On August 7, 2024, Conduent Inc (CNDT, Financial) released its 8-K filing detailing the company's financial performance for the second quarter of 2024. Conduent Inc, a provider of business process services specializing in transaction-intensive processing, analytics, and automation, operates through three segments: Commercial Industries, Government Services, and Transportation. The majority of its revenue is generated in the United States.
Performance Overview
Conduent Inc (CNDT, Financial) reported revenue of $828 million for Q2 2024, surpassing the analyst estimate of $812.33 million. However, the company's earnings per share (EPS) came in at $1.07, significantly higher than the estimated $0.08. Despite the revenue beat, the adjusted diluted EPS was a loss of $0.14, missing expectations.
Financial Achievements and Challenges
Conduent Inc (CNDT, Financial) achieved several milestones in Q2 2024, including:
- Recognized as a Leader in Multi-Process HR Transformation Services for Large Enterprises by NelsonHall.
- Named to Newsweek's Top 100 Global Most Loved Workplaces® for 2024 for the second consecutive year.
- Selected to provide Business Intelligence and Data Management technology services to the Colorado Department of Health Care Policy and Financing.
- Implemented technologies for the South Carolina Department of Social Services to combat fraud and enhance security for its EBT program.
- Expanded relationship with one of the largest health insurance companies in the U.S., including both CXM and multichannel communications solutions.
- Implemented Express Lanes tolling system for the Virginia Department of Transportation.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Y/Y Change |
|---|---|---|---|
| Revenue | $828M | $915M | (9.5)% |
| Adjusted Revenue | $811M | $851M | (4.7)% |
| GAAP Net Income (Loss) | $216M | $(7)M | n/m |
| Adjusted EBITDA | $29M | $64M | (54.7)% |
| Adjusted EBITDA Margin | 3.6% | 7.5% | (390) bps |
| GAAP Diluted EPS | $1.07 | $(0.04) | n/m |
| Adjusted Diluted EPS | $(0.14) | $0.01 | n/m |
| Cash Flow from Operating Activities | $(41)M | $(10)M | (310.0)% |
| Adjusted Free Cash Flow | $(55)M | $(26)M | (111.5)% |
Income Statement Highlights
Conduent Inc (CNDT, Financial) reported a pre-tax income of $300 million for Q2 2024, a significant improvement from the $(7) million loss in the same period last year. This increase was primarily driven by gains from the transfer of the BenefitWallet portfolio and the sale of the Curbside Management and Public Safety businesses.
Balance Sheet and Cash Flow
As of June 30, 2024, Conduent Inc (CNDT, Financial) had total assets of $2.78 billion, down from $3.16 billion at the end of 2023. The company's cash and cash equivalents stood at $300 million, a decrease from $498 million. The reduction in cash was partly due to the prepayment of $300 million of principal of the Term Loan B using proceeds from completed divestitures.
Commentary and Outlook
"We are pleased to report that our Adjusted Revenue and Adjusted EBITDA exceeded expectations, with upside from here. Meanwhile, as anticipated, Q2 represented the low point in our previously communicated growth trajectory. Commercial sales were stronger on both a year-over-year and sequential basis and although Government sales is off to a slower than anticipated start to the year, our overall sales pipeline remains strong as does our balance sheet," stated Cliff Skelton, Conduent President and Chief Executive Officer.
Conclusion
Conduent Inc (CNDT, Financial) demonstrated resilience in Q2 2024 by exceeding revenue expectations and achieving significant milestones. However, challenges remain, particularly in the Government Services segment. The company's strategic divestitures and capital management efforts have strengthened its balance sheet, positioning it well for future growth. Investors will be keen to see how Conduent navigates these challenges and leverages its achievements in the coming quarters.
Explore the complete 8-K earnings release (here) from Conduent Inc for further details.
