SEPTA pilots Conduent’s solution with plans to expand the number of fare gates in the future
Conduent’s 3D Fare Gate Solution is designed to detect, deter and quantify fare evasion, benefiting both agencies and riders
FLORHAM PARK, N.J. — Conduent Transportation, a global provider of smart mobility technology solutions and business unit of Conduent Incorporated (Nasdaq: CNDT), today announced a pilot program by the Southeastern Pennsylvania Transportation Authority (SEPTA) using Conduent’s 3D Fare Gate Solution at a Philadelphia area transit station. The pilot aims to track and curb incidents of fare evasion, which costs SEPTA an estimated $30 million to $40 million annually.
“We’re excited to be part of this important pilot for SEPTA to help detect, deter and quantify fare evasion, while simultaneously offering both the agency and riders increased security and convenience”
SEPTA selected the 69th Street station in Upper Darby as its test location for riders traveling on the Market-Frankford and Norristown High Speed lines. The gates, each measuring 7 feet, 8 inches tall, began operating in April. Following the three-month pilot program, the agency plans to expand the fare gates’ availability to other stations, including those with high reported incidents of fare evasion.
“We’re excited to be part of this important pilot for SEPTA to help detect, deter and quantify fare evasion, while simultaneously offering both the agency and riders increased security and convenience,” said Adam Appleby, President, Transportation Solutions at Conduent. “As transit agencies across the country and around the world grapple with how to curb fare evasion, Conduent is poised and ready to deliver our solution, which has shown to deliver meaningful results and helps ensure riders pay their fares.”
Conduent’s 3D Fare Gate Solution uses innovative 3D detection optical sensors, allowing travelers fast and convenient access while detecting and deterring ticketing fraud. The gates also provide transit authorities quick access to reporting and analytics, aiding in enforcement decisions by identifying precisely when and where fare evasion occurs.
The gates, which were also implemented in Paris by Transilien SNCF in 2019, are designed to detect the most common types of fare evasion using advanced, sensor-based feedback mechanisms. The solution, which is ADA-compliant and adaptable to meet agency needs, improves equity in transportation by improving accessibility for all riders as well as helping to ensure passengers pay their share.
SEPTA is one of the largest transit systems in the country, serving five counties in the Greater Philadelphia area and connecting to Delaware and New Jersey transit systems. It operates across six transportation modes and has 2,800 vehicles in service, 285 subway and rail stations, plus 13,000 bus and trolley stops.
Conduent Transportation is a leading provider of streamlined, high-volume mobility services and solutions, spanning road usage charging and advanced transit systems, that enhance the services provided by transportation agencies to benefit the citizens who use them. For over 50 years, the company has helped clients advance transportation solutions in more than 20 countries.
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 59,000 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.
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.
Transaction expected to close the third quarter of 2024
FLORHAM PARK, N.J. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, today announced an agreement to sell its Casualty Claims Solutions business to MedRisk, the nation’s largest managed care organization dedicated to the physical rehabilitation of workers’ compensation patients.
The sale, for $240 million in cash, subject to customary adjustments, consists of Conduent’s workers’ compensation and auto casualty bill review solutions and services that includes the processing of medical bills and clinical services, and its portfolio of Strataware bill review software products. In 2023, the business, with approximately 100 clients across multiple markets, processed approximately 29 million medical bills.
As part of this transaction, current Conduent employees in the Casualty Claims Solutions business will join MedRisk. Conduent will continue to provide mailroom services for current casualty claims clients including MedRisk. The transaction is expected to close in the third quarter of 2024, subject to the satisfaction of customary closing conditions and regulatory approvals.
“This transaction is an additional example of the significant progress we have made in our strategy to streamline our portfolio while increasing our focus on core capabilities to fuel Conduent’s growth,” said Cliff Skelton, Conduent President and CEO. “MedRisk is well-established in the workers’ compensation industry, and we are confident in a seamless transition for our associates and clients.”
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 59,000 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 MedRisk
Based in King of Prussia, Pennsylvania, MedRisk is the nation’s largest managed care organization dedicated to the physical rehabilitation of workers’ compensation patients. For more information, please visit www.medrisknet.com or call 800-225-9675.
Conduent is a trademark of Conduent Incorporated in the United States and/or other countries. Other names may be trademarks of their respective owners.
Forward-Looking Statements
This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” “continue to,” “endeavor,” “if,” “growing,” “projected,” “potential,” “likely,” “see,” “ahead,” “further,” “going forward,” “on the horizon,” 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 are forward-looking statements, including, but not limited to, all statements regarding the sale of Conduent’s Casualty Claims Solutions business, including that such transaction will be consummated and the timing of such consummation, expectations regarding our strategy to streamline our portfolio while increasing our focus on core capabilities to fuel Conduent’s growth, expectations regarding continued efforts to be strategic regarding the allocation of capital and any future portfolio rationalization efforts, and our confidence in a seamless transition for our associates and clients. 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 actual results to differ materially from those in our forward-looking statements include, but are not limited to: Conduent’s ability to realize the benefits anticipated from the sale of its Casualty Claims Solutions business, including as a result of a delay or failure to obtain certain required regulatory approvals or the failure of any other condition to the closing of the transaction such that the closing of the transaction is delayed or does not occur; unexpected costs, liabilities or delays in connection with the proposed transaction; the significant transaction costs associated with the proposed transaction; negative effects of the announcement, pendency or consummation of the transaction on the market price of our common stock or operating results, including as a result of changes in key customer, supplier, employee or other business relationships; the risk of litigation or regulatory actions; our inability to retain and hire key personnel; the risk that certain contractual restrictions contained in the definitive transaction agreement during the pendency of the proposed transaction could adversely affect our ability to pursue business opportunities or strategic transactions; and other factors that are set forth in the “Risk Factors” and other sections of our 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 press 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.
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.
Q1 beat. Conduent is in a period of transition, given that it is in the process of monetizing non-core assets. While year-over-year comparisons will be difficult to make, the company reported Q1 revenue and adj. EBITDA that were better than our expectations.
Positive commercial trends. Management noted that business activity in its Commercial segment (50% of total revenue) is improving in 2024 as client companies seek ways to restore projects while reducing costs. This could benefit Conduent, particularly for its outsourcing services.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
FLORHAM PARK, NJ, May 1, 2024 – Conduent (NASDAQ: CNDT), a global technology-led business process solutions and services company, today announced its first quarter 2024 financial results.
Cliff Skelton, Conduent President and Chief Executive Officer stated, “Q1 2024 is a continued reflection of progress in our portfolio performance overlaid by timing considerations and variations across our segments. While Revenue exceeded expectations and Adjusted EBITDA/Margin were broadly in line with expectations, sales performance lagged due to the timing of several opportunities between Q1 and Q2. The diversity of our portfolio is further evidenced by a strong quarter in Transportation, improvement in Commercial and some softness in Government.”
“Earlier today we announced the closure of the sale of our Curbside Management and Public Safety businesses. In addition, we expect to finalize the BenefitWallet transaction in May. We will continue to rationalize our portfolio to enable future growth with efficient and effective capital deployment.”
“Finally, as previously stated, 2024 represents what we believe to be the trough in our growth turnaround. With the continued backing of our strong client base, partnerships with some of the leading global technology firms such as Microsoft and Oracle, and 57,000 dedicated associates, we expect continued progress along our 3-year journey and that progress is directly in line with our plan.”
Key Financial Q1 2024 Results
($ in millions, except margin and per share data)
Q1 2024
Q1 2023
Current Quarter Y/Y B/(W)
Revenue
$921
$922
(0.1)%
GAAP Net Income (Loss)
$99
$(6)
n/m
Adjusted EBITDA(1)
$69
$90
(23.3)%
Adjusted EBITDA Margin (1)
7.5%
9.8%
(230) bps
GAAP Income (Loss) Before Income Tax
$127
$(8)
n/m
GAAP Diluted EPS
$0.46
$(0.04)
n/m
Adjusted Diluted EPS(1)
$(0.09)
$0.00
n/m
Cash Flow from Operating Activities
$(37)
$(12)
(208)%
Adjusted Free Cash Flow(1)
$(60)
$(37)
(62)%
Performance Commentary
During the first quarter of 2024, we completed the first tranche of the BenefitWallet portfolio transfer, receiving $164 million as the pro-rata share of the purchase price. Following the completion of the second tranche on April 11, 2024, we expect the third and final tranche of the BenefitWallet portfolio transfer to be completed by the end of the second quarter of 2024.
As a result of the completion of the first and second tranches of the BenefitWallet portfolio transfer, we prepaid $259 million of principal of our Term Loan B.
Other portfolio rationalization efforts include the closure of the sale of the Curbside Management and Public Safety businesses.
Pre-tax income (loss) for the first quarter of 2024 was $127 million versus $(8) million in the prior year period. This increase is primarily driven by the gain on the transfer of the BenefitWallet portfolio.
Q1 2024 Adjusted EBITDA of $69 million and Adjusted EBITDA Margin of 7.5% were in line with our expectations.
Revenue for the first quarter of 2024 was substantially unchanged versus the prior year.
Conduent’s nearly $1.0 billion total liquidity position remains strong with long-dated debt maturities and a modest net leverage ratio.
In the first quarter, we repurchased approximately 4.8 million shares of our common stock in connection with our ongoing share repurchase program.
Additional Q1 2024 Performance Highlights
Conduent achieved several milestones in technology-led solutions, operational excellence and culture, including:
Collaborated in partnership with Microsoft on an initiative across the Conduent portfolio to drive innovation using Microsoft Azure OpenAI Services;
Recently partnered with Oracle to streamline transaction processing by the migration of on-premises Oracle Exadata environment to the cloud with Oracle Database@Azure;
Recognized as a Leader in CX Services Transformation NEAT – Cost Optimization Focus by NelsonHall;
Named “GovTech Top 100 Company” for the third consecutive year; and
Named Newsweek America’s Greatest Workplaces for Women and Diversity 2024.
FY 2024 Outlook(2,3)
FY 2023Actuals
FY 2024Outlook(2,3)
Revenue
$3,722M
$3,600M – $3,700M
Adj. EBITDA(1) / Adj. EBITDA Margin(1)
$378M / 10.2%
8% – 9%
Adj. Free Cash Flow(1) as % of Adj. EBITDA(1)
(1.3)%
5% – 10%
(1) Refer to Appendix for definition and complete Non-GAAP reconciliations of 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. FY 2024 Outlook is not adjusted for completed or anticipated divestiture activity or use of such proceeds.
Conference Call
Management will present the results during a conference call and webcast on May 1, 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 13745034.
The international dial-in is 1-201-689-8337. The international conference ID is also 13745034.
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 13745034.
The telephone recording will be available until May 15, 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 57,000 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 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,” “plan,” “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” “continue to,” “endeavor,” “if,” “growing,” “projected,” “potential,” “likely,” “see,” “ahead,” “further,” “going forward,” “on the horizon,” 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; statements regarding portfolio divestitures, such as the transfer of the BenefitWallet portfolio and the sale of the Curbside Management and Public Safety Solutions businesses, including all statements regarding anticipated timing of closing of such divestitures; Conduent’s liquidity position remaining strong; statements regarding our portfolio rationalization plan, including continuing to rationalize our portfolio to enable future growth with efficient and effective capital deployment; 2024 representing what we believe to be the trough in our growth turnaround; and expectations of continued progress along our 3-year journey being directly in line with our plan; 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 pending dispositions, including the transfer of the Company’s BenefitWallet’s portfolio and the sale of the Company’s Curbside Management and Public Safety Solutions businesses, including but not limited to the Company’s ability to realize the benefits anticipated from such transactions, unexpected costs, liabilities or delays in connection with such transactions, and the significant transaction costs associated with such transactions; government appropriations and termination rights contained in our government contracts; the competitiveness of the markets in which we operate; 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 the Ukraine and 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.
CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
Three Months Ended March 31,
(in millions, except per share data)
2024
2023
Revenue
$
921
$
922
Operating Costs and Expenses
Cost of services (excluding depreciation and amortization)
735
720
Selling, general and administrative (excluding depreciation and amortization)
116
111
Research and development (excluding depreciation and amortization)
2
2
Depreciation and amortization
62
61
Restructuring and related costs
9
29
Interest expense
27
27
(Gain) loss on divestitures and transaction costs, net
(161
)
2
Litigation settlements (recoveries), net
4
(21
)
Loss on extinguishment of debt
2
—
Other (income) expenses, net
(2
)
(1
)
Total Operating Costs and Expenses
794
930
Income (Loss) Before Income Taxes
127
(8
)
Income tax expense (benefit)
28
(2
)
Net Income (Loss)
$
99
$
(6
)
Net Income (Loss) per Share:
Basic
$
0.46
$
(0.04
)
Diluted
$
0.46
$
(0.04
)
CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended March 31,
(in millions)
2024
2023
Net Income (Loss)
$
99
$
(6
)
Other Comprehensive Income (Loss), Net (1)
Currency translation adjustments, net
(11
)
17
Unrecognized gains (losses), net
—
1
Other Comprehensive Income (Loss), Net
(11
)
18
Comprehensive Income (Loss), Net
$
88
$
12
__________
(1) All amounts are net of tax. Tax effects were immaterial.
Shares of series A convertible preferred stock issued and outstanding
120
120
Shares of common stock held in treasury
13,665
8,841
CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
(in millions)
2024
2023
Cash Flows from Operating Activities:
Net income (loss)
$
99
$
(6
)
Adjustments required to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization
62
61
Contract inducement amortization
1
1
Deferred income taxes
13
(8
)
Amortization of debt financing costs
1
1
Loss on extinguishment of debt
2
—
(Gain) loss on divestitures and sales of fixed assets, net
(164
)
—
Stock-based compensation
3
2
Changes in operating assets and liabilities
(54
)
(63
)
Net cash provided by (used in) operating activities
(37
)
(12
)
Cash Flows from Investing Activities:
Cost of additions to land, buildings and equipment
(13
)
(11
)
Cost of additions to internal use software
(8
)
(11
)
Proceeds from divestitures
164
—
Net cash provided by (used in) investing activities
143
(22
)
Cash Flows from Financing Activities:
Payments on debt
(175
)
(10
)
Treasury stock purchases
(17
)
—
Taxes paid for settlement of stock-based compensation
(5
)
(7
)
Dividends paid on preferred stock
(2
)
(2
)
Net cash provided by (used in) financing activities
(199
)
(19
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(2
)
2
Increase (decrease) in cash, cash equivalents and restricted cash
(95
)
(51
)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
519
598
Cash, Cash Equivalents and Restricted Cash at End of period (1)
$
424
$
547
___________
(1) Includes $9 million and $21 million restricted cash as of March 31, 2024 and 2023 , respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.
Appendix
Definitions
Net ARR Activity Metric (TTM)
Projected Annual Recurring Revenue 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 COVID-related volume impacts and 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.
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 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 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 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 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 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 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.
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. Management cautions that amounts presented in accordance with Conduent’s definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by other companies because not all companies calculate Adjusted EBITDA and Adjusted EBITDA Margin in the same manner.
Free Cash Flow
Free Cash Flow is defined as cash flows from operating activities as reported on the 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 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 is reflected in the table below. In addition, “Full Year 2024 Outlook”, is not adjusted for completed or anticipated divestiture activity or use of such proceeds. 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. 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: Revenue at Constant Currency, Adjusted Net Income (Loss), Adjusted Effective Tax, Adjusted Operating Income (Loss) and Adjusted EBITDA were as follows:
Three Months Ended March 31,
(in millions)
2024
2023
REVENUE
Revenue
$
921
$
922
Adjustment:
Foreign currency impact
(2
)
3
Revenue at Constant Currency
$
919
$
925
ADJUSTED NET INCOME (LOSS)
Net Income (Loss)
$
99
$
(6
)
Adjustments:
Amortization of acquired intangible assets ( 1 )
1
2
Restructuring and related costs
9
29
Loss on extinguishment of debt
2
—
(Gain) loss on divestitures and transaction costs, net
(161
)
2
Litigation settlements (recoveries), net
4
(21
)
Other charges (credits)
(2
)
(1
)
Total Non-GAAP Adjustments
(147
)
11
Income tax adjustments ( 2 )
32
(3
)
Adjusted Net Income (Loss)
$
(16
)
$
2
ADJUSTED EFFECTIVE TAX
Income (Loss) Before Income Taxes
$
127
$
(8
)
Adjustments:
Total Non-GAAP Adjustments
(147
)
11
Adjusted PBT
$
(20
)
$
3
Income tax expense (benefit)
$
28
$
(2
)
Income tax adjustments ( 2 )
(32
)
3
Adjusted Income Tax Expense (Benefit)
(4
)
1
Adjusted Net Income (Loss)
$
(16
)
$
2
CONTINUED
Three Months Ended March 31,
(in millions)
2024
2023
ADJUSTED OPERATING INCOME (LOSS)
Income (Loss) Before Income Taxes
$
127
$
(8
)
Adjustments:
Total non-GAAP adjustments
(147
)
11
Interest expense
27
27
Adjusted Operating Income (Loss)
$
7
$
30
ADJUSTED EBITDA
Net Income (Loss)
$
99
$
(6
)
Income tax expense (benefit)
28
(2
)
Depreciation and amortization
62
61
Contract inducement amortization
1
1
Interest expense
27
27
EBITDA
217
81
Adjustments:
Restructuring and related costs
9
29
(Gain) loss on divestitures and transaction costs, net
(161
)
2
Litigation settlements (recoveries), net
4
(21
)
Loss on extinguishment of debt
2
—
Other charges (credits)
(2
)
(1
)
Adjusted EBITDA
$
69
$
90
___________
(1) Included in Depreciation and amortization on the Consolidated Statements of Income (Loss).
(2) The tax impact of Adjusted Pre-tax income (loss) from continuing operations was calculated under the same accounting principles applied to the ‘As Reported’ pre-tax income (loss), which employs an annual effective tax rate method to the results and without regard to the adjustments listed.
Non-GAAP Reconciliations: Adjusted Weighted Average Shares Outstanding, Adjusted Diluted EPS, Adjusted Effective Tax Rate, Adjusted Operating Margin and Adjusted EBITDA Margin were as follows:
Three Months Ended March 31,
(Amounts are in whole dollars, shares are in thousands and margins and rates are in %)
2024
2023
ADJUSTED DILUTED EPS (1)
Weighted Average Common Shares Outstanding
209,160
218,410
Adjustments:
Restricted stock and performance units / shares
—
—
Adjusted Weighted Average Common Shares Outstanding
209,160
218,410
Diluted EPS from Continuing Operations
$
0.46
$
(0.04
)
Adjustments:
Total non-GAAP adjustments
(0.70
)
0.05
Income tax adjustments (2)
0.15
(0.01
)
Adjusted Diluted EPS
$
(0.09
)
$
—
ADJUSTED EFFECTIVE TAX RATE
Effective tax rate
21.9
%
20.8
%
Adjustments:
Total non-GAAP adjustments
0.3
%
14.2
%
Adjusted Effective Tax Rate (2)
22.2
%
35.0
%
ADJUSTED OPERATING MARGIN
Income (Loss) Before Income Taxes Margin
13.8
%
(0.9)%
Adjustments:
Total non-GAAP adjustments
(15.9)%
1.3
%
Interest expense
2.9
%
2.9
%
Margin for Adjusted Operating Income
0.8
%
3.3
%
ADJUSTED EBITDA MARGIN
EBITDA Margin
23.6
%
8.8
%
Total non-GAAP adjustments
(16.1
)%
1.0
%
Adjusted EBITDA Margin
7.5
%
9.8
%
__________
(1) Average shares for the 2024 and 2023 calculation of adjusted EPS excludes 5.4 million shares associated with our Series A convertible preferred stock and includes the impact of preferred stock dividend of approximately $2 million and $2 million for the three months ended March 31, 2024 and 2023 , respectively.
(2) The tax impact of Adjusted Pre-tax income (loss) from continuing operations was calculated under the same accounting principles applied to the ‘As Reported’ pre-tax income (loss), which employs an annual effective tax rate method to the results and without regard to the Total Non-GAAP adjustments.
(3) Adjusted for the full impact from revenue and income/loss from divestitures for all periods presented.
Free Cash Flow and Adjusted Free Cash Flow Reconciliation:
Three Months Ended March 31,
(in millions)
2024
2023
Operating Cash Flow
$
(37
)
$
(12
)
Cost of additions to land, buildings and equipment
Sale demonstrates continued progress in Conduent’s strategy to streamline its portfolio to drive increased focus on its core capabilities and enable synergistic growth
FLORHAM PARK, N.J. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, today announced it has successfully completed the sale of its Curbside Management Solutions and Public Safety Solutions businesses to Modaxo, a division of Constellation Software Inc. (TSX: CSU). The signing of the transaction was announced on December 28, 2023. The sale has a purchase price of $230 million.
“This divestiture marks another significant step in our efforts to concentrate on our core capabilities and foster growth that benefits both our shareholders and clients,” said Cliff Skelton, Conduent President and CEO. “With the completion of this sale, our focus remains on a smooth transition for our team members and clients as we continue to execute our growth strategy and advance toward our deployable capital goal.”
As outlined during Conduent’s 2023 investor briefing, the company set on a course to rationalize its business portfolio to increase focus on core capabilities, become more nimble, and enhance shareholder and client value.
Conduent will also continue to drive innovation in its Road Usage Charging Solutions and Transit Solutions businesses to enable streamlined, high-volume mobility services. The sale to Modaxo has no impact on these businesses.
Additional details of the transaction are outlined in Conduent’s 8-K filed with the U.S. Securities and Exchange Commission (SEC) today.
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 59,000 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 .
Conduent is a trademark of Conduent Incorporated in the United States and/or other countries. Other names may be trademarks of their respective owners.
Forward-Looking Statements
This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” “continue to,” “endeavor,” “if,” “growing,” “projected,” “potential,” “likely,” “see,” “ahead,” “further,” “going forward,” “on the horizon,” “enable,” “strategy,” 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 are forward-looking statements, including, but not limited to, statements regarding Conduent’s focus on continuing to provide a seamless transition for team members and clients as Conduent executes its growth strategy and advances towards its deployable capital goal, expectations that Conduent will continue to drive innovation in its Road Usage Charging Solutions and Transit Solutions businesses to enable streamlined, high-volume mobility services, and Conduent’s strategy to streamline its portfolio to drive increased focus on its core capabilities and enable synergistic growth, as well as to rationalize its business portfolio to increase focus on core capabilities, become more nimble, and enhance shareholder and client value. 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 actual results to differ materially from those in our forward-looking statements include, but are not limited to: Conduent’s ability to realize the benefits anticipated from the sale of its curbside management and public safety businesses; unexpected costs, liabilities or delays in connection with the transaction; the significant transaction costs associated with the transaction; negative effects of the announcement, pendency or consummation of the transaction on the market price of our common stock or operating results, including as a result of changes in key customer, supplier, employee or other business relationships; the risk of litigation or regulatory actions; our inability to retain and hire key personnel; the risk that certain contractual restrictions contained in the definitive transaction agreement could adversely affect our ability to pursue business opportunities or strategic transactions; and other factors that are set forth in the “Risk Factors” and other sections of our 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 press 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.
Initiative initially focused on generative AI implementation in healthcare claims management, customer service platforms and fraud detection
FLORHAM PARK, N.J. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, today announced an innovation initiative with Microsoft that will use Microsoft Azure OpenAI Service to bring the power of generative AI to drive quality, productivity and faster cycle times for Conduent’s global clients.
The innovative initiative initially is exploring generative AI implementation in healthcare claims management, customer service platforms and fraud detection, with three pilots underway. By integrating generative AI into its client offerings and internal operations, Conduent builds on its longstanding history of delivering technologies and solutions that improve client operating and cost performance, enhance customer experience and optimize business processes.
“With a heritage built on helping our clients improve their business performance through technologies such as automation, machine learning, and digitalization, we are excited to collaborate with Microsoft to develop the next generation of business solutions that will be powered by generative AI,” said Cliff Skelton, Conduent President and Chief Executive Officer. “We are focused on harnessing the potential of generative AI to further advance our solutions and capabilities leading to improved quality, efficiency and productivity for our clients and in our own operations.”
“Generative AI has the power to transform how businesses and organizations operate – serving as a force-multiplier to improve efficiencies and enhance customer experiences across a range of industries,” said Svetlana Reznik, GM Data & AI at Microsoft. “Our collaboration with Conduent will help accelerate AI adoption for their customers in a secure cloud environment.”
Creating innovation in business processes through generative AI As a BPaaS leader with a diversified portfolio of solutions and industries served, Conduent is in a unique position to evaluate and embed generative AI across a range of applications and sectors.
Through this AI initiative, Conduent and Microsoft will be collaborating on multiple use cases across a variety of business processes. These use cases will use dedicated instances of AI to protect Conduent’s and its clients’ data. The generative AI pilots underway include:
Intelligent data harvesting from healthcare claims documents for faster adjudication by implementing Azure AI Document Intelligence and Azure OpenAI Service
Increasing the volume and speed of fraud detection processing in payments by using Azure Data Factory and Azure OpenAI Service
Improving customer service agent responsiveness by using Azure AI Language Service, Azure AI Speech Service and Azure OpenAI Service
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 59,000 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 .
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.
Conduent to maintain flexible, dynamic pricing and conduct license plate image reviews, helping to improve the flow of traffic and relieve congestion for VDOT
FLORHAM PARK, N.J. — Conduent Transportation, a global provider of smart mobility technology solutions and business unit of Conduent Incorporated (Nasdaq: CNDT), today announced the implementation of an Express Lanes tolling system in Virginia. The system, which went live March 17 on a segment of the I-64 Hampton Roads Express Lanes, was designed by Conduent as part of a 2021 contract from the Virginia Department of Transportation (VDOT).
Conduent will operate and maintain an innovative and completely overhead vehicle classification system, a traffic-responsive dynamic pricing system and an automated license plate recognition system, as well as conduct license plate image reviews for VDOT. These technologies and services are designed to help improve traffic flow and relieve congestion for motorists and passengers.
To enable dynamic pricing, VDOT will use data analytics to determine toll rates based on the volume of traffic during different times of the day, helping reduce overall travel times and enhance predictability and mobility choices for motorists. The lanes remain free for vehicles with two or more occupants using a required E-ZPass Flex transponder.
“It’s exciting to offer our clients the latest innovations in tolling technology that greatly enhance the roadway experience for motorists, from an overhead vehicle classification system to the ease of booth-less electronic payment – all enabling reduced congestion and faster journeys,” said Adam Appleby, President, Transportation Solutions at Conduent. “Our tolling solutions also improve operational efficiency, accuracy and customer service for transportation and tolling authorities. As a leader in road usage charging, Conduent continues to identify new solutions to transform mobility.”
This segment on I-64, located in Chesapeake and Norfolk, is the first of four segments that will be implemented with the new system. The segments will ultimately become a part of a continuous 45-mile Express Lanes network on the corridor. VDOT also has the option under the contract to implement a vehicle occupancy detection system in the future, which would use camera systems and video analytics to identify the number of occupants in a vehicle.
Conduent Transportation is a leading provider of streamlined, high-volume mobility services and solutions, spanning road usage charging and advanced transit systems, that enhance the services provided by transportation agencies to benefit the citizens who use them. For over 50 years, the company has helped clients advance transportation solutions in more than 20 countries.
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 59,000 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.
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.
The technologies can help agencies and beneficiaries nationwide prevent EBT fraud targeting nutrition assistance and other cash-aid programs
FLORHAM PARK, N.J. — Conduent Incorporated (Nasdaq: CNDT), a global technology-led business solutions and services company, has implemented technologies for the South Carolina Department of Social Services (SCDSS) to help combat fraud and further enhance the security of the state’s Electronic Benefits Transfer (EBT) program. In South Carolina and other states, EBT fraud targeting the Supplemental Nutrition Assistance Program (SNAP) and other cash benefits adds costs to government agencies and causes challenges for the recipients who depend on these benefits.
“Our agency is continually working with Conduent to deploy new strategies and safeguards to prevent our clients from becoming fraud victims.”
The fraud-reducing technologies are part of a suite of tools Conduent offers that can assist agencies and beneficiaries nationwide in protecting government aid for nutrition assistance, unemployment insurance and other cash-aid programs.
“SNAP beneficiaries rely on benefits to help supplement their monthly food budget to feed their families. When these benefits are stolen from them through fraud, that can result in less food on a family’s dinner table and hungry homes,” said Michael Leach, SCDSS State Director. “Our agency is continually working with Conduent to deploy new strategies and safeguards to prevent our clients from becoming fraud victims.”
Last year, Conduent implemented an advanced interactive voice response (IVR) system technology for South Carolina’s EBT customer service center that automatically identifies suspicious phone call patterns, such as an unusually high number of calls from a single phone number. When threats are identified, the technology can prevent access to EBT account information in real time.
South Carolina has also made an account protection feature available to beneficiaries, allowing them to easily and quickly lock and unlock their benefits card using Conduent’s ConnectEBT mobile app and cardholder portal. This feature, which applies to both in-state and out-of-state purchases, provides cardholders more control and security in managing their accounts and helps prevent perpetrators from gaining access to their benefits. Other states including Iowa, Maryland, New York and Ohio have also implemented this ConnectEBT feature.
In addition, for South Carolina, Conduent implemented the ability for cardholders to receive and manage usage alerts for identifying suspicious transaction activity on their EBT accounts. This feature can help beneficiaries monitor, spot and report the suspicious activity in real-time.
SCDSS says it will never send clients a text message about locking a card and requiring a SNAP recipient to contact a 1-888 number and provide the client’s EBT card number to unlock the benefits. To report suspicious activity or SNAP fraud, the public is encouraged to make a report to the USDA Office of the Inspector General at 1-800-424-9121 or online here.
“We’re proud and excited to bring these enhanced benefit protection features to South Carolina as well as other states,” said Wade Fairey, General Manager, Payments and Child Support Solutions at Conduent. “We’re providing agencies with security tools and technologies that help ensure states can most effectively serve their EBT constituents. These features are designed to help states curb unauthorized access to accounts and ensure that funds go to the intended benefits recipients.”
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 59,000 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.
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.
5-year contract renewal follows the recent implementation of a “Tap & Ride” payment option, allowing NJ TRANSIT bus and light rail customers to use contactless credit and debit cards
Similarly, in nearby Philadelphia, Conduent also implemented contactless payment options for SEPTA buses, subways and trolleys
FLORHAM PARK, N.J. — Conduent Transportation, a global provider of smart mobility technology solutions and business unit of Conduent Incorporated (Nasdaq: CNDT), today announced it received a 5-year contract renewal from NJ TRANSIT to continue implementation and upgrades of a contactless fare collection system for customers. Under the new contract, which builds on a relationship of more than 30 years with NJ TRANSIT, Conduent will also provide maintenance of various hardware and software systems, including ticket vending machines and on-board validators.
“As an industry leader in transportation technologies and innovation, we’re proud to help make mobility easier, more efficient and more enjoyable for transit agencies and their customers worldwide.”
Last fall, under the previous contract, Conduent implemented a new “Tap & Ride” payment option for NJ TRANSIT, allowing New Jersey bus and light rail customers to use contactless credit and debit cards. The system is currently usable with existing validators on buses and at light rail stations. Additional ticket types, including Google and Apple payment options, are being made available.
NJ TRANSIT is the nation’s largest statewide public transportation system and third largest transit system. It provides more than 925,000 weekday trips on 263 bus routes, three light rail lines, 12 commuter rail lines and Access Link paratransit service. It links major points in New Jersey, New York and Philadelphia.
“The convenience of digital, contactless payments is transforming how we purchase, pay and get paid in every aspect of our lives, and we’re excited to continue helping our clients extend these benefits to their riders,” said Adam Appleby, President, Transportation Solutions at Conduent. “As an industry leader in transportation technologies and innovation, we’re proud to help make mobility easier, more efficient and more enjoyable for transit agencies and their customers worldwide.”
SEPTA Contactless Payments
In nearby Philadelphia, under a separate contract, Conduent also recently implemented for SEPTA (the Southeastern Pennsylvania Transportation Authority) contactless payment options on transit, including buses, subways and trolleys. Customers can now easily tap their credit and debit cards or use mobile payment apps such as Apple Pay or Google Pay at turnstiles and fare boxes. These capabilities will be extended to all SEPTA modes when they launch on Regional Rail lines in 2024.
SEPTA is one of the largest transit systems in the country, serving five counties in the Greater Philadelphia area and connecting to Delaware and New Jersey transit systems. It operates across six transportation modes and has 2,800 vehicles in service, 285 subway and rail stations, plus 13,000 bus and trolley stops.
Conduent Transportation is a leading provider of streamlined, high-volume mobility services and solutions, spanning road usage charging and advanced transit systems, that enhance the services provided by transportation agencies to benefit the citizens who use them. For over 50 years, the company has helped clients advance transportation solutions in more than 20 countries.
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 59,000 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.
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.
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.
Initiating Coverage. We are initiating coverage with an Outperform rating and a $9 price target. While our initial recommendation is based on a sum of the parts analysis, we believe that the shares will eventually reflect its attractive ongoing businesses following its current rationalization and streamlining of its portfolio.
A transitional story. Since spinning off from Xerox in 2017, the company has sold several businesses, changed key members of the management team and simplified the business. Importantly, in the second half of 2023, the company announced the divestitures of three businesses that are expected to close in the first half of 2024. While the transitional story is not complete, there appears to be light at the end of the tunnel.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
