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Sep 30, 2023
Conduent Q3 2023 Earnings Report
Conduent's Q3 2023 financial results reflected consistent performance in Revenue and EBITDA, exceeding expectations. Portfolio diversity accommodated variation between businesses, and the sales pipeline grew, indicating optimism regarding future sales.
Key Takeaways
Conduent reported Q3 2023 revenue of $932 million and an adjusted EBITDA margin of 9.9%, both exceeding expectations. The company experienced a net loss of $289 million, impacted by a goodwill impairment related to the BenefitWallet agreement. Despite macroeconomic challenges in the Commercial sector, the Government and Transportation segments provided offset advantages.
Revenue and Adjusted Revenue reached $932 million.
Adjusted EBITDA margin was 9.9%.
New business signings ACV totaled $154 million.
Net ARR Activity Metric (TTM) was $103 million.
Forward Guidance
Conduent anticipates adjusted revenue between $3.700 billion and $3.720 billion and an adjusted EBITDA margin of approximately 10.0% for FY 2023. Adjusted Free Cash Flow is expected to be approximately 0% of Adjusted EBITDA.
Positive Outlook
- Adjusted Revenue is expected to be between $3,700M and $3,720M.
- Adjusted EBITDA Margin is expected to be approximately 10.0%.
- The company anticipates completing the transfer of its BenefitWallet HSA portfolio in the first half of 2024.
- An estimated pre-tax gain of approximately $425 million is expected from the BenefitWallet HSA portfolio transfer.
- The company's $1.0 billion total liquidity position remains strong with long-dated debt maturities and a modest net leverage ratio.
Challenges Ahead
- Adjusted Free Cash Flow as a percentage of Adjusted EBITDA is expected to be approximately 0%.
- Macro-economic conditions in the Commercial sector influenced near-term sales opportunities.
- FY 2023 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.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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