CONDUENT Inc 10-K

ITEM 1. BUSINESS In this Form 10-K, unless the content otherwise dictates, "Conduent", the "Company", "we" or "our" mean Conduent Incorporated and its consolidated subsidiaries. Our Business As one of the largest business process services companies in the world, we deliver mission-critical services and solutions on behalf of businesses and governments – creating exceptional outcomes for our clients and the millions of people who count on them. Through people, process, expertise in transaction-intensive processing and technology such as analytics and automation, our services and solutions create value by improving customer experience, increasing efficiencies, reducing costs and enabling revenue growth. Eighty percent of Fortune 100 companies and over 500 government entities depend on us every day as their trusted partner to manage their business processes and essential interactions with their end-users. With roots as one of the original pioneers in global business process outsourcing, we bring deep and diversified expertise across a broad range of industry segments. Our commercial portfolio includes leading solutions in attractive markets such as customer experience management, transaction processing services, healthcare and human resource and learning services. For example, we are a leading provider of medical bill review. In 2021, we administered bill review for and repricing on approximately 28 million medical bills for over 3 million workers compensation claims in the U.S resulting in $18 billion of total bill reductions on behalf of our clients. In addition, across our commercial and government businesses, we handled approximately 1.3 billion customer service interactions in 2021. We serve a vast range of the public sector including market leading transportation and government solutions. Our transportation portfolio includes Roadway Charging, Transit, Curbside Management and Public Safety solutions where we process nearly nine million tolling transactions every day. Our government portfolio includes payments, healthcare and eligibility solutions where our systems process over 45% of Supplemental Nutrition Assistance Program (SNAP) payments on behalf of government entities. We create value for our clients through efficient global service delivery combined with technology-enabled solutions and a personalized and seamless experience for the end-user. We apply our expertise, technology and innovation to continually modernize our offerings for improved customer and constituent satisfaction and loyalty, increased process efficiency and rapid response to changing market dynamics. With approximately 60,000 dedicated associates globally as of December 31, 2021, we focus on our clients' success across medium and large businesses and governments around the world. Of our global team, 42% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America and the Caribbean, and Europe. We have received numerous recognitions over the past year for our culture and diversity/inclusion practices. Conduent is a New York corporation, organized in 2016. Our common stock began trading on January 3, 2017, on the New York Stock Exchange, under the ticker "CNDT". In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the NASDAQ Global Select Market (NASDAQ), where it remains listed under the ticker "CNDT". CNDT 2021 Annual Report 4 Table of Contents Our Strategic Focus Our vision is to become the leading business services partner of choice for businesses and governments globally. Through our dedicated associates, we deliver mission-critical services and solutions on behalf of businesses and governments, creating valuable outcomes for our clients and the millions of people who count on us. To achieve this mission and purpose, we are focused on delivering outcomes simultaneously across three dimensions: Growth, Efficiency and Quality. Our strategy is designed to deliver shareholder value by creating profitable growth, expanding operating margins, focusing on process efficiencies, and deploying a disciplined capital allocation strategy. We have identified specific execution strategies across Growth, Efficiency and Quality. Growth : Our opportunity for growth comes from understanding our clients’ businesses, strengthening our relationships, and driving valuable outcomes for our clients that enable them to reduce costs, improve efficiencies and customer experience and grow their businesses. To capitalize on the growth opportunities, we are focused on the following strategies: • Sales Performance Optimization : The significant progress and investments in sales training and process improvements during the last couple of years, together with the foundational improvements in operational performance, have resulted in more selling opportunities for us to support the strategies of our existing clients with our portfolio of market-leading services and solutions. In 2021 our add-on sales grew by 44% compared to 2020. We continue to improve client responsiveness and increase sales coverage, including in international markets. We are providing our sales team with regular training tailored for their roles, streamlined processes, and implemented systems to equip them with modern tools that enable them to perform their jobs more efficiently and effectively. The dedication and expertise of our employees have resulted in Conduent serving 47 states and a majority of Fortune 100 companies, including: • 17 of the top 20 U.S. health insurers; • 7 of the top 10 pharma companies; • 4 of the top 5 automakers; and • 8 of the top 10 U.S. banks. • Offering Development : We have augmented our portfolio of services and solutions with innovative technology capabilities, including data analytics, robotic process automation (RPA) tools and machine learning capabilities, to create differentiated, high-value services for our clients and penetrate attractive market segments. As we continued to improve our quality and efficiency in 2021, our clients have renewed contracts with us and given us more business in adjacent service lines, and we’ve gained new clients. We are measuring more immediate success in “Growth” through revenue retention and new business signings, among other metrics. Efficiency : We continue to find ways to reduce costs and deliver more effectively via increased efficiencies. We have simplified and standardized our operating model by removing redundant management layers and implementing more robust processes to enable faster decision-making and greater transparency. In addition, we aim to unlock further efficiencies through the following strategies: • Automation : We will continue to invest in embedding intelligent process automation capabilities into operations, including document processing and intelligent virtual assistant customer care tools. Artificial intelligence and machine learning algorithms will complement RPA tools by improving processes through pattern recognition. Additionally, we are exploiting synergies from sharing and coordinating automation capabilities across our enterprise. • Technology Consolidation : We have identified and are rationalizing duplicative technology systems across our lines of business. Centralizing technology systems will drive economies of scale, amplify the impact of investments, and will continue to strengthen consistent, resilient service delivery. CNDT 2021 Annual Report 5 Table of Contents • Delivery Optimization : We are continuing to drive efficiencies by delivering common processes with a shared services model that enables economies of scale. We are driving progress in every process through process improvement methodologies and exploiting new staffing models including work from home and flexible “gig worker” models, and optimizing our geographic footprint. We continue to respond with agility to clients’ shifting needs and have received positive client feedback for our services and proactivity throughout the COVID-19 pandemic. We are measuring success in “Efficiency” by associate retention and improved adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) margin, among other metrics. Quality : Our clients count on consistent, high-quality service delivery. We continue to drive progress in increasing uptime, improving operational stability, and significantly boosting client confidence and satisfaction by focusing on the following strategies: • Proactive, Real time Monitoring of Applications and Service Performance : We are investing in artificial intelligence and machine learning technologies to proactively monitor and prevent incidents. We have a state-of-the-art global IT command center in Sandy, UT to deliver more seamless and reliable service to our global clients and continued to increase uptime in 2021. • Data Center Optimization : We continue to standardize our technology footprint to improve performance and lower costs. As part of this, we have made significant progress in our data center optimization program to consolidate our multiple data centers into a select few. For example, in 2021 we closed two of our largest facilities in the US, completing these highly complex closures that in turn drove a significant increase in service availability for our clients. • Improve End User Experience : We are improving user interface/user experience across our offerings by expanding self-service tools, launching mobile apps and leveraging analytics to create deeper insights. Our focus on quality is leading to improved client confidence and satisfaction. The quality of our services is being recognized by clients including receiving the GM Supplier of the Year Award and the Toyota Financial Services Supplier Excellence Award. We are measuring success in “Quality” by indicators such as service level agreement performance, technology incident rates, and client satisfaction. Investments Strategy : To achieve our business goals, we will invest in a disciplined manner, focused on allocating capital and investing to meet the needs of our clients and supporting our growth strategies. Our balanced investment approach falls into three broad categories: • Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation, and an investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins, and further capture additional “share”. An example is high-volume outbound contact center services. • Opportunities to enhance, where we have strong client relationships and a long history of servicing the markets we operate in, legacy technology that needs to be refreshed or modernized. Examples such as benefit management services in the government sector for healthcare, unemployment insurance and child support fit into this category. • Opportunities to expand, where we believe we can play and win, and we see the payback as more significant than the other businesses. These businesses, augmented with new capabilities, and with the opportunity to be supplemented by modest acquisitions, will address market dynamics, and provide additional growth opportunities. Our Healthcare and Transportation businesses are expansion opportunities. Our Market Opportunity We are exposed to compelling growth across several end markets, including Healthcare, Transportation and Customer Experience Management. We estimate our addressable market size in the global business process service industry to be over $200 billion in 2021, according to third-party industry reports. Many industry analysts and advisors place us as a leader across several segments in this large, diverse and growing market. CNDT 2021 Annual Report 6 Table of Contents Ongoing competitive pressures and increasing demand for further productivity gains have motivated businesses and government organizations to outsource elements of their day-to-day operations to accelerate performance and improve end-user experience. As a result, our clients have become more focused on their core businesses and the range of outsourced activities has expanded. Increasing globalization has also required many companies to optimize cost structures to retain competitiveness and business process services have become a key component of this strategy. The ongoing shift to next-generation software and automation technologies is driving greater demand for, and expectation of, efficiency and personalization by the constituents and customers of the businesses and governments we serve. Business process services that streamline operational processes have the potential to meaningfully enhance productivity for businesses and governments and improve satisfaction for their customers and constituents. We have developed a strong leadership position in the markets that we operate in, with increased recognition across multiple stakeholders, as demonstrated by recognition from industry resources. • Industry Analyst Accolades: • A leader in Healthcare: Nelson Hall; • A leader in HR and Learning Services: ISG, Everest Group, Brandon Hall Group; and • A leader in Customer Experience Services: ISG, Gartner. • Market Position: • Everest Group Top 50 BPS Providers, #7 • Gartner Market Share Analysis: BPO, Worldwide, #10 • ISG’s Top 15 Sourcing Index Standouts – Managed Services, Global Market - The Building 15 Segments We organize, manage and report our business through three reportable segments: Commercial Industries: Our Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries. Across the Commercial Industries segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees. Our Commercial Industries segment is our largest segment, with segment revenue for 2021 of $2,076 million, representing 50% of our total revenues. Government Services: Our Government Services segment provides government-centric business process services to U.S. federal, state, local and foreign governments for public assistance, health services, program administration, transaction processing and payment services. Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations. Government Services segment revenue for 2021 was $1,318 million, representing 32% of our total revenues. Transportation: Our Transportation segment provides systems and support, as well as revenue-generating services, to government clients. On behalf of government agencies and authorities in the transportation industry, we deliver mission-critical public safety, mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers. Transportation segment revenue for 2021 was $746 million, representing 18% of our total revenues. We present segment financial information in Note 3 – Segment Reporting to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, which is incorporated herein by reference. CNDT 2021 Annual Report 7 Table of Contents Our Service Offerings Commercial Industries Our solutions and services include Customer Experience Management (CXM), Business Operations Solutions (BOS), Commercial Healthcare Solutions and Human Resources and Learning Services (HRLS). • Customer Experience Management • We deliver a full range of omni-channel customer contact services, including customer care, technical support, loyalty management, and outbound and inbound sales. We create better experiences across the customer lifecycle through a variety of channels including social media, chat, email, voice and virtual agent to help customers where and how they want to engage. Through omni-channel communications, automation, and analytics, and labor efficiencies, we help our clients to reduce costs, enable scale and drive revenue growth and efficiencies. We serve marquee clients across multiple sectors including financial services, health and life sciences, manufacturing and automotive, aerospace and defense, consumer goods, retail, technology and telecom, travel, transportation, and hospitality sectors. The CXM business generally generates income on a per call, per call center employee, or per percentage of sales made basis. • Business Operations Solutions • In our BOS business, we help our clients to transform business processes and drive efficiency, automation and scale across essential business functions. We streamline mission-critical operations through our deep industry experience, understanding of our clients’ operations and the latest technology solutions, to reduce costs, improve security and enable revenue growth, while enhancing the end-user experience. Our solutions span customer communications, automated document and data management, payments processing, and finance, accounting, and procurement. We generate revenue in a variety of ways within this business, including per item handled, time and materials, and per service such as postage, web portal hosting or data storage. Our pricing can also be based on achieving specific outcomes for services rendered. • Commercial Healthcare Solutions • On behalf of the healthcare industry, we deliver administration, clinical support, and medical management solutions across the health ecosystem to reduce costs, increase compliance and enhance utilization, while improving health outcomes and experience for members and patients. Our solutions span: trials, sales, access, and adherence for pharmaceutical clients; case management, performance management and patient safety for hospital clients; medical bill review, claims processing, care integration, subrogation and payment integrity solutions for managed care companies; and workers compensation medical bill review, mailroom/data capture and medical management services for claims payers and third-party administrators. Through our solutions provided to pharmaceutical clients, we generate revenue either based on a per employee, per transaction basis or a per resource per hour basis. Through our workers compensation and medical bill review services, we generate revenue on a per click and outcome basis. Through our medical bill review, claims processing, and payment integrity solutions provided to managed care companies, we generate revenue on a per member per month basis for use of our platform, as a percentage of what we collect for the provider, or a monthly or annual fee. • Human Resources and Learning Services • We provide services to help our clients support their employees at all stages of employment from on-boarding through retirement. Our solutions span Health Savings Account Solutions, Benefits Solutions, Human Resources (HR) and Payroll Solutions, and Learning Solutions. On behalf of global organizations and governments, we deliver mission-critical, technology-enabled HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement and overall well-being. These solutions span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management. Depending on the solution, we generate revenue in a variety of ways. For our Health Savings Account (HSA) Solutions business, we generate revenue via account fees, interchange fees on debit cards, and interest-related revenues as a result of balance fees from depository banks that hold cash deposited into the Savings Account business. CNDT 2021 Annual Report 8 Table of Contents • As of December 31, 2021, we managed approximately 900,000 active HSAs with $2.7 billion of assets under management. In addition to managing HSAs, we manage Flexible Savings Accounts and other Notional Accounts on behalf of corporations providing incremental benefits to their employees. Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act (COBRA) and Affordable Care Act (ACA) administration, which are charged on a per transaction basis. Within our HR and Payroll Solutions, we generate revenue principally per client’s employee per period (month / year) pricing, with banding to address periodic variations in client employee headcount. Within our Learning Solutions, we generate revenue principally by transaction-based pricing per unit of production along with fixed monthly governance fees. Government Services Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions to streamline delivery of government services to constituents and families in need. • Government Healthcare Solutions • We provide mission-critical program administration solutions for State Medicaid and federally-funded healthcare programs in 31 states, the District of Columbia and Puerto Rico and a federal program (US Dept of Labor), which includes nearly 49 million Medicaid recipients supported. Our services include a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, contact center services, application processing, premium billing, and case management solutions. Our case management solutions provide disease surveillance and outbreak management to make it easy to process and access large volumes of digital data. Foreign governments also use our disease surveillance and outbreak case management solution. This can be used to track public health metrics (such as diseases like COVID-19, vitals, and birth defects), perform electronic visit verification, and more. These services help states, counties, and countries optimize their costs by streamlining access to care and improving patient health outcomes through population health management, while helping families in need, by improving beneficiary support. Within the Government Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis. • Government Service Solutions • With more than $125 billion disbursed annually, we are a leader in government payment disbursements for federally sponsored programs like Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps and Women, Infant and Children (WIC) as well as government-initiated cash disbursements such as child support and Unemployment Insurance (UI). We deliver electronic payments for government services in 36 states, including 113 prepaid debit card programs, 24 Electronic Benefit Transfer (EBT) programs, 13 EBT for WIC programs and 6 Electronic Child Care programs. In our SNAP payments solution, we generate revenue based on the number of cases or number of card holders. Within our UI payment solution, we generate revenue based on interchange fees and spending on cards as a percentage of transactions. Given the increased unemployment rates in the United States earlier in the pandemic as well as the federal stimulus supplemental benefits, this solution saw significantly increased activity in 2020 and 2021. CNDT 2021 Annual Report 9 Table of Contents • We also offer a broad set of child support services predominately to State Disbursement Units (SDUs), including processing and distributing payment, child support payment cards, childcare credentialing and case management, among others, to help states comply with federal standards. Within the child support solution, the way we generate revenue varies by state, but it is generally either per financial transaction, per call, fixed price, or for development. Transportation On behalf of government agencies and authorities in the global transportation industry, we deliver fare collection, violation management, notification, mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers. • Roadway Charging and Management Services • Our electronic tolling, urban congestion management and mileage-based user solutions help clients keep up with an ever-changing environment and get more travelers where they need to go while generating revenue for much-needed infrastructure improvements. Our solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions. We generate revenue based on a combination of fixed fee and transaction-based pricing. The transaction-based component can be per account per month, per notice mailed, per active account, per violations fees received, or per image-based transaction. • Transit Solutions • For today’s train, bus, subway, metro or other transit travelers, we aim to make journeys more personalized and convenient while increasing capacity and profitability for authorities and agencies. We combine the latest in fare collection and intelligent mobility so that clients can get the added efficiency of having a single point of contact for all their transit solutions. Within transit we primarily generate revenue via implementation of end projects (hardware and software, maintenance services, repair and sale of spare parts), and the building and operation of fare collection systems. • Curbside Management Solutions • We deliver intelligent curbside management systems that simplify parking programs and deliver convenient and hassle-free experience for drivers. Our curbside solutions include citation and permit administration, parking enforcement, and curbside demand management. In 2021, we processed over 8.2 million payments and collected over $700 million for citations and delinquent revenue collections. We generate revenue based on violations issued, payment processing transactions, collections activities or a fixed fee for our service. • Public Safety Solutions • Public safety is a priority in every community, especially as budgets shrink and populations grow. We provide data analytics, automated photo enforcement and other public safety solutions to make streets and communities safer. Our photo enforcement systems include red light, fixed and mobile speed, school bus, work zone, school zone, bus lane only, high occupancy and other enforcement systems. The majority of our contracts within this business are fixed fee based on the number of enforced locations. • Commercial Vehicles • Although a small part of our transportation business, we provide computer-aided dispatch/automatic vehicle location technology to help customers manage their fleet operations. CNDT 2021 Annual Report 10 Table of Contents Our Competitive Strengths We possess certain competitive strengths that distinguish us from our competitors, including: Leadership in attractive growth markets – We are a leading player in business process services delivering exceptional outcomes for our clients at an unparalleled scale. Our clients continue to outsource key business processes to improve efficiencies and to accelerate performance and digital transformation. Additionally, clients are moving beyond services for back-office functions in order to drive customer satisfaction and loyalty. The increase in globalization and cost competition continues to accelerate, forcing companies to seek ways to stay ahead of the competition. These factors, along with clients and their customers demanding more personalized, seamless and secure solutions, are collectively driving the ongoing shift to next-generation solutions and services. Through our portfolio of services and solutions, we have reached significant scale in our interactions including: • Healthcare – U.S. healthcare spending is expected to rise from 17.7% of GDP in 2019 to 19.7% of GDP by 2028 and is projected to grow at an average rate of 5.4% per year between 2019-2028. As one of the most regulated industries, healthcare providers must balance increased utilization with heightened complexity and new financial pressures such as government budget challenges to significantly reduce reimbursements, reimbursement penalties for hospital readmissions and the shift from fee-for-service to “value-based” population health management. We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 17 of the top 20 U.S. health plans and providing administrative and care management solutions to Medicaid programs and federally funded U.S. government healthcare programs in 31 states, the District of Columbia and Puerto Rico. Three out of every four U.S. insured lives are served by Conduent. Conduent’s healthcare capabilities have been recognized by NelsonHall, HfS Research and Everest Group. • Transportation – Traffic congestion continues to increase as urbanization and changing demographics take hold globally. As a result, optimized transportation systems are becoming critical to increase efficiency while maintaining strict safety requirements. Electronic toll collection, public transit and parking all represent key growth drivers as governments at all levels increasingly focus on transportation infrastructure. We are an award-winning innovator in parking management. • Business Operations Solutions – We provide high volume print and mail services, enrollment processing and personalized and targeted marketing and communications to large corporations and are a leading provider in this market with more than 3.7 billion documents captured, indexed and classified annually. Global delivery expertise – Our scale and global delivery network enables us to deliver our proprietary technology, differentiated service offerings and service capabilities expertly to clients around the world. We have operations in 24 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services. This global delivery model enables us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans. As of December 31, 2021, 50% of our employees were located in high-cost countries and 50% were located in low-cost countries. Differentiated suite of multi-industry service offerings at scale – We manage transaction-intensive processes and work directly with end-users to meet their needs often in real-time. We believe we are unique in our ability to offer our clients these business process services on a large scale and with high quality. Additionally, we can leverage our cross-industry services to bring the same scale and quality to our portfolio of industry-specific service offerings, such as healthcare claims management, employee benefits management and public transit fare collection. Recurring revenue model supported by a loyal, diverse client base – We have a broad and diverse base of clients in countries across geographies and industries, including 80% of the Fortune 100, many Fortune 1,000 companies, midsize businesses and governmental entities. Our close client relationships and successful client execution support our stable recurring revenue model and high renewal rates. CNDT 2021 Annual Report 11 Table of Contents Competition Although we encounter competition in all areas of our portfolio, we are a leader in many categories. We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support. We consider our "onshore", “near shore” and “offshore” delivery capabilities to be a competitive advantage. Our competitors range from large international companies to relatively small firms, and many of our competitors specialize in certain areas but none compete across all the same segments in total – for example, 73 of our top 100 commercial clients buy multiple service offerings. Our competitors include: • Large multinational service providers such as Accenture, Cognizant, TTEC and Teleperformance; • Traditional business process outsourcing companies such as Genpact and EXL Services; • Human resource, payroll processing and human capital management providers such as Alight and Willis Towers Watson; • Healthcare-focused IT and service solutions providers such as Gainwell, Optum and Maximus; • HSA administrators such as Health Equity; • U.S. Federal-focused government services providers such as Leidos; • Transportation multi-nationals such as TransCore, Thales, Cubic and Verra Mobility; and • Smaller niche business processing service providers and in-house departments that perform functions that could be outsourced. Sales and Marketing We market and sell our business process solutions and services to both potential and existing clients through our global sales and business development teams. Additionally, we have dedicated “solution architects” who work with clients to better understand their business requirements and to develop custom-tailored solutions to meet their unique needs. Our clients include commercial businesses of many sizes and industries as well as public sector enterprises. Our solutions help solve clients' business issues and help them achieve their desired business outcomes. We leverage our broad portfolio of offerings and dedicated team of associates to package solutions that exactly meet clients’ needs, while taking a disciplined approach to pricing and contracting. Our sales efforts typically involve extended selling cycles where our deep domain and industry expertise is critical to winning new business. We maintain strong relationships with our clients from initial engagement to implementation and on-going service delivery. Intellectual Property Our general policy is to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position. As of December 31, 2021, we own approximately 589 patents and have 59 pending applications. Our patent portfolio evolves as new patents are awarded to us and as older patents expire. These patents expire at various dates, generally 20 years from their original filing dates. While we believe that our portfolio of patents and applications has value, in general, no single patent is essential to our business or any individual segment. In addition, any of our proprietary rights could be challenged, invalidated or circumvented, or may not provide significant competitive advantages. Our business relies on software provided to an approximately equal extent, by both internal development and external sourcing to deliver our services. With respect to internally developed software, we claim copyright on all such software, registering works which may be accessible to third parties. In addition, we rely on maintaining source code confidentiality to assure our market competitiveness. With respect to externally sourced software, we rely on contracts assuring our continued access for our business usage. In the United States, we own 63 registered trademarks reflecting the many businesses we participate in. These trademarks may have a perpetual life, subject to renewal every 10 years and may be subject to cancellation or invalidation based on certain use requirements and third-party challenges, or on other grounds. We vigorously enforce and protect our trademarks. CNDT 2021 Annual Report 12 Table of Contents People and Culture Headcount The skills, expertise, and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes. As of December 31, 2021, we have approximately 60,000 associates in 24 countries working towards a common vision and purpose, with 42% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean, and Europe. Our three reportable segments, Commercial Industries, Government Services and Transportation, house most of our associates with approximately 42,300, 6,000 and 4,000 associates, respectively. Conduent Diversity & Inclusion (D&I) We draw strength from the diversity of our global workforce and we believe that creating an inclusive culture where all associates can bring their authentic selves to work creates value for all our stakeholders. Our Employee Impact Groups (EIG) are at the heart of our efforts to develop an inclusive workplace. In 2021, we added an eighth EIG that connects associates across generational and tenure segments, while growing overall EIG membership by over 100%. Our EIGs curated over 80 hours of cultural activities to engage our associates and promote our core value of being open and inclusive. Our EIGs have membership in every region wherein we have operations. In addition, they deployed over 20 hours of professional development activities to respond specifically to the needs of our diverse workforce. In addition, we identified leaders across the business to serve on our inaugural Global Diversity and Inclusion Council (GDIC). The newly formed GDIC has been charged with working with functional business leaders to shape the deployment of the Enterprise Diversity and Inclusion Plan. We are proud to have received several global workplace diversity awards, including our first designation as a “Best Places to Work for LGBTQ+ Equality” for 2022 by the Human Rights Campaign Foundation’s Corporate Equality Index in both the United States and its equivalent in Mexico, HRC Equidad MX. Employee Learning and Development As a services company, we believe our associates are our most important asset, which is why we invest in associate growth and development programs. We are focused on building a workplace where our people can do their best work and have access to the learning tools and resources they need to excel in their role, stay competitive and grow their skill set. We offer our associates modern, digital world-class learning platforms that help them learn anywhere, anytime on a wide range of topics including technology, professional and business-related. We continue to invest in new, cutting-edge learning platforms to elevate their learning experience. As a result, we have been successful in building a culture of continuous learning, with employees taking charge of their learning and development. In addition to our digital platforms, employees are also provided job-specific technical training when they are onboarded and during their professional journey as required. Our learning platforms are widely utilized with about 2.5 million learning assets completed in 2021 and have great learning effectiveness scores for satisfaction, skill improvement and application of learning on the job. We also ensure that our associates complete regulatory and compliance training on topics required based on their role and geography. Associate Engagement We continuously seek and encourage feedback from our associates to inform our talent strategy and further strengthen our employee value proposition. In 2021, we sustained a high-level of engagement despite a challenging pandemic year, as indicated by our Associate Experience Survey. We saw a significant increase in overall engagement with our senior leaders across all survey categories, with 'clarity of direction' about our company and 'resources and support' to work effectively being amongst our highest scoring categories for all associates. COVID-19 Pandemic (COVID) As we continued to navigate the uncertainty of the pandemic in 2021, protecting the health and safety of our associates remained our top priority. Our COVID case management tracking and reporting enabled us to monitor the impacts of COVID on our workforce and workplace and protect business continuity. A small percentage of our essential workforce returned to onsite work with stringent safety protocols in place. We continued to demonstrate resiliency, agility and prudence, enabling many of our associates to shift between onsite and remote work depending on local conditions. We have continued taking steps to connect our associates with resources that support their health and well-being, including hosting several mental health webinars and extending our 2020 time-off plans to give our associates more CNDT 2021 Annual Report 13 Table of Contents options to take time off for COVID-related sickness/hardships. Effective and constant communication regarding the state of the pandemic, local protocols and vaccine regulations has been a key element of our efforts to create the safest possible working environments for our associates. We also instituted vaccine attestation in the majority of the global geographies where we operate enabling us to understand vulnerabilities in our workforce and workplace to minimize risks during COVID spikes. The feedback from our associates continues to be positive, especially in terms of the Company’s efforts to provide a safe work environment. Awards and Recognition During 2021, Conduent has been honored to receive several prestigious awards related to our human capital management practices, including: • Being named to Comparably’s 2021: ◦ Best Company for Working Women list; ◦ Best Company for Global Culture list; ◦ Best Company in New York list; ◦ Best Company for Diversity list; and ◦ Best CEOs for Diversity list. • Being named to Forbes’ 2021 Best Employers for Diversity list • Being designated as a “Best Places to Work for LGBTQ+ Equality” for 2022 by the Human Rights Campaign Foundation’s (HRC) Corporate Equality Index in both the United States and in Mexico (through its HRC Equidad MX program). Corporate Ethics We operate according to our Ethics and Compliance Program (Program), which is focused on sustaining an ethical culture and designed to meet general governance and specific industry, regulatory, and legal requirements. The Program is based on our core values, including personal accountability, and overseen by Conduent’s Ethics Office. Conduent’s Code of Business Conduct (Code) is the foundation of our Program. Our Code embodies and reinforces Conduent’s commitment to the highest standards of integrity and sets forth our expectations for ethical leadership, job performance, and compliance with the Code and Company policies. It is designed to help associates recognize ethics and compliance issues before they arise and to deal appropriately with issues that occur. Conduent Finance Employees are additionally required to act in accordance with our supplemental Finance Code of Conduct. Our associates are required to complete annual business ethics training. Conduent’s Ethics Office periodically solicits associate input to gauge our ethical culture and help identify areas for continuing improvements. Our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer, principal financial officer and principal accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct. Each of these codes of conduct can be accessed through our website at www.conduent.com/corporate-governance . They are also available to any shareholder who requests them in writing addressed to Conduent Incorporated, 100 Campus Drive Suite 200, Florham Park, NJ 07932, Attention: Corporate Secretary. We will disclose any future amendments to, or waivers from, provisions of our Code of Business Conduct and Ethics for members of the Board and, our Code of Business Conduct and our Finance Code of Conduct for our officers on our website as promptly as practicable, and consistent with the requirements of applicable U.S. Securities and Exchange Commission (SEC) and NASDAQ rules. Seasonality Our revenues can be affected by various factors such as our clients’ demand patterns for our services, which includes peak windows for benefit enrollment, new product launches by clients, and busy retail and travel seasons. CNDT 2021 Annual Report 14 Table of Contents Availability of Company Information Our internet address is www.conduent.com . In the Investor Information section of our Internet website, you will find our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Proxy Statements and any amendments to these reports and statements. We make these documents available free of charge as soon as we can after we have filed them with, or furnished them to, the SEC. Our Corporate Social Responsibility Report can also be found in the Investor Information section of our Internet website. The SEC maintains an internet address (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted. Information about our Executive Officers The following is a list of the executive officers of Conduent as of February 23, 2022. Each officer is elected to hold office until the meeting of the Board of Directors held on the day of the next annual meeting of shareholders, subject to the provisions of our by-laws. Name Age Present Position Year Appointed to Present Position Conduent Officer Since Clifford Skelton* 66 President and Chief Executive Officer 2019 2019 Mark Brewer 57 Executive Vice President, Transportation 2020 2019 Louis Keyes 54 Executive Vice President, Chief Revenue Officer 2020 2020 Michael Krawitz 52 Executive Vice President, General Counsel and Secretary 2019 2019 Mark Prout 58 Executive Vice President, Chief Information Officer 2019 2020 Stephen Wood 55 Executive Vice President & Chief Financial Officer 2021 2020 _____________________________ * Member of Conduent Board of Directors Each of the officers named above has been an officer or an executive of Conduent or its subsidiaries for less than five years. As of February 23, 2022, there are no family relationships among any of the executive officers named above and any of our directors. Mr. Skelton was appointed Chief Operating Officer of Conduent in June 2019, Chief Executive Officer of Conduent in August 2019 and President of Conduent in May 2021. He served as President of Fiserv Output Solutions from March 2017 to June 2019. Prior to that, Mr. Skelton was the Group President and Chief Information Officer at Fiserv from April 2012 until March 2017. Mr. Skelton also held a variety of leadership roles at companies such as Ally Financial (formerly General Motors Acceptance Corporation) and Bank of America. Mr. Skelton is a former Navy fighter pilot and served in the Navy for over 20 years. Mr. Brewer joined Conduent as Chief Operating Officer Transportation in June 2019 and was appointed Executive Vice President and Global Head of Public Sector in November 2019. He became Executive Vice President, Transportation & Head of Enterprise Accounts in October 2020, and currently serves as Executive Vice President, Transportation. Prior to joining Conduent, he served as Senior Vice President and Managing Director of Diebold Nixdorf from 2018 to 2019. Prior to that Mr. Brewer was Global Vice President for DXC’s Technology, Enterprise Application and Cloud Businesses from 2016 to 2018. He also held a variety of leadership roles at IBM Corporation for over 20 years, in Europe, Asia and the Americas. Mr. Keyes joined Conduent as Global Head of Sales in September 2019. He was appointed Executive Vice President, Chief Revenue Officer in December 2020. Prior to joining Conduent, he served as Executive Vice President, Chief Sales Officer at York Risk Services from October 2017 to September 2019. Prior to York Risk Services, he was Senior Vice President at Fiserv Inc. between 2009 and 2017 where he led Enterprise Accounts and large sales teams. Mr. Keyes has also held senior executive leadership roles at Hewlett-Packard Enterprise Services and Electronic Data Systems Corporation. CNDT 2021 Annual Report 15 Table of Contents Mr. Krawitz has served as Executive Vice President, General Counsel and Secretary since November 2019. Prior to joining Conduent, from June 2015 to November 2019, Mr. Krawitz was Executive Vice President, General Counsel and Corporate Secretary of insurance services firm York Risk Services Group, a portfolio company of Onex Corp. From 2014 to 2015, he was Chief Legal Officer of Veriteq Corp., a biotech company. From 1999 to 2014, Mr. Krawitz held leadership roles in public and private companies in the technology and finance sectors. Mr. Krawitz began his career at Fried Frank and was educated at Cornell University and Harvard Law School. Mr. Prout joined Conduent as Head of Information Technology in June of 2019. He was appointed Executive Vice President, Chief Information Officer in September 2019. Prior to joining Conduent, between 2005 and 2019, Mr. Prout served as Chief Technology Officer and held several IT leadership positions at Fiserv. Prior to Fiserv, he served as CIO of Cendian Corporation. Mr. Prout has also held various leadership positions at United Parcel Service. Mr. Wood has served as the Chief Financial Officer of Conduent since June 2021. He served in his previous role as the Company’s Corporate Controller from August 2020 until June 2021 and was designated as its Principal Accounting Officer effective December 2020. Prior to joining Conduent, Mr. Wood spent 15 years at Fiserv in finance and accounting leadership positions. From December 2016 to May 2020, Mr. Wood served as Vice President & Chief Financial Officer of Fiserv Output Solutions, from March 2009 to December 2016, Mr. Wood served as Vice President & Controller over several different operating groups and from January 2005 to March 2009, Mr. Wood led International Finance & Accounting operations. Mr. Wood is a Chartered Global Management Accountant with an MBA with distinction from Warwick Business School. CNDT 2021 Annual Report 16 Table of Contents