CONDUENT Inc 10-Q

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED) CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share data) 2025 2024 2025 2024 Revenue $ 754 $ 828 $ 1,505 $ 1,749 Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 617 677 1,235 1,412 Selling, general and administrative (excluding depreciation and amortization) 100 115 220 231 Research and development (excluding depreciation and amortization) 1 1 2 3 Depreciation and amortization 48 51 96 113 Restructuring and related costs 8 8 12 17 Interest expense 12 19 24 46 (Gain) loss on divestitures and transaction costs, net 4 ( 347 ) 7 ( 508 ) Litigation settlements (recoveries), net — 1 2 5 Loss on extinguishment of debt — 3 — 5 Other (income) expenses, net 2 — 1 ( 2 ) Total Operating Costs and Expenses 792 528 1,599 1,322 Income (Loss) Before Income Taxes ( 38 ) 300 ( 94 ) 427 Income tax expense (benefit) 2 84 ( 3 ) 112 Net Income (Loss) $ ( 40 ) $ 216 $ ( 91 ) $ 315 Net Income (Loss) per Share: Basic $ ( 0.26 ) $ 1.10 $ ( 0.59 ) $ 1.54 Diluted $ ( 0.26 ) $ 1.07 $ ( 0.59 ) $ 1.51 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. CNDT Q2 2025 Form 10-Q 3 Table of Contents CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Net Income (Loss) $ ( 40 ) $ 216 $ ( 91 ) $ 315 Other Comprehensive Income (Loss), Net (1) Currency translation adjustments, net 24 ( 16 ) 33 ( 27 ) Unrecognized gains (losses), net — ( 1 ) 2 ( 1 ) Other Comprehensive Income (Loss), Net 24 ( 17 ) 35 ( 28 ) Comprehensive Income (Loss), Net $ ( 16 ) $ 199 $ ( 56 ) $ 287 __________ (1) All amounts are net of tax. Tax effects were immaterial. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. CNDT Q2 2025 Form 10-Q 4 Table of Contents CONDUENT INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except share data in thousands) June 30, 2025 December 31, 2024 Assets Cash and cash equivalents $ 275 $ 366 Accounts receivable, net 458 493 Contract assets 138 132 Other current assets 276 261 Total current assets 1,147 1,252 Land, buildings and equipment, net 182 167 Operating lease right-of-use assets 159 169 Intangible assets, net 13 14 Goodwill 617 609 Other long-term assets 370 388 Total Assets $ 2,488 $ 2,599 Liabilities and Equity Current portion of long-term debt $ 28 $ 24 Accounts payable 126 157 Accrued compensation and benefits costs 168 170 Unearned income 80 103 Other current liabilities 295 290 Total current liabilities 697 744 Long-term debt 628 615 Deferred taxes 16 24 Operating lease liabilities 127 138 Other long-term liabilities 101 93 Total Liabilities 1,569 1,614 Contingencies (See Note 12) Series A convertible preferred stock 142 142 Common stock 2 2 Treasury stock, at cost ( 218 ) ( 210 ) Additional paid-in capital 3,959 3,952 Retained earnings (deficit) ( 2,529 ) ( 2,433 ) Accumulated other comprehensive loss ( 437 ) ( 472 ) Total Conduent Inc. Equity 777 839 Noncontrolling Interest — 4 Total Equity 777 843 Total Liabilities and Equity $ 2,488 $ 2,599 Shares of common stock issued and outstanding 159,157 161,829 Shares of series A convertible preferred stock issued and outstanding 120 120 Shares of common stock held in treasury 63,550 60,868 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. CNDT Q2 2025 Form 10-Q 5 Table of Contents CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (in millions) 2025 2024 Cash Flows from Operating Activities: Net income (loss) $ ( 91 ) $ 315 Adjustments required to reconcile net income (loss) to cash flows from operating activities: Depreciation and amortization 96 113 Contract inducement amortization 1 1 Deferred income taxes ( 7 ) 18 Amortization of debt financing costs 1 2 Loss on extinguishment of debt — 5 (Gain) loss on divestitures and sales of fixed assets, net 2 ( 533 ) Stock-based compensation 8 8 Changes in operating assets and liabilities: Accounts receivable 44 7 Other current and long-term assets ( 69 ) ( 53 ) Accounts payable and accrued compensation and benefits costs ( 37 ) ( 28 ) Other current and long-term liabilities ( 9 ) ( 29 ) Net change in income tax assets and liabilities ( 12 ) 96 Net cash provided by (used in) operating activities ( 73 ) ( 78 ) Cash Flows from Investing Activities: Cost of additions to land, buildings and equipment ( 29 ) ( 31 ) Cost of additions to internal use software ( 9 ) ( 15 ) Proceeds from divestitures 53 599 Net cash provided by (used in) investing activities 15 553 Cash Flows from Financing Activities: Proceeds from revolving credit facility 125 30 Proceeds from the issuance of debt 4 — Payments on revolving credit facility ( 125 ) ( 30 ) Payments on debt ( 15 ) ( 503 ) Treasury stock purchases ( 7 ) ( 168 ) Excise tax payment on treasury stock purchases ( 2 ) — Taxes paid for settlement of stock-based compensation — ( 5 ) Dividends paid on preferred stock ( 5 ) ( 5 ) Repurchase of noncontrolling interest ( 5 ) — Net cash provided by (used in) financing activities ( 30 ) ( 681 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 5 ( 6 ) Increase (decrease) in cash, cash equivalents and restricted cash ( 83 ) ( 212 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 377 519 Cash, Cash Equivalents and Restricted Cash at End of period (1) $ 294 $ 307 ___________ (1) Includes $ 19 million and $ 7 million of restricted cash as of June 30, 2025 and 2024, respectively, that were included in Other current assets on the respective Condensed Consolidated Balance Sheets. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. CNDT Q2 2025 Form 10-Q 6 Table of Contents CONDUENT INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) Three Months Ended June 30, 2025 (in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1) Non-controlling Interest Shareholders' Equity Balance at March 31, 2025 $ 2 $ ( 210 ) $ 3,955 $ ( 2,486 ) $ ( 461 ) $ 4 $ 804 Dividends - preferred stock, $ 20 /share — — — ( 3 ) — — ( 3 ) Stock incentive plans, net — — 5 — — — 5 Treasury stock purchases — ( 8 ) — — — ( 8 ) Buyback of noncontrolling interest — — ( 1 ) — — ( 4 ) ( 5 ) Comprehensive Income (Loss): Net Income (Loss) — — — ( 40 ) — — ( 40 ) Other comprehensive income (loss), net — — — — 24 — 24 Total Comprehensive Income (Loss), Net — — — ( 40 ) 24 — ( 16 ) Balance at June 30, 2025 $ 2 $ ( 218 ) $ 3,959 $ ( 2,529 ) $ ( 437 ) $ — $ 777 Three Months Ended June 30, 2024 (in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1) Non-controlling Interest Shareholders' Equity Balance at March 31, 2024 $ 2 $ ( 44 ) $ 3,941 $ ( 2,752 ) $ ( 446 ) $ 4 $ 705 Dividends - preferred stock, $ 20 /share — — — ( 3 ) — — ( 3 ) Stock incentive plans, net — — 6 — — — 6 Treasury stock purchases — ( 152 ) — — — — ( 152 ) Contribution from noncontrolling interest — — — — — — — Comprehensive Income (Loss): Net Income (Loss) — — — 216 — — 216 Other comprehensive income (loss), net — — — — ( 17 ) — ( 17 ) Total Comprehensive Income (Loss), Net — — — 216 ( 17 ) — 199 Balance at June 30, 2024 $ 2 $ ( 196 ) $ 3,947 $ ( 2,539 ) $ ( 463 ) $ 4 $ 755 Six Months Ended June 30, 2025 (in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1) Non-controlling Interest Shareholders' Equity Balance at December 31, 2024 $ 2 $ ( 210 ) $ 3,952 $ ( 2,433 ) $ ( 472 ) $ 4 $ 843 Dividends - preferred stock, $ 40 /share — — — ( 5 ) — — ( 5 ) Stock incentive plans, net — — 8 — — — 8 Treasury stock purchases — ( 8 ) — — — — ( 8 ) Buyback of noncontrolling interest — — ( 1 ) — — ( 4 ) ( 5 ) Comprehensive Income (Loss): Net Income (Loss) — — — ( 91 ) — — ( 91 ) Other comprehensive income (loss), net — — — — 35 — 35 Total Comprehensive Income (Loss), Net — — — ( 91 ) 35 — ( 56 ) Balance at June 30, 2025 $ 2 $ ( 218 ) $ 3,959 $ ( 2,529 ) $ ( 437 ) $ — $ 777 Six Months Ended June 30, 2024 (in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1) Non-controlling Interest Shareholders' Equity Balance at December 31, 2023 $ 2 $ ( 27 ) $ 3,938 $ ( 2,849 ) $ ( 435 ) $ 4 $ 633 Dividends - preferred stock, $ 40 /share — — — ( 5 ) — — ( 5 ) Stock incentive plans, net — — 9 — — — 9 Treasury stock purchases — ( 169 ) — — — — ( 169 ) Comprehensive Income (Loss): Net Income (Loss) — — — 315 — — 315 Other comprehensive income (loss), net — — — — ( 28 ) — ( 28 ) Total Comprehensive Income (Loss), Net — — — 315 ( 28 ) — 287 Balance at June 30, 2024 $ 2 $ ( 196 ) $ 3,947 $ ( 2,539 ) $ ( 463 ) $ 4 $ 755 ___________ (1) AOCL - Accumulated other comprehensive loss. Refer to Note 11 – Accumulated Other Comprehensive Loss for the components of AOCL. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. CNDT Q2 2025 Form 10-Q 7 Table of Contents Note 1 – Basis of Presentation References herein to “we,” “us,” “our,” the “Company” and “Conduent” refer to Conduent Incorporated and its consolidated subsidiaries unless the context suggests otherwise. Description of Business Conduent Incorporated is a New York corporation, organized in 2016. Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them. The Company leverages cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 53,000 associates, as well as process expertise and advanced technologies, Conduent's solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Basis of Presentation The unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. The December 31, 2024 Condensed Consolidated Balance Sheet was derived from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments necessary for a fair statement of the financial position, results of operations and cash flows have been made. These adjustments consist of normal recurring items. The interim results of operations are not necessarily indicative of the results of the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to fair values of financial instruments, goodwill and intangible assets, income taxes and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Summary of Significant Accounting Policies The Company's significant accounting policies are described in Note 1 – Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. During 2025, there have been no changes to the Company's significant accounting policies as described therein. Note 2 – Recent Accounting Pronouncements New Accounting Standards Adopted Segment Reporting: In November 2023, the Financial Accounting Standards Board ("FASB") issued final guidance that expands reportable segment disclosures, particularly incremental segment expense disclosures. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. As the guidance is disclosure related, adoption did not have any impact on the Company's Condensed Consolidated Financial Statements. The required additional disclosure is included in Note 4 – Segment Reporting. CNDT Q2 2025 Form 10-Q 8 Table of Contents New Accounting Standards To Be Adopted Income Taxes: In December 2023, the FASB issued final guidance designed to improve income tax disclosures, particularly disclosures around business entities' income tax rate reconciliation and income taxes paid. The guidance requires consistent categories and greater disaggregation of information in the reconciliation of an entity's statutory tax rate to its effective tax rate and information about income taxes paid disaggregated by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024. The required disclosure will be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. As the guidance is disclosure related, adoption will not have any impact on the Company's results of operations, financial position or cash flows. Disaggregation of Income Statement Expenses: In November 2024, the FASB issued final guidance designed to enhance financial reporting by requiring public business entities to disclose additional details regarding specific expense categories in the notes to the financial statements for both interim and annual periods. The new guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is not early adopting this guidance. As the guidance is disclosure related, adoption will not have any impact on the Company's results of operations, financial position or cash flows. Note 3 – Revenue Disaggregation of Revenue In 2024, revenue from the BenefitWallet Portfolio and the Casualty Claims Solutions business were reclassified to the Divestitures segment from the Commercial segment. In addition, in 2024, revenue from the Curbside Management and Public Safety businesses was reclassified to the Divestitures segment from the Transportation segment. All prior periods presented have been recast to reflect these changes. During the first quarter of 2025, the Company updated the presentation of disaggregated revenue by major service offering within the Commercial segment. This change had no impact on disaggregated revenue by reportable segment or the timing of revenue recognition. All prior periods presented have been recast to reflect this change. The following table provides information about disaggregated revenue by major service offering and reportable segment and the timing of revenue recognition. Refer to Note 4 – Segment Reporting for additional information on the Company's reportable segments and Note 5 – Divestitures for additional information on the Company's divestitures. CNDT Q2 2025 Form 10-Q 9 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Commercial: Customer Experience Management $ 122 $ 128 $ 266 $ 278 BPaaS 115 126 232 253 Integrated Digital Solutions 128 134 269 276 Total Commercial 365 388 767 807 Government: Government Healthcare Solutions 137 137 263 290 Government Services Solutions 101 108 191 213 Total Government 238 245 454 503 Transportation: Road Usage Charging & Management Solutions 59 60 124 127 Transit Solutions 92 81 160 157 Commercial Vehicles — — — 1 Total Transportation 151 141 284 285 Divestitures — 54 — 154 Total Consolidated Revenue $ 754 $ 828 $ 1,505 $ 1,749 Timing of Revenue Recognition: Point in time $ 23 $ 25 $ 47 $ 56 Over time 731 803 1,458 1,693 Total Revenue $ 754 $ 828 $ 1,505 $ 1,749 There have been no changes to the major service offerings within the Government and Transportation segments as disclosed in Note 2 - Revenue in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. As noted above, the Company has updated the presentation of its major service offerings within the Commercial segment. These major service offerings are described as follows: Customer Experience Management: The Company delivers a full range of customer contact services including customer care, technical support, loyalty management, and outbound and inbound sales, handling many complex interactions and representing the brands of its clients. The Company creates better experiences across the customer lifecycle through a variety of channels including chat, email, voice and virtual agent to help customers where and how they want to engage. Through omni-channel communications, automation and analytics, as well as labor efficiencies, the Company helps its clients drive revenue growth, enable scale, and gain cost reductions and other operational efficiencies. The Company serves marquee clients across multiple sectors, including the financial services, healthcare and life sciences, logistics, technology, telecom, travel and hospitality sectors, helping to resolve complex issues for their customers with empathy and effectiveness. Business Process as a Service ("BPaaS"): The Company helps its clients digitally transform business processes and drive efficiency, automation and scale across essential business functions. The Company streamlines client operations through its deep industry experience, understanding of its clients’ needs and the latest technology solutions to reduce costs, improve security, performance and accuracy, and enable revenue growth, while enhancing the end-user experience. The Company's portfolio of BPaaS solutions spans payment integrity, finance, accounting, and procurement, human capital, legal and compliance, and bank and lending. Integrated Digital Solutions: The Company drives efficiencies for clients with more digitized processes across the customer and document lifecycle through automation, data analytics and AI-powered solutions. This helps to shorten time to decisions on items like claims and applications while lowering costs, reducing manual effort, improving data accuracy, providing omnichannel communications and enhancing the overall customer experience. The Company's solutions span: document and claims processing; health plan administration; scanning and digitization of mailrooms, data and documents; omnichannel digital and physical communications, including print and mail and solutions focused specifically in the pharmaceutical and banking industries. CNDT Q2 2025 Form 10-Q 10 Table of Contents Contract Balances The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are the Company’s rights to consideration for services provided when the right is conditioned on something other than passage of time (for example, meeting a milestone for the right to bill under the cost-to-cost measure of progress). Contract assets are transferred to Accounts receivable, net when the rights to consideration become unconditional. Unearned income includes payments received in advance of performance under the contract, which are realized when the associated revenue is recognized under the contract. The following table provides information about significant movements in contract assets (current and long-term) for the six months ended June 30, 2025 and 2024: (in millions) 2025 2024 Beginning balance $ 135 $ 190 Additional contract assets recognized 71 86 Billed and transferred to Accounts receivable and other ( 66 ) ( 120 ) Ending balance (1) $ 140 $ 156 ___ (1) Of which $ 2 million and $ 7 million are included in Other long-term assets as of June 30, 2025 and 2024, respectively. The following table provides information about significant movements in unearned income balances (current and long-term) for the six months ended June 30, 2025 and 2024: (in millions) 2025 2024 Beginning balance $ 155 $ 146 Additional deferral of income 98 130 Revenue recognized related to deferral of income (1) ( 113 ) ( 124 ) Ending balance (2) $ 140 $ 152 ___ (1) Of which $ 66 million and $ 69 million were recognized during the six months ended June 30, 2025 and 2024, respectively, that related to the Company's unearned income as of December 31, 2024 and 2023, respectively. (2) Of which $ 60 million and $ 57 million are included in Long-term unearned income as of June 30, 2025 and 2024, respectively. Transaction Price Allocated to the Remaining Performance Obligations Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied at June 30, 2025 was approximately $ 1.5 billion. The Company expects to recognize approximately 71 % of this revenue over the next two years and the remainder thereafter. Note 4 – Segment Reporting The Company's reportable segments correspond to how it organizes and manages the business, as defined by the Company's Chief Executive Officer, who is also its Chief Operating Decision Maker ("CODM"), and are aligned to the industries in which the Company's clients operate. The Company's segments involve the delivery of business process services and include service arrangements where it manages a customer's business activity or process. Divestitures includes the Company's BenefitWallet Portfolio, for which the Company completed the transfer in the second quarter of 2024, its Curbside Management and Public Safety Solutions businesses, which it sold in the second quarter of 2024, and its Casualty Claims business which it sold in the third quarter of 2024. Refer to Note 5 – Divestitures for additional information. The Company's CODM evaluates the Company's financial performance based on Segment profit (loss) for its three reportable segments - Commercial, Government and Transportation. The Company's CODM uses Segment profit (loss) information to monitor budget versus actual results and then uses this information to help make informed decisions about future resource investment, potential restructuring of segments to enhance overall company performance, and future divestitures and acquisitions. CNDT Q2 2025 Form 10-Q 11 Table of Contents The Company's CODM does not evaluate operating segments using discrete asset information as a significant portion of the assets is managed at the total company level. • Commercial: The Commercial segment provides business process services that span its clients' businesses end-to-end from the front-office to the back-office for a variety of commercial industries. These solutions are both cross-industry and industry-specific in nature. Across the Commercial segment, the Company operates on its clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enhance performance for the Company's clients and deliver better experiences for their consumers and employees. • Government: The Government segment provides government-centric business process services and solutions to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing, payment services and case management. In this segment, the Company helps governments respond to changing rules for eligibility and keep pace with increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment. • Transportation: The Transportation segment provides government agencies and transportation authorities around the world with systems, support and revenue-generating solutions serving toll and fare collections as well as mobility and digital payments that help streamline operations and increase revenue to government transportation agencies. With an expanded focus on sustainability and enhancing the quality of life for citizens and communities around the world, the Company's solutions help reduce congestion and greenhouse emissions, while creating seamless travel experiences for consumers throughout transportation ecosystems. Selected financial information for the Company's segments is as follows: Three Months Ended June 30, (in millions) Commercial Government Transportation Total (1) 2025 Segment revenue $ 365 $ 238 $ 151 $ 754 Expenses Wages and benefits $ 249 $ 95 $ 65 $ 409 Services and supplies 50 64 66 180 Rent lease and maintenance expense 37 16 13 66 Other operating expense 3 3 — 6 Depreciation and amortization expense 19 11 7 37 Segment expenses $ 358 $ 189 $ 151 $ 698 Segment profit (loss) $ 7 $ 49 $ — $ 56 2024 Segment revenue $ 388 $ 245 $ 141 $ 774 Expenses Wages and benefits $ 265 $ 107 $ 62 $ 434 Services and supplies 50 71 63 184 Rent lease and maintenance expense 36 16 12 64 Other operating expense 1 2 1 4 Depreciation and amortization expense 22 11 6 39 Segment expenses $ 374 $ 207 $ 144 $ 725 Segment profit (loss) $ 14 $ 38 $ ( 3 ) $ 49 __________ (1) Total excludes Divestitures and Unallocated Costs. CNDT Q2 2025 Form 10-Q 12 Table of Contents Six Months Ended June 30, (in millions) Commercial Government Transportation Total (1) 2025 Segment revenue $ 767 $ 454 $ 284 $ 1,505 Expenses Wages and benefits $ 514 $ 194 $ 126 $ 834 Services and supplies 108 125 119 352 Rent lease and maintenance expense 76 33 24 133 Other operating expense 3 4 2 9 Depreciation and amortization expense 43 21 15 79 Segment expenses $ 744 $ 377 $ 286 $ 1,407 Segment profit (loss) $ 23 $ 77 $ ( 2 ) $ 98 2024 Segment revenue $ 807 $ 503 $ 285 $ 1,595 Expenses Wages and benefits $ 545 $ 215 $ 133 $ 893 Services and supplies 109 147 125 381 Rent lease and maintenance expense 70 33 22 125 Other operating expense 2 4 2 8 Depreciation and amortization expense 48 24 12 84 Segment expenses $ 774 $ 423 $ 294 $ 1,491 Segment profit (loss) $ 33 $ 80 $ ( 9 ) $ 104 __________ (1) Total excludes Divestitures and Unallocated Costs. Other operating expense shown above is primarily comprised of third-party legal fees and other miscellaneous expenses. The following is a reconciliation of Segment profit (loss) to Income (loss) before income taxes: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Segment Profit (Loss) $ 56 $ 49 $ 98 $ 104 Reconciling items: Divestitures profit (1) — 8 — 32 Unallocated costs (2) ( 67 ) ( 71 ) ( 145 ) ( 143 ) Amortization of acquired intangible assets ( 1 ) ( 2 ) ( 1 ) ( 3 ) Restructuring and related costs ( 8 ) ( 8 ) ( 12 ) ( 17 ) Interest expense ( 12 ) ( 19 ) ( 24 ) ( 46 ) Loss on extinguishment of debt — ( 3 ) — ( 5 ) Gain (loss) on divestitures and transaction costs, net ( 4 ) 347 ( 7 ) 508 Litigation (settlements) recoveries, net — ( 1 ) ( 2 ) ( 5 ) Other income (expenses), net ( 2 ) — ( 1 ) 2 Income (Loss) Before Income Taxes $ ( 38 ) $ 300 $ ( 94 ) $ 427 (1) Divestitures profit is Income (loss) before income taxes excluding certain non-operating income and expenses. (2) Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to the reportable segments. Included in the three and six months ended June 30, 2025 periods are $ 0 million and $ 25 million, respectively, of Direct response costs related to the January 2025 Cyber Incident as well as a $ 0 million and $ 9 million, respectively, insurance recovery related to the 2019 Texas Matter. Refer to Note 3 – Revenue for additional information on disaggregated revenues of the reportable segments. CNDT Q2 2025 Form 10-Q 13 Table of Contents Note 5 – Divestitures The Company entered into various agreements to transfer or sell certain portfolios and businesses in 2024. Each of these transactions is described below. Divestiture of Casualty Claims Solutions Business On May 3, 2024, the Company entered into a definitive agreement to sell the Company’s Casualty Claims Solutions business (collectively referred to as the "Casualty Disposal Group") to MedRisk, Inc. ("MedRisk"). On September 1, 2024, the sale was completed and MedRisk paid Conduent $ 224 million of cash consideration, subject to certain post-closing adjustments. These adjustments were finalized in the first quarter of 2025 and were not material. The Company recorded a gain on the sale of $ 194 million, less costs to sell of $ 8 million, which was recorded in Gain (loss) on divestitures and transaction costs. Additionally, the Company recorded $ 33 million of income tax expense related to the divestiture. The Casualty Disposal Group generated revenue and income (loss) before income taxes as follows: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Revenue $ — $ 37 $ — $ 74 Income (loss) before income taxes — 2 — 4 Divestiture of Curbside Management and Public Safety Solutions Businesses In December 2023, the Company signed a definitive agreement to sell its Curbside Management and Public Safety Solutions businesses (collectively referred to as the "Curbside Disposal Group") to Modaxo, a division of Constellation Software Inc. ("Modaxo"), for $ 230 million (plus the assumption of certain indebtedness), subject to customary purchase price adjustments. On April 30, 2024, Conduent completed the sale of this business. The Company received $ 181 million of cash consideration and a $ 50 million non-interest bearing note payable to the Company that was due and paid on April 30, 2025. Additionally, the Company received reimbursement for payments made by the Company related to finance lease liabilities and related costs and reimbursement for the purchase of certain equipment made by the Company on the buyer's behalf. In 2024, the Company recorded a gain on the sale of $ 103 million less costs to sell of $ 5 million, which was recorded in Gain (loss) on divestitures and transaction costs . The Company recorded $ 28 million of income tax expense in connection with the divestiture. The Curbside Disposal Group generated revenue and income (loss) before income taxes as follows: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Revenue $ — $ 14 $ — $ 50 Income (loss) before income taxes — 3 — 6 Transfer of BenefitWallet Portfolio In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement to transfer its BenefitWallet health savings account and medical savings account portfolio (collectively, the "BenefitWallet Portfolio") to HealthEquity, Inc. for an aggregate purchase price of $ 425 million, subject to customary purchase price adjustments. The BenefitWallet transfer closed in multiple tranches from March to May 2024 and the Company received total aggregate cash consideration of $ 425 million as the tranches closed. The Company recorded a gain on the transfer of $ 425 million, less costs to sell of $ 11 million. Additionally, the Company recorded $ 102 million of income tax expense in connection with the transfer of the BenefitWallet Portfolio. The cash consideration and gain on the transfer of the BenefitWallet Portfolio recorded in the second quarter of 2024 were $ 261 million and $ 261 million, respectively. The Company recorded $ 63 million of income tax expense in connection with the transfer of the BenefitWallet Portfolio in the second quarter of 2024. CNDT Q2 2025 Form 10-Q 14 Table of Contents The BenefitWallet Portfolio generated revenue and income (loss) before income taxes as follows: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Revenue $ — $ 3 $ — $ 30 Income (loss) before income taxes — 1 — 20 Note 6 – Restructuring Programs and Related Costs The Company engages in a series of restructuring programs related to exiting certain activities, downsizing its employee base, outsourcing certain internal functions and engaging in other actions designed to reduce its cost structure and improve productivity. The implementation of the Company's operational efficiency improvement initiatives has reduced the Company's real estate footprint across all geographies and segments resulting in lease right-of-use ("ROU") asset impairments and other related costs. Also included in Restructuring and related costs are incremental, non-recurring costs related to the consolidation of the Company's data centers, which totaled $ 0 million and $ 2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0 million and $ 4 million for the six months ended June 30, 2025 and 2024, respectively. Management continues to evaluate the Company's businesses and, in the future, there may be additional provisions for new plan initiatives and/or changes in previously recorded estimates as payments are made, or actions are completed. Costs associated with restructuring, including employee severance and lease termination costs, are generally recognized when it has been determined that a liability has been incurred, which is generally upon communication to the affected employees or exit from the leased facility. In those geographies where the Company has either a formal severance plan or a history of consistently providing severance benefits representing a substantive plan, it recognizes employee severance costs when they are both probable and reasonably estimable. Asset impairment costs related to the reduction of the Company's real estate footprint include impairment of operating lease ROU assets and associated leasehold improvements. A summary of the Company's restructuring program activity during the six months ended June 30, 2025 and 2024 is as follows: (in millions) Severance and Related Costs Termination and Other Costs (2) Asset Impairments Total Accrued Balance at December 31, 2024 $ 13 $ 2 $ — $ 15 Provision 7 4 1 12 Changes in estimates — — — — Total Net Current Period Charges (1) 7 4 1 12 Charges against reserve and currency ( 12 ) ( 4 ) ( 1 ) ( 17 ) Accrued Balance at June 30, 2025 $ 8 $ 2 $ — $ 10 (in millions) Severance and Related Costs Termination and Other Costs (2) Asset Impairments Total Accrued Balance at December 31, 2023 $ 9 $ 1 $ — $ 10 Provision 7 8 2 17 Changes in estimates — — — — Total Net Current Period Charges (1) 7 8 2 17 Charges against reserve and currency ( 11 ) ( 7 ) ( 2 ) ( 20 ) Accrued Balance at June 30, 2024 $ 5 $ 2 $ — $ 7 __________ (1) Represents amounts recognized within the Condensed Consolidated Statements of Income (Loss) for the years shown. (2) During the six months ended June 30, 2024, the Company incurred $ 2 million of costs for bringing certain technology functions in-house. There were no such costs incurred in the six months ended June 30, 2025. These costs are included in the above table in Termination and other costs. No restructuring and related costs are allocated to the segments. CNDT Q2 2025 Form 10-Q 15 Table of Contents Note 7 – Debt Long-term debt was as follows: (in millions) June 30, 2025 December 31, 2024 Term loan A due 2026 $ 82 $ 88 Senior notes due 2029 520 520 Finance lease obligations 44 26 Other 15 12 Principal debt balance 661 646 Debt issuance costs and unamortized discounts ( 5 ) ( 7 ) Less: current maturities ( 28 ) ( 24 ) Total Long-term Debt $ 628 $ 615 As of June 30, 2025, the Company had no outstanding borrowings under its $ 550 million revolving credit facility (the "Revolver"). Additionally, the Company utilized $ 10 million of the Revolver to issue letters of credit as of June 30, 2025. The net Revolver available to be drawn upon as of June 30, 2025 was $ 540 million. In connection with voluntary prepayments of the Term Loan B made in 2024, the Company wrote-off related debt issuance costs of $ 3 million and $ 5 million, which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2024, respectively. At June 30, 2025, the Company was in compliance with all debt covenants related to the borrowings in the table above. Note 8 – Financial Instruments The Company is a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of its business. As a part of the Company's foreign exchange risk management strategy, the Company uses derivative instruments, primarily forward contracts, to hedge the funding of foreign entities which have a non-dollar functional currency, thereby reducing volatility of earnings or protecting fair values of assets and liabilities. At June 30, 2025 and December 31, 2024, the Company had outstanding forward exchange contracts with gross notional values of $ 208 million and $ 203 million, respectively. At June 30, 2025, approximately 78 % of these contracts mature within three months, 8 % in three to six months, 10 % in six to twelve months and 4 % in greater than twelve months. Most of these foreign currency derivative contracts are designated as cash flow hedges and did not have a material impact on the Company's condensed consolidated balance sheet, income statement or cash flows for the periods presented. Refer to Note 9 – Fair Value of Financial Assets and Liabilities for additional information regarding the fair value of the Company's foreign exchange forward contracts. Note 9 – Fair Value of Financial Assets and Liabilities Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows: Level 1: Fair value is determined using an unadjusted quoted price in an active market for identical assets or liabilities. Level 2: Fair value is estimated using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3: Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. CNDT Q2 2025 Form 10-Q 16 Table of Contents Summary of Financial Assets and Liabilities Accounted for at Fair Value on a Recurring Basis The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases was Level 2. (in millions) June 30, 2025 December 31, 2024 Assets: Foreign exchange contracts - forward $ 3 $ — Total Assets $ 3 $ — Liabilities: Foreign exchange contracts - forward $ — $ ( 2 ) Total Liabilities $ — $ ( 2 ) Summary of Other Financial Assets and Liabilities The estimated fair values of other financial assets and liabilities were as follows: June 30, 2025 December 31, 2024 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Long-term debt $ 628 $ 604 $ 615 $ 588 The fair value amounts for Cash and cash equivalents, Restricted cash, Accounts receivable, net and Short-term debt approximate carrying amounts due to the short-term maturities of these instruments. The fair value of Long-term debt was estimated using quoted market prices for identical or similar instruments (Level 2 inputs). Note 10 – Employee Benefit Plans The Company has post-retirement pension, savings and investment plans in several countries, including the U.S., India and the Philippines. In many instances, employees participating in defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan. In these plans, employees are permitted to contribute a portion of their salaries and bonuses to the plans. The Company, at its discretion, matches a portion of employee contributions. The Company recognized an expense related to its defined contribution plans of $ 2 million and $ 2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 4 million and $ 6 million for the six months ended June 30, 2025 and 2024, respectively. The balance sheet and income statement impacts of any remaining defined benefit plans are immaterial for all periods presented in these Condensed Consolidated Financial Statements. Note 11 – Accumulated Other Comprehensive Loss ("AOCL") Below are the balances and changes in AOCL (1) : (in millions) Currency Translation Adjustments Gains (Losses) on Cash Flow Hedges Defined Benefit Pension Items Total Balance at December 31, 2024 $ ( 478 ) $ 1 $ 5 $ ( 472 ) Other comprehensive income (loss) 33 2 — 35 Balance at June 30, 2025 $ ( 445 ) $ 3 $ 5 $ ( 437 ) (in millions) Currency Translation Adjustments Gains (Losses) on Cash Flow Hedges Defined Benefit Pension Items Total Balance at December 31, 2023 $ ( 441 ) $ 2 $ 4 $ ( 435 ) Other comprehensive income (loss) ( 27 ) ( 1 ) — ( 28 ) Balance at June 30, 2024 $ ( 468 ) $ 1 $ 4 $ ( 463 ) __________ (1) All amounts are net of tax. Tax effects were immaterial. CNDT Q2 2025 Form 10-Q 17 Table of Contents Note 12 – Contingencies and Litigation As more fully discussed below, the Company is involved in a variety of claims, lawsuits, investigations and proceedings concerning a variety of matters, including: governmental entity contracting, servicing and procurement law; intellectual property law; employment law; commercial and contracts law; the Employee Retirement Income Security Act ("ERISA"); and other laws and regulations. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing its litigation and regulatory matters using available information. The Company develops its view on estimated losses in consultation with outside counsel handling its defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in the Company's determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts in excess of any accrual for such matter or matters, this could have a material adverse effect on the Company's results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. The Company believes it has recorded adequate provisions for any such matters as of June 30, 2025. Litigation is inherently unpredictable, and it is not possible to predict the ultimate outcome of these matters. Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships with suppliers, customers and non-consolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance under a contract could trigger an obligation of the Company. These potential claims include actions based upon alleged exposures to products, real estate, intellectual property such as patents, environmental matters and other indemnifications. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the outcome of these claims. However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company's Condensed Consolidated Financial position or liquidity. As of June 30, 2025, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees. Litigation Against the Company Skyview Capital LLC and Continuum Global Solutions, LLC v. Conduent Business Services, LLC: On February 3, 2020, plaintiffs Skyview Capital LLC and Continuum Global Solutions LLC (collectively "Skyview") filed a lawsuit in the Supreme Court of the State of New York, County of New York against Conduent Business Services, LLC, a wholly-owned subsidiary of the Company ("CBS"). The lawsuit relates to the sale of a portion of CBS's select standalone customer care call center business to plaintiffs, which sale closed in February 2019. Under the terms of the sale agreement, CBS received approximately $ 23 million in principal amount of promissory notes from plaintiffs (the "Notes"). The lawsuit alleges various causes of action in connection with the acquisition, including: indemnification for breaches of representations and warranties; indemnification for breaches of covenants; and fraud. Plaintiffs alleged that their obligation to mitigate damages and their contractual right of set-off permitted them to withhold and deduct from any amounts that are owed to CBS under the Notes, and plaintiffs sought a judgment that they had no obligation to pay the Notes. On August 20, 2020, CBS filed counterclaims against Skyview seeking the outstanding balance on the Notes, the amounts owed for operating certain Jamaica-based call centers on plaintiffs' behalf pending closing (the "Jamaica Deferred Closing"), other obligations under a transition services agreement and its amendments (the "TSAs"), and late rent payment obligations. CBS also moved to dismiss Skyview’s claims in 2020. In May 2021, the court denied the motion and allowed the claims to proceed. Fact and expert discovery concluded and the parties filed summary judgment motions in July 2023. On December 8, 2023, the court rendered its decision on the parties’ cross-motions for summary judgment, finding there were certain material issues of fact that required trial on Skyview's fraud claim, and also entering partial summary judgment for each side. On January 5, 2024, CBS filed a notice of appeal with the New York Supreme Court, Appellate Division, First Department ("Appellate Division") with respect to the portion of the ruling that did not grant the summary judgment motion of CBS in its entirety and that granted certain limited relief in favor of Skyview. On January 23, 2024, Skyview filed its own notice of appeal, challenging the decision granting a portion of CBS’s counterclaims. In July 2024, Skyview informed CBS of its intention to sell a portion of its call center business. The parties reached an agreement on August 8, 2024, under which, contemporaneously with the closing of such a transaction, Skyview would pay the outstanding principal plus interest due on the outstanding Notes, fully discharging Skyview's obligations under the Notes, and would pay certain of CBS's litigation costs. CNDT Q2 2025 Form 10-Q 18 Table of Contents On September 24, 2024, Skyview and the buyer announced a signed and binding asset purchase agreement. Following regulatory review, the transaction closed in December 2024, at which point Skyview paid CBS approximately $ 33 million, representing all outstanding principal and interest due on the Notes and reimbursement of certain litigation costs. As a result, CBS dismissed its two counterclaims related to the Notes. In May 2025, the Appellate Division heard arguments on the parties’ 2024 cross-appeals and issued a ruling in June 2025, finding predominantly in CBS’s favor. Specifically, the Appellate Division reversed the trial court’s denial of summary judgment as to Skyview’s fraud claim and dismissed such claim in its entirety (along with Skyview’s request for punitive damages). In addition, the Appellate Division reversed the grant of summary judgment to Skyview on its breach of contract claim, finding there to be issues of fact for trial. No trial date has yet been set. With respect to CBS’s counterclaims, the Appellate Division (i) affirmed the grant of summary judgment on the counterclaims concerning the TSAs and late rent payment amounts and (ii) instructed the trial court to hold a hearing to resolve the final amount owed by Skyview to CBS on the Jamaica Deferred Closing counterclaim. The Appellate Division further found that the maximum amount that Skyview would have been entitled to set off against its liability on the Notes was $ 5 million (the limit set forth in the sale agreement). The trial court accordingly entered judgment on the TSA and late rent payment counterclaims on June 23, 2025, which is pending final entry by the County Clerk. On July 3, 2025, Skyview filed a motion to reargue the Appellate Division’s decision and, alternatively, for leave to appeal to the New York Court of Appeals. CBS continues to deny all of plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims, and will continue to defend the litigation vigorously. The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimates of the possible outcome or loss, if any, in excess of currently recorded reserves. Other Contingencies Certain contracts, primarily in the Company's Government and Transportation segments, require the Company to provide a surety bond or a letter of credit as a guarantee of performance. As of June 30, 2025, the Company had $ 566 million of outstanding surety bonds issued to secure its performance of contractual obligations with its clients, and $ 120 million of outstanding letters of credit issued to secure the Company's performance of contractual obligations to its clients as well as other corporate obligations. In general, the Company would only be liable for these guarantees in the event of default in the Company's performance of its obligations under each contract. The Company believes it has sufficient capacity in the surety markets and liquidity from its cash flow and its various credit arrangements to allow it to respond to future requests for proposals that require such credit support. Note 13 – Preferred Stock Series A Preferred Stock In December 2016, the Company issued 120,000 shares of Series A convertible perpetual preferred stock with an aggregate liquidation preference of $ 120 million and an initial fair value of $ 142 million. The convertible preferred stock earns quarterly cash dividends at a rate of 8 % per year ($ 9.6 million per year). Each share of convertible preferred stock is convertible at any time, at the option of the holder, into 44.9438 shares of common stock for a total of 5,393,000 shares (reflecting an initial conversion price of approximately $ 22.25 per share of common stock), subject to customary anti-dilution adjustments. CNDT Q2 2025 Form 10-Q 19 Table of Contents Note 14 – Earnings (Loss) per Share The Company did not declare any common stock dividends in the periods presented. The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock: Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share data in whole dollars and shares in thousands) 2025 2024 2025 2024 Basic Net Earnings (Loss) per Share: Net Income (Loss) $ ( 40 ) $ 216 $ ( 91 ) $ 315 Dividend - Preferred Stock ( 3 ) ( 3 ) ( 5 ) ( 5 ) Adjusted Net Income (Loss) Available to Common Shareholders - Basic $ ( 43 ) $ 213 $ ( 96 ) $ 310 Diluted Net Earnings (Loss) per Share: Net Income (Loss) $ ( 40 ) $ 216 $ ( 91 ) $ 315 Dividend - Preferred Stock ( 3 ) — ( 5 ) — Adjusted Net Income (Loss) Available to Common Shareholders - Diluted $ ( 43 ) $ 216 $ ( 96 ) $ 315 Weighted Average Common Shares Outstanding - Basic 161,162 194,539 161,448 201,159 Common Shares Issuable With Respect To: Restricted Stock and Performance Units / Shares — 2,149 — 1,672 8% Convertible Preferred Stock — 5,393 — 5,393 Weighted Average Common Shares Outstanding - Diluted 161,162 202,081 161,448 208,224 Net Earnings (Loss) per Share: Basic $ ( 0.26 ) $ 1.10 $ ( 0.59 ) $ 1.54 Diluted $ ( 0.26 ) $ 1.07 $ ( 0.59 ) $ 1.51 The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive (shares in thousands): Restricted stock and performance shares/units 19,849 11,916 17,615 11,277 Convertible preferred stock 5,393 — 5,393 — Total Anti-Dilutive and Contingently Issuable Securities 25,242 11,916 23,008 11,277 CNDT Q2 2025 Form 10-Q 20 Table of Contents Note 15 – Supplementary Financial Information The components of Other assets and Other liabilities were as follows: (in millions) June 30, 2025 December 31, 2024 Other Current Assets Prepaid expenses $ 108 $ 77 Income taxes receivable 20 11 Value-added tax receivable 8 7 Restricted cash 19 11 Net receivables from buyers of divested businesses 2 52 Other 119 103 Total Other Current Assets $ 276 $ 261 Other Current Liabilities Accrued liabilities to vendors $ 145 $ 156 Litigation related accruals 5 8 Current operating lease liabilities 51 52 Restructuring liabilities 10 15 Income tax payable — 3 Other taxes payable 13 16 Accrued interest 5 5 Direct response costs - cyber event liabilities 22 — Other 44 35 Total Other Current Liabilities $ 295 $ 290 Other Long-term Assets Internal use software, net $ 98 $ 107 Deferred contract costs, net 129 126 Product software, net 62 72 Deferred tax assets 24 23 Other 57 60 Total Other Long-term Assets $ 370 $ 388 Other Long-term Liabilities Income tax liabilities 18 18 Unearned income 60 52 Other 23 23 Total Other Long-term Liabilities $ 101 $ 93 Note 16 – Subsequent Events Tax Reform On July 4, 2025, the President of the United States signed into law the One Big Beautiful Bill Act, which contains certain provisions enacting tax reform. The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position. CNDT Q2 2025 Form 10-Q 21 Table of Contents TEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A is presented in seven sections: • Overview; • Financial Information and Analysis of Results of Operations; • Metrics; • Capital Resources and Liquidity; • Critical Accounting Estimates and Policies; • Recent Accounting Changes; and • Non-GAAP Financial Measures. The MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes. Overview We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 53,000 associates, as well as process expertise and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of June 30, 2025. Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate. These three segments are: • Commercial – Our Commercial segment provides business process services that span our clients' businesses end-to-end from the front-office to the back-office for a variety of commercial industries. These solutions are both cross-industry and industry-specific in nature. Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enhance performance for our clients and deliver better experiences for their consumers and employees. • Government – Our Government segment provides government-centric business process services and solutions to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing, payment services and case management. In this segment, we help governments respond to changing rules for eligibility and keep pace with increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment. • Transportation – Our Transportation segment provides government agencies and transportation authorities around the world with systems, support and revenue-generating solutions serving toll and fare collections as well as mobility and digital payments that help streamline operations and increase revenue to government transportation agencies. With an expanded focus on sustainability and enhancing the quality of life for citizens and communities around the world, our solutions help reduce congestion and greenhouse emissions, while creating seamless travel experiences for consumers throughout transportation ecosystems. CNDT Q2 2025 Form 10-Q 22 Table of Contents Executive Summary Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation. Building on this solid foundation, during 2023, we held an investor briefing outlining our three-year strategy. We continue to execute on this strategy and remain focused on accelerating growth and enhancing value for our stakeholders. We intend to achieve this by doubling down on key themes outlined in the 2023 investor briefing including focusing on key growth areas within each of our businesses, continuing our portfolio rationalization strategy, divesting certain solutions which have either scarcity value outside of Conduent or are capital intensive relative to their growth opportunity, and taking a balanced approach to allocating capital including internal investments in our solutions, pre-paying debt and repurchasing common shares. We believe this strategy has resulted and will continue to result in a more nimble and faster-growing Conduent with modest levels of net leverage, enhanced valuation, and a stronger balance sheet. 2025 is the year in which we intend to complete the remaining commitment of $1 billion of deployable capital through further portfolio rationalization, achieving the financial 2025 exit rate targets we have been anchoring to throughout this 3-year journey, as well as demonstrating revenue growth in the remaining Conduent portfolio of businesses. During the second quarter of 2025 we achieved the following: • Made progress on the execution of the second phase of our portfolio rationalization strategy, focusing on assets that are either capital-intensive or have a negative impact on our earnings profile. • Expanded our presence in the Philippines with a new facility in Lipa-Malver. • Relaunched our market-leading Vector platform in the cloud, which enables opportunities to scale across additional clients in our Transportation segment. • Named to Newsweek's 2025 Global Most Loved Workplaces list, earning recognition for the third consecutive year. • Received the remaining cash proceeds related to the sale of our Curbside Management and Public Safety businesses. • Executed a contract amendment, at improved margins, to extend our work in distributing Social Security payments on prepaid cards. • Continued to strengthen our partnership with one of our largest Transportation segment customers. This included executing a contract amendment with additional consideration, as well as streamlining the decision making and delivery process by repurchasing the interest of our minority partner. Cyber Event On January 13, 2025, the Company experienced an operational disruption and learned that a threat actor gained unauthorized access to a limited portion of the Company’s environment (the "January 2025 Cyber Event"). Upon detection, the Company activated its cybersecurity response plan with the help of external cybersecurity experts to contain, assess, and remediate the incident. The Company restored the affected systems and returned to normal operations within days, and in some cases, hours. The disruption did not have a material impact to the Company’s operations. As part of its ongoing investigation, the Company determined that the threat actor exfiltrated a set of files associated with a limited number of the Company’s clients. Due to the complexity of the files, the Company engaged cybersecurity data mining experts to evaluate the exfiltrated data and was recently informed of its nature, scope and validity, confirming that the data sets contained a significant number of individuals’ personal information associated with our clients’ end-users. The Company is continuing to further analyze and document the precise and detailed impact of the data exfiltrated, and clients are being informed as appropriate in order to determine next steps as required by federal and state law. To the Company’s knowledge, the exfiltrated data has not been released on the dark web or otherwise publicly. CNDT Q2 2025 Form 10-Q 23 Table of Contents While the Company did not experience material impacts to its operating environment or costs from the event itself, the Company has incurred and accrued material non-recurring expenses in the first quarter related to the event based on potential notification requirements. The Company maintains a cyber insurance policy and has also notified federal law enforcement authorities of the incident. It is possible that future risks and uncertainties resulting from the cyber event—including those related to impacted data, litigation, reputational harm, and regulatory actions—could adversely affect the Company’s financial condition or results of operations. See also Part II, Item 1A (Risk Factors). Financial Information and Analysis of Results of Operations Three Months Ended June 30, 2025 vs. 2024 (in millions) 2025 2024 $ Change % Change Revenue $ 754 $ 828 $ (74) (9) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 617 677 (60) (9) % Selling, general and administrative (excluding depreciation and amortization) 100 115 (15) (13) % Research and development (excluding depreciation and amortization) 1 1 — — % Depreciation and amortization 48 51 (3) (6) % Restructuring and related costs 8 8 — — % Interest expense 12 19 (7) (37) % (Gain) loss on divestitures and transaction costs, net 4 (347) 351 n/m Litigation settlements (recoveries), net — 1 (1) n/m Loss on extinguishment of debt — 3 (3) n/m Other (income) expenses, net 2 — 2 n/m Total Operating Costs and Expenses 792 528 264 Income (Loss) Before Income Taxes (38) 300 (338) Income tax expense (benefit) 2 84 (82) Net Income (Loss) $ (40) $ 216 $ (256) CNDT Q2 2025 Form 10-Q 24 Table of Contents Six Months Ended June 30, 2025 vs. 2024 (in millions) 2025 2024 $ Change % Change Revenue $ 1,505 $ 1,749 $ (244) (14) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 1,235 1,412 (177) (13) % Selling, general and administrative (excluding depreciation and amortization) 220 231 (11) (5) % Research and development (excluding depreciation and amortization) 2 3 (1) (33) % Depreciation and amortization 96 113 (17) (15) % Restructuring and related costs 12 17 (5) (29) % Interest expense 24 46 (22) (48) % (Gain) loss on divestitures and transaction costs, net 7 (508) 515 n/m Litigation settlements (recoveries), net 2 5 (3) (60) % Loss on extinguishment of debt — 5 (5) n/m Other (income) expenses, net 1 (2) 3 n/m Total Operating Costs and Expenses 1,599 1,322 277 Income (Loss) Before Income Taxes (94) 427 (521) Income tax expense (benefit) (3) 112 (115) Net Income (Loss) $ (91) $ 315 $ (406) Revenue Revenue for the three months ended June 30, 2025 decreased, compared to the prior year period, approximately 73% of which was due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. Excluding the divestitures impact, lost business and lower Commercial volumes contributed to the decrease and were partially offset by new business ramp and positive impacts from a contract amendment with a Transit Solutions customer. Revenue for the six months ended June 30, 2025 decreased, compared to the prior year period, approximately 63% of which was due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. Excluding the divestitures impact, lost business and lower volumes contributed to the decrease and were partially offset by new business ramp and positive impacts from a contract amendment with a Transit Solutions customer. Cost of Services (excluding depreciation and amortization) Cost of services for the three and six months ended June 30, 2025 decreased, compared to the prior year periods, primarily due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. Excluding the divestitures impact, lower expenses on lower revenues and cost optimizations contributed to the decline. Selling, General and Administrative ("SG&A") (excluding depreciation and amortization) SG&A for the three months ended June 30, 2025 decreased, compared to the prior year period, primarily driven by cost efficiencies in our corporate functions. SG&A for the six months ended June 30, 2025 decreased, compared to the prior year period, primarily driven by a $9 million benefit from the recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019 as well as cost efficiencies in our corporate functions. These were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event. CNDT Q2 2025 Form 10-Q 25 Table of Contents Depreciation and Amortization Depreciation and amortization for the three and six months ended June 30, 2025 decreased, compared to the prior year periods, primarily due to the absence of a write-off of an abandoned internal use software asset in our Commercial segment in the prior year and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. These decreases were partially offset by increased amortization of deferred contract costs related to new projects that went live in 2025. Restructuring and Related Costs We engage in a series of restructuring programs related to optimizing our employee base, reducing our real estate footprint, exiting certain activities, outsourcing certain internal functions, consolidating our data centers and engaging in other actions designed to reduce our cost structure and improve productivity. The following are the components of our Restructuring and related costs: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2025 2024 2025 2024 Severance and related costs $ 6 $ 3 $ 7 $ 7 Data center consolidation costs — 2 — 3 Termination, insourcing and asset impairment costs 2 3 5 7 Restructuring and related costs $ 8 $ 8 $ 12 $ 17 Refer to Note 6 – Restructuring Programs and Related Costs to the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs. Interest Expense Interest expense represents interest on long-term debt and the amortization of debt issuance costs. Interest expense for the three and six months ended June 30, 2025 decreased, compared to the prior year periods, primarily due to the 2024 voluntary prepayments of the entire Term Loan B balance outstanding and a portion of the Term Loan A balance with proceeds from divestitures. (Gain) Loss on Divestitures and Transaction Costs The completion of the BenefitWallet Transfer resulted in a gain of $261 million and $425 million for the three and six months ended June 30, 2024, respectively. The completion of the sale of the Curbside Management and Public Safety businesses in the second quarter of 2024 resulted in a gain of $108 million for the three and six months ended June 30, 2024. Additionally, professional fees and other costs related to these consummated and certain other non-consummated transactions considered by the Company are included in this financial statement line item for all periods. Litigation Settlements (Recoveries), Net Litigation settlements (recoveries), net for the six months ended June 30, 2025 and 2024 were not material. Income Taxes The effective tax rate for the three months ended June 30, 2025 was (5.7)%, compared to 28.2% for the three months ended June 30, 2024. The June 30, 2025 rate was lower than the U.S. statutory rate of 21%, due primarily to valuation allowances and geographic mix of income. The effective tax rate for the three months ended June 30, 2024 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes, geographic mix of income, and other nondeductible permanent differences, partially offset by the release of tax valuation allowances due to the gain from divestitures and tax credits. Excluding the impact of amortization, restructuring, divestiture, valuation allowances and discrete tax items, the normalized effective tax rate for the three months ended June 30, 2025 was 20.5%. The normalized effective tax rate for the three months ended June 30, 2024 was 23.6%, due primarily to excluding the gain from divestitures, restructuring costs, amortization of intangibles, valuation allowance release and other discrete tax adjustments. CNDT Q2 2025 Form 10-Q 26 Table of Contents The effective tax rate for the six months ended June 30, 2025 was 3.1%, compared to 26.3% for the six months ended June 30, 2024. The June 30, 2025 rate was lower than the U.S. statutory rate of 21%, primarily due to valuation allowances and geographic mix of income. The effective tax rate for the six months ended June 30, 2024 was higher than the U.S. statutory rate of 21%, primarily due to state and local taxes, geographic mix of income, and other nondeductible permanent differences, partially offset by tax benefit from valuation allowances and audit settlement reserve releases. Excluding the impact of amortization, restructuring, divestiture, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for the six months ended June 30, 2025 was 22.3%. The normalized effective tax rate for the six months ended June 30, 2024 was 23.1%, primarily due to excluding the impact of the gain from divestitures, restructuring costs, amortization of intangible assets, litigation reserve releases, audit settlement reserve release, valuation allowance and other discrete tax items. On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S. The legislation contains certain provisions related to the full expensing of U.S. research and development costs and other depreciable property. The legislation also includes changes to the determination of the amount of U.S. interest expense that is deductible for U.S. tax purposes. We are evaluating the full effects of the legislation on our estimated annual effective rate and cash tax position. As the legislation was signed into law subsequent to June 30, 2025, no impacts are included in our operating results for the three and six months ended June 30, 2025. In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax, known as Pillar Two. This alternative minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on our financial results of operations for the current period. We continue to monitor legislative developments, as well as additional guidance from countries that have enacted legislation. Operations Review of Segment Revenue and Profit Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments: • Commercial; • Government; and • Transportation. Divestitures include our BenefitWallet Portfolio and our Casualty Claims Solutions businesses (both of which were reclassified from our Commercial segment) and our Curbside Management and Public Safety Solutions businesses (which was reclassified from our Transportation segment). Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments. Results of our financial performance were: CNDT Q2 2025 Form 10-Q 27 Table of Contents Three Months Ended June 30, Commercial Government Transportation Divestitures Unallocated Costs Total (in millions) Reportable Segments 2025 Segment revenue $ 365 $ 238 $ 151 $ — $ — $ 754 Segment profit (loss) $ 7 $ 49 $ — $ — $ (67) $ (11) Segment depreciation and amortization $ 20 $ 11 $ 8 $ — $ 9 $ 48 Adjusted EBITDA $ 27 $ 60 $ 8 $ — $ (58) $ 37 % of Total Revenue 48.4 % 31.6 % 20.0 % — % — % 100.0 % Adjusted EBITDA Margin 7.4 % 25.2 % 5.3 % — % — % 4.9 % 2024 Segment Revenue $ 388 $ 245 $ 141 $ 54 $ — $ 828 Segment profit (loss) $ 14 $ 38 $ (3) $ 8 $ (71) $ (14) Segment depreciation and amortization $ 22 $ 11 $ 6 $ 3 $ 7 $ 49 Adjusted EBITDA $ 36 $ 49 $ 3 $ 11 $ (64) $ 35 % of Total Revenue 46.9 % 29.6 % 17.0 % 6.5 % — % 100.0 % Adjusted EBITDA Margin 9.3 % 20.0 % 2.1 % 20.4 % — % 4.2 % Six Months Ended June 30, Commercial Government Transportation Divestitures Unallocated Costs Total (in millions) Reportable Segments 2025 Segment revenue $ 767 $ 454 $ 284 $ — $ — $ 1,505 Segment profit (loss) $ 23 $ 77 $ (2) $ — $ (145) $ (47) Segment depreciation and amortization $ 44 $ 21 $ 16 $ — $ 15 $ 96 Direct response costs - cyber event $ — $ — $ — $ — $ 25 $ 25 Adjusted EBITDA $ 67 $ 98 $ 14 $ — $ (105) $ 74 % of Total Revenue 51.0 % 30.1 % 18.9 % — % — % 100.0 % Adjusted EBITDA Margin 8.7 % 21.6 % 4.9 % — % — % 4.9 % 2024 Segment Revenue $ 807 $ 503 $ 285 $ 154 $ — $ 1,749 Segment profit (loss) $ 33 $ 80 $ (9) $ 32 $ (143) $ (7) Segment depreciation and amortization $ 48 $ 24 $ 13 $ 12 $ 14 $ 111 Adjusted EBITDA $ 81 $ 104 $ 4 $ 44 $ (129) $ 104 % of Total Revenue 46.1 % 28.8 % 16.3 % 8.8 % — % 100.0 % Adjusted EBITDA Margin 10.0 % 20.7 % 1.4 % 20.4 % — % 5.9 % CNDT Q2 2025 Form 10-Q 28 Table of Contents (in millions) Three Months Ended June 30, Six Months Ended June 30, Adjusted EBITDA and Segment Profit (Loss) Reconciliation to Income (Loss) Before Income Taxes 2025 2024 2025 2024 Adjusted EBITDA $ 37 $ 35 $ 74 $ 104 Reconciling items: Segment depreciation and amortization (48) (49) (96) (111) Direct response costs - cyber event — — (25) — Segment Profit (Loss) $ (11) $ (14) $ (47) $ (7) Reconciling items: Amortization of acquired intangible assets (1) (2) (1) (3) Restructuring and related costs (8) (8) (12) (17) Interest expense (12) (19) (24) (46) Loss on extinguishment of debt — (3) — (5) Gain (loss) on divestitures and transaction costs, net (4) 347 (7) 508 Litigation (settlements) recoveries, net — (1) (2) (5) Other income (expenses), net (2) — (1) 2 Income (Loss) Before Income Taxes $ (38) $ 300 $ (94) $ 427 Commercial Segment Revenue Commercial revenue for the three and six months ended June 30, 2025 declined, compared to the prior year periods, driven by lower volumes, partially offset by new business ramp outpacing lost business. Segment Profit and Adjusted EBITDA Commercial segment profit and adjusted EBITDA for the three and six months ended June 30, 2025 decreased, compared to the prior year periods, primarily due to the revenue drivers noted above and higher fixed technology overhead, partially offset by cost efficiencies and the impact of lower depreciation due to the prior year write-off of internal use software and fully amortized assets. Government Segment Revenue Government revenue for the three months ended June 30, 2025 decreased, compared to the prior year period, primarily driven by the impacts associated with completing or extending several implementations. However, new business has now started to outpace lost business in this segment. Government revenue for the six months ended June 30, 2025 decreased, compared to the prior year period, primarily driven by the impact of lost business in our Government Healthcare business and some discrete negative impacts from the establishment of reserves for service level disputes in the first quarter of 2025, partially offset by new business ramp. Segment Profit and Adjusted EBITDA Government segment profit and adjusted EBITDA for the three months ended June 30, 2025 increased, compared to the prior year period, primarily due to cost efficiencies and lower expenses driven in part by our fraud prevention activities in our Government Services business resulting from the investments we have been making in AI. These were partially offset by impact of the revenue drivers mentioned above. Government segment profit and adjusted EBITDA for the six months ended June 30, 2025 decreased, compared to the prior year period, primarily due to lost business particularly in our Government Healthcare business partially offset by cost efficiencies and lower expenses driven by our fraud prevention activities in our Government Services business resulting from the investments we have been making in AI. CNDT Q2 2025 Form 10-Q 29 Table of Contents Transportation Segment Revenue Transportation revenue for the three months ended June 30, 2025 increased, compared to the prior year period, primarily due to a contract amendment with a Transit Solutions customer. The amended agreement included additional consideration and a cumulative catch-up adjustment was recorded in connection with the amendment. Revenue from our congestion charging back-office solution in a Road Usage Charging contract also contributed to the increase. These factors were partially offset by the non-retained portion of a Road Usage Charging contract and lower activity across certain smaller projects. Transportation revenue for the six months ended June 30, 2025 was flat, compared to the prior year period, primarily due to the items mentioned above being offset by a higher proportion of the non-retained portion of a Road Usage Charging contract. Segment Profit and Adjusted EBITDA Transportation segment profit and adjusted EBITDA for the three and six months ended June 30, 2025 increased due to the revenue drivers mentioned above and the absence of costs to transition the non-retained portion of a Road Usage Charging contract. Divestitures Revenue, Segment Profit and Adjusted EBITDA The decrease in revenue, segment profit and Adjusted EBITDA for the three and six months ended June 30, 2025, as compared to the prior year periods, was due to the transfer of the BenefitWallet portfolio, and the sales of the Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions businesses in 2024. Unallocated Costs Unallocated Costs for the three months ended June 30, 2025 decreased, compared to the prior year period, primarily due cost efficiencies in our corporate functions. Unallocated Costs for the six months ended June 30, 2025 also decreased, compared to the prior year period, primarily due to a $9 million recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019, as well as cost efficiencies in our corporate functions. However, these factors were partially offset by $25 million of direct response costs related to the previously disclosed January 2025 Cyber Event. Metrics Metrics We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business. We disclose these metrics to provide transparency in our performance trends. We present certain key metrics, including Signings and Net ARR Activity below. Signings Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Total Contract Value ("TCV") is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons are not a good measure of renewal performance. New business Annual Contract Value ("ACV") is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure. CNDT Q2 2025 Form 10-Q 30 Table of Contents Signing information for the three and six months ended June 30, 2025 and 2024 is as follows: Three Months Ended June 30, 2025 vs. 2024 ($ in millions) 2025 2024 (3) $ Change % Change New business ACV $ 150 $ 141 $ 9 6 % New business TCV $ 331 $ 273 $ 58 21 % Renewals TCV 469 242 227 94 % Total Signings $ 800 $ 515 $ 285 55 % Annual recurring revenue signings (1) $ 66 $ 61 $ 5 8 % Non-recurring revenue signings (2) $ 118 $ 109 $ 9 8 % Six Months Ended June 30, 2025 vs. 2024 ($ in millions) 2025 (3) 2024 (3) $ Change % Change New business ACV $ 259 $ 237 $ 22 9 % New business TCV $ 611 $ 416 $ 195 47 % Renewals TCV 712 637 75 12 % Total Signings $ 1,323 $ 1,053 $ 270 26 % Annual recurring revenue signings (1) $ 119 $ 92 $ 27 29 % Non-recurring revenue signings (2) $ 177 $ 180 $ (3) (2) % ___________ (1) Recurring revenue signings are for new business contracts longer than one year. (2) Non-recurring revenue signings are for contracts shorter than one year. (3) Adjusted to remove new business signings of the BenefitWallet Portfolio, Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions business. The total new business pipeline at the end of June 30, 2025 and 2024 was $3.3 billion and $3.1 billion, respectively. Total new business pipeline is defined as total new business ACV pipeline of deals at or beyond the qualified prospect stage. Beginning in the first quarter of 2025, we transitioned our measure of sales pipeline from TCV to ACV to align with our primary sales metric and have recast all prior period comparatives to reflect this change. This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required. Net ARR Activity Net ARR Activity is a metric that is defined as Projected Annual Recurring Revenue ("ARR") for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results. The metric annualizes the net impact to revenue. Timing of revenue impact varies and may not be realized within the forward 12-month timeframe. The metric is for indicative purposes only. This metric excludes non-recurring revenue signings. This metric is not indicative of any specific 12-month timeframe. The Net ARR activity metric for the trailing twelve months for each of the prior five quarters was as follows: (in millions) Net ARR Activity metric June 30, 2025 $ 63 March 31, 2025 116 December 31, 2024 92 September 30, 2024 46 June 30, 2024 (47) CNDT Q2 2025 Form 10-Q 31 Table of Contents Capital Resources and Liquidity As of June 30, 2025 and December 31, 2024, total cash and cash equivalents were $275 million and $366 million, respectively. We also have a $550 million revolving line of credit for our various cash needs, of which $10 million was used for letters of credit. The net amount available to be drawn upon under our revolving line of credit as of June 30, 2025, was $540 million. As of June 30, 2025, our total principal debt outstanding was $661 million, of which $28 million was due within one year. Refer to Note 7 – Debt in the Condensed Consolidated Financial Statements for additional debt information. To provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements. However, we believe that our cash on hand, projected cash flow from operations, sound balance sheet and our revolving line of credit will continue to provide sufficient financial resources to meet our expected business obligations for at least the next twelve months. Cash Flow Analysis The following table summarizes our cash flows, as reported in our Condensed Consolidated Statement of Cash Flows in the accompanying Condensed Consolidated Financial Statements: Six Months Ended June 30, (in millions) 2025 2024 Better (Worse) Net cash provided by (used in) operating activities $ (73) $ (78) $ 5 Net cash provided by (used in) investing activities $ 15 $ 553 (538) Net cash provided by (used in) financing activities $ (30) $ (681) 651 Operating activities The net decrease in cash used in operating activities of $5 million, compared to the prior year period, was primarily due to lower cash interest expense, improved accounts receivable Days Sales Outstanding and improved accounts payable Days Payable Outstanding. These were partially offset by lower Adjusted EBITDA due to the divestitures and the absence of a $22 million United States federal tax refund related to the 2018 tax year received in the first quarter of 2024. Investing activities Investing cash flow decreased by $538 million mainly due to the proceeds received from the BenefitWallet Portfolio transfer and the Curbside Management and Public Safety Solutions ("Curbside") divestiture in the first half of 2024. The 2025 period includes $50 million of cash received related to the non-interest bearing note from the Curbside divestiture. Financing activities The decrease in cash used in financing activities was due to the voluntary prepayment of $464 million of debt using the proceeds received from the BenefitWallet Portfolio transfer and the Curbside divestiture in the first half of 2024. Additionally, the prior year included $168 million of treasury stock purchases under the program that was completed in September 2024, including $132 million purchased from Carl Icahn and certain of his affiliates. CNDT Q2 2025 Form 10-Q 32 Table of Contents Sales of Accounts Receivable We have entered into a factoring agreement in the normal course of business as part of our cash and liquidity management, to sell certain accounts receivable without recourse to a third-party financial institution. The transactions under this agreement are treated as sales and are accounted for as reductions in accounts receivable because the agreement transfers effective control over, and risk related to, the receivables to the buyer. Cash proceeds from this arrangement are included in cash flow from operating activities in the Condensed Consolidated Statements of Cash Flows. The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the six months ended June 30, 2025 and 2024 was $(11) million and $(16) million, respectively. Material Cash Requirements from Contractual Obligations We believe our balances of cash and cash equivalents, which totaled $275 million as of June 30, 2025, along with cash generated by operations and amounts available for borrowing under our revolving credit facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. At June 30, 2025, the Company’s material cash requirements include debt, leases and estimated purchase commitments. See Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on our material cash requirements. Critical Accounting Estimates and Policies Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Condensed Consolidated Financial Statements and notes thereto. There have been no significant changes during the six months ended June 30, 2025 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. Recent Accounting Changes See Note 2 – Recent Accounting Pronouncements for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards. Non-GAAP Financial Measures We report our financial results in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). In addition, within this Form 10-Q Part I Item 2 we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with U.S. GAAP, to exclude the effects of certain items as well as their related tax effects. Management believes that these non-GAAP financial measures provide an additional means of analyzing the results of the current period compared to the corresponding prior period. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures and should be read only in conjunction with our Consolidated Financial Statements prepared in accordance with U.S. GAAP. Our management regularly uses our non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions, and providing such non-GAAP financial measures to investors allows for a further level of transparency as to how management reviews and evaluates our business results and trends. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on certain of these non-GAAP measures. CNDT Q2 2025 Form 10-Q 33 Table of Contents A reconciliation of the non-GAAP financial measures Adjusted EBITDA and EBITDA Margin to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP is provided in the "Operations Review of Segment Revenue and Profit" section above. Adjusted EBITDA and Adjusted EBITDA Margin We use adjusted EBITDA and adjusted EBITDA Margin as an additional way of assessing certain aspects of our operations that, when viewed with the U.S. GAAP results and the accompanying reconciliations to corresponding U.S. GAAP financial measures, provide a more complete understanding of our on-going business. Adjusted EBITDA Margin is adjusted EBITDA divided by revenue. Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items: • Amortization of acquired intangible assets. This is driven by acquisition activity, which can vary in size, nature and timing as compared to other companies within our industry and from period to period. • Restructuring and related costs. This includes restructuring and asset impairment charges as well as costs associated with our strategic transformation program. • Goodwill impairment. This represents goodwill impairment charges arising from annual or interim goodwill testing. • (Gain) loss on divestitures and transaction costs. This represents (gain) loss on divested businesses and transaction costs. • Litigation settlements (recoveries), net. This represents settlements or recoveries for various matters subject to litigation. • Loss on extinguishment of debt. This represents write-off of debt issuance costs related to prepayments of debt. • Direct response costs - cyber event. This represents costs related to investigating, remediating and responding to the cyber event that occurred in January 2025. • Other charges (credits). This includes Other (income) expenses, net on the Condensed Consolidated Statements of Income (Loss) and other adjustments. Adjusted EBITDA is not intended to represent cash flows from operations, operating income (loss) or net income (loss) as defined by U.S. GAAP as indicators of operating performance. Management cautions that amounts presented in accordance with Conduent's definition of adjusted EBITDA and adjusted EBITDA Margin may not be comparable to similar measures disclosed by other companies because not all companies calculate adjusted EBITDA and adjusted EBITDA Margin in the same manner.