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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-11 · 170 added, 83 removed, 214 unchanged (54% of the section changed)

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The following Management’s Discussion and Analysis ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results.

Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

Unless otherwise noted, the discussion of our results is on a continuing operations basis and does not include discontinued operations.

Transactions and other factors significantly impacting our financial condition, results of operations and liquidity are generally discussed in order of magnitude.

Our MD&A is presented in seven sections:

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The MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes.

We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them.

We deliver digital business solutions and services spanning the commercial and government spectrum – creating valuable outcomes for our clients and the millions of people who count on them.

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

Through a dedicated global team of approximately 46,000 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.

Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of June 30, 2026.

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

These three segments are:

These two segments are:

• Commercial – Our Commercial segment provides business process services that span our clients' businesses end-to-end from the front-office to the back-office for a variety of commercial industries.

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

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

With an expanded focus on sustainability and enhancing the quality of life for citizens and communities around the world, our solutions help reduce congestion and greenhouse emissions, while creating seamless travel experiences for consumers throughout transportation ecosystems.

CNDT Q1 2026 Form 10-Q

Executive Summary

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.

Our transformation at Conduent continued during the second quarter of 2026 as we built upon the strategic priorities established earlier in the year.

Throughout the quarter, we remained focused on driving growth in targeted markets, advancing portfolio optimization initiatives, strengthening operational execution, and improving the efficiency of our cost structure.

These actions contributed to continued progress in our efforts to position the Company for sustainable long-term growth and profitability.

Our priorities remain unchanged:

accelerating execution, enforcing financial discipline, reducing costs, optimizing the portfolio, converting pipeline into growth, and simplifying the organization.

During the second quarter, we made further progress against these objectives and believe we are building momentum as we move through the remainder of 2026.

During the second quarter of 2026 we achieved the following:

CNDT Q2 2026 Form 10-Q

• Entered into agreements to sell the Transit and Tolling businesses, which together comprise our Transportation segment, for aggregate consideration of $248 million less $15 million in cash to be transferred with the Transit Business on the day of closing.

The transactions are expected to close in the second half of 2026.

Collectively, these two transactions represent an exit from the Transportation business, a strategic shift that will have a major effect on the Company's operations and financial results, and as such, qualifies for reporting as discontinued operations.

See Note 5 – Divestitures and Discontinued Operations for additional information.

As of June 30, 2026, the Company had total outstanding surety bonds of $570 million and performance and other letters of credit of $123 million.

In connection with the divestitures, $473 million of these bonds and $89 million of the letters of credit are expected to be transferred to the respective buyers.

• Launched the 2026 Restructuring Program, a company-wide transformation initiative focused on improving growth, margins, operational execution, and efficiency across our global organization.

This initiative is designed to accelerate growth, improve delivery, modernize technology and optimize support functions and is expected to deliver at least $100 million in annual savings.

• Secured a significant expansion with an existing Commercial client, adding approximately 1,000 associates to support customer experience operations.

This engagement represents one of the largest growth opportunities within our healthcare portfolio and demonstrates our ability to scale delivery capabilities while maintaining operational excellence.

• Appointed a Head of Global Shared Services to further strengthen accountability, enhance operational consistency, and improve execution across our global organization.

The leadership appointment supports the continued alignment of key global functions and enables our client delivery teams to remain focused on serving clients.

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").

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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 $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.

We have made cash disbursements of $25 million through June 30, 2026 related to this matter.

Any expense in excess of this amount up to the coverage limit have been and 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 I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (Risk Factors).

See also Note 12 – Contingencies and Litigation contained herein and Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (Risk Factors).

CNDT Q2 2026 Form 10-Q

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Three Months Ended

March 31, 2026 vs.

June 30, 2026 vs.

(in millions) 2026 2025 $ Change % Change

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Litigation settlements (recoveries), net 1 — 1 n/m

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

Other (income) expenses, net — 1 (1) — %

Total Operating Costs and Expenses 588 646 (58)

Income (Loss) Before Income Taxes (27) (56) 29

Income tax expense (benefit) 6 (5) 11

Income (Loss) Before Income Taxes from Continuing Operations (57) (43) (14)

Income tax expense (benefit) from continuing operations 12 (1) 13

Net Income (Loss) from Continuing Operations $ (69) $ (42) $ (27)

Income (Loss) from Discontinued Operations, Net of Tax (47) 2 (49)

Net Income (Loss) $ (116) $ (40) $ (76)

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.

Six Months Ended

June 30, 2026 vs.

(in millions) 2026 2025 $ Change % Change

Revenue $ 1,118 $ 1,221 $ (103) (8) %

Operating Costs and Expenses

Cost of services (excluding depreciation and amortization) 897 995 (98) (10) %

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 (excluding depreciation and amortization) 158 201 (43) (21) %

Research and development (excluding depreciation and amortization) 1 2 (1) (50) %

Depreciation and amortization 78 82 (4) (5) %

Restructuring and related costs 28 12 16 133 %

Interest expense 25 24 1 4 %

(Gain) loss on divestitures and transaction costs, net 3 6 (3) (50) %

Litigation settlements (recoveries), net 1 2 (1) (50) %

Other (income) expenses, net 3 2 1 50 %

Total Operating Costs and Expenses 1,194 1,326 (132)

Income (Loss) Before Income Taxes from Continuing Operations (76) (105) 29

Income tax expense (benefit) from continuing operations 15 (7) 22

Net Income (Loss) from Continuing Operations $ (91) $ (98) $ 7

Income (Loss) from Discontinued Operations, Net of Tax (58) 7 (65)

Net Income (Loss) $ (149) $ (91) $ (58)

CNDT Q2 2026 Form 10-Q

Revenue for the three and six months ended June 30, 2026 decreased compared to the prior year period, primarily driven by contract losses, including the loss of the largest Commercial segment customer, and lower volumes, partially offset by new business ramp.

Cost of Services (excluding depreciation and amortization)

Cost of services for the three and six months ended June 30, 2026 decreased compared to the prior year periods, 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 March 31, 2026 decreased year over year, primarily driven by non-recurring items in the first quarter of 2025.

SG&A for the three months ended June 30, 2026 decreased compared the prior year period, primarily driven by cost efficiencies in our corporate functions and lower healthcare costs resulting from reduced U.S.

SG&A for the six months ended June 30, 2026 decreased compared to the prior year period, 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.

In addition, cost efficiencies in our corporate functions and lower healthcare costs resulting from reduced 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.

The current year period SG&A also 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 as described in Note 13 – Preferred Stock and Common Stock.

Depreciation and Amortization

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

Depreciation and amortization for the three and six months ended June 30, 2026 decreased compared to the prior year periods due to lower capital investments.

Restructuring and Related Costs

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Three Months Ended

June 30, Six Months Ended

(in millions) 2026 2025 2026 2025

Severance and related costs $ 13 $ 6 $ 19 $ 7

Contract termination and other costs 2 1

Contract termination and other related costs 6 3 8 4

Asset impairments 1 (1) 1 1

Restructuring and related costs $ 20 $ 8 $ 28 $ 12

Restructuring and related costs for the three and six months ended June 30, 2026 increased compared to the prior year periods due to the 2026 Restructuring Program noted above.

Refer to Note 6 – Restructuring Programs and Related Costs to the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs.

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

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.

Interest expense for the three and six months ended June 30, 2026 increased slightly, compared to the prior year periods due to higher average outstanding debt balances under our Credit Facility.

CNDT Q2 2026 Form 10-Q

(Gain) Loss on Divestitures and Transaction Costs

(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.

These costs exclude costs directly related to the pending divestitures of our Transit and Tolling businesses, which have been reclassified to Income (loss) from discontinued operations, net of tax.

The remaining amount of these costs for the three and six months ended June 30, 2026 declined, compared to the prior year periods, due to reduced portfolio rationalization activities.

Litigation Settlements (Recoveries), Net

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

Litigation settlements (recoveries), net for the six months ended June 30, 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.

Other (income) expenses, net for the six months ended June 30, 2026 and 2025 primarily include interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains).

Income Taxes from Continuing Operations

The effective continuing operations tax rate for the three months ended June 30, 2026 was (20.8)%, compared to 2.7% for the three months ended June 30, 2025.

The June 30, 2026 rate was lower than the U.S.

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

The effective tax rate for the three months ended June 30, 2025 was lower than the U.S.

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

Excluding the impact of restructuring, divestiture-related transaction costs, other expenses, amortization, valuation allowances and discrete tax items, the normalized effective tax rate for the three months ended June 30, 2026 was 20.5%.

The normalized effective tax rate for the three months ended June 30, 2025 was 21.9%, primarily due to excluding the impact of amortization, restructuring, divestitures, valuation allowances and discrete tax items.

The effective continuing operations tax rate for the six months ended June 30, 2026 was (20.2)%, compared to 6.8% for the six months ended June 30, 2025.

The June 30, 2026 rate was lower than the U.S.

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

The effective tax rate for the six months ended June 30, 2025 was lower than the U.S.

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

Excluding the impact of restructuring, former CEO departure costs, divestiture-related transaction costs, other expenses, amortization, valuation allowances and discrete tax items, the normalized effective tax rate for the six months ended June 30, 2026 was 24.0%.

The normalized effective tax rate for the six months ended June 30, 2025 was 24.9%, 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.

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

Net Loss from Discontinued Operations, Net of Tax

Net loss from discontinued operations, net of tax for all periods presented relates to the reclassification of our former Transportation segment to discontinued operations.

The three and six months ended June 30, 2026 amounts include the impairment loss of $31 million related to our Tolling business.

See Note 5 – Divestitures and Discontinued Operations for additional information.

CNDT Q2 2026 Form 10-Q

Operations Review of Segment Revenue and Profit

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

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

• Commercial;

• Government.

• Transportation.

The information below has been revised to exclude the results of our former Transportation segment, which, as described in Note 5 – Divestitures and Discontinued Operations, has been reclassified to Discontinued Operations following the announcement of the planned divestitures of the Transit business and Tolling business.

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.

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Three Months Ended

Commercial Government Transportation Unallocated Costs Total

Commercial Government Unallocated Costs (2)

(in millions) Reportable Segments

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$ — $ — $ — $ —

Direct response costs - cyber event $ — $ — $ — $ —

Adjusted EBITDA $ 24 $ 51 $ (59) $ 16

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Segment depreciation and amortization $ 20 $ 11 $ 9 $ 40

Other adjustments $ — $ — $ — $ —

Direct response costs - cyber event $ — $ — $ — $ —

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Adjusted EBITDA Margin 7.4 % 25.2 % — % 3.8 %

CNDT Q2 2026 Form 10-Q

Six Months Ended

Commercial Government Unallocated Costs (2)

(in millions) Reportable Segments

Segment revenue $ 677 $ 441 $ — $ 1,118

Segment profit (loss) $ 29 $ 86 $ (130) $ (15)

Segment depreciation and amortization $ 38 $ 24 $ 15 $ 77

Other adjustments (1)

$ — $ — $ 4 $ 4

Adjusted EBITDA $ 67 $ 110 $ (111) $ 66

% of Total Revenue 60.6 % 39.4 % — % 100.0 %

Adjusted EBITDA Margin 9.9 % 24.9 % — % 5.9 %

Segment Revenue $ 767 $ 454 $ — $ 1,221

Segment profit (loss) $ 23 $ 77 $ (158) $ (58)

Segment depreciation and amortization $ 44 $ 21 $ 16 $ 81

Direct response costs - cyber event $ — $ — $ 25 $ 25

Adjusted EBITDA $ 67 $ 98 $ (117) $ 48

% of Total Revenue 62.8 % 37.2 % — % 100.0 %

Adjusted EBITDA Margin 8.7 % 21.6 % — % 3.9 %

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

(2) Unallocated Costs in Segment profit (loss) includes certain indirect costs that are no longer allocated to the former Transportation segment, which is now classified as Discontinued Operations.

These costs were $4 million and $6 million for the three months ended June 30, 2026 and 2025, respectively.

These costs were $8 million and $13 million for the six months ended June 30, 2026 and 2025, respectively.

CNDT Q2 2026 Form 10-Q

(in millions) Three Months Ended

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

June 30, Six Months Ended

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

Adjusted EBITDA $ 16 $ 23 $ 66 $ 48

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Other income (expenses), net — (1) (3) (2)

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

Income (Loss) Before Income Taxes From Continuing Operations $ (57) $ (43) $ (76) $ (105)

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

Commercial Segment

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.

Commercial revenue for the three and six months ended June 30, 2026 decreased, compared to the prior year periods, primarily driven by contract losses, including our largest customer, 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 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.

Commercial segment profit and Adjusted EBITDA for the three months ended June 30, 2026 decreased, compared to the prior year period, primarily due to the revenue drivers noted above, as well as negative discrete impacts from penalties and unfavorable price adjustments.

Commercial segment profit for the six months ended June 30, 2026 increased, compared to the prior year period, while Adjusted EBITDA remained relatively flat.

The increase in segment profit was 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 and discrete negative impacts from penalties and unfavorable price adjustments noted above.

Government Segment

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.

Government revenue for the three and six months ended June 30, 2026 decreased, compared to the prior year periods, primarily due to contract losses and lower volumes.

These declines were partially offset by the ramp of new business.

Segment Profit and Adjusted EBITDA

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 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.

Government segment profit and Adjusted EBITDA for the three months ended June 30, 2026 decreased, compared to the prior year period, primarily due to the revenue drivers noted above.

Government Adjusted EBITDA Margin for the three months ended June 30, 2026 decreased compared to the prior year period, primarily due to reserves recorded in the current year and a favorable reserve reversal recognized in the second quarter of 2025.

Government segment profit and Adjusted EBITDA for the six months ended June 30, 2026 increased, compared to the prior year period, primarily due to cost efficiencies and continued lower expenses in our Government Services business, partially offset by the revenue drivers noted above.

CNDT Q2 2026 Form 10-Q

Segment Profit and Adjusted EBITDA

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 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.

Unallocated Costs for the three and six months ended June 30, 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.

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

All amounts exclude our Discontinued Operations.

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

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

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

Signings information for the three and six months ended June 30, 2026 and 2025 is as follows:

Three Months Ended

March 31, 2026 vs.

June 30, 2026 vs.

($ in millions) 2026 2025 $ Change % Change

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$ 27 $ 55 $ (28) (51) %

Six Months Ended

June 30, 2026 vs.

($ in millions) 2026 2025 $ Change % Change

New business ACV $ 188 $ 188 $ — — %

New business TCV $ 356 $ 376 $ (20) (5) %

Renewals TCV 903 704 199 28 %

Total Signings $ 1,259 $ 1,080 $ 179 17 %

Annual recurring revenue signings (1)

$ 112 $ 100 $ 12 12 %

Non-recurring revenue signings (2)

$ 101 $ 94 $ 7 7 %

(1) Recurring revenue signings are for new business contracts longer than one year.

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CNDT Q2 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.

The total new business pipeline as of June 30, 2026 and 2025 was $3.0 billion and $2.7 billion, respectively.

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

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(in millions) ACV Activity metric

June 30, 2026 $ 364

March 31, 2026 376

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June 30, 2025 361

March 31, 2025 498

Capital Resources and Liquidity

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

As of June 30, 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.

As of June 30, 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 June 30, 2026, was $190 million and the amount of borrowings at each quarter-end may be limited by our leverage covenant.

Subsequent to the balance sheet date, in July 2026, the Company borrowed $183 million under its Revolving Credit Facility and there are no plans to utilize the funds at this time.

As of June 30, 2026, our total principal debt outstanding was $722 million, of which $21 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.

therefore, all amounts outstanding as of June 30, 2026 are classified as long-term on our Condensed Consolidated Balance Sheets.

Refer to Note 7 – Debt in the Condensed Consolidated Financial Statements for additional debt information.

To provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements.

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

However, we believe that our cash on hand, projected cash flow from operations (considering the impacts of the sale of our Transportation businesses), 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 Q2 2026 Form 10-Q

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

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2026 2025 Better (Worse)

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Operating activities

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.

The net improvement in cash used in operating activities of $72 million, compared to the prior year period, was primarily due to favorable working capital results, which included, among other things, the effects of the natural evolution of some of our long-term projects in the Government and former Transportation segments whereby milestones have been achieved and contractual amounts billed and collected.

This was partially offset by lower Adjusted EBITDA and higher January 2025 Cyber Event-related payments.

Investing activities

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

Investing cash usage increased from the prior year due to the absence of the $50 million cash received in the prior year related to the non-interest bearing note from the Curbside Management and Public Safety Solutions divestiture.

This was partially offset by planned reductions in capital expenditures.

Financing activities

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

The increase in cash provided by financing activities was due to a net $35 million draw-down of the Facility for various cash needs in the current year as well as the absence of Treasury stock purchases and the repurchase of the noncontrolling interest in an Australian entity, both of which were made in the prior year.

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 three months ended March 31, 2026 and 2025 was $(8) million and $3 million, respectively.

The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the six months ended June 30, 2026 and 2025 was $(1) million and $(11) million, respectively.

Material Cash Requirements from Contractual Obligations

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.

We believe our balances of cash and cash equivalents, which totaled $228 million as of June 30, 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 June 30, 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 Operations of our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information on our material cash requirements.

CNDT Q2 2026 Form 10-Q

Critical Accounting Estimates and Policies

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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.

There have been no significant changes during the six months ended June 30, 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

1 unchanged sentence

Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the U.S.

In addition, within this Form 10-Q Part I Item 2 we have discussed our financial results using non-GAAP measures.

We report our financial results in accordance with U.S.

In addition, within this Form 10-Q Part I Item 2 we have discussed our financial results using non-GAAP measures for our Continuing Operations only, unless otherwise noted.

We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results.

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Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S.

GAAP measures and should be read only in conjunction with our Consolidated Financial Statements prepared in accordance with U.S.

GAAP measures and should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with U.S.

Our management regularly uses our non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions, and providing such non-GAAP financial measures to investors allows for a further level of transparency as to how management reviews and evaluates our business results and trends.

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This represents goodwill impairment charges arising from annual or interim goodwill testing.

CNDT Q2 2026 Form 10-Q

• (Gain) loss on divestitures and transaction costs.

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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