standards of corporate governance according to the National Association of Corporate Directors. Mr. Traub received a Bachelor of Arts from Emory College in 1983 and an MBA from Harvard Business School in 1988.

About Comtech

Comtech Telecommunications Corp. is a leading global technology company providing satellite and space communications technologies, terrestrial and wireless network solutions, NG911 emergency services, and cloud native capabilities to commercial and government customers around the world. Our unique culture of innovation and employee empowerment unleashes a relentless passion for customer success. With multiple facilities located in technology corridors throughout the United States and around the world, Comtech leverages its global presence, technology leadership, and decades of experience to create the world’s most innovative communications solutions. For more information, please visit www.comtech.com.

Cautionary Note Regarding Forward-Looking Statements

Certain information in this press release contains forward-looking statements. Forward-looking statements can be identified by words such as: “expect,” “future,” “goal,” “intend,” “likely,” “may,” “plan,” “potential,” “seek,” “should,” “strategy,” “will,” “would,” and similar references to future periods. Forward-looking statements include, among others, statements regarding our expectations for our operational initiatives, future performance and financial condition, the plans and objectives of our management and our assumptions regarding such future performance, financial condition, and plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under our control which may cause our actual results, future performance and financial condition to be materially different from the results, performance or other expectations implied by these forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, among other things: the outcome and effectiveness of initiatives referenced in this press release; our ability to access capital and liquidity so that we are able to continue as a going concern; our ability to implement changes in our executive leadership; the possibility that the expected synergies and benefits from our strategic activities will not be fully realized, or will not be realized within the anticipated time periods; the risk that acquired businesses will not be integrated successfully; impacts from and uncertainties regarding future actions that may be taken by Michael Porcelain and stockholders affiliated with him in furtherance of their nominations of director candidates for election at the Company’s Fiscal 2024 Annual Meeting of Stockholders; and other factors described in our other filings with the Securities and Exchange Commission (“SEC”). We urge you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements. The risks described above are not the only risks that we face. Additional risks and uncertainties, not currently known to us or that do not currently appear to be material, may also materially adversely affect our business, financial condition and/or operating results in the future. We do not intend to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

Important Additional Information and Where to Find It

The Company intends to file a proxy statement on Schedule 14A, an accompanying white proxy card, and other documents with the SEC in connection with its solicitation of proxies from the Company’s stockholders for the Company’s Fiscal 2024 Annual Meeting of Stockholders. THE COMPANY’S STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE COMPANY’S DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), THE ACCOMPANYING WHITE PROXY CARD, AND ALL OTHER DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders may obtain a copy of the definitive proxy statement, an accompanying white proxy card, any amendments or supplements to the definitive proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge by clicking the “Governance” link in the “Investors” section of the Company’s website, https://comtech.com/investors/, or by contacting investors@comtech.com as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.

Participants in the Solicitation

The Company, its directors, certain of its officers, and other employees may be deemed to be “participants” (as defined in Section 14(a) of the Securities Exchange Act of 1934, as amended) in the solicitation of proxies from the Company’s stockholders in connection with matters to be considered at the Company’s Fiscal 2024 Annual Meeting of Stockholders.

Information about the names of the Company’s directors and officers, their respective interests in the Company by security holdings or otherwise, and their respective compensation is set forth in the sections entitled “Stockholders, Directors and Executive Officers,” “Director Compensation,” and “Executive Compensation” of the Company’s Proxy Statement on Schedule 14A in connection with the Fiscal 2023 Annual Meeting of Stockholders, filed with the SEC on November 16, 2023 (available here). To the extent the security holdings of directors and executive officers have changed since the amounts described in these filings, such changes are set forth on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC, which can be found at no charge at the SEC’s website at www.sec.gov. Updated information regarding the identity of potential participants and their direct or indirect interests, by security holdings or otherwise, in the Company will be set forth in the Company’s Proxy Statement on Schedule 14A for the Fiscal 2024 Annual Meeting of Stockholders and other relevant documents to be filed with the SEC, if and when they become available. These documents will be available free of charge as described above.

Investor Relations Contact

Maria Ceriello

631-962-7102

investors@comtech.com

Media Contacts

Jamie Clegg

480-532-2523

jamie.clegg@comtech.com

Jed Repko / Aura Reinhard

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

Nasdaq, S&P 500 Slide as Meta and Microsoft Trigger AI Spending Concerns

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Meta and Microsoft’s AI spending plans trigger a broad tech stock decline.
– U.S. 10-year Treasury yield climbs to 4.33%, pressuring equities.
– Core PCE inflation and jobless claims data keep Fed policy under scrutiny.

Wall Street’s main indexes dropped sharply on Thursday, driven by renewed concerns over Big Tech’s escalating artificial intelligence (AI) expenses. While both Meta and Microsoft posted better-than-expected quarterly earnings, their plans to increase already significant spending on AI infrastructure raised red flags among investors. This push toward higher AI investment triggered a sell-off in the technology sector as fears surfaced that such costs could eat into future profitability.

The Nasdaq Composite, heavily influenced by tech giants, fell approximately 2%, while the S&P 500 dropped about 1.6%, reflecting the widespread impact of these concerns. Meta and Microsoft’s focus on AI investments caused their shares to slide, signaling that, despite their strong earnings, heightened spending in this area could offset potential gains. This trend extended to other major technology companies, such as Amazon and Apple, which are also slated to report earnings soon. Investors will closely monitor their results as the “Magnificent Seven” tech giants—the group of leading high-value companies that have largely driven market gains—determine much of the market sentiment around AI and technology spending.

Bond markets added another layer of volatility to the day’s trading activity. U.S. Treasury yields rose, with the 10-year yield hitting 4.33%, its highest level in months. A stronger dollar also accompanied this climb in yields, placing additional pressure on stocks, particularly in sectors sensitive to rate fluctuations. Meanwhile, across the Atlantic, the UK faced a bond market sell-off, fueled by inflation fears related to recent fiscal stimulus, adding further tension to global markets.

Compounding the market’s cautious mood was new economic data reflecting inflationary pressures and resilient employment. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s favored inflation gauge, showed core inflation rising 2.7% in September, maintaining August’s rate and slightly exceeding economists’ expectations. The data hints that inflationary forces might still be persistent, adding pressure on the Federal Reserve as it prepares for its next policy meeting. Investors are now left questioning whether the Fed might adjust its rate policy to control inflation, particularly as a series of rate cuts had been anticipated.

Additionally, weekly jobless claims fell to 216,000, a five-month low that was below market expectations of 230,000. This lower-than-expected figure further indicates a strong job market, a factor that could complicate the Fed’s decision on interest rates. Combined with last month’s spike in private payrolls, this data builds a case for economic resilience, though the Fed must balance this with inflation management. With the critical monthly jobs report due Friday, investors anticipate further insights into employment trends and inflation risks as they navigate these mixed signals.

This blend of rising bond yields, mixed tech earnings, and economic data reflecting both inflation and robust employment presents a complex landscape for investors. The challenges of AI’s impact on Big Tech’s financials, alongside uncertain Fed policy in the face of economic data, have amplified market volatility. The coming weeks, including additional earnings from major tech players, Middle Eastern tensions, the Nov. 5 U.S. election, and the Fed’s upcoming policy meeting, suggest that market fluctuations will likely continue.

Perfect Corp. (PERF) – Developing Additional Revenue Growth Catalysts

Posted on by cpereira@noblefcm.com


Thursday, October 31, 2024

Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Strong Q3 results. The company demonstrated attractive 11% revenue growth in Q3 with revenue of $16.1 million, slightly better than our estimate of $15.7 million. Adj. EBITDA and adj. net income for the quarter were both better than our expectations, due to lower-than-expected marketing, G&A, and R&D expenses.

Revenue drivers. The company’s B2C segment drove Q3 revenue growth, while the B2B segment revenue was more flat, as some of the company’s enterprise clients have faced economic challenges. Importantly, the company’s B2C web-based offering should bolster B2C revenue growth. As for B2B, interest rate cuts should have a positive impact on clients’ enterprise software budgets. Moreover, the company could increase contract values through new services, such as Perfect GPT.  


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Super Micro Computer Stock Plummets After Ernst & Young Resignation

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Super Micro Computer’s stock plummeted over 30% after EY resigned, citing a lack of trust in management’s financial representations.
– The resignation follows allegations from Hindenburg Research of accounting manipulation and an investigation by the U.S. Department of Justice.
– The company’s future remains uncertain as it navigates significant financial and regulatory challenges.

Super Micro Computer, Inc. (SMCI) faced a dramatic setback today, with shares plunging over 30% following the resignation of its accounting firm, Ernst & Young (EY). This sudden market reaction has raised alarms among investors, spotlighting significant concerns about the company’s financial integrity and future prospects.

In a filing with the SEC, EY disclosed that it could no longer rely on management’s representations or the Audit Committee’s assurances, leading to its resignation while conducting an audit for the fiscal year ending June 30, 2024. This lack of confidence from a major accounting firm is particularly troubling, considering the scrutiny surrounding Super Micro’s financial practices. In its response, Super Micro expressed disagreement with EY’s decision, emphasizing that its Special Committee has yet to finalize its review. Nonetheless, the company stated it takes EY’s concerns seriously and will carefully consider the findings and any recommended actions.

EY’s resignation comes on the heels of a scathing report from Hindenburg Research, which accused Super Micro of accounting manipulation and highlighted several red flags, including undisclosed related party transactions and potential sanctions violations. Following this report, Super Micro’s stock took a nosedive, dropping nearly 20% after the company delayed its annual report filing on August 28, 2024. To date, Super Micro has not filed its annual report for the 2024 fiscal year, which has further exacerbated investor anxiety.

Adding to the turbulence, the U.S. Department of Justice has reportedly launched an investigation into Super Micro Computer. While this inquiry is still in its early stages, it underscores the serious nature of the allegations and the potential legal repercussions for the company. The combination of regulatory scrutiny and damaging reports has created a challenging landscape for Super Micro, making it increasingly difficult to regain investor confidence.

Once a darling in the AI data center space, Super Micro’s stock had been buoyed by strong investor interest earlier this year. However, today’s sharp decline reflects a stark shift in sentiment. The outcomes of the Special Committee’s review and the DOJ investigation will be crucial in shaping the company’s path forward.

Super Micro Computer is at a critical juncture following EY’s resignation and mounting regulatory pressures. The company’s ability to navigate these challenges will determine its future trajectory. As always, thorough research and a clear understanding of the associated risks are essential for anyone observing this tumultuous environment.