Conduent Incorporated

What they do

Conduent delivers technology-led business process outsourcing, including customer experience management, finance and accounting, digital and document solutions, government healthcare claims processing, benefits payments, and tolling and transit payment services. In 2025, it managed approximately 2 billion customer service interactions, processed over 454 million Medicaid claims, and disbursed roughly $80 billion in government benefit payments.

Revenue drivers

• Commercial segment — Offers customer experience, finance and accounting, and human capital solutions to corporate clients; revenue declined in recent quarters, with Q2 2026 revenue at $531M total company (continuing operations).
• Government segment — Provides Medicaid claims processing, eligibility and enrollment, and benefit payment distribution; Q2 2026 profitability was lower year-over-year, impacting Adjusted EBITDA.
• Transportation segment — Includes tolling and public transit payment solutions, processing over 14 million tolling transactions per day; the company agreed to sell its Transit and Tolling businesses in Q2 2026.

Recent performance

For Q2 2026, revenue was $531M (continuing operations), down 11.9% year-over-year. GAAP net loss was $116M, and pre-tax loss from continuing operations was $57M, with Adjusted EBITDA of $16M and a 3.0% margin. Cash flow from operations improved to $7M from a -$15M in the prior-year quarter. The company signed divestitures expected to generate $234M in gross proceeds, and new business signings ACV were $99M.

Strategy

Management is executing a transformation plan with priorities to simplify the organization, strengthen financial discipline, and take structural costs out, targeting approximately $100 million in annualized cost savings. The company is reshaping its portfolio to focus on core growth markets, having announced the sale of its Transit and Tolling businesses. It intends to use most of the divestiture proceeds to reduce debt and strengthen the balance sheet. Investments are being made in go-forward technology capabilities, including AI, and go-to-market execution to convert a growing pipeline into profitable growth.

Risks

• Government contract appropriation risk — A significant portion of revenue comes from government contracts that are subject to fund appropriation, termination for convenience, and audits, which could reduce revenue or lead to penalties.
• Transformation execution risk — The restructuring and portfolio divestitures may not deliver the expected cost savings or proceeds, and Q2 2026 results showed higher restructuring costs and lower profitability.
• Revenue decline and profitability pressure — Revenue has declined for five consecutive years, and Q2 2026 Adjusted EBITDA margin fell to 3.0%, with lower government profitability.
• Debt and liquidity risk — The company has substantial debt, and while it plans to use proceeds to reduce leverage, weak operating cash flow and negative net income could constrain financial flexibility.

Outlook

Management expects the transformation actions to improve financial performance and create sustainable value, but notes that Q2 2026 results do not yet reflect the full impact. They are confident in converting a growing qualified pipeline into profitable growth, supported by new wins and expansions. The divestiture proceeds are expected to exceed the at least $200 million commitment made in Q1 2026, with most used to reduce debt.