What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-19 · 128 added, 137 removed, 334 unchanged (44% of the section changed)

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The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2025 and 2024, unless stated otherwise.

The discussion of 2023 items and related year-over-year comparisons as of and for the years ended December 31, 2024 and 2023 are found in Item 7 of Part II of our Form 10-K for the year ended December 31, 2024.

Throughout the MD&A, we refer to various notes to our Consolidated Financial Statements which appear in Item 8 of this Form 10-K, and the information contained in such notes is incorporated by reference into the MD&A in the places where such references are made.

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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 enable revenue growth for our clients and better experiences for their consumers and employees.

• Government – Our Government segment provides government-centric services and solutions to U.S.

federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction

Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and deliver better experiences for their consumers and employees.

CNDT 2025 Annual Report

processing, payment services and case management.

In this segment, we help governments respond to changing rules for eligibility and increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment.

• Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.

We deliver mission-critical tolling, transit and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless experiences for travelers.

We help transportation agencies contend with rising urbanization and mobility, the need for system efficiency and an increased focus on transportation infrastructure.

• Government – Our Government segment provides government-centric services and solutions to U.S.

federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing, eligibility and enrollment 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 adapt 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 and transportation agencies.

With and 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.

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.

Our emphasis on growth, quality, and efficiency, launched in 2020 and reinforced in our 2023 investor briefing, continued throughout 2025, the final year of our three-year plan.

We executed against this strategy by focusing on targeted-growth areas within each business advancing the second phase of our portfolio rationalization strategy to improve our earnings profile and maintained a balanced capital allocation framework that included making internal investments in our solutions, pre-paying debt and repurchasing common shares.

We expect this approach will continue positioning Conduent to become a more agile company with the potential for improved margins, stronger free cash flow, and a more resilient capital structure.

Significant 2025 Actions

• Divestitures – In 2024, we completed three divestitures as part of our portfolio rationalization strategy.

During the second quarter, we completed the transfer of the BenefitWallet Portfolio for a total purchase price of $425 million and completed the sale of the Curbside Management and Public Safety businesses with a purchase price of $230 million, $50 million of which is deferred to the first half of 2025.

During the third quarter, we completed the sale of the Casualty Claims Solutions Businesses with a purchase price of $224 million.

Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale in the Consolidated Financial Statements for additional information.

• Debt Prepayment – In 2024, we utilized a portion of the proceeds from the closing of our divestitures to voluntarily prepay all of the principal ($502 million ) of the Term Loan B and $137 million of the Term Loan A.

• Debt Refinancing – In 2025, we successfully completed refinancing of the Company's revolving credit facility and paid off the remaining $82 million balance of the Company's Senior Secured Term Loan A ("Term Loan A").

Refer to Note 10 – Debt in the Consolidated Financial Statements for additional information.

• Share Repurchases – During the second, third and fourth quarters of 2025, we repurchased 9.2 million shares of our common stock for $25 million under the current $50 million Board-authorized share repurchase program.

• Portfolio Rationalization – We started executing the second phase of our portfolio rationalization plans, prioritizing assets that are capital-intensive or have a negative impact on our earnings profile;

and during 2025, we received the remaining cash proceeds that were tied to previously announced divestitures.

• AI Experience Center – We launched the AI Experience Center to support client engagement and provide a structured environment for evaluating and demonstrating Conduent's AI-enabled capabilities.

Significant 2024 Actions

• Divestitures – In 2024, we completed three divestitures as part of our portfolio rationalization strategy - the BenefitWallet Portfolio, the Curbside Management and Public Safety businesses and the Casualty Claims Solutions businesses.

Refer to Note 4 – Divestitures in the Consolidated Financial Statements for additional information.

• Debt Prepayment – In 2024, we utilized a portion of the proceeds from the closing of our divestitures to voluntarily prepay all of the principal of the Term Loan B and a portion of the Term Loan A.

• Icahn Share Repurchase – During the second quarter of 2024, we entered into a purchase agreement with Carl C.

Icahn and certain of his affiliates pursuant to which we purchased an aggregate of approximately 38 million shares of our common stock, at a price of $3.47 per share, for an aggregate purchase price of approximately $132 million.

Icahn and certain of his affiliates pursuant to which we purchased their entire holdings or an aggregate of approximately 38 million shares of our common stock.

We utilized a portion of the proceeds from the closing of our divestitures to fund the purchase.

Refer to Note 16 – Common Stock and Preferred Stock in the Consolidated Financial Statements for additional information.

• Share Repurchases – In 2024, we completed our previously approved $75 million share repurchase program and bought back a total of 14 million shares of common stock.

• Leadership Updates – In 2024, we continued to enhance our leadership team and appointed a new Group President of the Commercial segment and a new Head of Government Solutions.

Significant 2023 Actions

• Strategic Growth Efforts – During 2023, we continued to see opportunities in our Government Healthcare segment, particularly with our cloud-native Medicaid Claims solution, and we now have a number of significant implementations underway in the space.

Our pipeline of opportunities remains strong in this area.

We also continued to make progress with our Immediate Payments offering, laying the marketing and educational foundation with our existing clients, and enhancing our partnership strategy.

We were the first organization to

• Share Repurchases – In 2024, we completed our previously approved $75 million share repurchase program.

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").

CNDT 2025 Annual Report

execute transactions over the newly implemented FedNow capability and we anticipate an acceleration of new business signings to occur in 2024.

• New Business Signings – Successfully attained the highest Total Contract Value ("TCV" as defined in Metrics section below) in several years, with an increase of 20% versus 2022.

This was predominantly driven by the $1 billion TCV deal in our Transportation segment, with the State of Victoria, Australia.

This is our largest TCV deal in the history of Conduent and continues to grow our international presence.

• Share Repurchases – The Board of Directors authorized a share repurchase program, granting approval for us to repurchase up to $75 million of our common stock over the next three years.

In 2023, 9 million shares were repurchased under this program.

This program was completed in September 2024.

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 subset of the Company’s clients.

Due to the complexity of the files, the Company engaged cybersecurity data mining experts to conduct a detailed analysis of the affected files to identify the personal information contained therein.

This detailed analysis confirmed that the data sets contained a significant number of individuals’ personal information associated with our clients’ end-users.

Upon completion of this time intensive data analysis, the Company notified impacted clients concerning their affected end-users.

The Company is working with affected clients to determine next steps as required by federal and state law, including individual and regulatory notifications that began in October 2025 and are anticipated to be concluded by early 2026.

The Company monitors the dark web regularly and has no evidence of any personal information associated with this event being released on the dark web.

The Company has also notified federal law enforcement authorities of the incident.

While the Company did not experience material impacts to its operating environment or costs from the event itself, the Company recorded a $25 million non-recurring charge in the first quarter of 2025 related to the event based on the notification requirements described above.

We have made cash disbursements of $17 million through December 31, 2025 and expect to make an additional $8 million of cash disbursements during the first half of 2026 related to these notification requirements.

Any notification expense in excess of these amounts up to the coverage limit are anticipated to be covered by the cyber insurance policy that the Company maintains.

The Company may experience costs beyond notification, but is not able to determine or predict whether the ultimate costs beyond notifications could exceed any applicable coverage limit.

See also Note 15 – Contingencies and Litigation to our Consolidated Financial Statements of Part II, Item 8 to this 10-K.

It is possible that future risks and uncertainties resulting from the January 2025 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 I, Item 1A (Risk Factors).

Macroeconomic and Geopolitical Uncertainty

Given the nature of our business and our global operations, the effects of global macroeconomic and geopolitical uncertainty could have a materially adverse effect on our business, results of operations and financial condition.

CNDT 2025 Annual Report

Financial Information

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Interest expense 48 75 (27) (36) %

Loss on extinguishment of debt 8 — 8 n/m

Goodwill impairment — 28 (28) (100) %

(Gain) loss on divestitures and transaction costs, net 11 (696) 707 n/m

Litigation settlements (recoveries), net 9 (30) 39 (130) %

Other (income) expenses, net (13) (3) (10) 333 %

Litigation settlements (recoveries), net (1) 9 (10) n/m

Loss on extinguishment of debt 1 8 (7) (88) %

Other (income) expenses, net 8 (13) 21 n/m

Total Operating Costs and Expenses 3,202 2,852 350

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Net Income (Loss) $ (170) $ 426 $ (596)

Revenue for 2024 decreased 10%, compared to the prior year, over half of which was due to the impact of the BenefitWallet Portfolio transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

In addition to the divestitures impact, lost business across our three segments was partially offset by new business ramp.

CNDT 2024 Annual Report

Revenue for 2025 decreased 9%, compared to the prior year, approximately 57% 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.

In addition to the divestitures impact, lost business and lower volumes contributed to the decrease and were partially offset by new business ramp, higher equipment sales and positive impacts from a contract amendment with a customer in the Transportation segment.

Cost of Services (excluding depreciation and amortization)

Cost of services for 2024 decreased 5%, compared to the prior year, approximately three quarters of which was primarily driven by the impact of the transfer of the BenefitWallet Portfolio and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

In addition to the divestitures impact, lower expenses on lower revenues and cost optimizations contributed to the decrease and were partially offset by the absence of a $17 million benefit from reversal of liabilities due to the settlement of the Cognizant matter in the prior year.

We expect Cost of services to decline in 2025 as a result of cost actions to be implemented throughout the year.

Cost of services for 2025 decreased 9%, compared to the prior year, 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.

In addition to the divestitures impact, lower expenses on lower revenues and continued cost optimization initiatives across segments contributed to the decline.

Selling, General and Administrative ("SG&A") (excluding depreciation and amortization)

SG&A for 2024 decreased 1%, compared to the prior year, primarily driven by the impact of the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

Cost efficiencies were partially offset by costs to transition away from a technology vendor.

We expect SG&A to decline in 2025 as a result of cost actions to be implemented throughout the year.

SG&A for 2025 decreased 9%, compared to the prior year, 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.

Depreciation and Amortization

Depreciation and amortization for 2024 decreased 23% compared to the prior year.

This decrease was primarily driven by the impact of the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses, a prior year write-off of capitalized software costs in our Commercial segment totaling $25 million, older assets becoming fully depreciated and planned lower capital investments in the past few years.

Depreciation and amortization for 2025 decreased 5% compared to the prior year, primarily due to the sale of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

This decrease was partially offset by increased amortization of deferred contract costs related to new projects that went live in 2025.

CNDT 2025 Annual Report

Restructuring and Related Costs

We engage in a series of restructuring programs related to downsizing 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.

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:

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Severance and related costs $ 18 $ 21

Data center consolidation costs 5 9

Termination, insourcing and asset impairment costs (2)

Total Net Current Period Charges 42 62

Consulting and other costs 4 —

Contract Termination and other costs 12 19

Asset impairments 5 6

Restructuring and Related Costs $ 35 $ 46

Reduction in headcount (1)

(1) 2023 includes costs related to the closure of one of our Commercial segment operations in Europe.

(2) Includes costs in 2024 and 2023 incurred for disengagement from a significant IT outsourcing provider.

(1) Relates to approximate headcount reductions worldwide associated with Severance and related costs.

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Interest expense represents interest on long-term debt and the amortization of debt issuance costs.

The decrease in Interest expense for 2024, compared to the prior year, was driven primarily by lower debt balances as we utilized proceeds from divestitures closed in 2024 to voluntarily prepay all of our Term Loan B and a portion of our Term Loan A.

The decrease in Interest expense for 2025, compared to the prior year, was 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.

The remaining Term Loan A balance was repaid at the execution of Amendment No.

3 to the Credit Facility.

Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information.

CNDT 2024 Annual Report

Goodwill Impairment

The goodwill impairment for 2024 is related to the write-down of the Transportation reporting unit's goodwill arising from the annual goodwill impairment test.

The impairment in 2023 is related to the write-down of the carrying value of the Commercial reporting unit.

This resulted from the evaluation of goodwill triggered by entering into the Custodial Transfer and Asset Purchase Agreement to transfer our BenefitWallet Portfolio.

Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on these impairments.

Refer to Note 7 – Goodwill to the Consolidated Financial Statements for additional information on this impairment.

(Gain) Loss on Divestitures and Transaction Costs

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Additionally, we recorded a $3 million gain adjustment related to a prior year divestiture following the partial settlement of the Skyview matter.

This financial statement line also includes professional fees and other costs associated with both consummated and non-consummated transactions totaling $30 million and $10 million in 2024 and 2023, respectively.

The 2024 amount also includes a $2 million reimbursement of previously incurred legal fees related to the partial settlement of the Skyview matter.

Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.

(Gain) loss on divestitures and transaction costs, net also includes professional fees and other costs associated with both consummated and non-consummated transactions totaling $9 million and $28 million in 2025 and 2024, respectively.

Refer to Note 4 – Divestitures and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.

Litigation Settlements (Recoveries), Net

Litigation settlements (recoveries), net for 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter and an $8 million reversal of reserves related to our former student loan business.

There were no individually significant items in 2024.

Litigation settlements (recoveries), net for 2025 and 2024 were not material.

Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.

Other (Income) Expenses, Net

Other (income) expenses, net for 2024 and 2023 primarily includes interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains).

The increase in 2024 is primarily due to interest income of $8 million related to the partial settlement of the Skyview matter.

Other (income) expenses, net for 2025 and 2024 primarily include interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains).

In 2025, interest income on invested cash was lower due to lower available cash and foreign currency transaction losses were higher due to unfavorable movements in foreign exchange rates, primarily the weakening of the U.S.

dollar against certain foreign currencies during the year.

In 2024, Other (income) expenses, net also included interest income of $8 million related to the partial settlement of the Skyview matter.

Refer to Note 15 – Contingencies and Litigation in the Consolidated Financial Statements for additional information.

In the fourth quarter of 2024, we implemented an internal reorganization in which we sold a portion of our top tier foreign holding company to a lower tier subsidiary.

This transaction and a subsequent tax election to treat the holding company as a partnership resulted in recognition of a built-in capital loss for tax purposes that offset capital gains from divestitures resulting in net tax savings of $59 million.

The determination of the tax characteristic of this transaction requires management to make judgments about the application of tax laws and regulations.

The United States Internal Revenue Service could determine a different tax treatment that would have an adverse impact on the Company.

However, the Company has obtained advice from its third-party advisor concluding that the current tax treatment should prevail on its merits.

CNDT 2025 Annual Report

The 2025 effective tax rate was (6.1)%, compared to 15.5% for 2024.

The 2025 rate was lower than the U.S.

statutory rate of 21% due to favorable permanent adjustments from the internal reorganization and outside basis on a stock sale partially offset by the non-deductible Transportation reporting unit goodwill impairment, tax reserves and geographic mix of income.

statutory rate of 21% primarily due to valuation allowances, geographic mix of income and discrete taxes.

The 2024 rate was lower than the U.S.

statutory rate of 21%, primarily due to the non-deductible Commercial reporting unit goodwill impairment, geographic mix of income and return to provision adjustments, partially offset by tax benefits related to tax settlements and reversal of reserves.

Excluding the impact of the internal reorganization, divestitures, goodwill impairment, amortization of intangible assets, restructuring costs and certain discrete tax items, the normalized effective tax rate for 2024 was 21.2%.

The 2023 rate was 107.3% excluding the impact of goodwill impairment, amortization of intangible assets, restructuring, litigation reserve releases and certain discrete tax items.

The rate was anomalous due to small adjusted pre-tax loss and tax which is a result of geographic mix of income and valuation allowances against losses in certain jurisdictions resulting in no tax benefit.

CNDT 2024 Annual Report

statutory rate of 21%, primarily due to favorable permanent differences from an internal reorganization and outside basis on a stock sale partially offset by non-deductible Transportation reporting unit goodwill impairment, tax reserves and geographic mix of income.

Excluding the impact of amortization, restructuring, divestitures, transaction costs, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for 2025 was 25.4%.

The normalized effective tax rate for 2024 was 21.2% excluding the impact of the internal reorganization, divestitures, goodwill impairment, amortization of intangible assets, restructuring costs and certain discrete tax items.

The 2025 rate is higher than the 2024 rate due to increased estimated tax credits and geographic mix of income.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") 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.

The acceleration of deductions as a result of anticipated elections the Company will make for the current year following the OBBBA has increased current year net operating loss ("NOL").

The NOL has created a deferred tax asset that required a valuation allowance for U.S.

GAAP purposes in 2025.

The NOL can be carried forward indefinitely.

In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax, known as Pillar Two.

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Operations Review of Segments

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:

Our financial performance is based on Segment Profit (Loss) for the following three segments:

• Commercial,

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• 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).

For the year ended December 31, 2022, Divestitures also includes our Midas business, which was sold in the first quarter of 2022.

Divestitures include our BenefitWallet Portfolio and our Casualty Claims Solutions businesses (both of which were reclassified from our Commercial segment in 2024) and our Curbside Management and Public Safety Solutions businesses (which was reclassified from our Transportation segment in 2024).

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.

The section below provides a comparative discussion of our financial performance by segment between the years ended December 31, 2025 and 2024.

The comparative discussion of our financial performance by segment between the years ended December 31, 2023 and 2022 is also included to reflect the impact of reclassifying divested businesses from our Commercial and Transportation segments as described above.

MD&A - Operations Review of Segments in our Annual Report on Form 10-K for the year ended December 31, 2024 for a comparative discussion of our financial performance by segment between the years ended December 31, 2024 and 2023.

CNDT 2025 Annual Report

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10.5 % 21.3 % — % 26.7 % — % 5.1 %

Year Ended Dec 31, 2022

Total Revenue $ 1,769 $ 1,150 $ 562 $ 377 $ — $ 3,858

Segment profit (Loss) $ 71 $ 294 $ 34 $ 70 $ (293) $ 176

Segment depreciation and amortization $ 94 $ 37 $ 21 $ 22 $ 46 $ 220

Adjusted EBITDA (1)

$ 165 $ 331 $ 55 $ 92 $ (247) $ 396

% of Total Revenue 45.8 % 29.8 % 14.6 % 9.8 % — % 100.0 %

Adjusted EBITDA Margin (1)(2)

9.3 % 28.8 % 9.8 % 24.4 % — % 10.3 %

(1) Refer to "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure.

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Segment depreciation and amortization (195) (202)

Direct response costs - cyber event (25) —

Other adjustments (1)

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Income (Loss) Before Income Taxes $ (160) $ 504

(1) The 2024 amount represents a termination for convenience fee related to the termination of Convergint as a subcontractor for our State of Victoria contract.

The 2023 amount represents a termination for convenience fee related to the termination of a contract with a significant IT outsourcing provider.

Both the 2024 and 2023 items are reported in Cost of Services on the Consolidated Statements of Income.

CNDT 2024 Annual Report

(1) The 2024 amount represents a termination for convenience fee related to the termination of Convergint as a subcontractor for our State of Victoria contract and is reported in Cost of Services on the Consolidated Statements of Income.

Commercial Segment

Commercial segment revenue for 2024 decreased, compared to the prior year, driven by lost business and lower volumes in certain industries within our client base, partially offset by new business ramp.

Commercial segment revenue for 2023 decreased, compared to the prior year, driven by lost business, lower volumes in certain industries within our client base and non-repeating items in the prior year, partially offset by new business ramp.

Commercial segment revenue for 2025 decreased by 6%, compared to the prior year, driven by contract losses and lower volumes, partially offset by new business ramps and multi-year licensing agreements with existing customers.

CNDT 2025 Annual Report

Segment Profit and Adjusted EBITDA

Commercial segment profit and Adjusted EBITDA for 2024 increased compared to the prior year primarily due to new business ramp and cost efficiencies, partially offset the impact of lost business and lower volumes.

Commercial segment profit also benefited from the absence of the prior year impact of a write-off of capitalized software totaling $25 million stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution as well as fully amortized assets.

Commercial segment profit for 2023 decreased compared to the prior year driven by a write-off of capitalized software totaling $25 million described above.

Commercial segment Adjusted EBITDA for 2023 was unchanged from the prior year.

Commercial segment profit and Adjusted EBITDA for 2025 decreased compared to the prior year 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

Government segment revenue for 2024 decreased, compared to the prior year, attributable to lost business, primarily in our Government Healthcare business, and lower volumes in our Government Services business due to the change in funding mechanism for the Electronic Benefits Transfer ("EBT") programs, partially offset by new business ramp.

Government segment revenue for 2023 decreased, compared to the prior year, primarily driven by lost business from prior years, non-repeating federal stimulus revenue in the prior year and the impact of an out of period adjustment of $7 million in the first quarter of 2023.

These were partially offset by the ramping of new business in Government Healthcare solutions, higher volumes in Government services solutions and a contractual change to a client implementation positively impacting revenue recognition.

Government segment revenue for 2025 decreased, compared to the prior year, primarily due to contract losses, lower volumes and the impacts from a U.S.

federal government shutdown during the fourth quarter of 2025, as well as the completion or extension of several implementations.

These declines were partially offset by ramp of new business.

Segment Profit and Adjusted EBITDA

Government segment profit and Adjusted EBITDA for 2024 decreased compared to the prior year, primarily due to the impact of lost business and the lower volumes mentioned above and the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year, partially offset by cost efficiencies.

Government segment profit for 2023 decreased slightly compared to the prior year and was impacted by lost business, the high margin non-repeating federal stimulus revenue in the prior year and the out of period adjustment in the first quarter of 2023 as well as by higher depreciation driven by the deployment of our new modularized CMdS platform in our Government Healthcare Solutions business.

Government segment adjusted EBITDA for 2023 decreased slightly compared to the prior year due to the Government segment profit drivers, excluding depreciation, mentioned above.

These were partially offset by the $17 million reversal of reserves due to the settlement of the Cognizant matter, a contractual change to a client implementation positively impacting revenue recognition and cost efficiency.

Government segment profit, Adjusted EBITDA and Adjusted EBITDA margin for 2025 increased compared to the prior year.

Government segment Adjusted EBITDA margin increased by 270 basis points compared to the prior year, primarily due to cost efficiencies and lower expenses resulting from AI-enabled fraud prevention activities in our Government Services business.

Transportation Segment

Transportation revenue for 2024 increased compared to the prior year, primarily driven by the ramp of new business and improved operational performance with fewer delays from extended completion timelines compared to the prior year, partially offset by lost business, a Tolling customer price decrease and lower volumes.

CNDT 2024 Annual Report

Transportation revenue for 2023 decreased compared to the prior year, primarily driven by extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue, the completion of smaller projects in our Transit solutions service offering and lost business from prior years, partially offset by new business and favorable exchange rate movement, particularly the Euro.

Transportation revenue for 2025 increased compared to the prior year, primarily driven by a contract amendment with a Transit Solutions customer, increased volumes and favorable exchange rate movements.

These increases were partially offset by the non-retained portion of a Road Usage Charging contract, and lower activity across certain smaller projects.

Segment Profit and Adjusted EBITDA

Transportation segment profit and adjusted EBITDA for 2024 decreased compared to the prior year.

This was primarily due to a Tolling contract with decreased price and lower volumes attributable to a portion of the contract not being retained.

This was partially offset by improved operational performance and reduced impact from extended implementation timelines compared to the prior year.

Transportation segment profit, adjusted EBITDA and adjusted EBITDA margin for 2023 all decreased primarily due to extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue and the completion of smaller projects in our Transit solutions service offering.

Transportation segment profit and Adjusted EBITDA for 2025 increased compared to the prior year due to the revenue drivers mentioned above and the absence of costs to transition the non-retained portion of a Road Usage Charging contract.

Revenue, Segment Profit (Loss) and Adjusted EBITDA

The decrease in revenue, segment profit and Adjusted EBITDA for 2024 was due to the BenefitWallet Portfolio, the Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions businesses being included for a full year in the prior year period whereas their results were only included until the date of their transfer and sale, as applicable, in 2024.

The increase in revenue, segment profit and Adjusted EBITDA for 2023 was primarily due to higher interest rates positively affecting the BenefitWallet business in 2023.

The decrease in revenue, segment profit and Adjusted EBITDA for 2025 as compared to the prior year 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 2024 decreased compared to the prior year primarily due to cost savings from insourcing certain technology functions, lower networking and corporate IT costs and lower depreciation costs as certain data center assets became fully depreciated.

Unallocated Costs for 2023 increased compared to the prior year primarily due to the prior year reflecting the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, and vendor credits earned in the prior year.

Unallocated Costs for 2025 decreased compared to the prior year 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.

These factors were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event and increase in medical expenses resulting from higher claims costs.

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.

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The metrics for all periods presented below have been recast to remove the activity related to the BenefitWallet Portfolio, the Casualty Claims Solutions business and the Curbside Management and Public Safety Solutions businesses.

CNDT 2025 Annual Report

Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.

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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 2024 Annual Report

Signing information for the years ended December 31, 2025 and 2024 is as follows:

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The total new business pipeline at the end of December 31, 2025 and 2024 was $3.2 billion and $3.1 billion, respectively.

Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.

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.

New business pipeline levels were stable year over year and were not a primary driver of period-over-period revenue or Net ARR performance.

Net ARR Activity

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This metric is not indicative of any specific 12-month timeframe.

Net ARR results during the year, including in the second, third and fourth quarters, were primarily influenced by the cadence of renewals and client losses, rather than new-business performance.

The Net ARR Activity metric for the trailing twelve months for each of the prior five quarters was as follows:

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As of December 31, 2025 and 2024, total cash and cash equivalents were $233 million (of which approximately $115 million was cash in foreign locations) and $366 million (of which approximately $140 million was cash in foreign locations), respectively.

We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $11 million has been utilized for letters of credit as of December 31, 2024.

We also have a $357 million Revolving Credit Facility (reducing to $187 million in October 2026) for our various cash needs, of which $109 million has been utilized for borrowings and $25 million has been utilized for letters of credit as of December 31, 2025.

The amount of borrowings outstanding under the Revolving Credit Facility at each quarter-end may be limited by our leverage covenant.

In February 2025, the Company borrowed $50 million under the Revolving Credit Facility for working capital purposes.

As of December 31, 2024, there was a total of $608 million of outstanding borrowings under our Term Loan A and Senior Notes, of which $14 million was due within one year.

In January 2026, the Company borrowed an additional $25 million under the Revolving Credit Facility for working capital purposes.

As of December 31, 2025, there was a total of $520 million of outstanding borrowings under our Senior Notes, none of which was due within one year.

Additionally, as of December 31, 2025, we had $22 million of finance lease and other debt due within one year.

We have the ability and intent to refinance the amount outstanding under our Revolving Credit Facility on a long-term basis;

therefore all amounts outstanding as of December 31, 2025 are classified as long-term on our Consolidated Balance Sheets.

Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information regarding our debt.

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Operating Activities

The net decrease in cash flow provided by operating activities of $139 million was primarily related to lower Adjusted EBITDA due to divestitures and higher cash taxes, partially offset by improved accounts receivable Days Sales Outstanding and lower cash interest expense.

The net increase in cash flow used in operating activities of $23 million was primarily related to unfavorable working capital changes and cash outflows related to the January 2025 Cyber Event, partially offset by lower cash tax outflows and lower net interest payments.

Investing Activities

The increase in cash provided by investing activities of $888 million was primarily due to the proceeds from our 2024 divestitures of $830 million and proceeds from the settlement of the Skyview matter related to notes receivable of $21 million.

In addition, there was a planned decrease in capital spending in the current year.

The decrease in cash provided by investing activities of $823 million was primarily due to the proceeds from our divestitures of $830 million and proceeds from the settlement of the Skyview matter related to notes receivable of $21 million in 2024.

In addition, there was a planned increase in capital spending in the current year of $25 million.

The 2025 period includes $50 million of cash received related to the non-interest-bearing note from the Curbside Disposal Group divestiture.

Financing Activities

The increase in cash used in financing activities was mainly driven by the $642 million early repayment of Term Loan B and Term Loan A utilizing funds received from our divestitures.

In addition, $132 million was utilized to purchase all of the common shares owned by the Icahn Parties.

The decrease in cash used in financing activities was mainly driven by the $642 million early repayment of Term Loan B and Term Loan A in 2024 utilizing funds received from our divestitures.

In addition, in 2024 $132 million was utilized to purchase all the common shares owned by the Icahn Parties.

The 2025 period includes a $25 million drawdown on our revolving line of credit for working capital purposes.

Sales of Accounts Receivable

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The net impact from the sales of accounts receivable represents the difference between current and prior year fourth quarter accounts receivable sales adjusted for the effects of collections prior to the end of the year.

CNDT 2025 Annual Report

Financial Instruments

Refer to Note 11 – Financial Instruments to the Consolidated Financial Statements for additional information.

CNDT 2024 Annual Report

Material Cash Requirements from Contractual Obligations

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Operating Leases

In the ordinary course of business, we enter into operating lease arrangements for certain equipment and facilities.

In the ordinary course of business, we enter operating lease arrangements for certain equipment and facilities.

As of December 31, 2025, total fixed lease payables were $182 million, of which $61 million was due within 12 months.

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the Employee Retirement Income Security Act ("ERISA");

data privacy and cybersecurity laws;

and other laws and regulations.

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Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information.

CNDT 2025 Annual Report

Off-Balance Sheet Arrangements

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In addition, refer to the preceding discussion of the Company's contractual cash obligations and other commercial commitments and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information regarding contingencies, guarantees and indemnifications.

CNDT 2024 Annual Report

Critical Accounting Estimates and Policies

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However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

Senior management has discussed the development and selection of the critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Board of Directors.

Senior management has discussed the development and selection of critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Board of Directors.

We consider these as critical to understanding our Consolidated Financial Statements, as their application places the most significant demands on management's judgment, since financial reporting results rely on estimates of the effects of matters that are inherently uncertain.

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Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated adverse events or conditions impacting revenues, cash flows or profitability, unanticipated competitive activities and acts by governments and courts.

Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information regarding our goodwill policies.

Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 7 – Goodwill to the Consolidated Financial Statements for additional information regarding our goodwill policies.

Application of the interim and annual goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and the assessment of the fair value of each reporting unit.

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Our annual quantitative impairment test of goodwill was performed as of October 1, 2025.

CNDT 2025 Annual Report

Goodwill is tested for impairment using a qualitative assessment and/or a quantitative assessment.

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In addition, we are required to make certain assumptions and estimates regarding the current economic environment, industry factors and the future profitability of our businesses.

CNDT 2024 Annual Report

When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected financial information and discount rates that are developed using market participant-based assumptions.

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If we used different assumptions for discount rates or long-term organic growth rates in this annual assessment, our calculated fair values of our Government reporting unit could be higher or lower which could result in a goodwill impairment.

Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on the impairment of the remaining goodwill in our Transportation reporting unit.

We are subject to income taxes in the United States and numerous foreign jurisdictions.

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Compensation of our executives is based in part on the performance of our business based on certain of these non-GAAP measures.

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.

A reconciliation of the non-GAAP financial measures Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable financial measures calculated and presented in accordance with U.S.

GAAP are provided in the Segment Performance Review above.

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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 January 2025 Cyber Event.

• Other charges (credits).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis