Conduent (CNDT) 7 Aug 242024 Q2 Earnings call transcript

Welcome to the Conduent Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Giles Goodburn, Vice President, Investor Relations. Thank you.

You may begin.

thanks, Quarter joining XXXX and discuss today operator, Second Conduent's Earnings. you, everyone, us for to Thank I'm joined today CEO; and by Cliff Skelton, Wood, CFO. our our Steve President and release chance We had to issued earlier review hope this a our you morning. press

are as a financial this This of on used the X-K. morning available well the on the as metrics filed were information copy press call Form call webcast release Relations this well with Investor slides detailed section being website. as is Conduent package as and the during the the This SEC of

that During current included forward-looking. or except Information in concerning to not this materially do annual result call, of or and Conduent's number SEC. we may Form and cause new statements assumptions a report that by forward-looking intend make the are with XX-K management's differ as developments statements factors actual information, these as reflect events is required filed factors those to law. to a We are of from statements update forward-looking statements. these expectations on subject These beliefs, may results future

U.S. The in they company's information includes measures. with financial these should are substitute results. presented reported not not accordance in be non-GAAP measures viewed as and addition calculated the to Because a today GAAP, for

see as regarding release. more press well their we limitations the how purposes, our as information definitions them to please For for of our and non-GAAP use measures usefulness comparative

And the now over like I'd to turn call Cliff. to

with today, I'll to progress strategic bit We'll today be on a little will strategy welcome, financials discussion EBITDA processes different. products and all people earnings a and $XXX everyone, expectations. begin But the were X.X% Steve our at and our adjusted margin, million just QX Giles, adjusted organization, QX our with framed technology. of revenue $XX regarding This categories respectively, and and and objective million, our in earnings. summary, exceeding Thanks, follow and have a by the

New deal the year-over-year million, sequentially Victoria recent in characterized business. up business commercial weakness flat business $XXX year some own. some sales, and net our last all in Transportation and its transportation signings holding of a by was in strength of state in were large government This

was Finally, net discuss first to point the number timing ARR that will a the and time, for moment. the due representing sequence in the Steve low

constant All theme. a of points this to

Meanwhile, own ratios, balance Carl our new Icahn, buy which deleverage sequential create improvement fact, has we're Board our and divestiture also in we've exactly along activity and us revenue in low is capital EBITDA. journey that our owned sheet and a be the margin allowing our planned, strategic us of of including and that XXXX all While say, lowered parameter, a terms at is point we'd in path leverage as little said net our said rate we stock, some to streamline And exit and, continue less we trough, to this as dialogue. simplify in in we be, of fact, some back debt to formerly progressing intensity. the where to better allowed continued by part

effect the discuss in and cycle. of explain will Steve revenue that those where EBITDA we are divestitures

to Steve? me Steve. over hand let So it

Cliff. Thanks,

non-GAAP appendix of numbers. we the presentation. GAAP in in our we're done both are As past, have reporting in and the and reconciliations filings the The

events towards to XXXX want and billion Let's updates. highlight deployable making capital the made laid out $X progress we've in again that significant our that our we're for progress investor with turn our earnings you of to Slide rationalizing X. We've I portfolio. exiting previously

with the received receiving months. divestiture $XXX the Public proceeds. a ] of over April we closed the at for million X the of quarter, further and During [ second the benefit $XX Safety XX remainder on close, The completed next which the transfer, we of tranches million deferred final wallet $XXX curbside million

the in casualty updated of close $XXX a business claims share associated divestitures, purchase drag later $X deployable solutions of upper proceeds, us million, proceeds. with puts in our $XXX These price $XXX of subject more anticipate against which the XX% tax combined along the capital, in repurchases. with on million for of million or the announced price QX. net and To favorable we an Also will adjustments, view around sale million we quarter, of to certain date, prepayment targeted deployed quartile to $XXX debt we've these the of targeted and billion the

and later $XXX in we repurchased B of approximately my million Term more shares. the detail Loan million cover presentation. During XX.X prepaid I'll our quarter, this on

say, to about later overall portfolio too this that of first, retains narrative. divestitures, of strategy. vis-a-vis in rich Cliff We've call. business earnings a a our the of talk continue key highly believe be aspects And that of have we traditionally our where Conduent debt strides significant Suffice we in through And against component different were apps will even was made to strategic a let's But get said number value. post of reducing the that initial part we'd the these levered.

of have reported we the the X the beginning to guidance from of numbers out year Our started that deviate closed laid the at because divestitures.

adjusted on we divestitures of guide of an for with a out well this outlined with as the I'll reporting for how remainder then, basis, as QX the approach XXXX adjusted consistent look providing as fully backing also you QX, expectations the to upcoming consistent so numbers the practice And for adjusted past will revenue quarter. our are our guiding give EBITDA. and I

XXXX. once set into and We the removal business. in of the be website. continue It's work earnings, likely here Investors have guidance to file in that Claims again, more once In our QX historical full metrics we of our find we'll for Solutions through to will of section on to closure the important adjust costs year of which note our Casualty will stranded investor the XXXX you a Conduent the updating adjusted financials full published

annualization these be the will until fully XXXX. numbers in back reflected so of the end of And our

rates, Finally, adjusted asset we'll updated out. our laid outlook continue you you guide XXXX bridge rate our we've XXXX XXXX so exit can with to the between and our to provide an actuals, walk

the into get Let's slides.

Slide X our sales reviewing to and Turning key metrics.

If you X, on Slide important X to the of metrics adjusted sales X all the note and at look these we've it's exclude to of completed all divestitures. that

as year QX in $XX ACV to As earnings, in in I QX to $XXX with million prefaced and compared start QX $XXX sales the in soft from QX rebounded coming million at million the XXXX.

of $X billion about signed in a As was of and we which the deal, $XX Victoria of ACV QX over ECV. million reminder, quarter Transit the state which XXXX contributed

rebound the sales, our to full half of of with ACV. a pleased completed $XXX we're outcome expecting for we're Adjusted between While effect of second in million continue the in the of $XXX and divestitures, X year. QX year looking to million improve the

had markets drive continuing and urgency as commercial, cost year. strong quarter, some the public to Double-clicking our the start targeted we're Commercial where into a the strong QX sector we of in see upgrades transformation spaces CX segment in in and making the delivery to deals our of expecting half we're renewed number, in quarter, second the sales BPaaS with $XX and through address on bigger investments outsourcing I to half, see We in precision second ACV last attainment the can quarter have million locations. strongly QX strategic play expand of our a the where technology issue. set broad timing offerings. of to during some encouraging to predicting ACV. we third We've both business capacity translated This and an of stated second global some an Within be ACV

which in environments. the quarter. modularize continues Government NRR achieved states modernize to The Our & add-on pipeline a for to business drove increase an government the strong Healthcare in segments their Medicaid technology to our and have existing strong Transportation requirements relating from clients, business

the year. Turning XXXX, million. many the a how the to quarter's to million We've just reason of a metric divestitures, net activity Adjusted quarter, in quarter. the the $XX view we XXXX. the third this as negative going said in additionally, last comment on we These number covered year back closed of with positive on. in to the earnings quarter, coming at metrics driving at in turned have this slide, the the that pronounced negative previously, stand asymmetry a pipeline this really, The extra far I the consistent half what's here negative sales ARR I to was previous but was while notified quarters. to the that's purposing X last with the messaged it you're our see in confidence of million X. is to $XX to this of trailing The pointers recovery couple by And remainder of remains. rollout metric asymmetry for effect that And is more end being around $XX metric weighted there with expect that the Slide losses in XX-month them in for

million, Now million discuss results. X.X% our QX down ahead to our revenue the overall segments. the we our continue financial QX Adjusted in for X let's XXXX year-over-year was compared XXXX X.X% turn Slide and as to and XXXX, QX on $XXX $XXX is I'll commercial expectations. detail view make transportation progress segment internal in slightly and cover basis, of in but currency a to constant minute, a that level down

government segment into XXXX. will of trajectory our However, the recovery continue in

as I quarter to $XX single-digit in to adjusted margin Adjusted in compared X.X% EBITDA quarter QX. EBITDA X.X% for the to $XX XXXX. the XXXX, as million the compared was and the for This was conforms million for QX low guided margin QX

we are of and the now sequential And as each this into threefold. We're XXXX. drivers progress anticipating remainder -- climb a through quarter and the XXXX of

year. for XXXX we'd were efficiency taking originally half XXXX over impact X% the baked built still low incremental guide in benefit adjusted efficiency actioned they end the XX% target continue our We're to the cost we out with we have these of these These without head more of work be good range get as programs in to that guide albeit an shape original our deeper of we that XXXX at been the margin, into how the into range. we the contract add X% cost having into efficiency second in and Firstly, probably and into EBITDA to that as of cost divestitures, booked with losses year, the programs roll-offs naturally annualize. and as compensate

$XXX been XXXX in got outlook annualizing laid million you've we've that cost just expansion in manifest of that our million We're rate our XXXX, the getting exit anticipating walk more exit and to $XXX we we how and with sharing. out clearly consistent Secondly, with million for to around as we're you XXXX that into. work, additional and which stranded in margin $XX

in enrollment our bit there's care Finally, especially the third little a vertical. more in quarter health the open and ramp from revenue fourth and

turn So to over and let's now segment go results. the Slide X

one effect XXXX, this the down For continues $XXX The XXXX. closer the segment the and Commercial due story sales we the top to lost business. Commercial working QX still were XXXX. compared segment quarter growth We adjusted some to segment expect of be flat prior performance QX to of gap improving narrow retention to revenues million and X.X% exit year for as off line coming to as

XXXX X.X% segment losses $XX QX EBITDA impact was fluctuation. to down XX.X% by of XXXX of adjusted down Adjusted margin and the in driven EBITDA basis for XXX QX the compared points as year-over-year, volume and Commercial the million, some was

mix divested, in nature As to that totally rates. dependent operating business not which on segment improved and we the our EBITDA the begins adjusted due was through offset reset high-margin time, to as wallet segment commercial margin towards costs, as you'll remove reminder, margins business now work high is be operational of other numbers. Over have Obviously, growth. well will stranded margin this recall this the the as efficiencies interest benefit move a to

as next some we to few quarters. the expect modest sequential We margin EBITDA through improvements move

points revenue the first work to the so QX are the lap For approximately see segment, million, of year-over-year going were we XXXX. end revenues XXXX, X.X The in The of then as QX XXXX was off progress we approximately be as QX, to contract decreases And QX referenced the in is effect X.X% the In into points in decline. driven government to points decline. there. going move XXXX. prior this but decline, X.X% them and Government discrete is by quarter and we the down $XXX as We'd you of X then compared where as retain very care at the this into the items: that didn't materialize, than quarter. compared was hope Firstly, other February, performance. terminated of QX, health for of reasons is some X ran Defect X effect year. both lapped to contract and

states to programs This to effect X our This with the in lost when and into Snap Secondly, a against business funding Government X change supplemental is as points of same. well the Payments about decline similarly move structure quarter, remaining volumes client. the in continue compared as in there's the as XXXX. lapped as the lower XXXX, we of fewer quarters about prior is revenue year, it's due then

will a midway to Finally, in to that started as down prior of revenue effect a state points contributing to here X per XXXX. the on year price large through be QX decline X in around eligibility program this quarter. points to QX, compared there's It take decline effect of with X.X quarter and

in overall revenue X% down about points And annualization to of an that in to assumed there's QX to so down QX of the we down and having into both large compares against to on complete program as year and in year. and an the QX growth X XX% impact all will state down you point X Just can XX% the other growth X% price only in XXXX. expected on in QX, compared get with of prior this one, any X% prior QX math

adjusts up with year our government X.X%, outcome some to to XXXX. XXXX this previously about of make versus to business. revenue expected be Overall, for down We new be expected full able this

year. has However, so as performance expectations previously sales far discussed, lagged this

of XXXX. business good base likely It's manifest to feel few The new we billion so of items. And driven in us. forward to will convert And now from opportunity about the our it's with reiterate in the $X.X segment a segment important absenting makes the revenue these, by amount government revenue pipeline ACV. pipeline of in a a front of government disproportionate up

as normalize XX% The later in XXXX flight drives as discrete in mentioned elevated down this, Adjusted above are implementations was year-over-year. EBITDA the couple government for QX a X well segment should items what of the short-term again, expenses to related of in $XX million, year. most that some

Transportation QX tolling long transit were almost X.X% was segment scope however, $XX revenues reduction business. pricing offset from in adjustment for implementation long-term in $XXX year-on-year. in in our Australia our a project million, and adjusted ramp The XXXX million, anticipated large up our large, completely client by

and improved $X EBITDA as between a our within There's primary for was adjusted The in the to have margin and mix scale was Public million initiatives $X into operating transit was is previously remove drive this continue and Safety And the performance. partially because of segment, Transportation EBITDA For the adjusted driver and curbside quarter here X.X%. incremental million the noted area compared been revenue reset build offset underway to XXXX, businesses. several QX costs, businesses. back we operational the by the specifically margin X transportation divestiture tolling to one and efficiency of stranded contracts

sort path to see is progress were incremental you quarters, of forward above, through effect should any our EBITDA these couple I and of levers items, going from margin absenting highlighted that drive as discrete next improvement but we the range, XXXX. In the in this

of turn which the shares and credit on deployed future repurchasing debt to Slide maturities. largely the at with repay price ended undrawn quarter. with our discuss flow. an approximately the sheet including made sheet balance revolving the authority quarter, from Let's balance the cash million cash our million quarter, $XXX with $XXX and at on near $XXX total approximately in up divestiture facility Loan and we $XXX the of and $XXX debt end deal XX our million average million payments quarter was of In of $X.XX. midterm million, to Term XX.X In we prepaying $XXX voluntarily on to B, million would proceeds, million additional We

to opportunity icon Karl an aggregate repurchase price of included affiliates million. of shares the the his for through $XXX by This approximate all purchase certain

$X We billion because business of that the in how on studies bit mark. the deployed we've the little a enter repurchase shares. think capital from ended Icon around of we our the the $XXX is into need somewhere opportunity that below cash work the seen the You've our of to million

debt $XX coming purchase of million our receive an net deferred the second of the of stronger businesses. then additional and in divestiture milestones inflows as look million in the prepay to If level our the to approximately reached of sale we on consideration good $XXX the to quarters, the to cash operating business of the our safety as turns of some program. of from expected closure the our in of over forward of liquidity. to target and expecting previous decreased desired, solutions has half turns. on proceeds large continue to contracts desired relation casualty some net we're public X X.X leverage year manage and sale The leverage on curbside combination a outlook our as range important claims our billing -- maintain of us We shape X.X well we flow

at outlook exit XXXX. expect X for You'll prepayment revenue, full target, in is net turn of see X.X% rate we our or revenue and considering of debt XXXX, that quarter in below second was or year X% the be summation slightly our about leverage. of to around Capital for medium-term expenditure

XXXX. now XX turn cover outlook and We'll Slide to our for

be we'd these that then, to about XXXX, lower to we with And again, businesses. of say of around the X% transportation said me commercial taking on segment, range without say overall, as somewhere that earlier guided out divested heard XXXX. laid I slightly for guide range that EBITDA, is for original my the You be divested expect better. businesses we're we our not X in the the But end for within above had sense out we still midpoint Government doing the the earlier, X% revenue and X% decline I'd renew the

at the you our for adjusted for the you'll As has look that outlook guidance been here, basis now X the pay divestitures. see to adjust closed our on restated

to X%, that's to We year billion to here improvement EBITDA of margin And X% sequential be expect to range At in about adjusted the adjusted expect $X.XXX on. from billion. the full midpoint, QX range down the be of in revenue $X.XXX year-over-year. X% with we

approximately which earnings Solutions about these expect our the further We adjusted and equate in reduction of in will QX to point anticipated margin. to EBITDA close business, of Casualty million the revenue of X be Claims for $XXX

divested terms other we In free the a some to around not our This is reiterate, adjusted are an and reduction the here of offset percentage being divested our To to loss is of flows a flow of as expense. present be interest to the assets, we've time these with adjusted point level down considerations, of EBITDA cash it work We closure, metric. additional it table our at removing fully the consideration. it this for the so in guide the in cost out a adjusted substantial modeling expect adjusted break efficiency of from discrete fully as cash the X. modeling businesses don't from of adjusted moved EBITDA and due from partially

the Solutions to CapEx in we see quarter. effect here come of divestiture with the Claims the reducing divestitures complete with third you'll Finally, more the expected Casualty when

next remains about think to view, on journey exit that on over giving continues so. XX. and Slide a months to XX or XXXX, how be This in the you Moving rate we walk the to important we're

to notice that minor complete view. adjustments also to rate some made had exit the we've will detail We've incremental XXXX work. this You here

contemplated. X $XXX divested the to million those revenue some the for reduced streams to we've we've from revenue divestitures $XXX account Firstly, announced versus originally that from retained million

targeted $XXX $XX and proceeds. the in X reduction of an million. related divested $XXX The announced of transactions million in and the million a our million three the loss increase million, the million of transactions these $XXX divestitures to $XXX specifically, $XXX range increasing proceeds X anticipated to from net approximately quartile the for the divested tax drag, EBITDA of businesses after-tax and we're upper clarity With more to of from revenue from is announced X approximately proceeds of the more announced

our contract assumption reflecting within large of refined We've the outcomes our federal to certain be in margin and X.X%, contractual on renewal to a business. range expected expansion government payments X% pricing

we year. bank. for no being and continue of the on behalf into we revenue reported large we contract our that It's will informal stage, the bank move run At and that adjust negotiated with negotiations XXXX, a to the we've this long Many this notification preliminary. needed another over revenue for informally is net minimally have program XX processing federal outlook program full been years. that metric time for line XXXX given loss know of year ARR that as does you included will the this government processing understand was Express we vendor notified this it hard as expand as both this in this complex our Direct Nor run and likely transition a regional through XXXX,

achieve this pricing contract intended for on to order in this make At refinement to removes renewal point, to we us retain. our attractive margin the this the work in incremental

For to and approximately government is of very currently and segment is the dilutive million it's priced. $XXX profitable size, marginally revenue

on Xx. an to an will XX%. ratio $XX between results this of million XX% will prepay range time, $XXX range and capital EBITDA net $XXX leverage to cash sequentially, recovers million Board in Interest our free $XXX of plans Our as approximately of towards adjusted debt. approximately drive allocation million million of debt, new and target this expense be Over include additional authority flow our

ability to sales deploy XX% $X which us billion, of The as and is already reduction programmatic rate to confidence pipeline convicted gives remain our our generate deployed. approach strength to these well the in achieving and targets underway, XXXX proven as already exit cost of

the a are be adjusted million. as sequential third QX, completed, million range we continue $XXX to to to X.XX%, and divestitures in to margin adjusted quarter work of improvement costs. cost of programs in expecting remove X.XX% revenue our stranded EBITDA to $XXX X our be on see terms expect the In the of And we efficiency the adjusted in we for range would for

financial it for for over quarter, to the because going on lot and Cliff update back concludes remarks That as broader well. the business there's a my there I'll hand Cliff?

Steve. Thanks,

spend XX to Slide journey. business to turn this time the respect talking Let's some and are where and we about with

X embarked recall, on ago, may operational years optimization we technological you an and plan. and As stabilization

and While year to never leadership our debt, less perfect, And over of business we more that outcome and of that March will is outlined then our largely to existing charted just create in X-year and further leaders, a That businesses in to and better strengthened doubling on on would our lower success path our our ago, cohesiveness, capital intact. intensity a synergies, clear on growth. build by to foundation initiatives penetrate prospective enabled clients' strategic each a technology-led process foreseen continuing XXXX, down market-driven for solutions be with different culture. strengthen plan growth a more nimble company

cycles. how across strong make discussed our those on into about progress with against in core both an optimal the made we do. tell would talked have X-year leverage continue in commercial public AI-infused those to markets. grow plan, as We're to journey be to I business sector the and and how diversity more results order have for our also platforms And continue months be. narrative track demonstrate said competencies that you A been and portfolio, QX and can discussed following We our technology in steady $X we that capital cloud-based would would we portfolio where that a manner. comments. rationalizing to we most our deliver to this our continue allocating billion our by we our and to to we deployable XX of strength offset optimize economic approximately We

tactically to Let's X-year representation turn change of plan. the to that a made you we've to advance Slide give XX

help we those First, the That our our simplified commercial them. who of public a organization. We'll but corporate still operate growth our Transportation welcome we reduce President now model leading to group sector. presidents the of public point in people coming We've will granular the sectors soon corporate measure operating steered of with lead view, to veteran business and overlaps. continue strengthen That ourselves from Head announcement and public the our and is business that Solutions, individually, lead will very new now will and more X and new sector organizations. a And or Appleby X. lead is for a services. very us week formerly important Adam seasoned next we industry Government streamlined within have our

For Americas Mike was where in July in years Prior new McDaniel us to positions, the Mike is President. sector, joined Group of Mike the spent including DXC, the commercial Accenture leading he from XX sales Modern President organization. DXC, DXC's senior Workplace business. at

great must customers. clients producing to our Randall We've know with As client diversity to and important and reaching that Chief wallet strength, his to role you have share. that King to their portfolio focus role role in can the see, ready needs. a base well. high some Again, retention opportunities impressive And do and to. also of at who drive leaders, we from entirely Client growth we very organization clients we're group a what uniquely Officer companies from pay leverage Commercial very attention is experienced penetrate and will outside this targeted growth have the clients the businesses represent client to on onboard dedicated top expanded now created move in some retain

workplaces. equality most proud been loved the top culture, our Newsweek the and recognized by Index. global to both Newsweek's regard named been particularly We're With to for second have we've disability XXX year to running

trust, buy It of because but clients our strength business, will are team. our be in our may proud people we're people and certainly our from they

several models. solutions, locations offshore in opportunity beginning our strong to investing and efficiency, and can our when comes sales require especially increased we're propensity way, clients progress. capacity processes and geographic When momentum meet And from differentiate. our across demand objectives, broadly existing we're logos. especially delivery our conditions additional new as our making economic we improved see strong to commercial Regarding outsource nearshore model to our in We're see

key Interestingly, well as sales we're and solutions, capital in as and procurement cross-segment opportunities finance, drive seeing our partnership we also markets for opportunities sector human accounting as solutions, solutions. experience public customer

space. For solutions, example, in and pension we're across the for administration in the our we reinsurance plan various have scale industry, need human it multiple states for seeing thus administrative creating opportunities the capital

or erroneous In toll recently, accounts to data toll finance, road as our is end analysis savings RTW for opening have into procurement collector in the which customer payments solution, engaged accounting new automatically which deliver Netherlands, payable cost duplicate tail and opportunities, a Netherlands in comprehensive of Conduent an procurement, detecting the several the such in states And at insight interested to FastCap of provide year. to support provides we a organization's the spend. uncover

line is governments many businesses, bottom than of greatly that The buy commercial products ubiquitous. while our are

from strategy our leverage of a and As to sheet. net portfolio to demonstrating use hallmark mentioned, Steve efforts. rationalization lower a our is ratio part divestitures down proceeds strong in debt, those a And balance of commitment our the large pay

help was quarter, [indiscernible] previously and owned another believe capital use as allocation we a mentioned, of streamline We the one Regarding important that repurchased by decision planning. I capital that very will important in shares decision-making all

create our technology. real will the made open few manner, showing and considerable AI and I'd examples. results use our to pilots products our excited in on adjacencies. a mention our a that unique promising initiatives. methodical of in to like continuing to third generative cases progress worked value some for Following and client new share progress we're we that We are our We're

will This takeover cardholder fraud fraud combined We Gen to with while allow materially where we detection completed us traditional experience. approach account related rules-based the the upon AI. improving successful a pilot approach improve improving on traditional on apply to AI

we capabilities As we XXX%. the provide of to we you the know, we disbursement and part as fraud many by government detection volume fraud of support, detection programs can up believe increase

in manual promising. with is at document looking clients' our documents faster can more our performed to the improve Using allow Secondly, do Gen granular This we documents clients. for space and the work by and and provide a unstructured the management allow us effort should pilot of level. paired of to classification will traditionally OCR traditional also documents AI related work technologies, queuing saving more the processing routing

capability. correspondence we open adjacencies, now processing appeals for documents such Finally, new believe because or this of care new as can claims we

leading or and burner is identify of health We're a to with to especially dealing notifications are innovative introduce experience speed information personally and information with PII quick on the a quickly teaming a protected in CEO a company Directors. within scale in front every they notifications. and event, whereby Now the gap the event, every up for necessary when to need help identifiable required cybersecurity seeing industry, his and for method accurately effective Board cybersecurity an and the and when that companies cyber response PHI data.

our combination a can this, and eDiscovery client-specific identify quickly. To do will we review PII experts develop technology that of PHI a tailored provide in to platform plan privacy

help can and we're While with capability just started mail will notifications. an on-demand include print with also that getting it plan, this

care of Gen a transformation, interaction operations were transformation expectation leadership. need health AI NelsonHall to a respect while HR and With a We human in continue adding named lot to services, demonstrating CX with and new CX for better transformation, leader price. is higher capability, we of quality continued solution the by see payer

exit we Finally, XXXX. the improvement, less of sequential we've our assumptions and about, move confident adjustments capital some is modest Conduent trajectory in margin talked We growth, into XXXX conversion. through cash to to made improved and that moving right as sustain line business on were as some our rate top intensity flow Steve

to thank As in day. work they great do our for their the nearly shareholders, and associates like our associates XX,XXX always, recognize our every our support for clients I'd

for back to everyone, lines operator the now to you, up and I'll for listening, turn it open Thank questions. operator?

Our Instructions] questions first line [Operator with Capital. of the come NOBLE Pat from McCann

questions, any a to pass him of decision-making that that just for one, couple going After and your to guys great. then I Carl would I you could divestiture. does floor affect you Number shares strategic circle how no the in provide be there on. back decisions? stock, the the his share process color simplify forward? wanted Could longer really Icahn Does -- have I'll and you being the repurchasing

the Thanks Cliff. it's for question. Pat, Yes,

you from activist Carl, go of X had X, when know, And members our out decision-making board X many as can As as an imagine, you easier. X. gets to certainly

got distribute cooks capital get time much want a time, you lot kitchen little activists, a the of of do things to the to have do to what You X, from bit sure. an line, you've a extra like cetera. in et keep in company, capital and got for time to you And vis-a-vis how want -- agenda we'll different much how of

of us. I you asset we frankly, the a and now, is are of is And is in call little M&A a can a and knows, job a a can't addition or primary is tell means boards. be always that, for Board's to tell everybody little just easier not I what of you decisions front concern primary going happen, in process and As some got in that terms capital I might but course, CEO it But keeping liberated center. easy And feel to that and strategy bit actual going -- keeping governance ways. bit to allocation,

Great. was QX? full -- -- results to said And how already for if commentary about bit target, give your from a you second my of the what question little commentary your confidence you for you've then year given you comes just where reported additional could

and talked through programs walk I heavily see just the into reiterate, sequential full efficiency a right, half Well, going through We've we through in this year. really sort EBITDA second I as a important now as think, ramp going that these year process become then the But our we of that that. and to incremental XXXX, in to resident It's cost to through confidence deal the the that kind the work. right? of have both again we in get confidence about see the of cost that resident rate underway modest we with in got year terms half we've and there's sales and more back is degree of we're revenue exit of XXXX, as outlook progress of the bit we've through that XXXX plans that. to remainder execution the as of fact the think this little to side we're in to And journey we've the sequential work place that, through get second in as efficiency quarter-over-quarter the resident a that improvement of And in high the we probably side as guide that we year. to quarterly got we're going see to the outlined,

that's The think to cost back I effect lag absolutely right, more of going reduction Steve. manifest the the half. little efforts a is in

We going EBITDA up efforts that the our are ramp bit of to our is we in of sales of will a finish. a to those first we'll the year. compared affect finish strong government half beginning Some start second slow to the little revenue think the half. impact on for hope All

wondering, -- other any are Great. mine becoming it progress was And to though, there? now. the if efforts, are divestitures of march It maybe more. more Should for how if you're forward view could if will, And squeeze given seems I though other though as opportunities focus done? the in you towards divestiture announced more be expect if made just side we possibility -- before don't you announcements there the I -- there your significant seems you if the is you've the divestitures, it you the the one mind, seems there. in as just already

kind horizon. Pat, a gap of at many consider. center RemainCo compartment fill process can the activity with you look we is do How And we But and outside fitting. get. on over do primarily. think things We as as what's recall, and debt target. take might we fast think and Steve scarce the the view point way I if monetize how the we you takes as may of see that we're posted target are would synergies grow small he divestiture don't a can. that we carve-outs, and pay There's on as do we're those remaining we that can And will. in assets how of couple well any down to from of it, then whole There we was in we some puts we terms and think, as over major get

Yes.

Just one further add, to thing Pat.

different in rich value businesses you the inside the portfolio. X couple made, think that strategic they combination. the of we outside. very -- still either themselves portfolio targeted assets have I of they we've But necessarily on X value, about scarcity a that of criteria. of we've have or thought businesses met We If a divestitures plus had thought equals weren't by X sort have

balance the is public I'd like we like We so shaping our, the portfolio to that sector And the business. our markets of and commercial way to say, our up. kind give

some can outlined, towards that to outlined, those drive the the there take end of exit the entertain obviously, those work we've proceeds, as would what I top we've but for be drive of doesn't comes but to off end we rates think might businesses necessarily as attractive outlined towards along range the we outside continue not you top But that and that that on particular as the has And asset towards the at those accommodate mission be we're range. discrete see to a Cliff table needed. for offer will to growth of are all strategically -- divestiture the that of

it what best so gives we be us the deem if more to And room it to do to in get trying done. we're into

Yes. a way got assets. of we we've opportunistic operating ideas, few and would can in portfolio the grow terms a metaphorical the terms open we but believe is I characterize mean I it radar in still is in

from we're going to a them down capital double of perspective. Some

were them efficient. going and optimize Some get to more of

to just need. -- what we drive them, is as of what we going some have see And is so -- to we're continue and we

with questions & next the Our come Sidoti Riddick line Marc of Company. from

appreciate from you're little announcement there your And really was you if that about early we the client I us. wondering the say. the that? could and on you what on little all bit I the provided read I wonder talk So year, bit was AI. if this talk what seeing a reactivity could a talk about little detail I maybe and is Microsoft partnership, of could deal with early about you a put bit into the if should

X Yes, everywhere. coming the letters it's turn I up can't on those a without good you question. Look, mean, TV

starting ways find settle Microsoft. storm that and We kind of our think some some and hype I pilots try early including the to to is real partnerships, into weather execution. to

Some indexing. of those pilots, around especially remarks, fruit, prepared scanning bear as are to I and mentioned and in fraud starting my

some real got has Healthcare Now opportunities.

call center and everybody in on what -- can space. do we is course, the So of focused

to to is talked partnership want But a with But Microsoft, narrowly we we're can along up X I move they with the as is that be going the Microsoft already very or going with obviously perspective. where respect industry, what those those they from focused bright. But we're for So just talk lot some there pilots. to using make And use can possible. to in partner initially, I and an say idea. for AI. There's select many new in partners can forward their can much would obviously. X we've great mentioned a of X those met I last we Azure executed again, the their about, a perspective and because we're is that's going proven that them leading pilots going a as think with lot North is or ways is charge work. those with the sales initially beneficial from on about and and they've on partnership or we're stay Microsoft about we've done head But as the implication in with week go-to-market we to what things the on, to also just strong, we hosting. do America focused sure a is And well. not. horizon narrowly And force we're what AI that that go-to-market I cyber, got And of quite

around -- And Okay. a sort sense you there. final if Great. Is around wanted the one And more color the maybe there that. maybe your up put I follow of on guess, I contract then follow-up of have prioritization. then thoughts government just could Express a cash to little status and of I

prepared his we know, Yes, we is going we what yes. at have any this thing don't which know told official Well, messaging don't Steve you look, is because where all. remarks in

they a equivalent We negotiation is another ours. with told their bank partner us and own what technology this of partner bank, have at have our

month security The very recipients, Here's of we do just for know. billion a VA deposits in risk operational inordinately complex And -- to $X.X this recipients. what is know and social government. do high. is risky that that it's every very very, And arrangement, happen We after got years, the is XX We've other as been it's risk technology attempted disbursements. we past partners fraud the our and inordinately those failed. the high for and

retained, we don't is I on or have -- from way government. messaging any the more the this a it formal notwithstanding manifest know conversion. or thing you that that but happen. that than just be would I if partner our even significant surface. fact X a we probability there's this that a takes say lot on in think complex it would the to for to And bank is we're does a high risk probably So tell the We year could

talk little sort potential future capital -- sort thoughts early then of to but and of returning the like. side other that thing of and sort form and a you're the have you when you Any sort when how on the that of walk, or thing type thoughts repurchase, evolve? thoughts sort shareholders the whether of to around share in of thoughts that on might the of get on takes about And of you and early be for certainly Okay. maybe for leverage -- the the might this, last getting me, there to looking at walk it's it that Can certainly reduce maybe

Mark, I'll take that.

making. about we've generating various piece So and if that think we've about through that. and capital the debt shares then $X of billion if of million made you already already authority for the and share pay together the the $X I got think we're down of repurchases deploying deployment. to XX% we've of from prepaid earmarked, say, Board. that But you We're billion comments that would of debt we've $XXX more that other that we've The been upwards and the the about global talked repurchase that Icahn of sort sort

$XXX that about it's to $XXX haven't on. million declarative we to been So million go

we're so in good I being situation. that And that now feel pretty

and I right cash divestitures of think get about we've million to in medium point the kind we're got half remainder is Clearly, second we've to short term, then we've of get stuff how flow the resident term, the operating medium $XXX got which to we've that And work some thinking in got and the direction. done. the in -- the got through at about moving to year, of with able billion. $XXX strides ratio allocated to to of net the about reduce we target the earmarked around we about giving deployment. And having think out I feel good And made a generating start I reducing thinking we'll think million of $X to that, leverage the we've be path now leverage, the share pretty count. one significant But right good turn. feel obviously,

right quarters. So We next bit comfortable about as now. obviously, are. more it a that's little feel there's But we get to few the the we we way come feel where through about pretty

say course, exactly it we're to right. is the I the stay And those decisions. right, that's lot think Steve board think as in I what outlined. term, a would Yes, Steve's I of going are near And got

from of with come Singular the Our next questions line Research.

sector is you're that where increased think to last there you're are increased Healthcare outsourcing. seeing seeing you highlight? previous the Is across in -- you In only as Or the sector the call, interest an wanted mentioned that I board, a outsourcing?

anywhere We're seeing cases, an not, capabilities, from point in believe scanning, it product and the where F&P. many Logistics. indexing, But us, certainly turn I Logistics, outsourcing. And CX, the think some don't and outsourcing for but interest -- in far of say, Healthcare, also have are but appetite, bit in and in obviously squeezed relationships increased stronger to just it's refinement are already be in or efficiency not offshore is certainly we see Certainly, would We're across I outsourcing and contained that's Healthcare for only And an in which view. Steve? the we'd margins certainly starting to primarily a pursuing. of of interested they where we those quite spectrum and two. more nearshore

the thing sector some I our of Cliff's opportunities about I traditionally -- other into we've remarks thought public market. about seeing is solutions that commercial of think new deploy would about to on think, the kind the we're add in solutions how

have And as we're the being that's we've so I commercial think in an interesting some we just think of that market. the solutions as good market adjacency seeing fit that where of for traditionally

In of we've Healthcare, and strong had and kind the always travel and got addition positions to in sector in automotive. trial we've -- strong also entertainment Logistics

that transformation And across operate propensity verticals to so of that cost I the address and broadly think we're seeing pretty many we in.

That's a good really point.

be capabilities center silos the sectors. In call sauces that suites here, of think is words, thinking we sector. in could massive in terms the I and of one have stop secret product to deployed in public other

We procurement of cross have payable state local has heretofore a are lot of functionality capabilities need. accounts governments not that there's There a and -- tapped. that and here been lot

or sector. public and it contained So involves to I one not confined it's also the industry, think any

on So it. it's to coming everywhere. from We got just execute

Okay.

outsourcing You guys destinations? as also in mentioned new that haven't do that in those are countries you markets when to -- previously attractive capability considered. they And that are What have geographic emerging clients regions? assuring considering

don't any We've strong. can The bit I at on. a let looks country some in geographies presence places Steve Well, quick strong. remains lot well. a Philippines South -- there's of Steve our think him and in managers, I in a I strong. movement India traditional going But of so Africa places of runs remain Guatemala remain there's large mean there's widespread I -- there's think those think and Jamaica. little as like got Egypt. terms directions. comment experimentation and

And do in so But resurgence the sure you seeing what certainly growth and we're think? some Philippines India. for in a Steve, I think

little really Only there. add Yes. a bit to

that's think right. I

offshore mix a capability have to capability. is and clearly key of natural the think I

think our geographic I like we mix.

places I as said we're we're capacity in increase a remarks, because adding demand. in some of think couple seeing in my I there

in be we're geographies. tendency want which in scale what those and esoteric that I and focused explore I think But business go on. is is locations, in think can driving cost a key our there is to key there the slightly to markets more building efficiency

very happy And mix. I think with our so we're geographic

nice demand a balance, it's seeing think geographies. and we're continued I for those

Just last question. one

to new that So relatively NIM. this

collaboration trying revenue model work? in I'm Gen model a the the Just typical collaboration work -- case the like? revenue And engagement AI Microsoft typical for does how to What how be with you? understand would -- that

all which means Azure. Gen into capability. a starts a power, it mean, know, built the centers lot data with compute Look, lot you go-to-market Well, everywhere I AI a of going as takes specifically public and and cloud being

their be, And so more business hope terms in we we to company the the strategy in we public Gen cloud with get, early can for more In Microsoft's Gen the in the would going company. the AI. Azure. of to get AI is for our prove what get because interest is enhanced want very more business the to to partnership, they our in we -- And case, that's products be and out business which be of hosted a that achieve want marketplace, look, in growth

the don't it an if ask if I again basically so it's I is back not like same sort the exactly. to it you answer of know and of got So maybe after, that time It's model. didn't there's were forth. revenue what exchange Gashi,

teleconference. This conclude appreciate your participation. with does concludes that, And We question-and-answer session. the today's

rest You this of Enjoy the at time. lines may your your day. disconnect