What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-07 · 104 added, 205 removed, 193 unchanged (62% of the section changed)

11 unchanged sentences

We leverage cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions.

Through a dedicated global team of approximately 53,000 associates, as well as process expertise and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.

Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of September 30, 2025.

Through a dedicated global team of approximately 48,000 associates, process expertise and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.

Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of March 31, 2026.

Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate.

2 unchanged sentences

These solutions are both cross-industry and industry-specific in nature.

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

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

federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing, payment services and case management.

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

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

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

federal, state, local and foreign governments for public assistance, healthcare programs administration, transaction processing, eligibility and enrollment processing, payment services and case management.

• Transportation – Our Transportation segment provides government agencies and transportation authorities around the world with systems, support and revenue-generating solutions serving toll and fare collections as well as mobility and digital payments that help streamline operations and increase revenue to government transportation agencies.

2 unchanged sentences

Executive Summary

Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation.

Building on this solid foundation, during 2023, we held an investor briefing outlining our three-year strategy.

We continue to execute this strategy and remain focused on accelerating growth and enhancing value for our stakeholders.

We intend to achieve this by doubling down on key themes outlined in the 2023 investor briefing including focusing on key growth areas within each of our businesses, continuing our portfolio rationalization strategy, divesting certain solutions which have either scarcity value outside of Conduent or are capital intensive relative to their growth opportunity, and taking a balanced approach to allocating capital including internal investments in our solutions, pre-paying debt and repurchasing common shares.

This strategy has resulted and will continue to result in a nimbler and faster-growing Conduent with modest levels of net leverage, stronger free cash flow, and higher margins, which we believe will enhance our valuation.

2025 is the final of year of our three-year period.

As we end 2025, we will update investors on how we finished versus that plan and on further targets for 2026 and beyond.

During the third quarter of 2025 we achieved the following:

• Successfully completed refinancing of the Company’s revolving credit facility and paid off the Term Loan A.

• Announced the integration of the Generative AI ("GenAI") and other advanced AI technologies into the Company’s Government solutions offerings to improve the disbursement of critical government benefits, enhance the citizen experience, and combat fraud in programs like Medicaid and SNAP.

• Awarded a contract by the Richmond Metropolitan Transportation Authority to implement a Pay-by-Plate toll collection system supporting the transition to all-electronic tolling designed to streamline traffic for a faster, safer, and more enjoyable driving experience.

• Announced an expansion of the Company’s Philippines operations and opened a facility in Lipa-Malvar to support customer experience management solutions for a leading U.S.

healthcare company.

• Expanded its FastCap® Finance Analytics solution by integrating GenAI-powered contract and spend analytics capability that enables it to expedite contract intake, verify contract compliance, and identify procurement savings and tariff-related financial exposures more efficiently and more accurately.

• Teamed with the State of Delaware to launch Conduent’s Maven® Disease Surveillance & Outbreak Management System, helping it to monitor, report, and better understand public health threats and infectious disease outbreaks.

Our emphasis on growth, quality, and efficiency, launched in 2020 and reinforced in our 2023 investor briefing, continued into the first quarter of 2026 as we build on the progress achieved at the conclusion of our three-year plan.

During the quarter, we remained focused on targeted-growth areas within each business, continued advancing our portfolio rationalization strategy, and invested in our solutions to improve operational efficiency and execution.

We believe these actions continue to position Conduent as a more agile company with the potential for improved margins, stronger free cash flow, and a more resilient capital structure over time.

During the first quarter of 2026 we achieved the following:

• Successfully completed our first Conduent Medicaid Suite implementation for a large Government client, replacing a 24‑year old legacy system with a fully integrated, modern Medicaid platform supporting nearly one million members.

This milestone strengthens our Government segment market position and demonstrates our ability to deliver large‑scale, mission‑critical Medicaid system modernizations at scale.

• Successfully implemented an intelligent automation solution for a marquee Commercial client, modernizing Explanation of Benefits processing and improving operational efficiency and scalability.

On January 13, 2025, the Company experienced an operational disruption and learned that a threat actor gained unauthorized access to a limited portion of the Company’s environment (the "January 2025 Cyber Event").

2 unchanged sentences

The disruption did not have a material impact to the Company’s operations.

As part of its ongoing investigation, the Company determined that the threat actor exfiltrated a set of files associated with a limited number of the Company’s clients.

As part of its investigation, the Company determined that the threat actor exfiltrated a set of files associated with a limited number of the Company’s clients.

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

1 unchanged sentence

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

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

The Company worked with affected clients to determine next steps as required by federal and state law, including individual and regulatory notifications that began in October 2025 and have been substantially concluded.

To the Company’s knowledge, the exfiltrated data has not been released on the dark web or otherwise publicly.

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

CNDT Q3 2025 Form 10-Q

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

We have made cash disbursements of $9 million through September 30, 2025 and expect to make an additional $16 million of cash disbursements by the end of the first quarter of 2026 related to these notification requirements.

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

We have made cash disbursements of $25 million through March 31, 2026 related to this matter.

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

It is possible that future risks and uncertainties resulting from the January 2025 Cyber Event, including those related to impacted data, litigation, reputational harm, and regulatory actions, could adversely affect the Company’s financial condition or results of operations.

See also Part II, Item 1A (Risk Factors).

See also Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (Risk Factors).

CNDT Q1 2026 Form 10-Q

Financial Information and Analysis of Results of Operations

Three Months Ended

September 30, 2025 vs.

March 31, 2026 vs.

(in millions) 2026 2025 $ Change % Change

7 unchanged sentences

Interest expense 12 12 — — %

(Gain) loss on divestitures and transaction costs, net 1 (188) 189 n/m

(Gain) loss on divestitures and transaction costs, net 3 3 — — %

Litigation settlements (recoveries), net — 2 (2) n/m

Loss on extinguishment of debt 1 1 — — %

Other (income) expenses, net 1 (1) 2 n/m

3 unchanged sentences

Net Income (Loss) $ (33) $ (51) $ 18

CNDT Q3 2025 Form 10-Q

Nine Months Ended

September 30, 2025 vs.

(in millions) 2025 2024 $ Change % Change

Revenue $ 2,272 $ 2,556 $ (284) (11) %

Operating Costs and Expenses

Cost of services (excluding depreciation and amortization) 1,866 2,068 (202) (10) %

Selling, general and administrative (excluding depreciation and amortization) 316 346 (30) (9) %

Research and development (excluding depreciation and amortization) 3 4 (1) (25) %

Depreciation and amortization 144 157 (13) (8) %

Restructuring and related costs 24 21 3 14 %

Interest expense 36 62 (26) (42) %

(Gain) loss on divestitures and transaction costs, net 8 (696) 704 n/m

Litigation settlements (recoveries), net 2 6 (4) (67) %

Loss on extinguishment of debt 1 6 (5) (83) %

Other (income) expenses, net 4 (4) 8 n/m

Total Operating Costs and Expenses 2,404 1,970 434

Income (Loss) Before Income Taxes (132) 586 (718)

Income tax expense (benefit) 5 148 (143)

Net Income (Loss) $ (137) $ 438 $ (575)

Revenue for the three months ended September 30, 2025 decreased, compared to the prior year period, with roughly 67% of the decrease attributable to the divestiture of the Casualty Claims Solutions business.

Excluding the divestiture impact, the decline was driven by lower revenue in Commercial, reflecting lost business and volume decreases with select clients, and anticipated reductions in certain benefit programs in our Government segment, partially offset by new business ramp and higher equipment sales within the Transportation segment.

Revenue for the nine months ended September 30, 2025 decreased, compared to the prior year period, approximately 63% of which was due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

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

Revenue for the three months ended March 31, 2026 decreased compared to the prior year period, primarily driven by lost business and lower volumes in our Commercial segment, partially offset by new business ramp, particularly in our Government and Transportation segments.

Cost of Services (excluding depreciation and amortization)

Cost of services for the three and nine months ended September 30, 2025 decreased, compared to the prior year periods, primarily due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

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

Cost of services for the three months ended March 31, 2026 decreased compared to the prior year period, primarily driven by lower expenses associated with reduced revenues and cost optimization initiatives.

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

SG&A for the three months ended September 30, 2025 decreased, compared to the prior year period, primarily driven by cost efficiencies in our corporate functions.

This decrease was partially offset by the increase in medical expenses resulting from higher claims.

SG&A for the nine months ended September 30, 2025 decreased, compared to the prior year period, primarily driven by a $9 million benefit from the recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019 as well as cost efficiencies in our corporate functions.

These were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event.

CNDT Q3 2025 Form 10-Q

SG&A for the three months ended March 31, 2026 decreased year over year, primarily driven by non-recurring items in the first quarter of 2025.

These items included the $25 million of direct response costs related to the January 2025 Cyber Event and the $9 million benefit from the recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019.

In addition, cost efficiencies in our corporate functions in the current year and lower healthcare costs due to lower U.S.

headcount contributed to the decrease.

The current year period SG&A included two offsetting items.

Separation costs of approximately $4 million related to the departure of our former Chief Executive Officer were offset by an approximate $3 million net benefit related to our 2025 Annual Performance Incentive Plan ("APIP") as described in Note 12 – Preferred Stock and Common Stock.

Depreciation and Amortization

Depreciation and amortization for the three months ended September 30, 2025 increased, compared to the prior year period, driven by completed capital investments being placed into service.

These increases were partially offset by lower depreciation and amortization from the sale of the Casualty Claims Solutions business.

Depreciation and amortization for the nine months ended September 30, 2025 decreased, compared to the prior year period, primarily due to the absence of a write-off of an abandoned internal use software asset in our Commercial segment in the prior year and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.

These decreases were partially offset by increased amortization of deferred contract costs related to new projects that went live in 2025.

Depreciation and amortization for the three months ended March 31, 2026 was substantially unchanged compared to the prior year period.

CNDT Q1 2026 Form 10-Q

Restructuring and Related Costs

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2026 2025

Severance and related costs $ 6 $ 1

Data center consolidation costs — 1 — 4

Termination, insourcing and asset impairment costs 5 1 10 8

Contract termination and other costs 2 1

Asset impairments — 2

Restructuring and related costs $ 8 $ 4

2 unchanged sentences

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

Interest expense for the three and nine months ended September 30, 2025 decreased, compared to the prior year periods, primarily due to the 2024 voluntary prepayments of the entire Term Loan B balance outstanding and a portion of the Term Loan A balance with proceeds from divestitures.

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

3 to the Credit Facility.

Interest expense for the three months ended March 31, 2026 was unchanged, compared to the prior year period due to comparable average debt balances and interest rates.

(Gain) Loss on Divestitures and Transaction Costs

The completion of the BenefitWallet Transfer resulted in a gain of $425 million for the nine months ended September 30, 2024.

The completion of the sale of the Curbside Management and Public Safety businesses in the second quarter of 2024 resulted in a gain of $108 million for the nine months ended September 30, 2024.

The completion of the sale of the Casualty Claims Solutions business in the third quarter of 2024 resulted in a gain of $195 million for the three and nine months ended September 30, 2024.

Additionally, professional fees and other costs related to these consummated and certain other non-consummated transactions considered by the Company are included in this financial statement line item for all periods.

(Gain) loss on divestitures and transaction costs include professional fees and other costs related to consummated and certain other non-consummated transactions considered by the Company related to its portfolio rationalization activities.

The amount of these costs for the three months ended March 31, 2026 was unchanged, compared to the prior year period.

Litigation Settlements (Recoveries), Net

Litigation settlements (recoveries), net for the nine months ended September 30, 2025 and 2024 were not material.

The effective tax rate for the three months ended September 30, 2025 was (19.5)%, compared to 22.2% for the three months ended September 30, 2024.

The September 30, 2025 rate was lower than the U.S.

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

The effective tax rate for the three months ended September 30, 2024 was higher than the U.S.

statutory rate of 21% primarily due to state and local taxes, geographic mix of income, and other discrete tax items, partially offset by a favorable permanent difference on gains from divestitures.

CNDT Q3 2025 Form 10-Q

Excluding the impact of amortization, restructuring, divestiture, valuation allowances and discrete tax items, the normalized effective tax rate for the three months ended September 30, 2025 was 44.7%.

The normalized effective tax rate for the three months ended September 30, 2024 was 12.5%, due primarily to excluding the impact of gain from divestitures, restructuring costs, amortization of intangibles, valuation allowance release and other discrete tax adjustments.

The effective tax rate for the nine months ended September 30, 2025 was (3.4)%, compared to 25.2% for the nine months ended September 30, 2024.

The September 30, 2025 rate was lower than the U.S.

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

The effective tax rate for the nine months ended September 30, 2024 was higher than the U.S.

statutory rate of 21%, primarily due to state and local taxes and geographic mix of income, partially offset by a favorable permanent difference on gain from divestitures, tax benefit from valuation allowances and audit settlement reserve releases.

Excluding the impact of amortization, restructuring, divestiture, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for the nine months ended September 30, 2025 was 29.0%.

The normalized effective tax rate for the nine months ended September 30, 2024 was 19.7%, primarily due to excluding the impact of the gain from divestitures, restructuring costs, amortization of intangible assets, litigation reserve releases, audit settlement reserve release, valuation allowance and other discrete tax items.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBA") was signed into law in the U.S.

The legislation contains certain provisions related to the full expensing of U.S.

research and development costs and other depreciable property.

The legislation also includes changes to the determination of the amount of U.S.

interest expense that is deductible for U.S.

tax purposes.

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

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

GAAP purposes that was increased in the third quarter of 2025.

The NOL may carryforward indefinitely.

Litigation settlements (recoveries), net for the three months ended March 31, 2026 and 2025 were not material.

Other (Income) Expenses, Net

Other (income) expenses, net for the three months ended March 31, 2026 and 2025 primarily include interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains).

The effective tax rate for the three months ended March 31, 2026 was (21.5)%, compared to 9.0% for the three months ended March 31, 2025.

The March 31, 2026 rate was lower than the U.S.

statutory rate of 21%, primarily due to geographic mix of income, valuation allowances recorded on net deferred tax assets and discrete tax items.

The effective tax rate for the three months ended March 31, 2025 was lower than the U.S.

statutory rate of 21%, primarily due to incremental tax from geographic mix, valuation allowances recorded on net deferred tax assets and discrete tax items.

Excluding the impact of restructuring, former CEO separation costs, divestiture-related transaction costs, other expenses, amortization, valuation allowances and discrete tax items, the normalized effective tax rate for the three months ended March 31, 2026 was 25.7%.

The normalized effective tax rate for the three months ended March 31, 2025 was largely consistent at 23.9%, primarily due to excluding the impact of amortization, restructuring, divestitures, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items.

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

1 unchanged sentence

We continue to monitor legislative developments, as well as additional guidance from countries that have enacted legislation.

CNDT Q1 2026 Form 10-Q

Operations Review of Segment Revenue and Profit

Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments:

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

• Commercial;

1 unchanged sentence

• Transportation.

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

Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments.

We also present Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Adjusted EBITDA Margin for the reasons described in Non-GAAP Financial Measures section of the MD&A below.

Results of our financial performance were:

CNDT Q3 2025 Form 10-Q

Three Months Ended

September 30,

Commercial Government Transportation Divestitures Unallocated Costs Total

Commercial Government Transportation Unallocated Costs Total

(in millions) Reportable Segments

2 unchanged sentences

Segment depreciation and amortization $ 21 $ 12 $ 7 $ 7 $ 47

Adjusted EBITDA $ 37 $ 61 $ 4 $ — $ (62) $ 40

% of Total Revenue 47.9 % 31.0 % 21.1 % — % — % 100.0 %

Adjusted EBITDA Margin 10.1 % 25.6 % 2.5 % — % — % 5.2 %

Segment Revenue $ 385 $ 255 $ 141 $ 26 $ — $ 807

Segment profit (loss) $ 15 $ 50 $ (6) $ 3 $ (70) $ (8)

Segment depreciation and amortization $ 20 $ 10 $ 6 $ 1 $ 7 $ 44

Other adjustments (1)

$ — $ — $ — $ 4 $ 4

Adjusted EBITDA $ 43 $ 59 $ (4) $ (49) $ 49

1 unchanged sentence

Adjusted EBITDA Margin 11.9 % 26.1 % (2.9) % — % 6.8 %

Nine Months Ended

September 30,

Commercial Government Transportation Divestitures Unallocated Costs Total

(in millions) Reportable Segments

Segment Revenue $ 402 $ 216 $ 133 $ — $ 751

5 unchanged sentences

Adjusted EBITDA Margin 10.0 % 17.6 % 4.5 % — % 4.9 %

Segment Revenue $ 1,192 $ 758 $ 426 $ 180 $ — $ 2,556

Segment profit (loss) $ 48 $ 130 $ (15) $ 35 $ (213) $ (15)

Segment depreciation and amortization $ 68 $ 34 $ 19 $ 13 $ 21 $ 155

Adjusted EBITDA $ 116 $ 164 $ 4 $ 48 $ (192) $ 140

% of Total Revenue 46.6 % 29.7 % 16.7 % 7.0 % — % 100.0 %

Adjusted EBITDA Margin 9.7 % 21.6 % 0.9 % 20.4 % — % 5.5 %

(1) Other adjustments in 2026 consist of former CEO separation costs.

CNDT Q1 2026 Form 10-Q

(in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

Adjusted EBITDA and Segment Profit (Loss) Reconciliation to Income (Loss) Before Income Taxes 2026 2025

3 unchanged sentences

Direct response costs - cyber event — (25)

Other adjustments (1)

Segment Profit (Loss) $ (2) $ (36)

3 unchanged sentences

Interest expense (12) (12)

Loss on extinguishment of debt (1) (1) (1) (6)

Gain (loss) on divestitures and transaction costs, net (3) (3)

2 unchanged sentences

Income (Loss) Before Income Taxes $ (27) $ (56)

(1) Other adjustments in 2026 consist of former CEO separation costs.

Commercial Segment

Commercial revenue for the three and nine months ended September 30, 2025 declined, compared to the prior year periods, primarily due to lower volumes, partially offset by new business ramp that outpaced lost business and a multi-year licensing agreement with an existing customer.

Commercial revenue for the three months ended March 31, 2026 decreased by 10% compared to the prior year period, primarily driven by contract losses and lower volumes, partially offset by new business ramp.

Segment Profit and Adjusted EBITDA

Commercial segment profit and adjusted EBITDA for the three months ended September 30, 2025 increased, compared to the prior year period, primarily due to a multi-year licensing agreement with an existing customer, partially offset by higher fixed technology overhead.

Commercial segment profit and adjusted EBITDA for the nine months ended September 30, 2025 decreased, compared to the prior year period, primarily due to the revenue drivers noted above and higher fixed technology overhead, partially offset by cost efficiencies and the impact of lower depreciation due to the prior year write-off of internal use software and fully amortized assets.

Commercial segment profit and adjusted EBITDA for the three months ended March 31, 2026 increased, compared to the prior year period, primarily driven by cost efficiencies implemented in the second half of the prior year, including lower fixed technology overhead, partially offset by the revenue drivers noted above.

Government Segment

Government revenue for the three and nine months ended September 30, 2025 decreased, compared to the prior year periods, primarily due to contract losses, lower volumes and impacts related to the completion or extension of several implementations.

These declines were partially offset by ramp of new business.

Government revenue for the three months ended March 31, 2026 increased, compared to the prior year period, primarily driven by the ramp of new business, price increases, and a discrete benefit recognized during the quarter.

The prior year also reflected discrete negative impacts from the establishment of reserves for service level disputes in the first quarter of 2025.

These favorable items were partially offset by lost business.

Segment Profit and Adjusted EBITDA

Government segment profit for the three months ended September 30, 2025 decreased, compared to the prior year period, primarily due to contract losses and lower volumes, partially offset by rate increases on contract renewals and lower expenses, driven by our fraud prevention activities in our Government Services business resulting from investments in AI.

Government adjusted EBITDA for the three months ended September 30, 2025 was relatively flat compared to the prior year period.

Government adjusted EBITDA Margin for the three months ended September 30, 2025 improved significantly compared to the prior year period, increasing by 210 basis points, due to margin improvement initiatives and our fraud prevention activities resulting from investment in AI as noted above.

CNDT Q3 2025 Form 10-Q

Government segment profit and adjusted EBITDA for the nine months ended September 30, 2025 decreased, compared to the prior year period, primarily due to contract losses and lower volumes, partially offset by cost efficiencies and lower expenses driven by AI-enabled fraud prevention activities.

Government segment profit and adjusted EBITDA for the three months ended March 31, 2026 increased, compared to the prior year period, primarily due to the revenue drivers noted above, as well as cost efficiencies and continued lower expenses in our Government Services business.

Transportation Segment

Transportation revenue for the three months ended September 30, 2025 increased, compared to the prior year period, primarily due to equipment sales to a large Transit Solutions customer, increased volumes and favorable exchange rate movement.

These factors were partially offset by lower activity across certain smaller projects.

Transportation revenue for the nine months ended September 30, 2025 increased, compared to the prior year period, primarily due to revenue drivers mentioned above, including a contract amendment with a Transit Solutions customer.

The amended agreement included additional consideration, and a cumulative catch-up adjustment was recorded in connection with such amendment.

These increases were partially offset by a higher proportion of the non-retained portion of a Road Usage Charging contract.

Transportation revenue for the three months ended March 31, 2026 increased modestly compared to the prior year period, primarily driven by increased volumes, favorable exchange rate movements and new business ramp.

These increases were partially offset by lost business and the absence of discrete incremental revenue recognized in the prior year period related to the go-live of our congestion charging back-office solution under a Road Usage Charging contract.

CNDT Q1 2026 Form 10-Q

Segment Profit and Adjusted EBITDA

Transportation segment profit and adjusted EBITDA for the three and nine months ended September 30, 2025 increased due to the revenue drivers mentioned above and the absence of costs to transition the non-retained portion of a Road Usage Charging contract.

Revenue, Segment Profit and Adjusted EBITDA

The decrease in revenue, segment profit and Adjusted EBITDA for the three and nine months ended September 30, 2025, as compared to the prior year periods, was due to the transfer of the BenefitWallet portfolio, and the sales of the Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions businesses in 2024.

Transportation segment profit and adjusted EBITDA for the three months ended March 31, 2026 decreased compared to the prior year period, primarily driven by the absence of the discrete revenue recognized in the prior year period noted above, which had no significant associated costs, as well as higher expenses associated with this contract in the current period, partially offset by the revenue drivers noted above.

Unallocated Costs

Unallocated Costs for the three months ended September 30, 2025 decreased, compared to the prior year period, primarily due cost efficiencies in our corporate functions.

This decrease was partially offset by the increase in medical expenses resulting from higher claims.

Unallocated Costs for the nine months ended September 30, 2025 also decreased, compared to the prior year period, primarily due to a $9 million recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019, as well as cost efficiencies in our corporate functions.

These factors were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event.

Unallocated Costs for the three months ended March 31, 2026 were favorable, compared to the prior year period, primarily driven by the absence of non-recurring items recognized in the prior year, including direct response costs related to the January 2025 Cyber Event and the recovery of legal costs from an insurance carrier related to the previously disclosed State of Texas matter, as well as cost efficiencies in our corporate functions.

We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business.

We disclose these metrics to provide transparency in our performance trends.

We present certain key metrics, including Signings and Net ARR Activity below.

We present certain key metrics, including Signings and ACV Activity as defined below.

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

3 unchanged sentences

New business Annual Contract Value ("ACV") is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure.

CNDT Q3 2025 Form 10-Q

Signing information for the three and nine months ended September 30, 2025 and 2024 is as follows:

Signing information for the three months ended March 31, 2026 and 2025 is as follows:

Three Months Ended

September 30, 2025 vs.

($ in millions) 2025 2024 (3)

$ Change % Change

New business ACV $ 111 $ 111 $ — — %

New business TCV $ 246 $ 235 $ 11 5 %

Renewals TCV 213 659 (446) (68) %

Total Signings $ 459 $ 894 $ (435) (49) %

Annual recurring revenue signings (1)

$ 64 $ 63 $ 1 2 %

Non-recurring revenue signings (2)

$ 55 $ 50 $ 5 10 %

Nine Months Ended

September 30, 2025 vs.

($ in millions) 2025 2024 (3)

$ Change % Change

March 31, 2026 vs.

($ in millions) 2026 2025 $ Change % Change

New business ACV $ 114 $ 109 $ 5 5 %

8 unchanged sentences

(2) Non-recurring revenue signings are for contracts shorter than one year.

(3) Adjusted to remove new business signings of the BenefitWallet Portfolio, Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions business.

The total new business pipeline at the end of September 30, 2025 and 2024 was $3.4 billion and $3.1 billion, respectively.

CNDT Q1 2026 Form 10-Q

The total new business pipeline as of March 31, 2026 and 2025 was $3.5 billion and $3.2 billion, respectively.

Total new business pipeline is defined as total new business ACV pipeline of deals at or beyond the qualified prospect stage.

Beginning in the first quarter of 2025, we transitioned our measure of sales pipeline from TCV to ACV to align with our primary sales metric and have recast all prior period comparatives to reflect this change.

This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required.

Net ARR Activity

Net ARR Activity is a metric that is defined as Projected Annual Recurring Revenue ("ARR") for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results.

The metric annualizes the net impact to revenue.

Timing of revenue impact varies and may not be realized within the forward 12-month timeframe.

The metric is for indicative purposes only.

This metric excludes non-recurring revenue signings.

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

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

(in millions) Net ARR Activity metric

September 30, 2025 $ 25

June 30, 2025 63

This extends past the next twelve-month period to include total pipeline.

ACV Activity reflects the Company’s trailing twelve-month (“TTM”) ACV sales activity and is used to evaluate trends in overall contract value generation across periods.

Beginning in the current period, the Company replaced Net ARR Activity with ACV Activity to better reflect total annual contract value-based sales activity rather than projected recurring revenue impacts.

The metric represents total ACV generated over the trailing twelve months, with the timing of revenue varying based on contract start dates and implementation timelines.

ACV Activity during the period reflects positive fluctuations in the Company's sales activity, including the conversion of pipeline opportunities, large contract awards, renewals and extensions of existing client relationships, and expansion within key accounts across its segments.

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

(in millions) ACV Activity metric

March 31, 2026 $ 522

1 unchanged sentence

September 30, 2025 502

CNDT Q3 2025 Form 10-Q

June 30, 2025 502

March 31, 2025 498

Capital Resources and Liquidity

As of September 30, 2025 and December 31, 2024, total cash and cash equivalents were $248 million and $366 million, respectively.

We also have a $357 million revolving line of credit for our various cash needs.

As of September 30, 2025 we had $134 million outstanding borrowings under this revolving line of credit and an additional $25 million was used for letters of credit.

The net amount available to be drawn upon under our revolving line of credit as of September 30, 2025, was $198 million.

As of September 30, 2025, our total principal debt outstanding was $717 million, of which $16 million was due within one year.

As of March 31, 2026 and December 31, 2025, total cash and cash equivalents were $228 million and $233 million, respectively.

We also have a $357 million Revolving Credit Facility (the "Facility") (reducing to $187 million in October 2026 and maturing in August 2028) for our various cash needs.

As of March 31, 2026 we had $144 million outstanding borrowings under the Facility and an additional $23 million was used for letters of credit.

The net amount available under the Facility as of March 31, 2026, was $190 million and the amount of borrowings at each quarter-end may be limited by our leverage covenant.

As of March 31, 2026, our total principal debt outstanding was $725 million, of which $23 million was due within one year.

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

therefore all amounts outstanding as of March 31, 2026 are classified as long-term on our Condensed Consolidated Balance Sheets.

Refer to Note 6 – Debt in the Condensed Consolidated Financial Statements for additional debt information.

1 unchanged sentence

However, we believe that our cash on hand, projected cash flow from operations, sound balance sheet and our revolving line of credit will continue to provide sufficient financial resources to meet our expected business obligations for at least the next twelve months.

CNDT Q1 2026 Form 10-Q

Cash Flow Analysis

The following table summarizes our cash flows, as reported in our Condensed Consolidated Statement of Cash Flows in the accompanying Condensed Consolidated Financial Statements:

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2026 2025 Better (Worse)

3 unchanged sentences

Operating activities

The net increase in cash used in operating activities of $21 million, compared to the prior year period, was primarily due to lower Adjusted EBITDA due to the divestitures, unfavorable working capital trends and January 2025 Cyber Event related cash outflows.

These unfavorable changes were partially offset by lower cash interest expense.

The net improvement in cash used in operating activities of $50 million, compared to the prior year period, was primarily due to improved Adjusted EBITDA and favorable working capital results, which included, among other things, net timing differences in payment of variable compensation of $14 million, which benefited the first quarter of 2026.

These were partially offset by January 2025 Cyber Event related payments.

Investing activities

Investing cash flow decreased by $767 million mainly due to the proceeds received from the BenefitWallet Portfolio transfer and the Curbside Disposal Group and Casualty Disposal Group divestitures in 2024.

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

Investing cash flow decreased slightly from the prior year due to planned reductions in capital expenditures.

Financing activities

The decrease in cash used in financing activities was due to the voluntary prepayment of $539 million of debt using the proceeds received from the divestitures noted above in 2024.

Additionally, the prior year included $182 million of treasury stock purchases under the share repurchase program that was completed in September 2024, including $132 million purchased from Carl Icahn and certain of his affiliates.

The 2025 period includes a $50 million drawdown on our revolving line of credit and $20 million of treasury stock purchases under our current share repurchase program.

CNDT Q3 2025 Form 10-Q

The increase in cash provided by financing activities was due to a net $35 million usage of the Facility for various cash needs.

Sales of Accounts Receivable

2 unchanged sentences

Cash proceeds from this arrangement are included in cash flow from operating activities in the Condensed Consolidated Statements of Cash Flows.

The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the nine months ended September 30, 2025 and 2024 was $(12) million and $(4) million, respectively.

The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the three months ended March 31, 2026 and 2025 was $(8) million and $3 million, respectively.

Material Cash Requirements from Contractual Obligations

We believe our balances of cash and cash equivalents, which totaled $248 million as of September 30, 2025, along with cash generated by operations and amounts available for borrowing under our revolving credit facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.

At September 30, 2025, the Company’s material cash requirements include debt, leases and estimated purchase commitments.

We believe our balances of cash and cash equivalents, which totaled $228 million as of March 31, 2026, along with cash generated by operations and amounts available for borrowing under our revolving credit facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.

At March 31, 2026, the Company’s material cash requirements include debt, leases and estimated purchase commitments.

See Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operation of our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information on our material cash requirements.

2 unchanged sentences

The preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Condensed Consolidated Financial Statements and notes thereto.

There have been no significant changes during the nine months ended September 30, 2025 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

GAAP requires us to make estimates and assumptions in certain circumstances that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on amounts reported in the accompanying Condensed Consolidated Financial Statements and notes thereto.

CNDT Q1 2026 Form 10-Q

There have been no significant changes during the three months ended March 31, 2026 to our critical accounting estimates and policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Changes

13 unchanged sentences

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

CNDT Q3 2025 Form 10-Q

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

5 unchanged sentences

Adjusted EBITDA Margin is adjusted EBITDA divided by revenue.

Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items:

Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items, if applicable:

• Amortization of acquired intangible assets.

11 unchanged sentences

• Direct response costs - cyber event.

This represents costs related to investigating, remediating and responding to the cyber event that occurred in January 2025.

This represents costs related to investigating, remediating and responding to the January 2025 Cyber Event.

• Other charges (credits).

This includes Other (income) expenses, net on the Condensed Consolidated Statements of Income (Loss) and other adjustments.

This includes Other (income) expenses, net on the Condensed Consolidated Statements of Income (Loss) and other adjustments, including former CEO separation costs.

CNDT Q1 2026 Form 10-Q

Adjusted EBITDA is not intended to represent cash flows from operations, operating income (loss) or net income (loss) as defined by U.S.

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis