Conduent Incorporated (CNDT) | Investment Case

1. Company Snapshot

1.a. Company Description

Conduent Incorporated provides business process services with capabilities in transaction-intensive processing, analytics, and automation in the United States, Europe, and internationally.It operates through three segments: Commercial Industries, Government Services, and Transportation.The Commercial Industries segment offers business process services and customized solutions to clients in various industries; and end-user customer experience management, transaction processing services, healthcare and human resource, and learning services.

The Government Services segment provides government-centric business process services to the United States federal, state, local, and foreign governments for public assistance, program administration, transaction processing, and payment services; medical management and fiscal agent care management services; and government healthcare, payment solutions, child support, and federal services.The Transportation segment offers systems and support comprising mission-critical mobility and payment solutions to government clients.This segment also provides electronic tolling, urban congestion management, and mileage-based user solutions; transit solutions; citation and permit administration, parking enforcement, and curbside demand management solutions; and computer-aided dispatch/automatic vehicle location solutions.

Conduent Incorporated was founded in 2016 and is headquartered in Florham Park, New Jersey.

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1.b. Last Insights on CNDT

Conduent Incorporated's recent performance was negatively driven by a disappointing Q4 earnings report, which showed a loss of $0.15 per share, missing revenue estimates. The company's pre-tax income loss of $82M in Q4 and full-year 2024 revenue of $3,356M, which was lower than expected, likely weighed on the stock. Additionally, the company's high medical care ratios and increasing costs may have contributed to the negative sentiment. Furthermore, the strategic alliance with BNY Mellon to deliver end-to-end pension risk transfer solutions, although a positive development, may not have been enough to offset the negative earnings report. The introduction of Conni, a GenAI virtual assistant, may also have been overshadowed by the earnings miss.

1.c. Company Highlights

Last Price	1.95
Change Percentage	-1.77%
Open	1.99
Previous Close	1.98
Market Cap ( Millions)	312
Volume	1097315
Year High	4.9
Year Low	1.72
M A 50	2.31
M A 200	2.57

FCF Yield	-16.05%
Dividend Yield	0.00%
ROE	2.07%
Debt / Equity	82.15%
Net Debt / EBIDTA	215.25%
Price To Book	0.34
Price Earnings Ratio	15.63
Price To FCF	-6.23
Price To sales	0.1
EV / EBITDA	3.55

2. Conduent's Q3 2025 Earnings: A Mixed Bag

Conduent's third quarter 2025 financial performance was marked by revenue of $767 million, in line with guidance, and adjusted EBITDA of $40 million, with a margin of 5.2%, up from 4.9% last quarter and 4.1% in Q3 2024. The company's EPS was -$0.09, missing estimates of -$0.07. The revenue growth was driven by a sequential increase, while year-over-year, the Commercial and Government segments saw a decline in adjusted revenue, down 4.7% and 6.7% respectively. In contrast, the Transportation segment saw a 14.9% increase in adjusted revenue.

Publication Date: Dec -02

                                    📋 Highlights
                                    Revenue Growth & Guidance Alignment:
                                                Revenue reached $767 million, matching guidance, with adjusted EBITDA of $40 million (5.2% margin) up from 4.9% last quarter.
New Business Momentum:
                                                Secured $111 million new ACV in Q3 (5% YTD growth vs. 2024), with a $3.4 billion qualified pipeline up 9% YoY.
Segment Performance:
                                                Transportation revenue surged 14.9% to $162 million, while Commercial (-4.7%) and Government (-6.7%) segments declined year-over-year.
2025 Outlook:
                                                Adjusted revenue forecast at $3.05–$3.1 billion, with EBITDA margin target of 5–5.5%, driven by cost discipline and Gen AI efficiency gains.
Capital Allocation:
                                                Share repurchases hit $70 million, and refinanced credit facilities simplified the balance sheet, though adjusted free cash flow remained negative at $54 million.

                                

Segment Performance

The Commercial segment's decline was partly offset by the growth in the Transportation segment. The Government segment's decline was attributed to the government shutdown, which affected deal closures, but not the revenue stream. As Cliff Skelton, President and CEO, noted, the government shutdown impacted near-close deals in Q2 expected to close in Q3, which did not materialize. The company's diversified portfolio and business continuity efforts helped maintain operations despite challenges such as hurricane damage in the Philippines.

New Business Wins and Pipeline

The company signed $111 million of new business ACV in the quarter, consistent with the prior year, and year-to-date 2025 new business ACV is up 5% versus the same period in 2024. The qualified ACV pipeline remains strong at $3.4 billion, up 9% year-over-year, indicating a healthy prospect for future growth.

Valuation and Outlook

With a P/S Ratio of 0.1 and EV/EBITDA of 3.6, the company's valuation appears reasonable. However, the negative Free Cash Flow Yield of -15.49% raises concerns about the company's ability to generate cash. Conduent has updated its 2025 outlook, expecting adjusted revenue to be between $3.05 billion and $3.1 billion, and adjusted EBITDA margin to be between 5% and 5.5%. Analysts estimate next year's revenue growth at 5.6%, indicating a positive outlook for the company's future performance.

AI Deployment and Cost Discipline

The company's Gen AI deployment is driving productivity and quality gains, particularly in the Government space. The company measures productivity gains from Gen AI through expense reduction and revenue increases. Conduent has a strong cost discipline and continually optimizes areas, with some Phase 2 actions planned for 2026. The initial phase of stranded costs related to divestitures is complete, indicating a focus on improving operational efficiency.

3. NewsRoom

Solutions by Text and Conduent Partner to Modernize Loan Servicing with Integrated, Compliant Text Messaging

Nov -13

Source: prnewswire.com

Conduent Seeks To Stabilize Revenue Drop As Divestitures Slow (Downgrade)

Nov -11

Source: seekingalpha.com

Conduent Incorporated (CNDT) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Conduent (CNDT) Reports Q3 Loss, Misses Revenue Estimates

Nov -07

Source: zacks.com

Conduent Cuts 2025 Revenue Forecast, But CEO Says Capital Plan On Track With Cash Cushion

Nov -07

Source: benzinga.com

Conduent Reports Third Quarter 2025 Financial Results

Nov -07

Source: globenewswire.com

Conduent Applies GenAI to Revolutionize Detection of Reportable Events and Sets New Standard for FDA Compliance

Nov -05

Source: businesswire.com

Conduent Appoints Michael J. Fucci to Board of Directors

Oct -31

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.79%)

6. Segments

Commercial

Expected Growth: 1.8%

Conduent's 1.8% commercial segment growth is driven by increasing demand for business process outsourcing, digital transformation, and automation. The company's focus on innovation, operational efficiency, and strategic partnerships also contribute to growth. Additionally, the rising need for cost savings, improved customer experience, and compliance with regulatory requirements in industries such as healthcare and finance further support segment expansion.

Government

Expected Growth: 1.5%

Government segment growth of 1.5% from Conduent Incorporated is driven by increasing demand for digital transformation, modernization of legacy systems, and outsourcing of non-core functions. Additionally, the need for cost savings, improved efficiency, and enhanced citizen experience also contribute to this growth.

Transportation

Expected Growth: 2.2%

Conduent's Transportation segment growth of 2.2% is driven by increasing demand for digital payment solutions, expansion of tolling and transit systems, and growing adoption of intelligent transportation systems. Additionally, strategic partnerships and investments in emerging technologies such as electric vehicle charging infrastructure and autonomous vehicles are contributing to the segment's growth.

7. Detailed Products

Business Process Outsourcing (BPO)

Conduent provides business process outsourcing services to help clients improve efficiency, reduce costs, and enhance customer experience.

Digital Payments

Conduent offers digital payment solutions to help clients manage payment processing, including online bill pay, mobile payments, and more.

Customer Experience Management

Conduent provides customer experience management services to help clients improve customer engagement, loyalty, and retention.

Human Resource Services

Conduent offers human resource services, including benefits administration, payroll processing, and HR consulting.

Learning Services

Conduent provides learning services, including training and development programs, to help clients improve employee performance and productivity.

Transaction Processing

Conduent offers transaction processing services, including payment processing, document processing, and more.

8. Conduent Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Conduent Incorporated operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand reputation and customer loyalty help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Conduent Incorporated's customers have a high bargaining power due to the availability of substitutes and the company's dependence on a few large customers. This gives customers the power to negotiate prices and terms.

Bargaining Power Of Suppliers

Conduent Incorporated has a diverse supplier base, and the company is not heavily dependent on a few suppliers. This reduces the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the industry is moderate, as there are barriers to entry such as high capital requirements and regulatory hurdles. However, new entrants can still disrupt the market and pose a threat to Conduent Incorporated.

Intensity Of Rivalry

The industry in which Conduent Incorporated operates is highly competitive, with many players competing for market share. This leads to a high intensity of rivalry, which can lead to pricing pressure and reduced profit margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	62.45%
Debt Cost	8.65%
Equity Weight	37.55%
Equity Cost	11.97%
WACC	9.90%
Leverage	166.28%

11. Quality Control: Conduent Incorporated passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

IBEX

A-Score: 5.0/10

Value: 5.0

Growth: 5.7

Quality: 6.1

Yield: 0.0

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

Usio

A-Score: 4.0/10

Value: 6.2

Growth: 4.7

Quality: 5.8

Yield: 0.0

Momentum: 5.0

Volatility: 2.3

1-Year Total Return ->

WidePoint

A-Score: 3.8/10

Value: 5.1

Growth: 4.6

Quality: 4.4

Yield: 0.0

Momentum: 7.5

Volatility: 1.3

1-Year Total Return ->

Conduent

A-Score: 3.6/10

Value: 8.4

Growth: 3.7

Quality: 4.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

1-Year Total Return ->

Telos

A-Score: 3.6/10

Value: 6.8

Growth: 0.8

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

1-Year Total Return ->

Grid Dynamics

A-Score: 2.9/10

Value: 4.3

Growth: 4.3

Quality: 5.5

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

20.27%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.90%

Conduent Incorporated - US2067871036

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CNDT

1.c. Company Highlights

Cheaper

Lower Growth

Lower Quality

Earnings Beats

Revenues Beats

Average Quality

Average Yield

Earnings Miss

Revenues Miss

Better Quality

Average Growth

Stable Momentum

Weak Momentum

2. Conduent's Q3 2025 Earnings: A Mixed Bag

Segment Performance

New Business Wins and Pipeline

Valuation and Outlook

AI Deployment and Cost Discipline

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.79%)

6. Segments

Commercial

Expected Growth: 1.8%

Government

Expected Growth: 1.5%

Transportation

Expected Growth: 2.2%

7. Detailed Products

Business Process Outsourcing (BPO)

Digital Payments

Customer Experience Management

Human Resource Services

Learning Services

Transaction Processing

8. Conduent Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Conduent Incorporated passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.94$

Current Price

1.95$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA