CONDUENT Inc 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Conduent Incorporated Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Conduent Incorporated and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of income (loss), of comprehensive income (loss), of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2025 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made CNDT 2025 Annual Report 47 Table of Contents only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition for Certain Revenue As described in Notes 1 and 2 to the consolidated financial statements, the Company’s total revenue was $3,042 million for the year ended December 31, 2025, of which a significant portion relates to certain revenue. Typically, the Company’s contracts include performance obligation(s) to stand-ready on a daily or monthly basis to provide services to the customers. Under a stand-ready obligation, the evaluation of the nature of the Company’s performance obligation is focused on each time increment rather than the underlying activities. Accordingly, the promise to stand-ready is accounted for as a single-series performance obligation. Once management determines the performance obligations, management determines the transaction price, which is based on fixed and/or variable consideration. The Company typically satisfies its performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because the nature of the Company’s promise is a stand-ready service and efforts are expended evenly throughout the period. The principal consideration for our determination that performing procedures relating to revenue recognition for certain revenue is a critical audit matter is a high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company’s revenue recognition for certain revenue. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others (i) testing revenue recognized, on a sample basis, by (a) obtaining and inspecting source documents, such as contracts, invoices, evidence of satisfaction of performance obligations, and where applicable, cash receipts, (b) where applicable, confirming services provided with the customer when payment has not been received for invoices, and (c) recalculating revenue recognized and (ii) confirming, on a sample basis, outstanding customer invoice balances as of December 31, 2025 and for confirmations not returned, and for invoices which have been paid, obtaining and inspecting subsequent cash receipts, or for invoices not yet paid, obtaining and inspecting source documents, such as contracts, invoices, and where applicable, evidence of satisfaction of performance obligations. /s/ PricewaterhouseCoopers LLP New York, New York February 19, 2026 We have served as the Company’s auditor since 2016. CNDT 2025 Annual Report 48 Table of Contents REPORTS OF MANAGEMENT Management's Responsibility for Financial Statements Our management is responsible for the integrity and objectivity of all information presented in this annual report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management's best estimates and judgments. Management believes the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements fairly represent the Company's financial position and results of operations. The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly with the independent registered public accountants, PricewaterhouseCoopers LLP, the internal auditors and representatives of management to review accounting, financial reporting, internal control and audit matters, as well as the nature and extent of the audit effort. The Audit Committee is responsible for the engagement of the independent registered public accountants. The independent registered public accountants and internal auditors have free access to the Audit Committee. /s/ HARSHA V. AGADI /s/ GILES GOODBURN President and Chief Executive Officer Executive Vice President and Chief Financial Officer /s/ GEORGE ABATE Vice President and Chief Accounting Officer CNDT 2025 Annual Report 49 Table of Contents CONDUENT INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (LOSS) Year Ended December 31, (in millions, except per-share data) 2025 2024 2023 Revenue $ 3,042 $ 3,356 $ 3,722 Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 2,490 2,730 2,888 Selling, general and administrative (excluding depreciation and amortization) 412 455 458 Research and development (excluding depreciation and amortization) 4 6 7 Depreciation and amortization 194 204 264 Restructuring and related costs 35 46 62 Interest expense 48 75 111 Goodwill impairment — 28 287 (Gain) loss on divestitures and transaction costs, net 11 ( 696 ) 10 Litigation settlements (recoveries), net ( 1 ) 9 ( 30 ) Loss on extinguishment of debt 1 8 — Other (income) expenses, net 8 ( 13 ) ( 3 ) Total Operating Costs and Expenses 3,202 2,852 4,054 Income (Loss) Before Income Taxes ( 160 ) 504 ( 332 ) Income tax expense (benefit) 10 78 ( 36 ) Net Income (Loss) $ ( 170 ) $ 426 $ ( 296 ) Net Income (Loss) per Share: Basic $ ( 1.14 ) $ 2.28 $ ( 1.41 ) Diluted $ ( 1.14 ) $ 2.23 $ ( 1.41 ) The accompanying notes are an integral part of these Consolidated Financial Statements. CNDT 2025 Annual Report 50 Table of Contents CONDUENT INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (in millions) 2025 2024 2023 Net Income (Loss) $ ( 170 ) $ 426 $ ( 296 ) Other Comprehensive Income (Loss), Net (1) Currency translation adjustments, net 34 ( 37 ) 31 Unrecognized gains (losses), net ( 1 ) ( 1 ) 1 Changes in benefit plans, net 2 1 ( 1 ) Other Comprehensive Income (Loss), Net 35 ( 37 ) 31 Comprehensive Income (Loss), Net $ ( 135 ) $ 389 $ ( 265 ) __________ (1) All amounts are net of tax. Tax effects were immaterial. Refer to Note 18 – Other Comprehensive Income (Loss) for information about pre-tax amounts. The accompanying notes are an integral part of these Consolidated Financial Statements. CNDT 2025 Annual Report 51 Table of Contents CONDUENT INCORPORATED CONSOLIDATED BALANCE SHEETS December 31, (in millions, except share data in thousands) 2025 2024 Assets Cash and cash equivalents $ 233 $ 366 Accounts receivable, net 500 493 Contract assets 123 132 Other current assets 213 261 Total current assets 1,069 1,252 Land, buildings and equipment, net 181 167 Operating lease right-of-use assets 136 169 Deferred contract costs, net 128 126 Goodwill 617 609 Other long-term assets 266 276 Total Assets $ 2,397 $ 2,599 Liabilities and Equity Current portion of long-term debt $ 22 $ 24 Accounts payable 142 157 Accrued compensation and benefits costs 173 170 Contract liabilities 74 103 Other current liabilities 270 290 Total current liabilities 681 744 Long-term debt 665 615 Deferred taxes 19 24 Operating lease liabilities 102 138 Other long-term liabilities 103 93 Total Liabilities 1,570 1,614 Contingencies (See Note 15) Series A convertible preferred stock 142 142 Common stock 2 2 Treasury stock, at cost ( 235 ) ( 210 ) Additional paid-in capital 3,968 3,952 Retained earnings (deficit) ( 2,613 ) ( 2,433 ) Accumulated other comprehensive loss ( 437 ) ( 472 ) Total Conduent Inc. Equity 685 839 Non-controlling Interest — 4 Total Equity 685 843 Total Liabilities and Equity $ 2,397 $ 2,599 Shares of common stock issued and outstanding 154,709 161,829 Shares of series A convertible preferred stock issued and outstanding 120 120 Shares of common stock held in treasury 70,097 60,868 The accompanying notes are an integral part of these Consolidated Financial Statements. CNDT 2025 Annual Report 52 Table of Contents CONDUENT INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in millions) 2025 2024 2023 Cash Flows from Operating Activities: Net income (loss) $ ( 170 ) $ 426 $ ( 296 ) Adjustments required to reconcile net loss to cash flows from operating activities: Depreciation and amortization 194 204 264 Contract inducement amortization 3 3 3 Goodwill impairment — 28 287 Deferred income taxes ( 22 ) ( 5 ) ( 54 ) Amortization of debt financing costs 1 3 4 Loss on extinguishment of debt 1 8 — (Gain) loss on divestitures and sales of fixed assets, net 2 ( 724 ) — Stock-based compensation 19 19 19 Changes in operating assets and liabilities: Accounts receivable 2 34 26 Other current and long-term assets ( 33 ) ( 60 ) ( 111 ) Accounts payable and accrued compensation and benefits costs ( 12 ) ( 14 ) ( 52 ) Other current and long-term liabilities ( 60 ) ( 11 ) ( 2 ) Net change in income tax assets and liabilities 2 39 1 Net cash provided by (used in) operating activities ( 73 ) ( 50 ) 89 Cash Flows from Investing Activities: Cost of additions to land, buildings and equipment ( 59 ) ( 28 ) ( 51 ) Cost of additions to internal use software ( 22 ) ( 28 ) ( 42 ) Proceeds from divestitures 53 851 — Net cash provided by (used in) investing activities ( 28 ) 795 ( 93 ) Cash Flows from Financing Activities: Proceeds from revolving credit facility 259 80 — Proceeds from the issuance of debt, net 5 — — Payments of debt issuance costs ( 4 ) — — Payments of revolving credit facility ( 150 ) ( 80 ) — Payments of debt ( 105 ) ( 676 ) ( 41 ) Treasury stock purchases ( 25 ) ( 182 ) ( 27 ) Excise tax payment on treasury stock purchases ( 2 ) — — Taxes paid for settlement of stock-based compensation ( 2 ) ( 9 ) ( 7 ) Dividends paid on preferred stock ( 10 ) ( 10 ) ( 10 ) (Repurchase of) contribution from noncontrolling interest ( 5 ) — 4 Net cash provided by (used in) financing activities ( 39 ) ( 877 ) ( 81 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 6 ( 10 ) 6 Increase (decrease) in cash, cash equivalents and restricted cash ( 134 ) ( 142 ) ( 79 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 377 519 598 Cash, Cash Equivalents and Restricted Cash at End of period (1) $ 243 $ 377 $ 519 ___________ (1) Includes $ 10 million, $ 11 million and $ 21 million of restricted cash as of the years ended December 31, 2025, 2024 and 2023, respectively, that was included in Other current assets on their respective Consolidated Balance Sheets. The accompanying notes are an integral part of these Consolidated Financial Statements. CNDT 2025 Annual Report 53 Table of Contents CONDUENT INCORPORATED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in millions) Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings AOCL (1) Non-controlling Interest Shareholders’ Equity Balance at December 31, 2022 $ 2 $ — $ 3,924 $ ( 2,543 ) $ ( 466 ) $ — $ 917 Dividend - preferred stock, $ 80 /per share — — — ( 10 ) — — ( 10 ) Stock incentive plans, net — — 14 — — — 14 Treasury stock purchases — ( 27 ) — — — — ( 27 ) Contribution from noncontrolling interest — — — — — 4 4 Comprehensive Income (Loss): Net Loss — — — ( 296 ) — — ( 296 ) Other comprehensive income (loss), net — — — — 31 — 31 Total Comprehensive Income (Loss), Net — — — ( 296 ) 31 — ( 265 ) Balance at December 31, 2023 $ 2 $ ( 27 ) $ 3,938 $ ( 2,849 ) $ ( 435 ) $ 4 $ 633 Dividend - preferred stock, $ 80 /per share — — — ( 10 ) — — ( 10 ) Stock incentive plans, net — — 14 — — — 14 Treasury stock purchases — ( 183 ) — — — — ( 183 ) Contribution from noncontrolling interest — — — — — — — Comprehensive Income (Loss): Net Loss — — — 426 — — 426 Other comprehensive income (loss), net — — — — ( 37 ) — ( 37 ) Total Comprehensive Income (Loss), Net — — — 426 ( 37 ) — 389 Balance at December 31, 2024 $ 2 $ ( 210 ) $ 3,952 $ ( 2,433 ) $ ( 472 ) $ 4 $ 843 Dividend - preferred stock, $ 80 /per share — — — ( 10 ) — — ( 10 ) Stock incentive plans, net — — 17 — — — 17 Treasury stock purchases — ( 25 ) — — — — ( 25 ) Buyback of noncontrolling interest — — ( 1 ) — — ( 4 ) ( 5 ) Comprehensive Income (Loss): Net Income — — — ( 170 ) — — ( 170 ) Other comprehensive income (loss), net — — — — 35 — 35 Total Comprehensive Income (Loss), Net — — — ( 170 ) 35 — ( 135 ) Balance at December 31, 2025 $ 2 $ ( 235 ) $ 3,968 $ ( 2,613 ) $ ( 437 ) $ — $ 685 ___________ (1) AOCL - Accumulated other comprehensive loss. The accompanying notes are an integral part of these Consolidated Financial Statements. CNDT 2025 Annual Report 54 Table of Contents CONDUENT INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 – Basis of Presentation and Summary of Significant Accounting Policies 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 51,000 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 Company's Consolidated Financial Statements included the historical basis of assets, liabilities, revenues and expenses of the individual businesses of the Company, including joint ventures and partnerships over which the Company has a controlling financial interest. The Company has prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the SEC. Certain reclassifications have been made to prior years' amounts to conform to the current year presentation. All intercompany transactions and balances have been eliminated. In the first quarter of 2023, the Company identified an error and recorded an out-of-period adjustment to correct the recognition of revenue on a Government segment contract that originated in 2020 and impacted all quarterly periods through December 31, 2022. This adjustment resulted in a reduction to revenue and income (loss) before income taxes of $ 7 million and a corresponding decrease to accounts receivable of $ 1 million and an increase to other current liabilities of $ 6 million in the first quarter of 2023. The Company evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously issued interim or annual consolidated financial statements and the adjustment was not material to the year ending December 31, 2023. The Company has evaluated subsequent events through February 19, 2026. The common stock of Conduent trades on the Nasdaq Global Select Market ("Nasdaq") under the ticker "CNDT". Use of Estimates The Company prepared the Consolidated Financial Statements using financial information available at the time of preparation, which requires it to make estimates and assumptions that affect the amounts reported. The Company's most significant estimates pertain to valuation of goodwill, contingencies and litigation and income taxes. These estimates are based on management's best knowledge of current events, historical experience, and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. New Accounting Standards Disaggregation of Income Statement Expenses: In November 2024, the Financial Accounting Standards Board ("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 Consolidated Financial Statements. CNDT 2025 Annual Report 55 Table of Contents Internal-use Software : In September 2025, the FASB issued final guidance designed to modernize the accounting for software costs that are accounted for as "internal-use software." This new guidance removes all previous references to project stages. It requires capitalization of software costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new guidance is effective for annual and interim periods beginning after December 15, 2027. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact that this new standard will have on its Consolidated Financial Statements. Recently Adopted Accounting Standards 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. As allowed by the guidance, the Company adopted this guidance prospectively effective January 1, 2025. As the guidance is disclosure related, adoption did not have any impact on the Company's Consolidated Financial Statements. The required disclosure is included in Note 14 – Income Taxes. Summary of Accounting Policies Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, including money market funds and investments with original maturities of three months or less. Restricted cash is primarily comprised of cash collected on accounts receivable that have been factored but not yet remitted to third-party institutions. The Company includes restricted cash in Other current assets and the corresponding liability is included in Other current liabilities in its Consolidated Balance Sheets. Accounts Receivable, Net and Receivable Sales Credit risk has not historically been significant to the Company's business due to the nature of its customers, which are state and federal governments, public sector, and large commercial corporations. The Company believes that the credit risk associated with its receivables is limited due to the creditworthiness of its customers. Allowances for credit losses were less than $ 1.0 million at December 31, 2025 or 2024. The Company enters into factoring agreements in the normal course of business as part of our cash and liquidity management, to sell certain accounts receivable without recourse to third-party financial institutions. These transactions are treated as a sale and are accounted for as a reduction in accounts receivable because the agreement transfers effective control over, and risk related to, the receivables to the buyers. Cash proceeds from this arrangement are included in cash flow from operating activities in the Consolidated Statements of Cash Flows. In 2025, 2024 and 2023, the Company sold certain accounts receivable and derecognized the corresponding receivable balance. Accounts receivable sales for the years ended December 31, 2025 and 2024 were $ 875 million and $ 624 million, respectively. Assets/Liabilities Held for Sale The Company classifies assets as held for sale in the period when the following conditions are met: (i) management, having the authority to approve the action, commits to a plan to sell the asset (disposal group); (ii) the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal group); (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; (iv) the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset (disposal group) beyond one year; (v) the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. CNDT 2025 Annual Report 56 Table of Contents A long-lived asset (disposal group) that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset (disposal group) until the date of sale. The fair value of a long-lived asset (disposal group) less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the asset (disposal group), as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale. Refer to Note 4 – Divestitures to the Consolidated Financial Statements for additional information. Land, Buildings and Equipment Land, buildings and equipment are recorded at cost. Buildings and equipment are depreciated over their estimated useful lives. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life. Significant improvements are capitalized and maintenance and repairs are expensed when incurred. Refer to Note 5 – Land, Buildings, Equipment and Software, Net for further discussion. Internal Use and Product Software Internal Use Software: The Company capitalizes direct costs associated with developing, purchasing or otherwise acquiring software for internal use and amortizes these costs on a straight-line basis over the estimated useful life of the software, beginning when the software is implemented. Costs for upgrades and enhancements that will not result in additional functionality are expensed as incurred. Amounts paid for Internal Use Software are included in Cash Flows from Investing Activities. Produc t Software : The Company expenses product software costs to Research and development prior to technological feasibility. Upon reaching technological feasibility, certain costs related to the development of software solutions to be sold to its customers are capitalized. These costs are amortized on a straight-line basis over the estimated economic life of the software. Amounts paid for Product Software are included in Cash Flows from Operating activities. The Company performs annual reviews to ensure that unamortized Product Software costs remain recoverable from estimated future operating profits (net realizable value). Costs to support or service licensed software are charged to Costs of services as incurred. Internal use and Product software are included in Other long-term assets on the Company's Consolidated Balance Sheets. Refer to Note 5 – Land, Buildings, Equipment and Software, Net and Note 9 – Supplementary Financial Information for further information. Leases The Company determines if an arrangement is a lease at the inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company has operating and finance leases for real estate and equipment. Operating leases are included in Operating lease right of use ("ROU") assets, Other current liabilities, and Operating lease liabilities in the Company's Consolidated Balance Sheets. Finance leases are included in Land, buildings and equipment, net, Current portion of long-term debt, and Long-term debt in the Company's Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of lease payments over the lease term using the Company’s incremental borrowing rates as the Company's leases generally do not provide an implicit rate. The incremental borrowing rate represents an estimate of the interest rate that the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option based on economic factors. The Company recognizes operating fixed lease expense and finance lease depreciation on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Leases with an initial term of one CNDT 2025 Annual Report 57 Table of Contents year or less are expensed on a straight-line basis over the lease term. The Company accounts for lease and non-lease components separately for its equipment leases, based on the estimated standalone price of each component, and combines lease and non-lease components for its real estate leases. Refer to Note 6 – Leases for further information. Contingencies and Litigation The Company is currently involved in various claims and legal proceedings. At least quarterly, it reviews the status of each significant matter and assesses its potential financial exposure considering all available information including, but not limited to, the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. The estimated losses are recorded within Litigation settlements (recoveries), net in the Company's income statement. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates. These revisions in the estimates of potential liabilities could have a material impact on the results of operations and financial position. The Company's policy is to expense legal defense costs related to such matters as incurred. These costs are recorded within Selling, general and administrative expenses in the Company's income statement. Any insurance recoveries for litigation settlements and defense costs are recorded when such recoveries are deemed probable and collectability is reasonably assured. Such recoveries are recorded in the same financial statement line as the related costs to which the recoveries relate. Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information regarding loss contingencies. Goodwill For acquired businesses, the Company records the acquired assets and assumed liabilities based on their relative fair values at the date of acquisitions (commonly referred to as the purchase price allocation). Goodwill represents the excess of the purchase price paid in excess of the fair value of net tangible and intangible assets acquired. For the Company’s business acquisitions, the purchase price is allocated to identifiable intangible assets separate from goodwill if they are from contractual or other legal rights, or if they could be separated from the acquired business and sold, transferred, licensed, rented or exchanged. The Company tests goodwill for impairment annually as of October 1st, or more frequently if an event or change in circumstances indicate the asset may be impaired. Impairment testing for goodwill is performed at the reporting unit level using a qualitative and/or quantitative assessment. For the quantitative assessment, the Company determines the fair value of its reporting units utilizing a combination of both an Income Approach and a Market Approach. The Income Approach applies a discounted cash flow analysis based on forecasted future business results of the reporting units. The Market Approach utilizes the guideline public company method. These valuation approaches require significant judgment and consider several factors that include, but are not limited to, expected future cash flows, growth rates and discount rates and comparable multiples from publicly traded companies in our industry. In addition, the Company is required to make certain assumptions and estimates regarding the current economic environment, industry factors and the future profitability of its businesses. When performing its discounted cash flow analysis for each reporting unit, the Company incorporates the use of projected financial information and discount rates that are developed using market participant-based assumptions. The cash-flow projections are based on three-year financial forecasts developed by management that include revenue and expense projections, restructuring activities, capital spending trends and investment in working capital to support anticipated revenue growth or other changes in the business. The selected discount rates consider the risk and nature of the respective reporting units' cash flows, appropriate capital structure and rates of return that market participants would require to invest their capital in our reporting units. The Company believes these assumptions are appropriate and reflect its forecasted long-term business model and considers its historical results as well as the current economic environment and markets that the Company serves. The most significant assumptions used in the goodwill analysis relate to discount rates and long-term organic growth rates. CNDT 2025 Annual Report 58 Table of Contents Refer to Note 7 – Goodwill for further information. Impairment of Long-Lived Assets The Company reviews the recoverability of its long-lived assets, including buildings, equipment, internal use software, product software, right-of-use assets and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset from the expected future cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company's primary measure of fair value is based on forecasted cash flows. Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are based on differences between U.S. GAAP reporting and tax bases of assets or liabilities and based on current tax laws, regulations and rates. The recognition of deferred tax assets requires an assessment to determine the realization of such assets. Management establishes valuation allowances on deferred tax assets when it is determined “more-likely-than-not” that some portion or all the deferred tax assets may not be realized. Management considers positive and negative evidence in evaluating the ability of the Company to realize its deferred tax assets, including its historical results and forecasts of future ability to realize its deferred tax assets, including projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. The Company is subject to ongoing tax examinations and assessments in various jurisdictions. The Company has unrecognized tax benefits for uncertain tax positions. The Company follows U.S. GAAP which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company's ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require judgment and can materially increase or decrease its effective tax rate, as well as impact its operating results. On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act ("Tax Reform"). The Tax Reform includes a tax on global intangible low-taxed income (“GILTI”), which imposes a U.S. tax on certain income earned by the Company’s foreign subsidiaries. The Company elected to treat the tax on GILTI as a period cost when incurred and therefore, no deferred taxes for GILTI were recognized for the year ended December 31, 2025. Refer to Note 14 – Income Taxes for further discussion. Share Repurchase Program On May 16, 2023, the Board of Directors authorized a share repurchase program, granting approval for the Company to repurchase up to $ 75 million of its common stock over the next three years (the "2023 Repurchase Plan"). This 2023 Repurchase Plan was completed in September 2024. On May 20, 2025, the Board of Directors authorized a new share repurchase program, granting approval for the Company to repurchase up to $ 50 million of its common stock over the next three years (the "2025 Repurchase Plan"). The Company had or has the discretion to repurchase shares periodically through open market transactions and may include Rule 10b5-1 trading plans under both the 2023 Repurchase Plan and the 2025 Repurchase Plan. Neither the 2023 Repurchase Plan nor the 2025 Repurchase Plan obligated the Company to acquire a specific number of shares and both programs were or can be modified, suspended or discontinued at any time at the Company’s discretion without prior notice. The Company holds repurchased shares of common stock as treasury stock. The Company accounts for treasury stock under the cost method and includes treasury stock as a component of shareholders' equity. The Company accrues the cost of repurchased shares and excludes such shares from the calculation of basic and diluted earnings per share, as of the trade date. The Company recognized a liability for share repurchases which had not settled and for which cash had not been paid in Other current liabilities on the Company's Consolidated Balance Sheets. CNDT 2025 Annual Report 59 Table of Contents Noncontrolling Interest The Company's Consolidated Financial Statements include the historical basis of assets, liabilities, revenues and expenses of the individual businesses of the Company, including joint ventures over which the Company has a controlling financial interest. Control is based on ownership interest. The ownership interest held by an owner other than the Company in a less than wholly owned subsidiary is classified as a non-controlling interest. Net income (loss) is allocated to the noncontrolling interest based on ownership interest. In May 2023, the Company signed a new customer contract with the State of Victoria, Australia to provide the next generation of the state's public transport ticketing system. As a result, the Company and Convergint Australia Pty Ltd (“Convergint”) entered into a shareholder agreement to form Conduent Victoria Ticketing System Pty Ltd (“Conduent Victoria”). The Company held an 80 % equity investment in Conduent Victoria and the remaining 20 % was owned by Convergint. During 2025, the Company repurchased the interest held by the minority partner for $ 5 million and Conduent Victoria became a wholly-owned subsidiary of the Company. Prior to its repurchase by the Company, noncontrolling interest in Conduent Victoria was not material to the Company's Consolidated Statements of Income (Loss) or Consolidated Statements of Comprehensive Income (Loss) for any of the periods presented. Therefore, the Company did not present any separate disclosures for such noncontrolling interest in those statements. Foreign Currency Translation The functional currency for most foreign operations is the local currency. Net assets are translated at current rates of exchange and income, expense and cash flow items are translated at average exchange rates for the applicable period. The translation adjustments are recorded in Accumulated other comprehensive loss. The U.S. Dollar is used as the functional currency for certain foreign subsidiaries that conduct their business in U.S. Dollars. A combination of current and historical exchange rates is used in re-measuring the local currency transactions of these subsidiaries and the resulting exchange adjustments are recorded in Currency (gains) and losses within Other (income) expenses, net together with other foreign currency re-measurements. Stock-based Compensation Stock-based compensation expense for stock-based awards which include restricted stock units (RSUs) and performance stock units (“PSUs") is based on the grant date fair value of those awards. Stock-based compensation expense is recognized for RSUs as shares vest over the requisite service period. Vesting of PSUs is contingent on meeting performance targets. If the minimum performance targets are not met, no compensation cost is recognized and any recognized compensation cost is reversed. Refer to Note 17 – Shareholders’ Equity for further information. Revenue Recognition The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company's contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately, versus together, may require judgment. Typically, the Company’s contracts include performance obligation(s) to stand-ready on a daily or monthly basis to provide services to the customers. Under a stand-ready obligation, the evaluation of the nature of our performance obligation is focused on each time increment rather than the underlying activities. Accordingly, the promise to stand-ready is accounted for as a single-series performance obligation. Once the Company determines the performance obligations, the Company determines the transaction price, which is based on fixed and/or variable consideration. Typical forms of variable consideration include variable pricing based on the number of transactions processed or usage-based pricing arrangements. Variable consideration is also present in the form of volume discounts, tiered and declining pricing, penalties for service level agreements, performance bonuses and credits. In circumstances where the Company meets certain requirements to allocate variable consideration to a distinct service within a series of related services, it allocates variable consideration to CNDT 2025 Annual Report 60 Table of Contents each distinct period of service within the series. In limited circumstances, if the Company does not meet those requirements, it includes an estimate of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. For contracts with multiple performance obligations, the transaction price is allocated to separate performance obligations on a relative standalone selling price basis. The Company generally determines standalone selling prices based on the prices charged to customers or by using expected cost plus a reasonable margin. The Company typically satisfies its performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because the nature of the Company’s promise is a stand-ready service and efforts are expended evenly throughout the period. In limited circumstances, such as contracts for implementation or development projects, the Company also uses a cost-to-cost based input method. The Company has determined that the above methods provide a faithful depiction of the transfer of services to the customer. Estimates of revenue expected to be recognized in future periods exclude unexercised customer options to purchase additional services that do not represent material rights to the customer. Customer options that do not represent a material right are only accounted for when the customer exercises its option to purchase additional goods or services. The Company recognizes revenue for non-refundable upfront implementation fees on a straight-line basis over the period between the initiation of the services through the end of the contract term. When more than one party is involved in providing services to a customer, the Company evaluates whether it is the principal, and reports revenue on a gross basis, or an agent, and reports revenue on a net basis. In this assessment, the Company considers the following: if it obtains control of the specified services before they are transferred to the customer; is primarily responsible for fulfillment and inventory risk; and has discretion in establishing price. The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. The primary revenue-based taxes are sales tax and value-added tax ("VAT"). The Company's payment terms vary by type of services offered. The time between invoicing and when payment is due is not significant. For certain services and customer types, the Company requires payment before services are rendered. From time to time, the Company's contracts are modified to account for additions or changes to existing performance obligations. The Company's contract modifications related to stand-ready performance obligations are generally accounted for prospectively. Refer to Note 2 – Revenue for further discussion. Costs to Obtain and Fulfill a Contract The Company capitalizes commission expenses paid to internal sales personnel that are incremental costs related to obtaining customer contracts. These costs are recorded as Deferred contract costs, net. The judgments made in determining the costs to be capitalized include whether the commissions are incremental and directly related to a successful acquisition of a customer contract. Capitalized costs are amortized within Depreciation and amortization over the term of the contract or the estimated life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission. Sales commissions are expensed as incurred if the amortization period is one year or less. In addition, the Company may provide inducement payments to secure customer contracts. These inducement payments are capitalized and amortized as a reduction of revenue over the term of the customer contract. The Company also capitalizes costs incurred to fulfill its contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the Company’s performance obligation under the contract and (iii) are expected to be recovered through revenue generated under the contract. These costs primarily consist of set-up and transition activities and are included in Deferred contract costs, net. Contract fulfillment costs are amortized within Depreciation and amortization on a systematic basis over the expected period of benefit as the Company satisfies its performance obligations by transferring services to the customer. CNDT 2025 Annual Report 61 Table of Contents Deferred contract costs are reviewed for recoverability annually or whenever an event occurs that indicates that the capitalized contract costs may no longer be recoverable. Refer to Note 2 – Revenue for further discussion. Note 2 – Revenue Disaggregation of Revenue The Company's contracts with customers are broadly similar in nature throughout the Company's major service offerings. The following is a description of the major service offerings: 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 decision-making time 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. Government Healthcare Solutions: The Company provides program administration solutions for government healthcare programs with a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, customer contact services, application processing, premium billing, and case management solutions. Government Services Solutions: The Company is a leader in government payment disbursements for federally sponsored programs including benefit card programs and payment card programs. Benefit card programs are closed loop solutions that support Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families and Women, Infants and Children. Payment card programs are open loop solutions that support child support and Unemployment Insurance. The Company also offers a broad set of child support services predominately to State Disbursement Units, including processing and distributing payments, child support payment cards, childcare credentialing and case management, among others, to help states comply with federal standards. Road Usage Charging and Management Services: The Company's electronic tolling, urban congestion management and mileage-based user solutions help its clients accurately assess and collect payments millions of times every day to generate revenue for infrastructure improvements. The Company's solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions. Transit Solutions: For train, bus, subway, metro and other transit travelers, the Company helps make journeys more personalized and convenient while increasing fare collections for authorities and agencies. The Company combines fare collection, account-based ticketing and intelligent mobility to provide clients with the added efficiency of a single point of management for all transit solutions. CNDT 2025 Annual Report 62 Table of Contents Commercial Vehicles: The Company provides computer-aided dispatch/automatic vehicle location technology to help clients manage their fleet operations. In 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 revised 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 3 – Segment Reporting for additional information on the Company's reportable segments. Year Ended December 31, (in millions) 2025 2024 2023 Commercial: Customer Experience Management $ 515 $ 549 $ 617 BPaaS 465 506 521 Integrated Digital Solutions 531 551 530 Total Commercial 1,511 1,606 1,668 Government: Government Healthcare Solutions 532 551 605 Government Services Solutions 390 433 489 Total Government 922 984 1,094 Transportation: Road Usage Charging & Management Solutions 238 244 317 Transit Solutions 371 341 233 Commercial Vehicles — 1 8 Total Transportation 609 586 558 Other: Divestitures — 180 402 Total Consolidated Revenue $ 3,042 $ 3,356 $ 3,722 Timing of Revenue Recognition: Point in time $ 113 $ 106 $ 107 Over time 2,929 3,250 3,615 Total Revenue $ 3,042 $ 3,356 $ 3,722 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): (in millions) December 31, 2025 December 31, 2024 Beginning balance $ 135 $ 190 Additional contract assets recognized 199 139 Billed and transferred to Accounts receivable and other ( 206 ) ( 194 ) Ending balance (1) $ 128 $ 135 ___ (1) Of which $ 6 million and $ 3 million are included in Other long-term assets as of December 31, 2025 and 2024, respectively. CNDT 2025 Annual Report 63 Table of Contents The following table provides information about significant movements in contract liability balances (current and long-term): (in millions) December 31, 2025 December 31, 2024 Beginning balance $ 155 $ 146 Additional deferral of income 207 276 Revenue recognized related to deferral of income (1) ( 219 ) ( 267 ) Ending balance (2) $ 143 $ 155 ___ (1) Of which $ 94 million and $ 92 million were recognized during the years ended December 31, 2025 and 2024, respectively, that related to the Company's contract liabilities as of December 31, 2024 and 2023, respectively. (2) Of which $ 69 million and $ 52 million are included in Long-term contract liabilities as of December 31, 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 December 31, 2025, was approximately $ 1.3 billion. The Company expects to recognize approximately 75 % of this revenue over the next 2 years and the remainder thereafter. Costs to Obtain and Fulfill a Contract The following table shows the net book value of the capitalized costs to obtain and fulfill a contract: (in millions) December 31, 2025 December 31, 2024 Costs to obtain a contract $ 18 $ 19 Costs to fulfill a contract 105 99 The amortization of costs incurred to obtain and fulfill a contract, excluding contract inducements, for the years ended December 31, 2025, 2024 and 2023 were $ 53 million, $ 40 million and $ 40 million, respectively. The balances at December 31, 2025 and 2024 are expected to be amortized over a weighted average remaining life of approximately 4 and 3 years, respectively. The expected amortization expense for the next five years and thereafter for the costs to obtain and fulfill a contract is as follows (in millions): 2026 2027 2028 2029 2030 Thereafter $ 41 $ 27 $ 15 $ 10 $ 5 $ 25 The net book value of contract inducement costs was $ 5 million and $ 8 million as of December 31, 2025 and 2024, respectively. The net book value of costs to obtain and fulfill a contract are referred to as Deferred contract costs, net on the Company's Consolidated Balance Sheets. Note 3 – 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 results of the Company's BenefitWallet Portfolio, Curbside Management and Public Safety Solutions businesses and Casualty Claims business, each of which was divested in 2024. Refer to Note 4 – 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 2025 Annual Report 64 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 program administration, transaction processing, eligibility and enrollment 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 adapt 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. CNDT 2025 Annual Report 65 Table of Contents The following table presents revenues, expenses and segment profit (loss) for the Company's reportable segments: Year Ended December 31, (in millions) Commercial Government Transportation Total (1) 2025 Segment revenue $ 1,511 $ 922 $ 609 $ 3,042 Expenses Wages and benefits $ 1,002 $ 383 $ 251 $ 1,636 Services and supplies 202 243 288 733 Rent lease and maintenance expense 149 69 48 266 Other operating expense 5 7 5 17 Depreciation and amortization expense 87 45 29 161 Segment expenses $ 1,445 $ 747 $ 621 $ 2,813 Segment profit (loss) $ 66 $ 175 $ ( 12 ) $ 229 2024 Segment Revenue $ 1,606 $ 984 $ 586 $ 3,176 Expenses Wages and benefits $ 1,081 $ 420 $ 256 $ 1,757 Services and supplies 212 282 279 773 Rent lease and maintenance expense 145 66 46 257 Other operating expense 1 6 6 13 Depreciation and amortization expense 90 44 24 158 Segment expenses $ 1,529 $ 818 $ 611 $ 2,958 Segment profit (loss) $ 77 $ 166 $ ( 25 ) $ 218 2023 Segment Revenue $ 1,668 $ 1,094 $ 558 $ 3,320 Expenses Wages and benefits $ 1,132 $ 411 $ 247 $ 1,790 Services and supplies 224 284 242 750 Rent lease and maintenance expense 140 65 43 248 Other operating expense 8 9 10 27 Depreciation and amortization expense 128 41 23 192 Segment expenses $ 1,632 $ 810 $ 565 $ 3,007 Segment profit (loss) $ 36 $ 284 $ ( 7 ) $ 313 __________ (1) Total excludes Divestitures and Unallocated Costs. CNDT 2025 Annual Report 66 Table of Contents 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: Year Ended December 31, (in millions) 2025 2024 2023 Segment Profit (Loss) $ 229 $ 218 $ 313 Reconciling items: Divestitures profit (1) — 35 103 Unallocated costs (2) ( 285 ) ( 287 ) ( 304 ) Amortization of acquired intangible assets ( 2 ) ( 5 ) ( 7 ) Restructuring and related costs ( 35 ) ( 46 ) ( 62 ) Interest expense ( 48 ) ( 75 ) ( 111 ) Loss on extinguishment of debt ( 1 ) ( 8 ) — Goodwill impairment — ( 28 ) ( 287 ) Gain (loss) on divestitures and transaction costs, net ( 11 ) 696 ( 10 ) Litigation (settlements) recoveries, net 1 ( 9 ) 30 Other income (expenses), net ( 8 ) 13 3 Income (Loss) Before Income Taxes $ ( 160 ) $ 504 $ ( 332 ) __________ (1) Divestitures profit is Income (loss) before income taxes. (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. Refer to Note 2 – Revenue for additional information on disaggregated revenues of the reportable segments. No sales to an individual customer accounted for more than 10% of revenue for the years ended December 31, 2025, 2024 or 2023. Geographic area data is based upon the location of the subsidiary reporting the revenue or long-lived assets and is as follows for each of the years ended December 31: Revenues Long-Lived Assets (1) (in millions) 2025 2024 2023 2025 2024 United States $ 2,545 $ 2,887 $ 3,328 $ 351 $ 386 Europe 298 291 314 30 31 Other areas 199 178 80 92 98 Total Revenues and Long-Lived Assets $ 3,042 $ 3,356 $ 3,722 $ 473 $ 515 __________ (1) Long-lived assets are comprised of (i) Land, buildings and equipment, net, (ii) Internal use software, net, (iii) Product software, net and (iv) Operating lease right-of-use assets. Note 4 – Divestitures Divestiture of Casualty Claims Solutions Business On September 1, 2024, the Company completed the sale of its Casualty Claims Solutions business (collectively referred to as the "Casualty Disposal Group") to MedRisk. The Company received $ 224 million of cash consideration for this divestiture. In 2024, the Company recorded a gain on the sale of $ 194 million, which is recorded in Gain (loss) on divestitures and transaction costs, net . Additionally, the Company recorded $ 33 million of income tax expense related to this divestiture. The revenue generated by the Casualty Disposal Group was $ 100 million and $ 146 million for the years ended December 31, 2024 and 2023, respectively. Divestiture of Curbside Management and Public Safety Solutions Businesses On April 30, 2024, Conduent completed the sale of its Curbside Management and Public Safety Solutions businesses (collectively referred to as the "Curbside Disposal Group") to Modaxo, a division of Constellation Software Inc. 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 CNDT 2025 Annual Report 67 Table of Contents reimbursement for payments made by the Company related to finance lease liabilities and related costs and the 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, which is recorded in Gain (loss) on divestitures and transaction costs, net . The Company recorded $ 28 million of income tax expense in connection with the divestiture. The revenue generated by the Curbside Disposal Group was $ 50 million and $ 137 million for the years ended December 31, 2024 and 2023, respectively. 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. The transfer of the BenefitWallet Portfolio closed in multiple tranches from March to May 2024 and the Company received aggregate cash consideration of $ 425 million as the tranches closed. The Company recorded a gain on the transfer of $ 425 million, which is recorded in Gain (loss) on divestitures and transaction costs, net . The Company recorded $ 102 million of income tax expense in connection with the transfer of the BenefitWallet Portfolio. The revenue generated by the BenefitWallet Portfolio was $ 30 million and $ 118 million for the years ended December 31, 2024 and 2023, respectively. Note 5 - Land, Buildings, Equipment and Software, Net Land, buildings and equipment, net was as follows: Estimated Useful Lives December 31, (in millions except as noted) (Years) 2025 2024 Land $ 1 $ 1 Building and building equipment 25 to 50 5 6 Leasehold improvements Varies 223 214 IT, other equipment and office furniture 3 to 15 907 831 Other 4 to 20 2 2 Construction in progress 13 12 Subtotal 1,151 1,066 Accumulated depreciation ( 970 ) ( 899 ) Land, Buildings and Equipment, Net $ 181 $ 167 Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was $ 73 million, $ 80 million and $ 102 million, respectively. CNDT 2025 Annual Report 68 Table of Contents Internal Use and Product Software Internal use and Product software are included in Other long-term assets on the Company's Consolidated Balance Sheets. Additions to Internal use and Product software as well as year-end balances for these assets were as follows: (in millions) Year Ended December 31, Additions to: 2025 2024 2023 Internal use software $ 22 $ 28 $ 42 Product software 23 14 21 December 31, (in millions) 2025 2024 Internal use software, at cost $ 545 $ 528 Accumulated amortization ( 453 ) ( 421 ) Internal use software, net $ 92 $ 107 Product software, at cost $ 243 $ 226 Accumulated amortization ( 178 ) ( 154 ) Product software, net $ 65 $ 72 The useful lives of the Company's Internal use software and enhancements range from one to five years . Product software is amortized over the shorter of: (i) four years ; (ii) the expected economic life of the product; or (iii) the term of the associated customer contract. Amortization expense for Internal use and Product software for the years ended December 31, 2025, 2024 and 2023 was $ 67 million, $ 79 million and $ 114 million, respectively. The 2023 amount includes the write-off of capitalized software costs totaling $ 25 million, stemming from management’s decision to abandon an internal use software project and a decision by a customer to not implement a product software solution. Note 6 - Leases The Company has entered non-cancelable operating and finance leases primarily for office space and equipment with lease terms that range from less than one year to 11 years. The components of lease costs were as follows: Year Ended December 31, (in millions) 2025 2024 2023 Finance Lease Costs: Amortization of right of use assets $ 16 $ 12 $ 12 Interest on lease liabilities 4 3 2 Total Finance Lease Costs $ 20 $ 15 $ 14 Operating lease costs: Base rent $ 58 $ 67 $ 75 Short-term lease costs 1 1 2 Variable lease costs (1) 19 21 23 Sublease income ( 1 ) ( 1 ) — Total Operating Lease Costs $ 77 $ 88 $ 100 __________ (1) Primarily related to taxes, insurance and common area and other maintenance costs for real estate leases. CNDT 2025 Annual Report 69 Table of Contents Supplemental cash flow information related to leases was as follows: Year Ended December 31, (in millions) 2025 2024 2023 Cash paid for the amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 69 $ 75 $ 83 Operating cash flows from finance leases 4 2 3 Total Cash Flow from Operating Activities $ 73 $ 77 $ 86 Financing cash flow from finance leases $ 13 $ 17 $ 16 Supplemental non-cash information on right of use assets obtained in exchange for new lease obligations: Operating leases $ 19 $ 41 $ 70 Finance leases $ 35 $ 19 $ 21 Supplemental balance sheet information related to leases was as follows: December 31, (in millions) 2025 2024 Operating lease assets: Operating lease right-of-use assets $ 136 $ 169 Operating lease liabilities: Other current liabilities 52 52 Operating lease liabilities 102 138 Total Operating Lease Liabilities $ 154 $ 190 Finance lease assets: Land, buildings and equipment, net $ 54 $ 37 Finance lease liabilities: Current portion of long-term debt 13 8 Long-term debt 36 18 Total Finance Lease Liabilities $ 49 $ 26 The weighted average discount rates and weighted average remaining lease terms for operating and finance leases as of December 31, 2025 and 2024 were as follows: December 31, 2025 December 31, 2024 Operating Leases Finance Leases Operating Leases Finance Leases Weighted average discount rates 8.6 % 8.1 % 8.4 % 8.7 % Weighted average remaining lease term (in years) 4 4 4 4 CNDT 2025 Annual Report 70 Table of Contents Maturities of operating and finance lease liabilities as of December 31, 2025 were as follows: December 31, 2025 (in millions) Operating Lease Payments Finance Lease Payments 2026 $ 61 $ 16 2027 50 15 2028 28 15 2029 18 9 2030 11 2 Thereafter 14 — Total undiscounted lease payments 182 57 Less imputed interest 28 8 Present value of lease liabilities $ 154 $ 49 As of December 31, 2025, the Company entered into additional operating lease agreements for equipment for $ 6 million, real estate for $ 19 million and finance leases for equipment for $ 16 million which have not commenced and have not been recognized on the Company's Consolidated Balance Sheets. These leases are expected to commence in 2026 and 2027 with average lease terms of 4 , 9 and 5 years, respectively. Note 7 - Goodwill Goodwill The following table presents the changes in the carrying amount of goodwill, by reportable segment: (in millions) Commercial Government Transportation Total Balance at December 31, 2023 $ — $ 623 $ 28 $ 651 Foreign currency translation — ( 14 ) — ( 14 ) Impairment — — ( 28 ) ( 28 ) Balance at December 31, 2024 $ — $ 609 $ — $ 609 Foreign currency translation — 8 — 8 Impairment — — — — Balance at December 31, 2025 $ — $ 617 $ — $ 617 Gross goodwill $ 2,198 $ 1,371 $ 608 $ 4,177 Accumulated impairment ( 2,198 ) ( 754 ) ( 608 ) ( 3,560 ) Balance at December 31, 2025 $ — $ 617 $ — $ 617 2025 Impairment Testing The Company performed its annual goodwill impairment test as of October 1, 2025 for the Government reporting unit. This testing did not identify any goodwill impairment for the Government reporting unit and, accordingly, no impairment charge was recorded. 2024 Impairment Testing and Impairment Charge As part of its 2024 annual goodwill impairment testing, the Company identified a $ 28 million goodwill impairment for the Transportation reporting unit, which was primarily due to a reduction in projected cash flows from new customer contract signings and increased delivery costs. This represented a full impairment of goodwill for the Transportation reporting unit. 2023 Impairment Charge In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase Agreement") to transfer its BenefitWallet Portfolio, which was reported within the Company’s Commercial segment. Since the Purchase Agreement did not represent a disposition of a business, no goodwill was allocated to the BenefitWallet Portfolio related to this transaction. CNDT 2025 Annual Report 71 Table of Contents Consequently, the Purchase Agreement was identified as a triggering event for the Commercial reporting unit that required the Company to evaluate goodwill for impairment. This evaluation resulted in a full impairment of the Commercial reporting unit's goodwill, totaling $ 287 million. The impairment charge was primarily driven by the Purchase Agreement and was recognized in the third quarter of 2023. The fair values of the goodwill impairment charge were estimated based on a determination of the implied fair value of goodwill, leveraging the results from the Income Approach and Market Approach, and are designated as level 3 of the fair value hierarchy. In connection with the Commercial reporting unit impairment assessment, the Company first performed a recoverability assessment of long-lived assets and concluded that such assets were not impaired. Note 8 – Restructuring Programs and Related Costs The Company engages in a series of restructuring programs related to downsizing its employee base, exiting certain activities, 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 asset impairments and other related costs. Although the current program is substantially complete, 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 are generally recognized when it has been determined that a liability has been incurred, upon communication to the affected employees or exit from the leased facility. A summary of the Company's restructuring program activity in the table below for years ended December 31, 2025 and 2024 includes: • Severance and related costs - employee termination costs, which include severance, retraining and other related contractual benefits; • Contract termination and other costs - incremental, non-recurring costs related to the consolidation of the Company's data centers, costs associated with bringing certain technology functions in-house, costs related to the discontinuation of software service contracts and non-lease costs associated with exited lease facilities; and • Asset impairments - non-cash impairments of operating lease right-of-use ("ROU") assets and associated leasehold improvements related to the reduction of the Company's real estate footprint. (in millions) Severance and Related Costs Contract Termination and Other Costs Asset Impairments Total Balance at December 31, 2023 $ 9 $ 1 $ — $ 10 Provision 22 19 6 47 Changes in estimates ( 1 ) — — ( 1 ) Total Net Current Period Charges (1) 21 19 6 46 Charges against reserve and currency ( 17 ) ( 18 ) ( 6 ) ( 41 ) Balance at December 31, 2024 $ 13 $ 2 $ — $ 15 Provision 18 12 5 35 Changes in estimates — — — — Total Net Current Period Charges (1) 18 12 5 35 Charges against reserve and currency ( 26 ) ( 11 ) ( 5 ) ( 42 ) Balance at December 31, 2025 $ 5 $ 3 $ — $ 8 __________ (1) Represents amounts recognized within the Consolidated Statements of Income (Loss) for the years shown No restructuring and related costs are allocated to the segments. CNDT 2025 Annual Report 72 Table of Contents Note 9 – Supplementary Financial Information The components of Other assets and Other liabilities were as follows: December 31, (in millions) 2025 2024 Other Current Assets Prepaid expenses $ 87 $ 77 Income taxes receivable 12 11 Value-added tax receivable 8 7 Restricted cash 10 11 Net receivables from buyers of divested businesses 1 52 Other 95 103 Total Other Current Assets $ 213 $ 261 Other Current Liabilities Accrued liabilities to vendors $ 147 $ 156 Litigation related accruals — 8 Current operating lease liabilities 52 52 Restructuring liabilities 8 15 Income tax payable 5 3 Other taxes payable 17 16 Accrued interest 5 5 Direct response costs - cyber event liabilities 8 — Other 28 35 Total Other Current Liabilities $ 270 $ 290 Other Long-term Assets Internal use software, net $ 92 $ 107 Intangible assets, net 12 14 Product software, net 65 72 Deferred tax assets 24 23 Other 73 60 Total Other Long-term Assets $ 266 $ 276 Other Long-term Liabilities Income tax liabilities $ 14 $ 18 Contract liabilities 69 52 Other 20 23 Total Other Long-term Liabilities $ 103 $ 93 Note 10 – Debt The Company classifies its debt based on the contractual maturity dates of the underlying debt instruments. The Company defers costs associated with debt issuance over the applicable term. These costs are amortized as interest expense in the Consolidated Statements of Income (Loss). CNDT 2025 Annual Report 73 Table of Contents Long-term debt was as follows: December 31, (in millions) Weighted Average Interest Rates at December 31, 2025 (1) 2025 2024 Revolving credit facility 6.58 % $ 109 $ — Term loan A due 2026 n/a — 88 Senior notes due 2029 6.20 % 520 520 Finance lease obligations 8.13 % 49 26 Other 5.45 % 13 12 Principal Debt Balance $ 691 $ 646 Debt issuance costs and unamortized discounts ( 4 ) ( 7 ) Less: current maturities ( 22 ) ( 24 ) Total Long-term Debt $ 665 $ 615 ____________ (1) Represents weighted average effective interest rate which includes the effect of discounts and debt issuance costs on issued debt. At December 31, 2025, the Company was in compliance with all debt covenants related to the borrowings in the table above. Scheduled principal payments due on long-term debt for the next five years (in millions) were as follows: 2026 2027 2028 2029 2030 Thereafter Total $ 22 $ 13 $ 124 $ 530 $ 2 $ — $ 691 2021 Credit Facilities On October 15, 2021, the Company refinanced its previously outstanding credit facilities by entering into a new senior secured credit agreement among the Company, its subsidiaries Conduent Business Services, LLC ("CBS"), Conduent State & Local Solutions, Inc. ("CSLS") and Affiliated Computer Services International B.V., the lenders party thereto and Bank of America, N.A., as the administrative agent ("Credit Agreement"). The Credit Agreement contains senior secured credit facilities ("Senior Credit Facilities") consisting of: (i) Senior Secured Term Loan A ("Term Loan A") with an aggregate principal amount of $ 265 million, which was paid off in connection with the "2025 Credit Agreement" described below; (ii) Senior Secured Term Loan B ("Term Loan B") with an aggregate principal amount of $ 515 million, the previously outstanding balance of which was paid off in 2024; and (iii) Senior Revolving Credit Facility maturing in 2026, which was amended and replaced by the "2025 Credit Agreement" described below. Senior Notes Concurrent with the Credit Agreement, on October 15, 2021, CBS and CSLS (collectively, the "Issuers") issued 6.00 % fixed rate senior notes due 2029 ("Senior Notes"). The Senior Notes are guaranteed on a senior secured basis by the Company and existing and future material direct and indirect wholly owned domestic subsidiaries of CBS that guaranteed the obligations under the Senior Credit Facilities. Interest is payable semi-annually. Prior to November 1, 2024, the Issuers could redeem the Senior Notes, in whole or in part, at a price equal to the principal amount of the Senior Notes, plus a make-whole premium plus accrued and unpaid interest. The Issuers can redeem the Senior Notes, in whole or in part, at any time on or after November 1, 2024, at the redemption prices specified in the Indenture governing the Senior Notes, plus accrued and unpaid interest, if any, up to but excluding the redemption date. In addition, the Company may be required to make an offer to purchase the notes upon the sale of certain assets and upon a change of control. No Senior Notes were redeemed in 2025 or 2024. 2025 Credit Agreement On August 26, 2025, the Company (as the parent guarantor), the Borrowers, the other guarantors party thereto, the Administrative Agent and the lenders and letter of credit issuers party thereto, entered into an amendment to the 2021 Credit Agreement (“Amendment No. 3” and the 2021 Credit Agreement as amended by Amendment No. 3, the CNDT 2025 Annual Report 74 Table of Contents “2025 Credit Agreement”) to amend the terms of the 2021 Credit Agreement, to, among other things, (i) prepay in full the Term Loan A outstanding under the 2021 Credit Agreement utilizing funds from the Revolving Credit Facility (as defined below), (ii) reduce the amount of the revolving credit facility to $ 357 million, of which $ 187 million will mature on August 26, 2028 and the remaining $ 170 million will continue to mature on October 15, 2026 (as amended, the “Revolving Credit Facility”), (iii) add a new performance letter of credit facility in the amount of approximately $ 93 million (the “Performance Letter of Credit Facility” and together with the Revolving Credit Facility, the “2025 Credit Facilities”), which will mature on August 26, 2028 and (iv) make certain other changes to the 2021 Credit Agreement as set forth in Amendment No. 3. The Borrowers may voluntarily repay outstanding loans under the 2025 Credit Facilities at any time without premium or penalty, other than customary breakage costs. Borrowings under the Revolving Credit Facility bear interest, at the Company's option, at a rate per annum equal to an applicable margin over a base rate or a Secured Overnight Financing Rate ("SOFR"), depending on the type of loan. The applicable margin for the Revolving Credit Facility for SOFR loans range from 1.75 % to 3.00 % per annum, depending on certain leverage ratios and for base rate loans range from 0.75 % to 2.00 % per annum. In addition to paying interest on outstanding principal under the Revolving Credit Facility, the Company is required to pay a commitment fee ranging from 0.30 % to 0.55 % per annum to the lenders in respect of unutilized commitments thereunder. Issuances of letters of credit under the Performance Letter of Credit Facility bear interest at a rate per annum equal to an applicable margin. The applicable margin for the Performance Letter of Credit Facility ranges from 1.05 % to 1.80 % per annum, depending on certain leverage ratios. In addition to paying fees on outstanding principal under the Performance Letter of Credit Facility, the Company is required to pay a commitment fee ranging from 0.30 % to 0.55 % per annum to the performance letter of credit issuers in respect of unutilized commitments thereunder. All obligations under the 2025 Credit Agreement are unconditionally guaranteed by the Company, CBS and CSLS, and the existing and future direct and indirect wholly owned domestic restricted subsidiaries of CBS (subject to certain exceptions). All obligations under the 2025 Credit Agreement are secured, subject to certain exceptions, by a first-priority pledge of substantially all assets of CBS and the subsidiary guarantors, and all of the capital stock of CBS and each of CBS' wholly owned material restricted subsidiaries directly held by CBS and CSLS or a subsidiary guarantor. The 2025 Credit Agreement contains certain customary affirmative and negative covenants, restrictions, prepayment terms and events of default. It requires the consolidated first lien net leverage ratio to not exceed 4.50 to 1.00 and a fixed charge coverage ratio of greater than or equal to 2.50 to 1.00. If an event of default occurs, the lenders under the 2025 Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the 2025 Credit Agreement and all actions permitted to be taken by secured creditors under applicable law. As of December 31, 2025, the Company had $ 109 million outstanding borrowings under its Revolving Credit Facility. The Company utilized $ 25 million of the Revolving Credit Facility to issue letters of credit as of December 31, 2025. Additionally, the Company utilized $ 81 million of the Performance Letter of Credit Facility to issue performance letters of credit as of December 31, 2025. The remaining unused capacity, reflecting total borrowing facility size minus outstanding borrowings and letters of credit, under the Revolving Credit Facility and the Performance Letter of Credit Facility was $ 223 million and $ 12 million, respectively, as of December 31, 2025. In connection with the voluntary repayment of the Term Loan A, the Company wrote-off related debt issuance costs of $ 1 million, which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss) for the year ended December 31, 2025. In connection with voluntary prepayments of the Term Loan B made in 2024, the Company wrote-off related debt issuance costs of $ 6 million, which is included in Loss on extinguishment of debt in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024. Interest Interest paid on short-term and long-term debt amounted to $ 46 million, $ 72 million and $ 106 million for the years ended December 31, 2025, 2024 and 2023, respectively. CNDT 2025 Annual Report 75 Table of Contents Interest expense and interest income were as follows: Year Ended December 31, (in millions) 2025 2024 2023 Interest expense $ 48 $ 75 $ 111 Interest income (1) 7 23 18 ____________ (1) Included in Other (income) expenses, net on the Consolidated Statements of Income (Loss). Note 11 – Financial Instruments The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. The Company manages its exposure to these market risks through regular operating and financing activities and, when appropriate, using derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. The Company enters limited types of derivative contracts to manage foreign currency exposures that it hedges. The primary foreign currency market exposures include the Philippine Peso and Indian Rupee. The fair market values of all the Company's derivative contracts change with fluctuations in interest rates or currency exchange rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes. The related cash flow impacts of all derivative activities are reflected as cash flows from operating activities. The Company does not believe there is significant risk of loss in the event of non-performance by the counterparty associated with its derivative instruments because these transactions are executed with a major financial institution. Further, the Company's policy is to deal only with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties. Summary of Foreign Exchange Hedging Positions At December 31, 2025 and 2024, the Company had outstanding forward exchange with gross notional values of $ 163 million and $ 203 million, respectively. At December 31, 2025, approximately 71 % of these contracts mature within three months, 11 % in three to six months, 14 % in six to twelve months and 4 % in greater than 12 months. The following is a summary of the primary hedging positions and corresponding fair values: December 31, 2025 December 31, 2024 (in millions) Gross Notional Value Fair Value Asset (Liability) (1) Gross Notional Value Fair Value Asset (Liability) (1) Currencies Hedged (Buy/Sell) Philippine Peso/U.S. Dollar $ 61 $ ( 1 ) $ 67 $ ( 1 ) Indian Rupee/U.S. Dollar 55 ( 1 ) 55 ( 1 ) Euro/U.S. Dollar — — 57 — Mexican Peso/U.S. Dollar 21 — — — All Other 26 — 24 — Total Foreign Exchange Hedging $ 163 $ ( 2 ) $ 203 $ ( 2 ) ____________ (1) Represents the net receivable (payable) amount included in the Consolidated Balance Sheets. Note 12 – 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. CNDT 2025 Annual Report 76 Table of Contents 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. 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) December 31, 2025 December 31, 2024 Assets: Foreign exchange contracts - forward $ — $ — Total Assets $ — $ — Liabilities: Foreign exchange contracts - forward $ ( 2 ) $ ( 2 ) Total Liabilities $ ( 2 ) $ ( 2 ) Summary of Other Financial Assets and Liabilities The estimated fair values of other financial assets and liabilities were as follows: December 31, 2025 December 31, 2024 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Long-term debt $ 665 $ 592 $ 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 13 – Employee Benefit Plans Defined Benefit Plans The Company's remaining benefit obligations and plan assets at December 31, 2025 were $ 13 million and $ 0 million, respectively. The Company's benefit obligations and plan assets at December 31, 2024 were $ 13 million and $ 0 million, respectively. Defined Contribution Plans The Company has post-retirement savings and investment plans in several countries, including the U.S., U.K. and Canada. In many instances, employees from those 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 allowed to contribute a portion of their salaries and bonuses to the plans, and the Company matches a portion of the employee contributions. The Company recorded expenses related to its defined contribution plans of $ 6 million in 2025, $ 5 million in 2024 and $ 11 million in 2023. CNDT 2025 Annual Report 77 Table of Contents Note 14 - Income Taxes Income (loss) before income taxes from continuing operations was as follows: Year Ended December 31, (in millions) 2025 2024 2023 Domestic income (loss) $ ( 224 ) $ 461 $ ( 349 ) Foreign income 64 43 17 Income (loss) before income taxes $ ( 160 ) $ 504 $ ( 332 ) Provision (benefit) for income taxes were as follows: Year Ended December 31, (in millions) 2025 2024 2023 Federal Income Taxes Current $ 3 $ 45 $ 6 Deferred ( 22 ) ( 5 ) ( 41 ) Foreign Income Taxes Current 25 23 12 Deferred — ( 7 ) ( 2 ) State Income Taxes Current 4 15 — Deferred — 7 ( 11 ) Total Provision (Benefit) $ 10 $ 78 $ ( 36 ) CNDT 2025 Annual Report 78 Table of Contents As allowed by the guidance, the Company has prospectively adopted the new accounting guidance on income taxes concerning effective tax rate reconciliations described in Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for the year ended December 31, 2025. The reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate for the year ended December 31, 2025 was as follows: Year Ended December 31, 2025 ($ in millions) Amount Percent U.S. federal statutory income tax rate $ ( 34 ) 21.0 % State and local income taxes, net of federal benefit (1) 2 ( 1.5 ) % Foreign tax effects India Statutory tax rate difference between India and U.S. 2 ( 1.4 ) % US/India BAPA transfer pricing agreement 3 ( 2.0 ) % Other — 0.2 % France Changes in valuation allowance 3 ( 1.7 ) % Return to provision adjustments ( 2 ) 1.3 % Other 1 ( 0.7 ) % Germany Changes in valuation allowance 2 ( 1.2 ) % Other — 0.4 % Other or not specified foreign jurisdictions 3 ( 2.0 ) % Tax credits Research and development tax credits ( 6 ) 4.2 % Work opportunity tax credit ( 3 ) 1.7 % Other — ( 0.1 ) % Change in valuation allowance for deferred tax assets 36 ( 21.8 ) % Nontaxable or nondeductible items 2 ( 1.5 ) % Changes in unrecognized tax benefits 1 ( 0.9 ) % Other (2) — ( 0.1 ) % Total Provision and Effective Income Tax Rate $ 10 ( 6.1 ) % _______________ (1) State taxes in Texas and New York made up the majority (greater than 50%) of the tax effect in this category. (2) In 2025, the "Other" line includes immaterial reconciling items. As such, the Company believes it is appropriate for these items to remain in "Other". CNDT 2025 Annual Report 79 Table of Contents The reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate for the years ended December 31, 2024 and 2023 was as follows: Year Ended December 31, 2024 2023 U.S. federal statutory income tax rate 21.0 % 21.0 % Nondeductible expenses 1.8 % ( 1.2 ) % Change in valuation allowance for deferred tax assets 1.7 % 0.8 % State taxes, net of federal benefit 3.6 % 3.1 % Tax-exempt income, credits and incentives ( 0.8 ) % 0.8 % Foreign rate differential adjusted for U.S. taxation of foreign profits (1) 0.1 % ( 0.4 ) % Divestitures ( 1.7 ) % — % Internal reorganization ( 13.4 ) % — % Impairments (2) 0.9 % ( 12.2 ) % Unrecognized tax benefits 1.7 % 0.4 % Audit and other tax adjustments 0.9 % ( 1.4 ) % Other (3) ( 0.3 ) % ( 0.2 ) % Effective Income Tax Rate 15.5 % 10.7 % _______________ (1) The “Foreign rate differential adjusted for U.S. taxation of foreign profits” includes the U.S. tax, net of foreign tax credits, associated with actual and deemed repatriations of earnings from our non-U.S. subsidiaries. (2) Impairment represents adjustments for the non-deductible component of goodwill in 2024 and 2023. (3) In 2024 and 2023, the "Other" line includes immaterial reconciling items. As such, the Company believes it is appropriate for these items to remain in "Other". The Company has prospectively adopted the new accounting guidance on income taxes concerning income taxes paid by jurisdiction described in Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for the year ended December 31, 2025. The schedule of net cash paid (refunds received) for income tax by jurisdiction during the year ended December 31, 2025 was as follows: (in millions) Year Ended December 31, 2025 U.S. federal income tax $ 1 US state and local income tax 5 Australia 4 India 8 Mexico 3 Peru 2 United Kingdom 2 Other foreign jurisdictions 5 Net cash paid (refunds received) for income tax $ 30 On a consolidated basis, the Company paid $ 44 million and $ 18 million in combined income taxes to federal, foreign and state jurisdictions during the years ended December 31, 2024 and 2023, respectively. Unrecognized Tax Benefits and Audit Resolutions The Company recognizes tax liabilities when, despite its belief that its tax return positions are supportable, the Company believes that certain positions may not be fully sustained upon review by tax authorities. Each period the Company assesses uncertain tax positions for recognition, measurement and effective settlement. Benefits from uncertain tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Where the Company has determined that its tax return filing position does not satisfy the more-likely-than-not recognition threshold, the Company has recorded no tax benefits. The Company is also subject to ongoing tax examinations in numerous jurisdictions due to the extensive geographical scope of its operations. The Company's ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require judgment and can increase or decrease the Company's effective CNDT 2025 Annual Report 80 Table of Contents tax rate, as well as impact its operating results. The specific timing of when the resolution of each tax position will be reached is uncertain. In the fourth quarter of 2024, the Company implemented an internal reorganization in which it sold a portion of its 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. As of December 31, 2025, the Company had $ 19 million of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate. Of this amount, $ 17 million is related to the valuation of the Company's foreign operations used in the calculation of the loss on the internal reorganization mentioned above. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows: (in millions) 2025 2024 2023 Balance at January 1 $ 19 $ 10 $ 12 Additions related to current year — 17 — Additions related to prior years positions 1 2 — Reductions related to prior years positions ( 1 ) ( 9 ) ( 1 ) Settlements with taxing authorities — ( 1 ) ( 1 ) Lapse of Statute of limitations — — — Balance at December 31 $ 19 $ 19 $ 10 The Company maintains offsetting benefits from other jurisdictions of $ 1 million, $ 2 million and $ 1 million, at December 31, 2025, 2024 and 2023, respectively. The Company recognized interest and penalties accrued on unrecognized tax benefits within income tax expense. The Company had $ 1 million, $ 1 million and $ 2 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at December 31, 2025, 2024 and 2023, respectively. We are subject to federal income tax examinations in the U.S. and to income tax examinations in various states and foreign jurisdictions. In the U.S., the Company is no longer subject to U.S. federal income tax examinations for years before 2022. With limited exceptions, as of December 31, 2025, we are no longer subject to state, local or foreign examinations by tax authorities for years before 2021. Deferred Income Taxes The Company is indefinitely reinvested in the undistributed earnings of its foreign subsidiaries with respect to the U.S. These foreign subsidiaries have aggregate cumulative undistributed earnings of $ 60 million as of December 31, 2025. For years after 2017, current tax law allows for certain earnings to be repatriated free from U.S. Federal taxes. However, the repatriation of earnings could give rise to additional tax liabilities. The Company has not provided for these liabilities. The Company has also not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries. A determination of the unrecognized deferred taxes related to these other components of the Company's outside basis differences is not practicable. The Company has provided for deferred taxes with respect to certain unremitted earnings of foreign subsidiaries that are not indefinitely reinvested between foreign subsidiaries outside of the U.S. CNDT 2025 Annual Report 81 Table of Contents The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows: December 31, (in millions) 2025 2024 Deferred Tax Assets Net operating losses and capital loss carryforward $ 171 $ 86 Operating reserves, accruals and deferrals 42 41 Deferred compensation 3 2 Interest expense capitalization 16 11 Settlement reserves 3 5 Operating lease liabilities 37 43 Tax credits 5 10 Capitalized research and experimentation costs 14 24 Compensation related accruals 17 18 Other 2 1 Subtotal 310 241 Valuation allowance ( 151 ) ( 95 ) Total $ 159 $ 146 Deferred Tax Liabilities Intangibles and goodwill $ 52 $ 32 Depreciation 47 48 Operating lease right-of-use assets 32 38 Other 23 29 Total $ 154 $ 147 Total Deferred Tax Assets (Liabilities), Net $ 5 $ ( 1 ) The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future. The net change in the total valuation allowance for the years ended December 31, 2025 and 2024 was an increase of $ 56 million and a decrease of $ 5 million, respectively. The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which the Company has concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations. Although realization is not assured, the Company has concluded that it is more-likely-than-not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences. At December 31, 2025, the Company had tax credit carryforwards of $ 5 million available to offset future income taxes, which will expire between 2027 and 2043, if not utilized. The following table presents the Company's worldwide net operating loss carryforwards ("NOLs") as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 (in millions) Gross Tax Effected Gross Tax Effected U.S Federal NOLs $ 310 $ 65 $ 2 $ — U.S. State NOLs 509 26 255 13 Foreign NOLs 337 77 303 71 Total $ 1,156 $ 168 $ 560 $ 84 CNDT 2025 Annual Report 82 Table of Contents The Company has $ 1,156 million of gross net operating loss carryforwards for income tax purposes including $ 640 million that will expire between 2026 and 2045, if not utilized, and $ 516 million available to offset future taxable income indefinitely. The Company had $ 8 million of foreign capital losses available to offset future capital gains income indefinitely. The Company does not expect to receive a tax benefit for the majority of the NOLs presented above, as valuation allowances have been recorded against most of the state and foreign NOLs and capital losses. Note 15 – 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 December 31, 2025. Litigation is inherently unpredictable, and it is not possible to predict the ultimate outcome of these matters and such outcome in any such matters could be more than any amounts accrued and could be material to the Company's results of operations, cash flows or financial position in any reporting period. 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 Consolidated Financial position or liquidity. As of December 31, 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 ("CBS"), a wholly-owned subsidiary of the Company. 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 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 to dismiss and allowed Skyview's 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 CNDT 2025 Annual Report 83 Table of Contents Division") with respect to the portion of the ruling that did not grant CBS's summary judgment motion 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 summary judgment on certain 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. 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 adjudicate 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 contractual indemnification 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, with final entry by the County Clerk on August 20, 2025. 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. This motion was denied on September 4, 2025. Conduent is in the process of seeking to collect on the outstanding judgment and will continue to pursue the amount owed by Skyview to CBS on the Jamaica Deferred Closing counterclaim. No trial date has yet been set. CBS continues to deny all of plaintiffs' allegations, believes that it has strong defenses to all 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. In re: Conduent Business Services Data Breach Litigation The Company and CBS (collectively, “Conduent”) are parties to several lawsuits in the U.S. asserted by or on behalf of individuals who allegedly received a notification letter that their personal information may have been affected by the January 2025 Cyber Event. Most of these lawsuits have been consolidated into one single action in the U.S. District Court, District of New Jersey. Conduent continues to work on consolidating these lawsuits and responding accordingly. Conduent denies plaintiffs' allegations, believes that it has strong defenses to plaintiffs’ claims, and will continue to defend the litigations 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. Guarantees and Indemnifications Indemnifications Provided as Part of Contracts and Agreements Acquisitions/Divestitures: The Company has indemnified, subject to certain deductibles and limits, the purchasers of businesses or divested assets for the occurrence of specified events under certain of its divestiture agreements. In addition, the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants, including such matters as adequate title to assets sold, intellectual property rights and certain income taxes arising prior to the date of acquisition. Where appropriate, an obligation for such indemnifications is recorded as a liability at the time of the acquisition or divestiture. Since the obligated amounts of these types of CNDT 2025 Annual Report 84 Table of Contents indemnifications are often not explicitly stated or are contingent on the occurrence of future events, the overall maximum amount, or range of amount of the obligation under such indemnifications cannot be reasonably estimated. Other than obligations recorded as liabilities at the time of divestiture, the Company has not historically made significant payments for these indemnifications. Additionally, under certain of the Company's acquisition agreements, it has provided for additional consideration to be paid to the sellers if established financial targets are achieved within specific timeframes post-closing. The Company has recognized liabilities for these contingent obligations based on an estimate of the fair value of these contingencies at the time of acquisition. Contingent obligations related to indemnifications arising from divestitures and contingent consideration provided for by acquisitions are not expected to be material to the Company's financial position, results of operations or cash flows. Other Agreements: The Company is also party to the following types of agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters: • Guarantees on behalf of the Company's subsidiaries with respect to real estate leases. These lease guarantees may remain in effect after the sale of the subsidiary. • Agreements to indemnify various service providers, trustees and bank agents from any third-party claims related to their performance on the Company's behalf, except for claims that result from the third-party's own willful misconduct or gross negligence. • Guarantees of the Company's performance in certain services contracts to its customers and indirectly the performance of third parties with whom the Company has subcontracted for their services. This includes indemnifications to customers for losses that may be sustained because of the Company's performance of services at a customer's location. In each of these circumstances, payment is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract and such procedures also typically allow the Company to challenge the other party's claims. In the case of lease guarantees, the Company may contest the liabilities asserted under the lease. Further, obligations under these agreements and guarantees may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments it made. Intellectual Property Indemnifications The Company does not own all of the software that it uses to run its business. Instead, the Company licenses this software from a small number of primary vendors. The Company indemnifies certain software providers against claims that may arise as a result of the Company's use or its subsidiaries', customers' or resellers' use of their software in the Company's services and solutions. These indemnities usually do not include limits on the claims, provided the claim is made pursuant to the procedures required in the services contract. Indemnification of Officers and Directors The Company's corporate by-laws require that, except to the extent expressly prohibited by law, the Company must indemnify its officers and directors against judgments, fines, penalties and amounts paid in settlement and reasonable expenses, including attorneys' fees, incurred in connection with civil or criminal action or proceedings or any appeal, as it relates to their services to the Company and its subsidiaries. Although the by-laws provide no limit on the amount of indemnification, the Company may have recourse against its insurance carriers for certain payments made by the Company. However, certain indemnification payments may not be covered under the Company's directors' and officers' insurance coverage. The Company also indemnifies certain fiduciaries of its employee benefit plans for liabilities incurred in their service as fiduciary whether or not they are officers of the Company. Finally, in connection with the Company's acquisition of businesses, it may become contractually obligated to indemnify certain former and current directors, officers and employees of those businesses in accordance with pre-acquisition by-laws or indemnification agreements or applicable state law. 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 December 31, 2025, the Company had $ 555 million of outstanding surety bonds issued to secure its performance of contractual obligations with its clients and $ 130 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 CNDT 2025 Annual Report 85 Table of Contents 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 16 - Preferred Stock Series A Preferred Stock In connection with the December 31, 2016 separation from the Company's former parent company (the "Separation"), 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 Series A convertible preferred stock pays quarterly cash dividends at a rate of 8 % per year ($ 9.6 million per year). Each share of the Series A 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. If the closing price of the Company's common stock exceeds 137 % of the initial conversion price for 20 out of 30 trading days, the Company has the right to cause any or all of the Series A convertible preferred stock to be converted into shares of common stock at the then applicable conversion rate. The Series A convertible preferred stock is also convertible, at the option of the holder, upon a change in control, at the applicable conversion rate plus an additional number of shares determined by reference to the price paid for the Company's common stock upon such change in control. In addition, upon the occurrence of certain fundamental change events, including a change in control or the delisting of Conduent's common stock, the holder of Series A convertible preferred stock has the right to require the Company to redeem any or all of the Series A convertible preferred stock in cash at a redemption price per share equal to the liquidation preference and any accrued and unpaid dividends to, but not including, the redemption date. As a result of the contingent redemption feature, the Series A convertible preferred stock is classified as temporary equity and reflected separately from permanent equity in the Consolidated Balance Sheets. Note 17 – Shareholders’ Equity Preferred Stock As of December 31, 2025, the Company had one class of preferred stock outstanding. Refer to Note 16 – Preferred Stock for further information. The Company is authorized to issue approximately 100 million shares of convertible preferred stock at $ 0.01 par value per share. Common Stock The Company has 1 billion authorized shares of common stock at $ 0.01 par value per share. At December 31, 2025, 19.5 million shares were reserved for issuance under the Company's incentive compensation plans and 5.4 million shares were reserved for conversion of the Series A convertible preferred stock. Stock Compensation Plans Certain of the Company's employees participate in a long-term incentive plan. The Company's long-term incentive plan authorizes the issuance of restricted stock units / shares and performance stock units / share to employees. Stock-based compensation expense includes expense based on the awards and terms previously granted to the employees. Stock-based compensation expense was as follows: Year Ended December 31, (in millions) 2025 2024 2023 Stock-based compensation expense, pre-tax $ 19 $ 19 $ 19 Income tax benefit recognized in earnings 3 4 4 Restricted Stock Units / Shares ("RSUs"): Compensation expense is based upon the grant date market price. The compensation expense is recorded over the vesting period based on management's estimate of the number of shares expected to vest. The Company’s RSU awards typically vest in three separate and equal tranches over a 2.75 year period. Each tranche vests annually, at December 31, following the date of grant. CNDT 2025 Annual Report 86 Table of Contents In 2025, the Company issued 287,000 Deferred Stock Units ("DSU") to non-employee members of the Board of Directors. DSU awards typically vest in accordance with certain service conditions. Performance Stock Units / Shares ("PSUs"): The Company has granted PSUs under various scenarios including: • PSUs that vest contingent upon its achievement of certain specified financial performance criteria that are averaged over a three-year period. If the three-year actual results exceed the stated targets, then the plan participants have the potential to earn additional shares of common stock, which cannot exceed 50 % and 100 % of the original grant for the awards granted in 2024 and 2023, respectively. The fair value of these PSUs is based upon the market price of Conduent's common stock on the date of the grant. Compensation expense is recognized over the vesting period, which is 2.75 years from the date of grant, based on management's estimate of the number of shares expected to vest. If the stated targets are not met, any recognized compensation cost would be reversed. • PSUs that vest contingent upon the increase of Conduent’s stock price to certain levels over a 2.75 years period from the date of grant. The number of shares eligible to vest may be adjusted upward or downward by 50 % based on total shareholder return, which measures the Company’s stock performance relative to the stock performance of the Company’s proxy peers over the measurement period. These PSUs also have a service requirement that must be met for them to vest. The fair value of these PSUs is based upon a Monte Carlo simulation, which uses assumptions about the risk free rate and volatility of the Company's stock price at the date of grant. Compensation expense is recognized over the vesting period based on management's estimate of the number of shares expected to vest. The PSUs granted in 2022 were canceled at December 31, 2024 as the performance measures were not met. • In 2025, for certain senior executives, the Company changed its Annual Performance Incentive Plan (“APIP”) cash incentive by awarding a portion of the incentive in PSUs. These shares vest contingent upon: (i) the achievement of the specified 2025 APIP financial performance criteria, and (ii) the meeting of service criteria. The plan participants cannot earn additional shares if APIP performance achievement exceeds 100% of the stated targets. Rather, any overachievement is paid in cash. The fair value of these PSUs is based upon the market price of Conduent’s common stock on the date of the grant, June 1, 2025. Compensation expense is recognized over the vesting period, which is 22 months from the date of grant, based on management’s estimate of the number of shares expected to vest. Summary of Stock-based Compensation Activity 2025 2024 2023 (shares in thousands) Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Restricted Stock Units / Shares Outstanding at January 1 4,387 $ 3.67 5,031 $ 4.02 3,165 $ 5.39 Granted 4,334 2.77 3,912 3.36 5,418 3.51 Vested ( 3,347 ) 3.22 ( 3,498 ) 3.87 ( 3,103 ) 4.49 Canceled ( 1,077 ) 3.03 ( 1,058 ) 3.53 ( 449 ) 4.26 Outstanding at December 31 4,297 3.27 4,387 3.67 5,031 4.02 Performance Stock Units / Shares Outstanding at January 1 5,947 $ 3.28 5,013 $ 3.97 3,097 $ 5.16 Granted 7,503 2.37 3,848 3.29 3,052 3.27 Vested — — — — ( 49 ) 1.39 Canceled ( 1,528 ) 2.81 ( 2,914 ) 4.47 ( 1,087 ) 5.52 Outstanding at December 31 11,922 2.77 5,947 3.28 5,013 3.97 CNDT 2025 Annual Report 87 Table of Contents The total unrecognized compensation cost related to non-vested stock-based awards at December 31, 2025 was as follows (in millions): Awards Unrecognized Compensation Remaining Weighted-Average Expense Period (Years) Restricted Stock Units / Shares $ 7 1.7 Performance Stock Units / Shares 8 1.4 Total $ 15 The aggregate intrinsic value of outstanding RSUs and PSUs awards were as follows (in millions): Awards December 31, 2025 Restricted Stock Units / Shares $ 8 Performance Stock Units / Shares 23 The total intrinsic value and actual tax benefit realized for vested stock-based awards were as follows: (in millions) December 31, 2025 December 31, 2024 December 31, 2023 Awards Total Intrinsic Value Cash Received Tax Benefit Total Intrinsic Value Cash Received Tax Benefit Total Intrinsic Value Cash Received Tax Benefit Restricted Stock Units / Shares $ 7 $ — $ 1 $ 14 $ — $ 1 $ 11 $ — $ 2 Performance Stock Units / Shares — — — — — — — — — Note 18 – Other Comprehensive Income (Loss) Other Comprehensive Income (Loss) is comprised of the following: Year Ended December 31, 2025 2024 2023 (in millions) Pre-tax Net of Tax Pre-tax Net of Tax Pre-tax Net of Tax Currency Translation Currency translation adjustments, net $ 34 $ 34 $ ( 37 ) $ ( 37 ) $ 31 $ 31 Translation adjustments gains (losses) $ 34 $ 34 $ ( 37 ) $ ( 37 ) $ 31 $ 31 Unrealized Gains (Losses) Changes in fair value of cash flow hedges gains (losses) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ 1 $ 1 Net Unrealized Gains (Losses) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ ( 1 ) $ 1 $ 1 Defined Benefit Plans Gains (Losses) Net actuarial/prior service gains (losses) $ 2 $ 2 $ 1 $ 1 $ ( 1 ) ( 1 ) Changes in Defined Benefit Plans Gains (Losses) $ 2 $ 2 $ 1 $ 1 $ ( 1 ) $ ( 1 ) Other Comprehensive Income (Loss) $ 35 $ 35 $ ( 37 ) $ ( 37 ) $ 31 $ 31 Accumulated Other Comprehensive Loss ("AOCL") Below are the balances and changes in AOCL (1) : CNDT 2025 Annual Report 88 Table of Contents (in millions) Currency Translation Adjustments Gains (Losses) on Cash Flow Hedges Defined Benefit Pension Items Total Balance at December 31, 2022 $ ( 472 ) $ 1 $ 5 $ ( 466 ) Other comprehensive income (loss) before reclassifications 31 1 ( 1 ) 31 Amounts reclassified from accumulated other comprehensive loss — — — — Net current period other comprehensive income (loss) 31 1 ( 1 ) 31 Balance at December 31, 2023 $ ( 441 ) $ 2 $ 4 $ ( 435 ) Other comprehensive income (loss) before reclassifications ( 37 ) ( 1 ) 1 ( 37 ) Amounts reclassified from accumulated other comprehensive loss — — — — Net current period other comprehensive income (loss) ( 37 ) ( 1 ) 1 ( 37 ) Balance at December 31, 2024 $ ( 478 ) $ 1 $ 5 $ ( 472 ) Other comprehensive income (loss) before reclassifications 34 ( 1 ) 2 35 Amounts reclassified from accumulated other comprehensive loss — — — — Net current period other comprehensive income (loss) 34 ( 1 ) 2 35 Balance at December 31, 2025 $ ( 444 ) $ — $ 7 $ ( 437 ) __________ (1) All amounts are net of tax. Tax effects were immaterial. Note 19 – 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 loss per share of common stock: Year Ended December 31, (in millions, except per share data. Shares in thousands) 2025 2024 2023 Basic Net Earnings (Loss) per Share: Net Income (Loss) $ ( 170 ) $ 426 $ ( 296 ) Dividend - Preferred Stock ( 10 ) ( 10 ) ( 10 ) Adjusted Net Income (Loss) Available to Common Shareholders - Basic $ ( 180 ) $ 416 $ ( 306 ) Diluted Net Earnings (Loss) per Share: Net Income (Loss) $ ( 170 ) $ 426 $ ( 296 ) Dividend - Preferred Stock ( 10 ) — ( 10 ) Adjusted Net Income (Loss) Available to Common Shareholders - Diluted $ ( 180 ) $ 426 $ ( 306 ) Weighted Average Common Shares Outstanding - Basic 158,422 182,513 216,779 Common Shares Issuable with Respect to: Restricted Stock and Performance Units / Shares — 3,224 — 8% Convertible Preferred Stock — 5,393 — Weighted Average Common Shares Outstanding - Diluted 158,422 191,130 216,779 Net Earnings (Loss) per Share: Basic $ ( 1.14 ) $ 2.28 $ ( 1.41 ) Diluted $ ( 1.14 ) $ 2.23 $ ( 1.41 ) 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 16,916 7,731 8,652 8% Convertible preferred stock 5,393 — 5,393 Total Anti-Dilutive and Contingently Issuable Securities 22,309 7,731 14,045 CNDT 2025 Annual Report 89 Table of Contents Note 20 – Related Party Transactions In the normal course of business, the Company provided services to, and purchased from, certain related parties with the same shareholders. The services provided to these entities included those related to human resources, end-user support and other services and solutions. The purchases from these entities included office equipment and related services and supplies. Revenue and purchases from these entities were included in Revenue and Costs of services or Selling, general and administrative, respectively, on the Company's Consolidated Statements of Income (Loss). Xerox Corporation ("Xerox") was historically classified as a related party due to significant shares of both Xerox and the Company being held by entities controlled by one individual. As of September 28, 2023, Xerox was no longer considered a related party due to the disposition of all Xerox stock by these entities and, therefore, the Company does not consider transactions with Xerox after that date to be transactions with related parties. Transactions with related parties were as follows: Year Ended December 31, (in millions) 2025 2024 2023 Revenue from related parties $ — $ — $ 6 Purchases from related parties $ — $ — $ 18 The Company had no receivable or payable balances with related party entities as of December 31, 2025 and 2024. CNDT 2025 Annual Report 90 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.