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What changed in CONDUENT Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CONDUENT Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+335 added−319 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in CONDUENT Inc's 2024 10-K

335 paragraphs added · 319 removed · 255 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

94 edited+25 added−23 removed25 unchanged
Biggest changeWe have developed a strong leadership position in the markets that we operate in, with increased recognition across multiple stakeholders, as demonstrated by recognition from industry resources. • Industry Analyst Accolades: • NelsonHall Next Generation Benefits Administration NEAT – Leader (Focus Areas: Overall, Digital, H&W, Marketplace and TBO) • ISG Provider Lens Contact Center - Customer Experience Services US 2023 – Leader (Focus Areas: AI & Analytics, Digital Operations, Social Media Services, Work from Home) • ISG Provider Lens Finance and Accounting Outsourcing Services Global 2023 - Rising Star in Procure to Pay (P2P) • Everest Group Healthcare Payer Operations PEAK Matrix Assessment 2023 – Leader CNDT 2023 Annual Report 5 Table of Contents • Market Position: • Everest Group BPS Top 15 2023 - #10 • Gartner Market Share IT Services 2023 - BPO, Worldwide - #11 Segments We organize, manage and report our business through three reportable segments: Commercial: Our Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries.
Biggest changeCNDT 2024 Annual Report 5 Table of Contents • Industry Analyst Accolades: • NelsonHall Multi-Process HR Transformation NEAT 2024 – Leader (Focus Areas: Overall, Efficiency, North America, Europe, Multi-Country, Large Enterprise) • ISG Provider Lens Contact Center - Customer Experience Services US and Europe 2024 – Leader (Focus Areas: Digital Operations, Intelligent Agent Experience, Intelligent CX (AI & Analytics); also a Leader in Digital Operations (Global) • NelsonHall Healthcare Payer Operations Transformation NEAT 2024 – Leader (Focus Areas: Overall, Care Management & Wellness Services, Care Management Suitability, Claims Management Administration, Member Engagement Services & Enrollment, Provider Management Administration & Network Management) • Market Position: • Everest Group BPS Top 10 2024 - #8 • Gartner Market Share IT Services 2023 - BPO, Worldwide - #13 Segments We organize, manage and report our business through three reportable segments: Commercial: Our Commercial segment provides business process services that span our clients’ business processes end-to-end from the front-office to the back-office for a variety of commercial industries.
Our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer and principal financial and accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct.
Our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer, principal financial officer and principal accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct.
Our internal investments to support our business goals and client needs fall into three broad categories: • Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation, and an investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins, and further capture additional share. • Opportunities to enhance, where we have strong client relationships, a long history of expertise in that market, and legacy technology that needs to be refreshed or modernized. • Opportunities to expand, where we believe we can compete successfully, and we see the return on investment as more significant than in other businesses.
Our internal investments to support our business goals and client needs fall into three broad categories: • Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation and investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins and further capture additional share. • Opportunities to enhance, where we have strong client relationships, a long history of expertise in that market and legacy technology that needs to be refreshed or modernized. • Opportunities to expand, where we believe we can compete successfully, and we see the return on investment as more significant than in other businesses.
The CXM business generally generates income on a per call, per agent, or per percentage of sales made basis. • Business Operations Solutions • In our BOS business, we help our clients transform business processes and drive efficiency, automation and scale across essential business functions.
The CXM business generally generates income on a per call, per agent, or per percentage of sales made basis. • Business Operations Solutions • In our BOS business, we help our clients digitally transform business processes and drive efficiency, automation and scale across essential business functions.
We have operations in 26 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services. This global delivery model allows us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans.
We have operations in 24 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services. This global delivery model allows us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans.
Government Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions that streamline delivery of government benefits and programs to constituents and families in need. • Government Healthcare Solutions • We provide mission-critical 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 Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions that streamline delivery of government benefits and programs to constituents and families in need. • Government Healthcare Solutions • We provide 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.
We estimate our addressable market size in the global business process services industry to be $210 billion in 2023, according to third-party industry reports. Many industry analysts and advisors place us as a leader across several segments in this large, diverse, and growing market.
We estimate our addressable market size in the global business process services industry to be $210 billion in 2024, according to third-party industry reports. Many industry analysts and advisors place us as a leader across several segments in this large, diverse and growing market.
In 2023 our year-over-year Comparably scores held steady, with our overall culture score in the top 10% of similar sized companies, and love of team, challenging work, and flexibility to do remote work cited among the positives.
In 2024, our year-over-year Comparably scores held steady, with our overall culture score in the top 10% of similar sized companies, and love of team, challenging work, and flexibility to do remote work cited among the positives.
Each day, our people and our digital business solutions and services serve millions of end users on behalf of our clients. Of our global team, 41% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America, the Caribbean, and Europe.
Each day, our people and our digital business solutions and services serve millions of end users on behalf of our clients. Of our global team, nearly 40% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America, the Caribbean and Europe.
We streamline mission-critical operations through our deep industry experience, understanding of our clients’ operations and the latest technology solutions, to reduce costs, improve security, performance and accuracy and enable revenue growth, while enhancing the end-user experience. Our portfolio of solutions spans automated document and data management, payments processing, finance, accounting and procurement, and financial industry solutions.
We streamline client operations through our deep industry experience, understanding of our 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. Our portfolio of solutions spans automated document and data management, payments processing, finance, accounting and procurement, and financial industry solutions.
Our Competitive Strengths We possess competitive strengths that distinguish us from our competitors, including: Leadership in attractive growth markets: We are a leader in business process solutions that deliver exceptional outcomes for our clients at an unparalleled scale. Our clients continue to outsource key business processes to improve efficiencies and to accelerate performance and digital transformation.
Our Competitive Strengths We possess competitive strengths that distinguish us from our competitors, including: Leadership in attractive growth markets: We are a leader in business process solutions that deliver exceptional outcomes for our clients on an unparalleled scale. Our clients continue to outsource key business processes to improve efficiency and to accelerate performance and digital transformation.
Our case management solutions provide disease surveillance and outbreak management to make it easier to monitor, report and protect the health of communities globally. Both U.S. and international governments depend on our disease surveillance and outbreak case management solution to track public health metrics, including COVID-19, vitals, and birth defects, provide contact tracing and understand outbreak dynamics.
Our case management and tracking solutions provide disease surveillance and outbreak management to make it easier to monitor, report and protect the health of communities globally. Both U.S. and international governments depend on our disease surveillance and outbreak case management solution to track public health metrics, vitals and birth defects, provide contact tracing and understand outbreak dynamics.
Our solutions span Benefits Administration Solutions, Human Resources ("HR") and Payroll Solutions, Health Savings Accounts Solutions and Learning Solutions. On behalf of global organizations and governments, we deliver mission-critical, technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement, and overall well-being.
Our solutions span Benefits Administration, Human Resources ("HR") and Payroll, and Learning. On behalf of global organizations and governments, we deliver technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement and overall well-being.
Wood is a Chartered Global Management Accountant with an MBA with distinction from Warwick Business School and a Bachelor of Science from the University of Birmingham in the United Kingdom. CNDT 2023 Annual Report 14 Table of Contents
Wood is a Chartered Global Management Accountant with an MBA with distinction from Warwick Business School and earned his Bachelor of Science from the University of Birmingham in the United Kingdom. CNDT 2024 Annual Report 14 Table of Contents
We combine fare collection and intelligent mobility to provide clients with the added efficiency of a single point of management for all transit solutions.
We combine 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.
Our solutions span: trials, sales, access, and adherence for pharmaceutical clients; medical bill review, claims processing, care integration, subrogation and payment integrity solutions for managed care companies; and workers compensation medical bill review, intake mailroom/data capture and medical management services for claims payers and third-party administrators.
Our solutions span: clinical trials, sales, access and adherence for pharmaceutical clients; claims processing, care integration, subrogation and payment integrity solutions for managed care companies; and intake mailroom/data capture and medical management services for claims payers and third-party administrators.
Our team’s talent and dedication has resulted in Conduent serving 47 states, many of the Fortune 100 companies, and other leading companies, including: • 9 of the top 10 U.S. health insurers; • 6 of the top 10 pharma companies; • 4 of the top 5 automakers; and • 6 of the top 10 U.S. banks. • Offering Development : We continue to augment our portfolio of services and solutions with innovative technology capabilities, including cloud, data analytics, automation tools, AI and machine learning capabilities to create differentiated, high-value solutions for our clients and to enable greater penetration of attractive market segments.
Our team’s talent and dedication has resulted in Conduent serving 48 states, nearly half of the Fortune 100 companies and other leading companies, including: • 9 of the top 10 U.S. health insurers; • 6 of the top 10 pharma companies; • 4 of the top 5 automakers; and • 6 of the top 10 U.S. banks. • Offering Development : We continue to augment our portfolio of services and solutions with innovative technology capabilities, including cloud, data analytics, automation tools, generative AI ("GenAI")/ AI, digital payments and machine learning capabilities to create differentiated, high-value solutions for our clients, operate efficiently and enable greater penetration of attractive market segments.
We maintain strong relationships with our clients from initial engagement to implementation and on-going service delivery. Intellectual Property Generally, our policy is to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position.
We maintain strong relationships with our clients from initial engagement to implementation and on-going service delivery. CNDT 2024 Annual Report 10 Table of Contents Intellectual Property Generally, our policy is to seek patent protection for those inventions likely to be incorporated into our products and services or where obtaining such proprietary rights will improve our competitive position.
Recurring revenue model supported by a loyal, diverse client base: We have a broad and diverse base of clients across geographies and industries, including many Fortune 100 companies, midsize businesses and governmental entities. Our clients are increasingly satisfied as evidenced by our NPS that has increased by nearly 30 points since becoming Conduent in 2017.
Recurring revenue model supported by a loyal, diverse client base: We have a broad and diverse base of clients across multiple geographies and industries, including nearly half of the Fortune 100 companies, midsize businesses and governmental entities. Our clients are increasingly satisfied as evidenced by our NPS that has increased by 38 points since becoming Conduent.
As of December 31, 2023, we own approximately 631 U.S. patents and have 7 pending applications. Our patent portfolio evolves as new patents are awarded to us and as older patents expire. These patents expire at various dates, generally 20 years from their original filing dates.
As of December 31, 2024, we own approximately 504 U.S. patents and have 14 pending applications. Our patent portfolio evolves as new applications are filed, patents are awarded to us and as older patents expire. These patents expire at various dates, generally 20 years from their original filing dates.
Differentiated technology-led suite of multi-industry solutions: Through dedicated people, process expertise and technology, such as analytics and automation, Conduent solutions and services create value for our clients by creating efficiencies, improving experiences, reducing costs and enabling revenue growth while better serving millions of end customers that depend on us.
Differentiated technology-led suite of multi-industry solutions: Through dedicated people, process expertise and technology, such as analytics and automation, Conduent solutions and services create value across multiple industries by creating efficiencies, improving experiences, reducing costs and enabling revenue growth while better serving millions of end users that depend on us.
We consider our "onshore", “near shore” and “offshore” delivery capabilities to be a competitive advantage. Our competitors range from large international companies to relatively small firms. Many of our competitors specialize in certain areas but none compete across all the same segments in our total portfolio.
We consider our "onshore", “near shore” and “offshore” delivery capabilities to be a competitive advantage. Our competitors range from large international companies to relatively small firms. Many of our competitors specialize in certain areas but none compete across all the same segments in our total portfolio which enables us to serve our clients end-to-end across their enterprises.
We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 9 of the top 10 U.S. health plans and providing administrative and mission-critical program administration solutions for government healthcare programs in 35 states, the District of Columbia, and a federal program (U.S. Department of Labor), which includes nearly 119 million recipients supported.
We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 9 of the top 10 U.S. health plans and providing administrative and mission-critical program administration solutions for government healthcare programs serving 119 million recipients in 34 states and the District of Columbia.
Our close client relationships and successful client execution support our stable recurring revenue model and high renewal rates. CNDT 2023 Annual Report 9 Table of Contents Competition Although we encounter competition in all areas of our portfolio, we are a leader in many categories. We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support.
Our strong client relationships and successful client execution support our stable recurring revenue model and high renewal rates. Competition Although we encounter competition in all areas of our portfolio, we are a leader in many categories. We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support.
We’re on a journey to create an equitable and inclusive workplace where everyone, regardless of their differences, has an equal opportunity to thrive, do work that fulfills them, and contribute their strengths. This commitment is essential to our business strategy, fuels our work for clients, and carries forward to their millions of end-users who interact with us every day.
We continue to support an open and inclusive workplace where everyone, regardless of their differences, has an equal opportunity to thrive, do work that fulfills them and contribute their strengths. This commitment is essential to our business strategy, fuels our work for clients and carries forward to their millions of end-users who interact with us every day.
Efficiency : We continue to identify ways to reduce costs and deliver solutions more efficiently. We have simplified and standardized our operating model by removing redundant management layers and applying processes that enable faster decision-making and greater transparency and accountability.
Efficiency : We continue to identify ways to reduce costs and create new efficiencies. We have simplified and standardized our operating model by removing redundant management layers and applying processes that enable faster decision-making and greater transparency and accountability.
Our strategy is designed to deliver shareholder value by creating profitable growth, expanding operating margins, identifying process efficiencies, and employing a disciplined capital allocation strategy. We have identified specific execution strategies and key performance indicators across Growth, Efficiency and Quality.
To achieve this, we focus on delivering outcomes across three critical dimensions: Growth, Efficiency and Quality. Our strategy is designed to deliver shareholder value by creating profitable growth, expanding operating margins, identifying process efficiencies and employing a disciplined capital allocation strategy. We have identified specific execution strategies and key performance indicators across Growth, Efficiency and Quality.
Depending on the solution, we generate revenue in a variety of ways. • Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act ("COBRA") and Affordable Care Act ("ACA") administration, which are charged on a per transaction basis.
Within our Benefits Solutions, we CNDT 2024 Annual Report 7 Table of Contents principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act ("COBRA") and Affordable Care Act ("ACA") administration, which are charged on a per transaction basis.
In 2023 alone, we processed 562 million claims. Our cloud-based Medicaid Suite is a modular software as a service ("SaaS") solution for state Medicaid agencies to transform from a legacy Medicaid Management Information System ("MMIS") to a digital, interoperable, and scalable Medicaid Enterprise System.
In 2024 alone, we processed nearly 450 million claims. Our cloud-native Conduent Medicaid Suite ("CMdS") is a modular software as a service ("SaaS") solution for state Medicaid agencies to transform from a legacy Medicaid Management Information System ("MMIS") to a digital, interoperable and scalable Medicaid Enterprise System.
We continue to advance our efforts towards embedding DE&I in our talent management and recruiting practices and are proud to have received several global and regional workplace culture and diversity awards, including: • Top 100 Global Most Loved Workplaces (Newsweek: 2023) • Most Loved Workplaces in America (Newsweek: 2023) • America’s Best 500 Employers for Diversity (Forbes: 2023, 2022, 2021) • Corporate Equality Index top ranking (Human Rights Campaign: 2023, 2022) • Top Employer for LGBT+ Inclusion in India (IWEI: 2023, 2022) • LGBTQ+ Best Places to Work in Mexico (Human Rights Campaign Equidad MX: 2023,2022) • Best Place to Work for Disability Inclusion (Disability Equality Index: 2023) • Best for Vets Employers (Military Times: 2023) • ERS Silver Award (Armed Forces Covenant: 2023) Employee Learning and Development As a services company, we believe our associates are our most important asset, which is why we invest in associate growth and development programs.
We continue to advance our efforts to attract, retain and develop a diverse and engaged workforce and are proud to have received several global and regional workplace culture awards, including: • Top 100 Global Most Loved Workplaces (Newsweek: 2024, 2023) • Most Loved Workplaces in America (Newsweek: 2024, 2023) • America’s Best 500 Employers for Diversity (Forbes: 2024, 2023, 2022, 2021) • Corporate Equality Index top ranking (Human Rights Campaign: 2024, 2023, 2022) • Top Employer for LGBT+ Inclusion in India (IWEI: 2024, 2023, 2022) • LGBTQ+ Best Places to Work in Mexico (Human Rights Campaign Equidad MX: 2024, 2023,2022) CNDT 2024 Annual Report 11 Table of Contents • Best Place to Work for Disability Inclusion (Disability Equality Index: 2024, 2023) • Best for Vets Employers (Military Times: 2024, 2023) • ERS Silver Award (Armed Forces Covenant: 2024, 2023) Employee Learning and Development As a services company, we believe our associates are our most important asset, which is why we invest in associate growth and development programs.
As of December 31, 2023, we had approximately 59,000 associates in 26 countries working towards a common vision and purpose, with 41% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean, and Europe.
As of December 31, 2024, we had approximately 56,000 associates in 24 countries working towards a common vision and purpose, with approximately 40% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean and Europe.
We deliver electronic payments for government services in 37 states, including 24 Electronic Benefit Transfer ("EBT") programs, 13 EBT for WIC programs and 7 Electronic Child Care programs. In our closed-loop payments solution, we generate revenue based on the number of cases or number of card holders.
We deliver electronic payments for government services in 35 states, including 22 Electronic Benefit Transfer ("EBT") programs, 13 EBT for WIC programs and 6 Electronic Childcare programs. In our closed-loop payments solution, we generate revenue based on the number of cases or number of card holders.
The Company leverages cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical business process solutions. Through a dedicated global team of associates, 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.
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 56,000 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.
In addition, we aim to achieve additional efficiencies through the following strategies: • Automation : We will continue to invest in embedding intelligent process automation and artificial intelligence into existing operations, including automated document management and customer experience.
In addition, we aim to achieve additional efficiencies through the following strategies: • AI and Automation : We will continue to invest in embedding GenAI/AI and intelligent process automation into existing operations, including automated document management, fraud prevention and detection, claims adjudication and customer experience.
To capitalize on growth opportunities, we remain focused on several key strategies: • Sales Performance Optimization : We continue to optimize sales training, processes and account management to strengthen client and prospect relationships to gain more selling opportunities both with new clients as well as greater share of wallet with existing clients, expanding new logo sales significantly year over year including a large transportation win in Australia.
To capitalize on growth opportunities, we remain focused on several key strategies: • Sales Performance Optimization : We continue to optimize sales training, talent, processes and account management to strengthen client and prospect relationships to gain more selling opportunities both with new clients as well as greater share of wallet with existing clients.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Proxy Statements and any amendments to these reports and statements are found on the Investors section of our website.
Availability of Company Information Our internet address is www.conduent.com . Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our Proxy Statements and any amendments to these reports and statements are found on the Investors section of our website.
Our three reportable segments, Commercial, Government and Transportation, house most of our associates with approximately 42,000, 5,000 and 4,000 associates, respectively. Conduent Diversity, Equity & Inclusion ("DE&I") At Conduent, we work to build a culture where individuality is noticed and valued, and associates feel like they belong and can bring their authentic selves to work.
Our three reportable segments, Commercial, Government and Transportation, house most of our associates with approximately 40,600, 5,300 and 3,400 associates, respectively. Conduent Culture At Conduent, we work to build a culture where individuality is noticed and valued, and all associates feel like they belong and can bring their authentic selves to work.
Our people, expertise and technology elevate experiences and outcomes every day. In 2023, we managed approximately 2.3 billion customer service interactions, captured and classified 5.4 billion documents, and supported millions of employees with HR services.
Our people, process expertise and technology elevate client outcomes every day. In 2024, we managed approximately 2.3 billion customer service interactions, captured and classified 10 billion documents and claims and supported millions of employees with human resource ("HR") services.
From March 2009 to December 2016, he served as Vice President & Controller over several different operating groups, and from January 2005 to March 2009, he led International Finance & Accounting operations. Mr.
From December 2016 to May 2020, Mr. Wood served as Vice President & Chief Financial Officer of Fiserv Output Solutions. From March 2009 to December 2016, he served as Vice President & Controller over several different operating groups, and from January 2005 to March 2009, he led International Finance & Accounting operations. Mr.
This recognition was based largely on direct feedback gathered from our associates indicating a strong "emotional connection" between associates and our Company. We also continuously monitor our rankings and feedback from current associates on review sites such as Comparably.
In 2024, Conduent was recognized among Newsweek’s Top 100 Global Most Loved Workplaces. This recognition was based largely on direct feedback gathered from our associates indicating a strong "emotional connection" between associates and our Company. We also continuously monitor our rankings and feedback from current associates on review sites such as Comparably.
CNDT 2023 Annual Report 3 Table of Contents Growth : Our opportunity for growth stems from understanding our clients’ businesses and driving valuable outcomes for our clients to help them reduce costs, improve efficiencies and elevate customer experiences.
Growth : Our opportunity for growth stems from understanding our clients’ businesses and driving valuable outcomes to help them reduce costs, improve efficiencies and elevate customer experiences.
Through our solutions provided to pharmaceutical clients, we generate revenue either based on a per employee, per transaction basis or a per resource per hour basis. Through our workers compensation and medical bill review services, we generate revenue on a per click and outcome basis.
Through our solutions provided to pharmaceutical clients, we generate revenue either based on a per employee, per transaction or a per resource per hour basis.
Our Service Offerings Commercial Our technology-led solutions and services include Customer Experience Management ("CXM"), Business Operations Solutions ("BOS"), Healthcare Claims and Administration Solutions and Human Capital Solutions ("HCS"). • Customer Experience Management • We deliver a full range of omni-channel customer contact services and customer communications, including customer care, technical support, loyalty management, and outbound and inbound sales.
CNDT 2024 Annual Report 6 Table of Contents Our Service Offerings Commercial Our technology-led solutions and services include Customer Experience Management ("CXM"), Business Operations Solutions ("BOS"), Healthcare Claims and Administration Solutions and Human Capital Solutions ("HCS"). • Customer Experience Management • We deliver a full range of customer contact services and customer communications, including customer care, technical support, loyalty management and outbound and inbound sales, handling many complex interactions and representing the brands of our client.
We deliver performance by optimizing processes to be more efficient, flexible and secure. We deliver value by driving valuable outcomes and reducing costs at scale. We enhance the customer experience by improving experiences, engagement and loyalty of end users.
By understanding our clients' businesses, we deliver performance by optimizing processes to be more efficient, flexible and secure, and our innovative, tech-led solutions are highly configurable to meet our clients' needs. We deliver value by driving valuable outcomes and reducing costs at scale. We enhance customer experience by improving experiences, engagement and loyalty of end users.
Our automation tools increase productivity through advanced data extraction and handling of structured and unstructured data, improve workflow efficiency through business rules and task automation and increase operational accuracy through predictive analytics. • Technology Consolidation : We have identified and are rationalizing redundant technology systems across our lines of business.
Our automation tools increase productivity through advanced data extraction and handling of structured and unstructured data, improve workflow efficiency through business rules and task automation and increase operational accuracy through predictive analytics.
We generate revenue in a variety of ways within this business, including per item handled, time and materials, and per service such as postage, web portal hosting or data storage. Our pricing can also be based on achieving specific outcomes for services rendered.
We generate revenue in a variety of ways within this business, including per item handled, time and materials, and per service such as postage, web portal hosting or data storage.
Ross School of Business. Mr. Krawitz has served as Executive Vice President, General Counsel and Secretary since November 2019. Prior to joining Conduent, from June 2015 to November 2019, Mr. Krawitz was Executive Vice President, General Counsel and Corporate Secretary of insurance services firm York Risk Services Group, a portfolio company of Onex Corp.
Prior to joining Conduent, from June 2015 to November 2019, Mr. Krawitz was Executive Vice President, General Counsel and Corporate Secretary of insurance services firm York Risk Services Group, a portfolio company of Onex Corp. From 2014 to 2015, he was Chief Legal Officer of Veriteq Corp., a biotech company. From 1999 to 2014, Mr.
He served as President of Fiserv Output Solutions from March 2017 to June 2019. Prior to that, Mr. Skelton was the Group President and Chief Information Officer at Fiserv from April 2012 until March 2017. Mr. Skelton also held a variety of leadership roles at companies such as Ally Financial (formerly General Motors Acceptance Corporation) and Bank of America. Mr.
Skelton was the Group President and Chief Information Officer at Fiserv from April 2012 until March 2017. Mr. Skelton also held a variety of leadership roles at companies such as Ally Financial (formerly General Motors Acceptance Corporation) and Bank of America. Mr. Skelton is a former Navy fighter pilot and served in the Navy for over 20 years. Mr.
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, enhance public safety, and create seamless travel experiences for consumers throughout transportation ecosystems. • Road Usage Charging and Management Solutions • Our electronic tolling, urban congestion management and mileage-based user solutions help our clients get travelers to where they need to go while generating revenue for infrastructure improvements.
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 experiences for travelers throughout transportation ecosystems. • Road Usage Charging and Management Solutions • Our electronic tolling, urban congestion management and mileage-based user solutions help our clients accurately assess and collect payments millions of times every day to generate revenue for infrastructure improvements.
Securities and Exchange Commission ("SEC") and Nasdaq rules. Seasonality Our revenues can be affected by various factors such as our clients’ demand patterns for our services, which includes peak windows for benefit enrollment, new product launches by clients, and busy retail and travel seasons. Availability of Company Information Our internet address is www.conduent.com .
Securities and Exchange Commission ("SEC") and Nasdaq Global Select Market ("Nasdaq") rules. CNDT 2024 Annual Report 12 Table of Contents Seasonality Our revenues can be affected by various factors such as our clients’ demand patterns for our services, which includes peak windows for benefit enrollment, new product launches by clients and busy retail and travel seasons.
These solutions help empower millions of employees and span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management.
These solutions help empower millions of employees and span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, pensions administration, HR, talent, and workforce management. • Depending on the solution, we generate revenue in a variety of ways.
As of December 31, 2023, 47% of our employees were located in high-cost countries and 53% were located in low-cost countries.
As of December 31, 2024, 44% of our employees were in high-cost countries and 56% were in low-cost countries.
We serve marquee clients across multiple sectors including financial services, health and life sciences, logistics, retail, technology and telecom, travel, and hospitality sectors.
We serve marquee clients across multiple sectors including financial services, health and life sciences, logistics, retail, technology and telecom, travel and hospitality sectors, helping to resolve complex issues for the customers with empathy and effectiveness.
These businesses, augmented with new capabilities and geographic expansion, and with the opportunity to be supplemented by modest acquisitions, will address market dynamics and provide additional growth opportunities. Our Market Opportunity We operate in markets with compelling growth opportunities, including healthcare, transportation and customer experience management.
These businesses, augmented with new capabilities and geographic expansion, will address market dynamics and provide additional growth opportunities. Our Market Opportunity We operate in markets with compelling growth opportunities, including Business Process as a Service, transportation, payments and customer experience management, as well as in many industries, including healthcare and financial services.
These trademarks may have a perpetual life, subject to renewal every 10 years and may be subject to cancellation or invalidation based on certain use requirements and third-party challenges, or on other grounds. We vigorously enforce and protect our trademarks.
In the United States, we own 38 registered trademarks, with 4 pending, reflecting the many businesses we participate in. These trademarks may have a perpetual life, subject to renewal every 10 years and may be subject to cancellation or invalidation based on certain use requirements and third-party challenges, or on other grounds.
Federal-focused government services providers such as Leidos; • Transportation multi-nationals such as TransCore, Thales, Cubic and Verra Mobility; and • Smaller, niche business processing service providers and in-house departments that perform functions that could be outsourced.
Federal-focused government services providers such as Leidos; • Transportation multi-nationals such as TransCore, Thales, Cubic and INIT; and • Smaller, niche business processing service providers and in-house departments that perform functions that could be outsourced. Sales and Marketing We market and sell our solutions and services to both potential and existing clients through our global sales and business development teams.
Our focus on quality has resulted in continued client confidence and satisfaction which is reflected in our Net Promoter Score improvement. We measure “Quality” by service level agreement performance, system availability, technology incident rates, and client satisfaction. Investment Strategy : We maintain a balanced and disciplined approach to capital allocation including debt repayment, shareholder returns and internal investments.
Our focus on quality has resulted in continued client confidence and satisfaction which is reflected in our Net Promoter Score improvement as well as improved client retention rates. We measure “Quality” by service level agreement performance, system availability, technology incident rates and client satisfaction.
Each day, Conduent's solutions and services interact in the lives of millions of people in many ways — from safer, more seamless commutes that reduce congestion to streamlined benefits enrollment, digital payments, customer experiences and government healthcare claims. Our commercial portfolio includes leading solutions in attractive growth markets, including customer experience management, business operations, healthcare and human capital solutions.
Each day, our solutions and services interact in the lives of millions of people in many ways - from safer, more seamless commutes that reduce congestion to streamlined benefits enrollment, digital payments, customer experiences and government healthcare claims. Conduent’s uniqueness, loyalty and dedication to service make for a future of robust value creation and growth.
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees. Our Commercial segment is our largest segment, with segment revenue for 2023 of $1,932 million, representing 51.9% of our total revenues.
These solutions are both cross-industry and industry-specific in nature. Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees.
We offer our associates modern, digital world-class learning platforms that help them learn anywhere, anytime on a wide range of topics including technology, professional and business-related themes. We continue to invest in new, cutting-edge learning platforms to elevate their learning experience.
We offer our associates modern, digital world-class learning platforms that help them learn anywhere, anytime on a wide range of topics including technology, professional and business-related themes. As a result, we have been successful in building a culture of continuous learning, with employees taking charge of their learning and development.
Through our portfolio of digital business solutions and services, we have reached significant scale in our interactions including: • Healthcare: U.S. healthcare spending is expected to increase slightly as a percentage of GDP (from 18.3% of GDP in 2021 to 19.6% in 2031) and is projected to grow at an average rate of 5.4% per year between 2022-2031.
Through our portfolio of digital business solutions and services, we have reached significant scale in our businesses including: • Healthcare: The U.S. healthcare market is projected to grow at an average rate of 5.6% per year between 2023-2032.
As a result, we have been successful in building a culture of continuous learning, with employees taking charge of their learning and development. In addition to our digital platforms, employees are also provided job-specific technical training when they are onboarded and during their professional journey as required.
In addition to our digital platforms, employees are also provided job-specific technical training when they are onboarded and as required during their professional journey. Furthermore, we launched a new, blended learning and development program for people managers in 2024.
Our business relies on software provided, to an approximately equal extent, by both internal development and external sourcing to deliver our services. With respect to internally developed software, we claim copyright on all such software, registering works which may be accessible to third parties. In addition, we rely on maintaining source code confidentiality to assure our market competitiveness.
With respect to internally developed software, we claim copyright on all such software, registering works which may be accessible to third parties. In addition, we rely on maintaining source code confidentiality to assure our market competitiveness. With respect to externally sourced software, we rely on contracts assuring our continued access for our business use.
In 2023, in response to our continued commitment to quality and efficiency, our clients have renewed contracts with us and given us more business in adjacent service lines, and we’ve gained new clients. We measure success in “Growth” through revenue retention and new business signings, among other metrics.
In 2024, our existing clients renewed contracts with us and gave us more business in adjacent service lines and we also gained new clients. We measure success in “Growth” through revenue retention, our net Annual Recurring Revenue ("ARR") activity metric and new business signings, among other metrics.
CNDT 2023 Annual Report 10 Table of Contents People and Culture Headcount The skills, expertise, and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes.
Additionally, some trademarks were included with assets divested during the year. We vigorously enforce and protect our trademarks. People and Culture Headcount The skills, expertise and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes.
Transportation On behalf of government agencies and transportation authorities around the world, we deliver solutions serving toll and fare collection, mobility and digital payments, violation and citation management, and photo enforcement that help streamline operations and increase revenue.
CNDT 2024 Annual Report 8 Table of Contents Transportation On behalf of transportation authorities around the world, we deliver solutions to facilitate toll and fare collection, congestion and fleet management and digital payments that help streamline operations and increase revenue.
Prout earned his Bachelor's degree in business management and programming from Southern Illinois University, Carbondale. Mr. Wood has served as the Chief Financial Officer of Conduent since June 2021. He served in his previous role as Conduent’s Corporate Controller from August 2020 until June 2021 and was designated as its Principal Accounting Officer effective December 2020.
Wood has served as the Chief Financial Officer of Conduent since June 2021. He served in his previous role as Conduent’s Corporate Controller from August 2020 until June 2021 and served as its Principal Accounting Officer from December 2020 to August 2024. Prior to joining Conduent, Mr. Wood spent 15 years at Fiserv in finance and accounting leadership positions.
He was appointed Executive Vice President, Chief Information Officer in September 2019. Prior to joining Conduent, between 2005 and 2019, Mr. Prout served as Chief Technology Officer and held several IT leadership positions at Fiserv. Prior to Fiserv, he served as CIO of Cendian Corporation. Mr. Prout has also held various leadership positions at United Parcel Service. Mr.
Prout served as Chief Technology Officer of Fiserv, as well as held several IT leadership positions at Fiserv. Prior to Fiserv, he served as CIO of Cendian Corporation. Mr. Prout has also held various leadership positions at United Parcel Service. Mr. Prout earned his Bachelor's degree in business management and programming from Southern Illinois University, Carbondale. Mr.
CNDT 2023 Annual Report 6 Table of Contents • Healthcare Claims and Administration Solutions • On behalf of the healthcare and casualty insurance industries, we deliver administration, clinical support, bill review and medical management solutions across the health ecosystem to reduce costs, increase compliance and enhance utilization, while improving health outcomes and experiences for members and patients.
Our pricing can also be based on achieving specific outcomes for services rendered. • Healthcare Claims and Administration Solutions • On behalf of the healthcare industry, we deliver administration, clinical support, claims management and patient assistance solutions across the healthcare ecosystem to reduce costs, increase compliance and enhance utilization, while improving outcomes and experiences for members and patients.
Within the Government CNDT 2023 Annual Report 7 Table of Contents Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis. • Government Service Solutions • With $99 billion disbursed annually, we are a leader in government payment disbursements for federally sponsored programs including Supplemental Nutrition Assistance Program ("SNAP"), formerly known as food stamps, and Women, Infant and Children ("WIC") as well as government-initiated cash disbursements such as child support and Unemployment Insurance ("UI").
Within the Government Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis. • Government Service Solutions • With approximately $85 billion disbursed annually, we are a leader in government payment disbursements for federally sponsored programs including benefit card programs and payment card programs.
As part of our focus on DE&I awareness and education in 2023, we delivered extensive training on "inclusive leadership" and hosted panel discussions with our leadership team members on a range of DE&I topics.
As part of our focus on creating an inclusive culture, in 2024, we delivered learning on "inclusive leadership" and hosted panel discussions with our leadership team members on a range of topics such as belonging, trust, psychological safety and mental health.
We drive progress through continuous process improvement, and capitalizing on a range of staffing models, including flexible work from home and hybrid work, and by optimizing our geographic footprint. We continue to respond with agility to clients’ shifting needs and our Net Promoter Score ("NPS") has increased by nearly 30 points since becoming Conduent in 2017.
We drive progress through continuous process improvement and capitalizing on a range of staffing models, including flexible work from home and hybrid work and optimizing our geographic footprint.
Name Age Present Position Year Appointed to Present Position Conduent Officer Since Clifford Skelton* 68 President and Chief Executive Officer 2019 2019 Louis Keyes 56 Executive Vice President, Chief Revenue Officer 2023 2020 Randall King 58 Executive Vice President, Commercial Solutions 2022 2022 Michael Krawitz 54 Executive Vice President, General Counsel and Secretary 2019 2019 Mark Prout 60 Executive Vice President, Chief Information Officer 2019 2020 Stephen Wood 57 Executive Vice President, Chief Financial Officer 2021 2020 _____________________________ * Member of Conduent Board of Directors Each of the officers named above has been an officer or an executive of Conduent or its subsidiaries for less than five years.
Name Age Present Position Year Appointed to Present Position Conduent Officer Since Clifford Skelton (1) 69 President and Chief Executive Officer 2019 2019 George Abate (2) 63 Vice President, Chief Accounting Officer 2024 2024 Adam Appleby (2) 50 Executive Vice President, Public Sector Solutions 2024 2024 Mike McDaniel (2) 55 Executive Vice President, Commercial Solutions 2024 2024 Michael Krawitz 55 Executive Vice President, General Counsel and Secretary 2019 2019 Mark Prout 61 Executive Vice President, Chief Information & Technology Officer 2019 2020 Stephen Wood (2) 58 Executive Vice President, Chief Financial Officer 2021 2020 _____________________________ (1) Member of Conduent Board of Directors (2) Officer or executive officer of Conduent or its subsidiaries for less than five years As of February 19, 2025, there are no family relationships among any of the executive officers named above and any of our directors.
Electronic toll collection and public transit represent key growth drivers as governments at all levels increasingly focus on transportation infrastructure. • Business Operations Solutions: We provide high volume print and mail services, enrollment processing and personalized and targeted marketing and communications to large corporations and are a leading provider in this market with more than 5.4 billion documents captured, indexed and classified annually.
CNDT 2024 Annual Report 9 Table of Contents • Business Operations Solutions: We provide high volume print and mail services, enrollment processing and personalized communications to large corporations and are a leading provider in this market with more than 10 billion documents captured, indexed and classified annually.
Krawitz began his career at Fried Frank and earned his Bachelor of Arts in Economics and in Government from Cornell University and his Juris Doctor from Harvard Law School. CNDT 2023 Annual Report 13 Table of Contents Mr. Prout joined Conduent as Head of Information Technology in June of 2019.
Krawitz held leadership roles in public and private companies in the technology and finance sectors. Mr. Krawitz began his career at Fried Frank and earned his Bachelor of Arts in Economics and in Government from Cornell University and his Juris Doctor from Harvard Law School. Mr.
Furthermore, we launched a new, blended learning and development program for people managers in 2023. Our learning platforms are widely utilized with about 2 million learning assets completed in 2023 and have great learning effectiveness scores for satisfaction, skill improvement and on the job practical application.
Our learning platforms are widely utilized with about 1.63 million learning assets completed in 2024 and have great learning effectiveness scores for satisfaction, skill improvement and on the job practical application. We also ensure that our associates complete regulatory and compliance training on topics required based on their role and geography.
While we believe that our portfolio of patents and applications has value, in general, no single patent is essential to our business or to any individual segment of our business. In addition, any of our proprietary rights could be challenged, invalidated, or circumvented, or may not provide significant competitive advantages.
Additionally, approximately 140 U.S. patents and applications were included with assets divested with the public safety business. While we believe that our portfolio of patents and applications has value, in general, no single patent is essential to our business or to any individual segment of our business.
We serve a substantial portion of the public sector, providing market-leading transportation and government offerings such as smart mobility solutions that seamlessly connect travelers and digital benefit payments that constituents depend on every day. Our transportation portfolio includes Road Usage Charging, Transit, Curbside Management and Public Safety solutions.
We serve a substantial portion of the public sector, providing market-leading government and transportation offerings that streamline enrollment and automate claims for government-funded programs such as Medicaid and accurately deliver benefits payments that residents depend on every day and seamlessly move travelers.
Sales and Marketing We market and sell our business process solutions and services to both potential and existing clients through our global sales and business development teams. Additionally, we have dedicated “solution architects” who work with clients to better understand their business requirements and tailor our standard solutions to meet their unique needs.
Additionally, we have dedicated account managers and solution architects who work with clients to better understand their business requirements and tailor our standard solutions to meet their unique needs. Our solutions solve clients' business issues and help them achieve their desired business outcomes.
Within transit, we primarily generate revenue via implementation of end projects (hardware and software, maintenance services, repair and sale of spare parts), and the building and operation of fare collection systems. • Curbside Management Solutions • We deliver intelligent curbside management systems that simplify parking programs and deliver convenient and hassle-free experiences for drivers.
Within transit, we primarily generate revenue via implementation of end projects (hardware and software, maintenance services, repair and sale of spare parts), and the building and operation of fare collection systems. • Commercial Vehicles • We provide computer-aided dispatch/automatic vehicle location technology to help clients manage their fleet operations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe loss of key senior management or the failure to attract and retain necessary technical personnel and qualified subcontractors could materially adversely affect our results of operations and financial condition. Our success depends, in part, upon key managerial and technical personnel, including our ability to attract and retain additional qualified personnel, as well as qualified subcontractors.
Biggest changeOur success depends, in part, upon key managerial and technical personnel, including our ability to attract and retain additional qualified personnel, as well as qualified subcontractors. The loss of certain key personnel, such as our Chief Executive Officer ("CEO"), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.
Divestitures may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction, which would adversely affect our financial results. Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures to our Consolidated Financial Statements for additional information about our divestitures.
Divestitures may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction, which would adversely affect our financial results. Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale to our Consolidated Financial Statements for additional information about our divestitures.
We are potentially subject to various contingent liabilities that are not reflected on our balance sheet, including those arising as a result of being involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities laws; governmental and non-governmental entity contracting, servicing and governmental entity procurement laws; intellectual property laws; environmental laws; employment laws; the Employee Retirement Income Security Act of 1974 ("ERISA"); and other laws, regulations and contractual undertakings, as discussed under Note 16 – Contingencies and Litigation to the Consolidated Financial Statements.
We are potentially subject to various contingent liabilities that are not reflected on our balance sheet, including those arising as a result of being involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities laws; governmental and non-governmental entity contracting, servicing and governmental entity procurement laws; intellectual property laws; environmental laws; employment laws; the Employee Retirement Income Security Act of 1974 ("ERISA"); and other laws, regulations and contractual undertakings, as discussed under Note 15 – Contingencies and Litigation to the Consolidated Financial Statements.
If a client is not satisfied with the quality of work performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors CNDT 2023 Annual Report 16 Table of Contents fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.
If a client is not satisfied with the quality of work CNDT 2024 Annual Report 16 Table of Contents performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.
It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or that disruptions may continue to occur while we enhance this infrastructure.
It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or disruptions may continue to occur while we enhance this infrastructure.
Our employees and customers in a particular country or region in the world may be impacted as a result of a variety of diversions, including: geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity; macroeconomic conditions, such as the level of inflation, economic activity and interest rates; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages, major public health issues, including pandemics (such as the coronavirus); and significant local, national or global events capturing the attention of a large part of the population.
Our employees and customers in a particular country or region in the world may be impacted as a result of a variety of diversions, including: geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity (including the war in the Ukraine and the conflict in the Middle East); macroeconomic conditions, such as the level of inflation, economic activity and interest rates; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages, major public health issues, including pandemics (such as the coronavirus); and significant local, national or global events capturing the attention of a large part of the population.
In addition, it can be very costly to defend litigation and these costs could materially adversely affect our results of operations and financial condition. Refer to Note 16 – Contingencies and Litigation to the Consolidated Financial Statements.
In addition, it can be very costly to defend litigation and these costs could materially adversely affect our results of operations and financial condition. Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements.
In addition, we are subject to the examination of our income tax returns by the United States Internal Revenue Service and other tax authorities around the world. The company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.
In addition, we are subject to the examination of our income tax returns by the United States Internal Revenue Service and other tax authorities around the world. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.
As a leader in business process solutions, we leverage cloud computing, artificial intelligence, machine learning and advanced analytics. We act as a trusted business partner in both front-office and back-office platforms, providing interactions on a substantial scale with our customers and other third-parties.
As a leader in business process solutions, we leverage cloud computing, AI, machine learning and advanced analytics. We act as a trusted business partner in both front-office and back-office platforms, providing interactions on a substantial scale with our customers and other third-parties.
Cybersecurity failure might be caused by computer hacking, malware, computer viruses, worms and other destructive software, “cyber-attacks” and other malicious activity, as well as natural disasters, power outages, terrorist attacks and similar events. Operational or business delays may also result from the disruption of network or information systems and subsequent remediation activities.
Cybersecurity failure might be caused by computer hacking, compromised credentials, malware, computer viruses, worms, trojans, ransomware and other destructive software, “cyber-attacks” and other malicious activity, as well as natural disasters, power outages, terrorist attacks and similar events. Operational or business delays may also result from the disruption of network or information systems and subsequent remediation activities.
CNDT 2023 Annual Report 15 Table of Contents Our ability to recover capital and other investments in connection with our contracts is subject to risk.
CNDT 2024 Annual Report 15 Table of Contents Our ability to recover capital and other investments in connection with our contracts is subject to risk.
Our results of operations and financial condition may be materially adversely affected by conditions abroad, including local economics, political environments, fluctuating foreign currencies and shifting regulatory schemes. Approximately 11% of our 2023 revenues was generated from operations outside the United States. In addition, we maintain significant operations outside the United States.
Our results of operations and financial condition may be materially adversely affected by conditions abroad, including local economics, political environments, fluctuating foreign currencies and shifting regulatory schemes. Approximately 14% of our 2024 revenues was generated from operations outside the United States. In addition, we maintain significant operations outside the United States.
These may restrict our and our subsidiaries’ ability to take some or all of the following actions: • incur or guarantee additional indebtedness or sell disqualified or preferred stock; • pay dividends on, make distributions in respect of, repurchase or redeem capital stock; • make investments or acquisitions; CNDT 2023 Annual Report 23 Table of Contents • sell, transfer or otherwise dispose of certain assets; • create liens; • enter into sale/leaseback transactions; • enter into agreements restricting the ability to pay dividends or make other intercompany transfers; • consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets; • enter into transactions with affiliates; • prepay, repurchase or redeem certain kinds of indebtedness; • issue or sell stock of our subsidiaries; and/or • significantly change the nature of our business.
These may restrict our and our subsidiaries’ ability to take some or all of the following actions: • incur or guarantee additional indebtedness or sell disqualified or preferred stock; • pay dividends on, make distributions in respect of, repurchase or redeem capital stock; • make investments or acquisitions; • sell, transfer or otherwise dispose of certain assets; • create liens; • enter into sale/leaseback transactions; • enter into agreements restricting the ability to pay dividends or make other intercompany transfers; • consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets; • enter into transactions with affiliates; • prepay, repurchase or redeem certain kinds of indebtedness; • issue or sell stock of our subsidiaries; and/or • significantly change the nature of our business.
Changes to existing laws, the introduction of new laws in this area or our failure to comply with existing laws that are applicable to us may subject us to, among other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, CNDT 2023 Annual Report 19 Table of Contents restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.
Changes to existing laws, the introduction of new laws in this area or our failure to comply with existing laws that are applicable to us may subject us to, among other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.
We cannot guarantee that our stock repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value. Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.
We cannot guarantee that our stock repurchase program, although fully utilized to the full value approved, will enhance long-term stockholder value. Repurchases could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.
Future service disruptions could hinder our ability to attract new customers, cause us to incur legal liability, contractual penalties or issue service credits to our customers and cause us to lose current customers, each of which could have a material adverse effect on our business, results of operations and financial condition.
Future service disruptions could hinder CNDT 2024 Annual Report 18 Table of Contents our ability to attract new customers, cause us to incur legal liability, contractual penalties or issue service credits to our customers and cause us to lose current customers, each of which could have a material adverse effect on our business, results of operations and financial condition.
If unauthorized parties gain physical access to one of our or one of our third-party service providers’ facilities or gain electronic access to our or one of our third-party service providers’ information systems, such access could result in, among other things, unfavorable publicity and significant damage to our brand, governmental inquiry, oversight and possible regulatory action, difficulty in marketing our services, loss of existing and potential customers, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations for substantial damages related to the theft or misuse of such information, any of which could materially adversely affect our results of operations and financial condition.
Such access could result in, among other things, unfavorable publicity and significant damage to our brand, governmental inquiry, oversight and possible regulatory action, difficulty in marketing our services, loss of existing and potential customers, allegations by our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations for substantial damages related to the theft or misuse of such information, any of which could materially adversely affect our results of operations and financial condition.
CNDT 2023 Annual Report 25 Table of Contents Increases in the cost of voice and data services or significant interruptions in such services could materially adversely affect our results of operations and financial condition. Our business is significantly dependent on voice and data services provided by various communication and data service providers around the world.
Increases in the cost of voice and data services or significant interruptions in such services could materially adversely affect our results of operations and financial condition. Our business is significantly dependent on voice and data services provided by various communication and data service providers around the world.
We may be required to record additional charges to earnings during the period in which any impairment of our goodwill or other intangible assets is determined which could adversely impact our results of operations. As of December 31, 2023, our goodwill balance was $651 million, which represented 20.6% of total consolidated assets.
We may be required to record additional charges to earnings during the period in which any impairment of our goodwill or other intangible assets is determined which could adversely impact our results of operations. As of December 31, 2024, our goodwill balance was $609 million, which represented 23.4% of total consolidated assets.
We are a holding company and, therefore, may not be able to receive dividends or other payments in needed amounts from our subsidiaries. Our principal assets are the shares of capital stock and indebtedness of our subsidiaries.
CNDT 2024 Annual Report 26 Table of Contents We are a holding company and, therefore, may not be able to receive dividends or other payments in needed amounts from our subsidiaries. Our principal assets are the shares of capital stock and indebtedness of our subsidiaries.
Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery.
Even if we believe a claim is covered by insurance, insurers may dispute our CNDT 2024 Annual Report 22 Table of Contents entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery.
If an event of default occurs, the lenders would have the right to accelerate the repayment of such debt and the event of default or acceleration may result in the acceleration of the repayment of any other of our debt to which a cross-default or cross-acceleration provision applies.
If an event of default occurs, the lenders would have the right to accelerate the repayment of such CNDT 2024 Annual Report 24 Table of Contents debt and the event of default or acceleration may result in the acceleration of the repayment of any other of our debt to which a cross-default or cross-acceleration provision applies.
We are susceptible to breach of security systems which may result in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.
We have in the past been, and remain, susceptible to breach of security systems which may result and has resulted in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.
Refer to Note 8 – Goodwill and Intangible Assets, Net to our Consolidated Financial Statements for additional information about our goodwill impairments. Our significant indebtedness could materially adversely affect our results of operations and financial condition. We have and will continue to have a significant amount of debt and other obligations.
CNDT 2024 Annual Report 23 Table of Contents Refer to Note 7 – Goodwill and Intangible Assets, Net to our Consolidated Financial Statements for additional information about our goodwill impairments. Our significant indebtedness could materially adversely affect our results of operations and financial condition. We have and will continue to have a significant amount of debt and other obligations.
Moreover, a security breach could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures that we employ to guard such personal information against "cyber-attacks" and to maintain various systems and data centers for our customers.
Moreover, security breaches have and could require us to devote significant management resources to address the problems created by the security breach and to expend significant additional resources to upgrade further the security measures that we employ to guard such personal information against "cyber-attacks" and to maintain various systems and data CNDT 2024 Annual Report 21 Table of Contents centers for our customers.
This makes the bidding process for new CNDT 2023 Annual Report 24 Table of Contents contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.
This makes the bidding process for new contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.
CNDT 2023 Annual Report 22 Table of Contents Additionally, we may selectively pursue strategic acquisitions, investments and joint ventures. We also may enter into relationships with other businesses to expand our products or our ability to provide services.
Additionally, we may selectively pursue strategic acquisitions, investments and joint ventures. We also may enter into relationships with other businesses to expand our products or our ability to provide services.
There can be no assurance that the outcomes from these examinations will not have an adverse effect on the company’s provision for income taxes and cash tax liability. CNDT 2023 Annual Report 26 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
There can be no assurance that the outcomes from these examinations will not have an adverse effect on our provision for income taxes and cash tax liability. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
CNDT 2023 Annual Report 18 Table of Contents Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
Economic and political conditions could affect our clients’ businesses and the markets they serve. We have non-recurring revenue, which subjects us to a risk that our revenues and cash flows from operations may fluctuate from period to period. Revenue generated from our non-recurring services may fluctuate due to factors both within and outside of our control.
We have non-recurring revenue, which subjects us to a risk that our revenues and cash flows from operations may fluctuate from period to period. Revenue generated from our non-recurring services may fluctuate due to factors both within and outside of our control.
CNDT 2023 Annual Report 21 Table of Contents Our results of operations and financial condition could be materially adversely affected by legal and regulatory matters.
Our results of operations and financial condition could be materially adversely affected by legal and regulatory matters.
Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations.
Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations. There is no guarantee that the repurchase program, even though fully utilized, will enhance long-term stockholder value.
Any of these could materially adversely affect our results of operations and financial condition. Our data systems, information systems and network infrastructure may be subject to hacking or other cybersecurity threats and other service interruptions, which could expose us to liability, impair our reputation or temporarily render us unable to fulfill our service obligations under our contracts.
CNDT 2024 Annual Report 20 Table of Contents Our data systems, information systems and network infrastructure may be subject to hacking or other cybersecurity threats and other service interruptions, which could expose us to liability, impair our reputation or temporarily render us unable to fulfill our service obligations under our contracts.
Hacking, CNDT 2023 Annual Report 20 Table of Contents malware, phishing, viruses and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.
Unauthorized access, hacking, malware, phishing, viruses, worms, trojans, ransomware and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.
Actual losses on client balances could differ from current estimates and, as a result, may require adjustment of our receivables for unbilled services. Our receivables include long-term contracts.
The profitability of certain of our large contracts depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed. Actual losses on client balances could differ from current estimates and, as a result, may require adjustment of our receivables for unbilled services. Our receivables include long-term contracts.
In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents. If we fail to meet industry data security standards, our ability to meet contractual obligations may be impaired and result in contractual damage or contract breach claims.
In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us, or the carrier may decline to cover us, against claims related to security incidents, cyberattacks and other related incidents.
Many governments, regulators, investors, associates, clients and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human rights, and diversity, equity and inclusion.
Although there has been a recent shift in U.S. federal policy under the new presidential administration, many governments, regulators, investors, associates, clients and other stakeholders have been and/or remain focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human rights, and diversity, equity and inclusion.
In some of our services lines, we are contractually subject to industry data security standards.
If we fail to meet industry data security standards, our ability to meet contractual obligations may be impaired and result in contractual damage or contract breach claims. In some of our services lines, we are contractually subject to industry data security standards.
If we are unable to collect our receivables for billed or unbilled services, our results of operations and financial condition could be materially adversely affected. The profitability of certain of our large contracts depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed.
CNDT 2024 Annual Report 25 Table of Contents If we are unable to collect our receivables for billed or unbilled services, our results of operations and financial condition could be materially adversely affected.
The loss of certain key personnel, such as CNDT 2023 Annual Report 17 Table of Contents our Chief Executive Officer ("CEO"), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.
CNDT 2024 Annual Report 17 Table of Contents The loss of key senior management or the failure to attract and retain necessary technical personnel and qualified subcontractors could materially adversely affect our results of operations and financial condition.
In May 2023, our Board of Directors authorized a three-year stock repurchase program for up to $75 million of our common stock. Under the repurchase program, repurchases can be made from time to time using open market transactions, and may include Rule 10b5-1 trading plans, all in accordance with the rules of the SEC and other applicable legal requirements.
In May 2023, our Board of Directors authorized a three-year stock repurchase program for up to $75 million of our common stock. This program was completed in September 2024.
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The specific timing, price and size of the purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations consistent with our capital allocation strategy.
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Our use of artificial intelligence involves risks such as potential liability, regulatory issues, competition, and reputational damage. Artificial intelligence (“AI”) technologies create specific risks that require tailored governance and review. Insufficient oversight could lead to legal liability, financial loss, and reputational harm. We use AI to sort, organize, analyze, and generate data for business purposes.
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The repurchase program does not obligate us to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.
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AI encompasses machine learning, generative AI, and other data processing techniques. The utilization of AI, whether implemented directly by us or in collaboration with third parties, will necessitate ongoing investment in governance and security resources to help ensure our responsible use of AI and to safeguard against potential risks and vulnerabilities.
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As these technologies evolve, some services and tasks currently performed by our associates may be replaced by automation, including AI-enabled solutions, which could lead to reduced demand for our services and/or reduce the required headcount for us to provide services. The use of AI carries considerable risks, and we cannot guarantee the achievement of intended outcomes.
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While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise. As an evolving technology, AI may occasionally produce incomplete or misleading results.
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Despite training and risk management efforts, there is a possibility that employees might misuse AI, either intentionally or unintentionally. Should our AI generate suboptimal or contentious outcomes, or if public perception of AI shifts negatively due to perceived risks, we may encounter operational challenges, competitive disadvantages, legal liabilities, reputational harm, or other business impacts.
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AI-related legal and regulatory frameworks are evolving due to concerns about bias, discrimination, transparency, and security. The use of AI technologies involves issues associated with intellectual property, data privacy, consumer protection, competition, and equal opportunity, with potential for new regulations.
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Several jurisdictions where we operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data, CNDT 2024 Annual Report 19 Table of Contents such as the European Union’s AI Act and the U.S.’s Executive Order on AI, and the recent elections may influence the regulatory landscape in the United States.
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New or expanded AI laws could raise compliance costs and pose unpredictable risks, which could materially adversely affect our results of operations and financial condition.
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Any of these could materially adversely affect our results of operations and financial condition.
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We have in the past experienced, and in the future could experience, an unauthorized party gaining physical access to one of our or one of our third-party service providers’ facilities or gain electronic access to our or one of our third-party service providers’ information systems.
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Economic and political conditions could affect our clients’ businesses and the markets they serve. The loss of significant clients or a significant reduction in volume from our significant clients as a result of these or other reasons would materially adversely affect our results of operations and financial condition.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe do not believe that any incidents that have occurred prior to the date of this report have had or will have a material adverse effect on our business strategy, results of operations, reputation or financial position. Future cybersecurity incidents could, however, materially affect our strategy, results of operations, reputation or financial condition. See Item 1A.
Biggest changeNew information concerning any known cybersecurity incidents that have occurred prior to the date of this report, however, could change our current belief and could result in a material adverse effect on our business strategy, results of operations, reputation or financial condition. In addition, future cybersecurity incidents could materially affect our strategy, results of operations, reputation or financial condition.
As noted above, we face a number of cybersecurity risks in connection with our business and, from time to time, experience or are subject to a variety of cybersecurity incidents that arise during the ordinary course of its business.
As noted above, we face a number of cybersecurity risks in connection with our business and, from time to time, experience or are subject to a variety of cybersecurity incidents that arise during the ordinary course of our business.
Our systems that manage customer-facing products, where appropriate and contractually required, are certified/attested to applicable security standards, including, without limitation, National Institute of Standards and Technology's publication (NIST 800-53 rev 5 moderate baseline), Payment Card Industry Data Security Standard ("PCI-DSS"), Health Insurance Portability and Accountability Act ("HIPAA"), International Organization for Standardization ("ISO") and, the International Electrotechnical Commission ("IEC") Standard (ISO/IEC 27001:2013 & ISO 9001:2015).
Our systems that manage customer-facing products, where appropriate and contractually required, are certified/attested to applicable security standards, including, without limitation, National Institute of Standards and Technology ("NIST") (NIST Special Publication 800-53 rev 5 moderate baseline), Payment Card Industry Data Security Standard ("PCI-DSS"), Health Insurance Portability and Accountability Act ("HIPAA"), International Organization for Standardization ("ISO"), and the International Electrotechnical Commission ("IEC") Standard (ISO/IEC 27001:2013 & ISO 9001:2015).
ITEM 1C. CYBERSECURITY MATTERS As a leader in business process solutions, we leverage cloud computing, artificial intelligence, machine learning, automation and advanced analytics, our systems and information technology, and that of our third-party providers, and our interfaces with our customers are critical to our business, operating results, growth, prospects and reputation.
ITEM 1C. CYBERSECURITY MATTERS As a leader in business process solutions, we leverage cloud computing, AI, machine learning, automation and advanced analytics, our systems and information technology, and that of our third-party providers, and our interfaces with our customers are critical to our business, operating results, growth, prospects and reputation.
This program is integrated into our overall Enterprise Risk Management (“ERM”) program, which is designed to strengthen our risk management capabilities by developing and implementing a governance structure, risk management framework, and processes that enable the identification, assessment, monitoring and management of risks.
These processes are integrated into our overall Enterprise Risk Management (“ERM”) program, which is designed to strengthen our risk management capabilities by developing and implementing a governance structure, risk management framework, and processes that enable the identification, assessment, monitoring, and management of risks.
The underlying controls of our cybersecurity risk management program are based upon industry standards for cybersecurity and information technology. Our corporate information technology environment aligns with Center for Internet Security Critical Security Controls (“CIS CSC”).
The underlying controls of our cybersecurity risk management program are based upon industry standards for cybersecurity and information technology. Our corporate information technology environment aligns with the Center for Internet Security ("CIS") Critical Security Controls (“CSC”).
CNDT 2023 Annual Report 27 Table of Contents We rely on a variety of security software, including cloud-based technology to scan and analyze for vulnerable software or misconfigurations, for our operations and our business processing solutions. These systems are either developed by us or licensed from or maintained by third-party providers.
We rely on a variety of security software, including cloud-based technology to scan and analyze for vulnerable software or misconfigurations, for our operations and our business processing solutions. These systems are either developed by us or licensed from or maintained by third-party providers.
Our Board of Directors (the “Board”) maintains oversight responsibility for our ERM program. This oversight is facilitated primarily through the Risk Oversight Committee of the Board (the “Risk Committee”), which reviews the ERM program, related assessments and remediation activities for subsequent review by the Board.
This oversight is facilitated primarily through the Risk Oversight Committee of the Board (the “Risk Committee”), which reviews the ERM program, related assessments and remediation activities for subsequent review by the Board.
Our policies and procedures concerning cybersecurity matters include processes to safeguard our information systems, monitor these systems, protect the confidentiality and integrity of our data, train and raise awareness of cybersecurity threats among employees, detect intrusions into our systems and respond to cybersecurity incidents.
Our policies and CNDT 2024 Annual Report 27 Table of Contents procedures concerning cybersecurity matters include processes to safeguard our information systems, monitor these systems, protect the confidentiality and integrity of our data, train and raise awareness of cybersecurity threats among employees, detect intrusions into our systems, and respond to cybersecurity incidents.
Risk Factors for additional information on how risks could materially affect the Company.
See Item 1A. Risk Factors for additional information on how risks could materially affect the Company.
We assess key third-party cybersecurity controls through a cybersecurity questionnaire, require the implementation of certain security controls in our contracts where applicable, maintain continuous monitoring during the engagement of the third party, and maintain the ability to discontinue our engagement with a key vendor if its cybersecurity posture fails to meet pre-established standards.
We assess key third-party cybersecurity controls through a cybersecurity questionnaire, require the implementation of certain security controls in our contracts where applicable, monitor the third party, and maintain the ability to discontinue our engagement with a key vendor if its cybersecurity posture fails to meet pre-established standards. Our Board of Directors (the “Board”) maintains oversight responsibility for our ERM program.
We also engage third parties and cybersecurity consultants on a regular basis to assess, test, and assist with the implementation of our risk management strategies, policies and procedures to enhance our detection, response and management of cybersecurity risks and compliance frameworks, including but not limited to, consultants who assist with risk assessment, assist with our PCI-DSS compliance assessments, assess our systems’ alignment with the NIST Cybersecurity Framework, ensuring adherence to ISO audits.
We also engage third parties and cybersecurity consultants on a regular basis to assess, test, and assist with the implementation of our risk management strategies, policies and procedures to enhance our detection, response and management of cybersecurity risks and compliance frameworks, including but not limited to, consultants who assist with risk assessment, third parties who assist with our PCI-DSS compliance assessments, and auditors who audit our systems to ensure adherence to the relevant standard under evaluation.
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In addition, the Company has implemented an Incident Response Materiality Assessment Committee (“IRMAC”), which consists of members from the Senior Leadership Team and is responsible for assessing the materiality of a cybersecurity incident referred to it by the Cybersecurity Incident Response Team (“CSIRT”).
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Procedures exist to CNDT 2024 Annual Report 28 Table of Contents ensure the Risk Committee of the Board of Directors, and if appropriate, the full Board of Directors are notified about cybersecurity incidents being assessed by the IRMAC.
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As of the date of this report, we do not believe that any risks from cybersecurity threats, including as a result of any known cybersecurity incidents, have materially affected, or are reasonably likely to materially affect, the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeBecause of the interrelation of our business segments, each of the segments uses substantially all of these properties at least in part. During 2023, we aggressively pursued portfolio reduction opportunities through lease terminations, subleases and consolidation of properties. As a result, the surplus property portfolio was reduced by approximately 0.7 million square feet during the year ended December 31, 2023.
Biggest changeBecause of the interrelation of our business segments, each of the segments uses substantially all of these properties at least in part. We have aggressively pursued portfolio reduction opportunities through lease terminations, subleases and consolidation of properties. Partially offsetting these reductions, in 2024, we executed strategic portfolio expansions in the Philippines and Guatemala.
LEGAL PROCEEDINGS The information set forth under Note 16 – Contingencies and Litigation to the Consolidated Financial Statements in Part II, Item 8 is incorporated herein by reference.
LEGAL PROCEEDINGS The information set forth under Note 15 – Contingencies and Litigation to the Consolidated Financial Statements in Part II, Item 8 to this 10-K is incorporated herein by reference.
The size of our property portfolio as of December 31, 2023 was approximately 4.9 million square feet at an annual operating cost (lease costs and expenses) of approximately $135 million and was composed of 186 leased properties and 4 owned properties. We believe that our current facilities are suitable and adequate for our current businesses.
The size of our property portfolio as of December 31, 2024 was approximately 4.6 million square feet at an annual operating cost (lease costs and expenses) of approximately $118 million and was composed of 158 leased properties and 3 owned properties. We believe that our current facilities are suitable and adequate for our current business.
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Additional leased and owned properties may become surplus in the future as we continue to optimize our workforce location strategy based on existing conditions and leverage enhanced work-from-home capabilities.
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As a result, the portfolio net reduction was approximately 0.3 million square feet during the year ended December 31, 2024. We will continue efforts to optimize our workforce location strategy. ITEM 3.
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Although we are obligated to maintain our leased surplus properties through required contractual lease periods, we continue to examine opportunities to dispose of or sublease these properties and further align our business units in an effort to best optimize the portfolio. CNDT 2023 Annual Report 28 Table of Contents ITEM 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph CNDT 2023 Annual Report 30 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended December 31, 2023 was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as a Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions) October 1-31, 2023 1,085,481 $ 3.27 1,085,481 $ 64 November 1-30, 2023 3,872,447 2.75 3,872,447 54 December 1-31, 2023 1,656,682 3.40 1,656,682 48 Total 6,614,610 $ 3.00 6,614,610 $ 48 (1) On May 16, 2023, the Board of Directors authorized a three-year share repurchase program, granting approval for the Company to repurchase up to $75 million of its common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers On May 16, 2023, the Board of Directors authorized a three-year share repurchase program, granting approval for the Company to repurchase up to $75 million of its common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.
Conduent Common Stock Dividends We did not pay any dividends on our common stock in 2023. We intend to retain future earnings for use in the operation of our business and to fund future growth. We do not anticipate paying any dividends on our common stock for the foreseeable future.
Conduent Common Stock Dividends We did not pay any dividends on our common stock in 2024. We intend to retain future earnings for use in the operation of our business and to fund future growth. We do not anticipate paying any dividends on our common stock for the foreseeable future.
Securities Authorized for Issuance Under Existing Equity Compensation Plans Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
CNDT 2024 Annual Report 30 Table of Contents Securities Authorized for Issuance Under Existing Equity Compensation Plans Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ITEM 6. [RESERVED]
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock Exchange Information The common stock of Conduent began trading on January 3, 2017, on the New York Stock Exchange, under the ticker "CNDT".
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock Exchange Information The common stock of Conduent trades on Nasdaq under the ticker "CNDT". Common Shareholders of Record There w ere 12,008 shareholders o f record as of January 31, 2025.
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In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the Nasdaq, where it remains listed under the ticker "CNDT". Common Shareholders of Record There w ere 13,038 shareholders o f record as of January 31, 2024.
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Performance Graph Historically, we have presented the S&P 500 as our published market index and the S&P 500 Data Processing and Outsourced Services index as our published industry index.
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(2) Average share price includes transaction commissions. The timing and number of shares repurchased depended on a variety of factors, including price, capital availability, legal requirements and economic and market conditions.
Added
In 2024, we reevaluated our market and industry indices and determined that, as we are a component of the Russell 2000 and S&P 1500 Data Processing and Outsourced Services indices, these would be more appropriate indices for comparative purposes.
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This share repurchase program does not obligate the Company to acquire a specific number of shares and the program may be modified, suspended or discontinued at any time at the Company’s discretion without prior notice.
Added
For this fiscal year only, we are presenting both market and industry indices in the graph above for comparative purposes to prior fiscal year graphs.
Added
This program was completed in September 2024. There were no share repurchases during the three months ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSegment Performance Review (in millions) Commercial Government Transportation Divestitures Unallocated Costs Total Year Ended Dec 31, 2023 Total Revenue $ 1,932 $ 1,094 $ 696 $ — $ — $ 3,722 Segment profit (Loss) $ 134 $ 284 $ (2) $ — $ (304) $ 112 Segment depreciation and amortization $ 140 $ 41 $ 43 $ — $ 36 $ 260 Adjusted EBITDA (1) $ 274 $ 325 $ 41 $ — $ (262) $ 378 % of Total Revenue 51.9 % 29.4 % 18.7 % — % — % 100.0 % Adjusted EBITDA Margin (1)(2) 14.2 % 29.7 % 5.9 % — % — % 10.2 % Year Ended Dec 31, 2022 Total Revenue $ 1,992 $ 1,150 $ 709 $ 7 $ — $ 3,858 Segment profit (Loss) $ 124 $ 294 $ 49 $ 2 $ (293) $ 176 Segment depreciation and amortization $ 102 $ 37 $ 35 $ — $ 46 $ 220 Adjusted EBITDA (1) $ 226 $ 331 $ 84 $ 2 $ (247) $ 396 % of Total Revenue 51.6 % 29.8 % 18.4 % 0.2 % — % 100.0 % Adjusted EBITDA Margin (1)(2) 11.3 % 28.8 % 11.8 % 28.6 % — % 10.3 % (1) Refer to "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure.
Biggest changeCNDT 2024 Annual Report 36 Table of Contents Segment Performance Review Commercial Government Transportation Divestitures Unallocated Costs Total (in millions) Reportable Segments Year Ended Dec 31, 2024 Total Revenue $ 1,606 $ 984 $ 586 $ 180 $ — $ 3,356 Segment profit (Loss) $ 77 $ 166 $ (25) $ 35 $ (287) $ (34) Segment depreciation and amortization $ 92 $ 44 $ 25 $ 13 $ 28 $ 202 Adjusted EBITDA (1) $ 169 $ 210 $ — $ 48 $ (255) $ 172 % of Total Revenue 47.9 % 29.3 % 17.4 % 5.4 % — % 100.0 % Adjusted EBITDA Margin (1)(2) 10.5 % 21.3 % — % 26.7 % — % 5.1 % Year Ended Dec 31, 2023 Total Revenue $ 1,668 $ 1,094 $ 558 $ 402 $ — $ 3,722 Segment profit (Loss) $ 36 $ 284 $ (7) $ 103 $ (304) $ 112 Segment depreciation and amortization $ 129 $ 41 $ 26 $ 28 $ 36 $ 260 Adjusted EBITDA (1) $ 165 $ 325 $ 19 $ 131 $ (262) $ 378 % of Total Revenue 44.8 % 29.4 % 15.0 % 10.8 % — % 100.0 % Adjusted EBITDA Margin (1)(2) 9.9 % 29.7 % 3.4 % 32.6 % — % 10.2 % Year Ended Dec 31, 2022 Total Revenue $ 1,769 $ 1,150 $ 562 $ 377 $ — $ 3,858 Segment profit (Loss) $ 71 $ 294 $ 34 $ 70 $ (293) $ 176 Segment depreciation and amortization $ 94 $ 37 $ 21 $ 22 $ 46 $ 220 Adjusted EBITDA (1) $ 165 $ 331 $ 55 $ 92 $ (247) $ 396 % of Total Revenue 45.8 % 29.8 % 14.6 % 9.8 % — % 100.0 % Adjusted EBITDA Margin (1)(2) 9.3 % 28.8 % 9.8 % 24.4 % — % 10.3 % (1) Refer to "Non-GAAP Financial Measures" section for an explanation of the non-GAAP financial measure.
Government Segment Revenue Government segment revenue for 2023 decreased, compared to the prior year, primarily driven by lost business from prior years, non-repeating federal stimulus revenue in the prior year and the impact of an out of period adjustment of $7 million in the first quarter of 2023.
Government segment revenue for 2023 decreased, compared to the prior year, primarily driven by lost business from prior years, non-repeating federal stimulus revenue in the prior year and the impact of an out of period adjustment of $7 million in the first quarter of 2023.
Segment Profit and Adjusted EBITDA Transportation segment profit, adjusted EBITDA and adjusted EBITDA margin for 2023 all decreased primarily due to extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue and the completion of smaller projects in our Transit solutions service offering.
Transportation segment profit, adjusted EBITDA and adjusted EBITDA margin for 2023 all decreased primarily due to extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue and the completion of smaller projects in our Transit solutions service offering.
GAAP). In addition, within this Form 10-K Part II Item 7 we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with U.S.
In addition, within this Form 10-K Part II Item 7 we have discussed our financial results using non-GAAP measures. We believe these non-GAAP measures allow investors to better understand the trends in our business and to better understand and compare our results. Accordingly, we believe it is necessary to adjust several reported amounts, determined in accordance with U.S.
Net ARR Activity The Net ARR Activity metric is defined as Projected Annual Recurring Revenue 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.
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 2023 rate was lower than the U.S. statutory rate of 21% due to non-deductible expenses, primarily the non-deductible Commercial reporting unit goodwill impairment, geographic mix of income and return to provision adjustments, partially offset by tax benefits related to tax settlements and reversal of reserves.
The 2023 rate was lower than the U.S. statutory rate of 21%, primarily due to the non-deductible Commercial reporting unit goodwill impairment, geographic mix of income and return to provision adjustments, partially offset by tax benefits related to tax settlements and reversal of reserves.
Segment Profit and Adjusted EBITDA Government segment profit for 2023 decreased slightly compared to the prior year and was impacted by lost business, the high margin non-repeating federal stimulus revenue in the prior year and the out of period adjustment in the first quarter of 2023 as well as by higher depreciation driven by the deployment of our new modularized CMdS platform in our Government Healthcare Solutions business.
Government segment profit for 2023 decreased slightly compared to the prior year and was impacted by lost business, the high margin non-repeating federal stimulus revenue in the prior year and the out of period adjustment in the first quarter of 2023 as well as by higher depreciation driven by the deployment of our new modularized CMdS platform in our Government Healthcare Solutions business.
Other Contingencies and Commitments As more fully discussed in Note 16 – Contingencies and Litigation to the Consolidated Financial Statements, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property law; employment law; the Employee Retirement Income Security Act ("ERISA"); and other laws and regulations.
Other Contingencies and Commitments As more fully discussed in Note 15 – Contingencies and Litigation to the Consolidated Financial Statements, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property law; employment law; the Employee Retirement Income Security Act ("ERISA"); and other laws and regulations.
CNDT 2023 Annual Report 42 Table of Contents Critical Accounting Estimates and Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto.
CNDT 2024 Annual Report 42 Table of Contents Critical Accounting Estimates and Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes in this Form 10-K for the year ended December 31, 2023. This MD&A provides additional information about our operations, current developments, financial condition, cash flows and results of operations.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes in this Form 10-K for the year ended December 31, 2024. This MD&A provides additional information about our operations, current developments, financial condition, cash flows and results of operations.
Annual Goodwill Impairment Evaluation Our annual quantitative impairment test of goodwill was performed as of October 1, 2023. Goodwill is tested for impairment using a qualitative assessment and/or a quantitative assessment. In our quantitative assessment, we estimate the fair value of each reporting unit by weighting the results from the Income Approach (discounted cash flow methodology) and Market Approach.
Annual Goodwill Impairment Evaluation Our annual quantitative impairment test of goodwill was performed as of October 1, 2024. Goodwill is tested for impairment using a qualitative assessment and/or a quantitative assessment. In our quantitative assessment, we estimate the fair value of each reporting unit by weighting the results from the Income Approach (discounted cash flow methodology) and Market Approach.
Overview We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical business process solutions.
Overview We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions.
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 16 – Contingencies and Litigation to the Consolidated Financial Statements for additional information regarding loss contingencies.
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.
Off-Balance Sheet Arrangements As of December 31, 2023, we do not believe we have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off-Balance Sheet Arrangements As of December 31, 2024, we do not believe we have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Metrics Metrics We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business. We disclose these metrics to provide transparency in our performance trends. We discuss certain key metrics, including Signings and Net ARR Activity below.
Metrics Metrics We use metrics to evaluate our business, determine the allocation of our resources, make decisions regarding corporate strategies and evaluate forward-looking projections and trends affecting our business. We disclose these metrics to provide transparency in our performance trends. We present certain key metrics, including Signings and Net ARR Activity below.
Financial Information The section below provides a comparative discussion of our consolidated results of operations for the year ended December 31, 2023 and 2022. See Item 7. MD&A–Financial Information in our Annual Report on Form 10-K for the year ended December 31, 2022, for a comparative discussion of our consolidated results of operations between 2022 and 2021.
Financial Information The section below provides a comparative discussion of our consolidated results of operations for the year ended December 31, 2024 and 2023. See Item 7. MD&A – Financial Information in our Annual Report on Form 10-K for the year ended December 31, 2023, for a comparative discussion of our consolidated results of operations between 2023 and 2022.
The net impact from the sales of accounts receivable represents the difference between current and prior year fourth quarter accounts receivable sales adjusted for the effects of collections prior to the end of the year. Financial Instruments Refer to Note 12 – Financial Instruments to the Consolidated Financial Statements for additional information.
The net impact from the sales of accounts receivable represents the difference between current and prior year fourth quarter accounts receivable sales adjusted for the effects of collections prior to the end of the year. Financial Instruments Refer to Note 11 – Financial Instruments to the Consolidated Financial Statements for additional information.
GAAP, to exclude the effects of certain items as well as their related tax effects. Management believes that these non-GAAP financial measures provide an additional means of analyzing the results of the current period against the corresponding prior period.
GAAP, to exclude the effects of certain items as well as their related tax effects. Management believes that these non-GAAP financial measures provide an additional means of analyzing the results of the current period compared to the corresponding prior period.
In addition, refer to the preceding discussion of the Company's contractual cash obligations and other commercial commitments and Note 16 – Contingencies and Litigation to the Consolidated Financial Statements for additional information regarding contingencies, guarantees and indemnifications.
In addition, refer to the preceding discussion of the Company's contractual cash obligations and other commercial commitments and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information regarding contingencies, guarantees and indemnifications.
Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 8 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information regarding our goodwill policies.
Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information regarding our goodwill policies.
Unallocated Costs Unallocated Costs for 2023 increased compared to the prior year primarily due to the prior year reflecting the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, and expense credits in the prior year.
Unallocated Costs for 2023 increased compared to the prior year primarily due to the prior year reflecting the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, and vendor credits earned in the prior year.
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2023 and 2022, unless stated otherwise.
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2024 and 2023, unless stated otherwise.
Adjusted EBITDA and EBITDA Margin We use Adjusted EBITDA and Adjusted EBITDA Margin as an additional way of assessing certain aspects of our operations that, when viewed with the U.S. GAAP results and the accompanying reconciliations to corresponding U.S. GAAP financial measures, provide a more complete understanding of our on-going business. Adjusted EBITDA Margin is Adjusted EBITDA divided by revenue.
Adjusted EBITDA and Adjusted EBITDA Margin We use Adjusted EBITDA and Adjusted EBITDA Margin as an additional way of assessing certain aspects of our operations that, when viewed with the U.S. GAAP results and the accompanying reconciliations to corresponding U.S. GAAP financial measures, provide a more complete understanding of our on-going business.
Management cautions that amounts presented in accordance with Conduent's definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by other companies because not all companies calculate Adjusted EBITDA and Adjusted EBITDA Margin in the same manner. CNDT 2023 Annual Report 47 Table of Contents
Management cautions that amounts presented in accordance with Conduent's definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similar measures disclosed by other companies because not all companies calculate Adjusted EBITDA and Adjusted EBITDA Margin in the same manner. CNDT 2024 Annual Report 46 Table of Contents
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 COVID-related volume impacts and non-recurring revenue signings. This metric is not indicative of any specific 12-month timeframe.
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.
Additionally, as of December 31, 2023, we had $16 million of finance lease and other debt due within one year. Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information regarding our debt. To provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements.
Additionally, as of December 31, 2024, we had $10 million of finance lease and other debt due within one year. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information regarding our debt. To provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements.
To the extent we believe the adoption of new accounting standards has had or will have a material impact on our consolidated results of operations, financial condition or liquidity, we also discuss the impact in the applicable section(s) of this MD&A. Non-GAAP Financial Measures We reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S.
To the extent we believe the adoption of new accounting standards has had or will have a material impact on our consolidated results of operations, financial condition or liquidity, we also discuss the impact in the applicable section(s) of this MD&A. Non-GAAP Financial Measures We report our financial results in accordance with U.S. GAAP.
Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $559 million, of which $103 million is due within 12 months. Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information. Operating Leases In the ordinary course of business, we enter into operating lease arrangements for certain equipment and facilities.
Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $192 million, of which $43 million is due within 12 months. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information. Operating Leases In the ordinary course of business, we enter into operating lease arrangements for certain equipment and facilities.
Gross deferred tax assets of $253 million and $239 million had valuation allowances of $100 million and $102 million at December 31, 2023 and 2022, respectively. We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters.
Gross deferred tax assets of $241 million and $253 million had valuation allowances of $95 million and $100 million at December 31, 2024 and 2023, respectively. We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters.
Sales of Accounts Receivable The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2023, 2022 and 2021 was $(4) million, $54 million and $(10) million, respectively.
Sales of Accounts Receivable The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2024, 2023 and 2022 was $7 million, $(4) million and $54 million, respectively.
Refer to Note 16 – Contingencies and Litigation to the Consolidated Financial Statements for additional information.
Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information.
Transportation Segment Revenue Transportation revenue for 2023 decreased compared to the prior year, primarily driven by extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue, the completion of smaller projects in our Transit solutions service offering and lost business from prior years, partially offset by new business and favorable exchange rate movement, particularly the Euro.
CNDT 2024 Annual Report 38 Table of Contents Transportation revenue for 2023 decreased compared to the prior year, primarily driven by extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue, the completion of smaller projects in our Transit solutions service offering and lost business from prior years, partially offset by new business and favorable exchange rate movement, particularly the Euro.
Commercial Segment Revenue Commercial segment revenue for 2023 decreased, compared to the prior year, driven by lost business, lower volumes in certain industries within our client base and non-repeating items in the prior year, partially offset by new business ramp and higher interest rates positively impacting our BenefitWallet business.
Commercial segment revenue for 2023 decreased, compared to the prior year, driven by lost business, lower volumes in certain industries within our client base and non-repeating items in the prior year, partially offset by new business ramp.
As of December 31, 2023, total fixed lease payables were $251 million, of which $69 million was due within 12 months. Refer to Note 7 – Leases to the Consolidated Financial Statements for additional information. Estimated Purchase Commitments We have committed to purchasing certain materials and services to support our operations.
As of December 31, 2024, total fixed lease payables were $226 million, of which $65 million was due within 12 months. Refer to Note 6 – Leases to the Consolidated Financial Statements for additional information. Estimated Purchase Commitments We have committed to purchasing certain materials and services to support our operations.
CNDT 2023 Annual Report 45 Table of Contents Recent Accounting Changes See Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards.
Recent Accounting Changes See Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards.
Material Cash Requirements from Contractual Obligations We believe our balances of cash and cash equivalents, which totaled $498 million as of December 31, 2023, 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.
CNDT 2024 Annual Report 41 Table of Contents Material Cash Requirements from Contractual Obligations We believe our balances of cash and cash equivalents, which totaled $366 million as of December 31, 2024, 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.
We were the first organization to execute transactions over the newly implemented FedNow capability and we anticipate an acceleration of new business signings to occur in 2024. • New Business Signings – While we experienced some softness in New Business Signings in 2023, we successfully attained the highest Total Contract Value ("TCV" as defined in Metrics section below) in several years, with an increase of 20% versus 2022.
We were the first organization to CNDT 2024 Annual Report 32 Table of Contents execute transactions over the newly implemented FedNow capability and we anticipate an acceleration of new business signings to occur in 2024. • New Business Signings – Successfully attained the highest Total Contract Value ("TCV" as defined in Metrics section below) in several years, with an increase of 20% versus 2022.
Excluding the impact of the goodwill impairment, amortization of intangible assets, restructuring, litigation reserve releases and certain discrete tax items, the normalized effective tax rate for 2023 was 107.3%.
Excluding the impact of the internal reorganization, divestitures, goodwill impairment, amortization of intangible assets, restructuring costs and certain discrete tax items, the normalized effective tax rate for 2024 was 21.2%. The 2023 rate was 107.3% excluding the impact of goodwill impairment, amortization of intangible assets, restructuring, litigation reserve releases and certain discrete tax items.
Litigation Settlements (Recoveries), Net Litigation settlements (recoveries), net for 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter and an $8 million reversal of reserves related to our former student loan business.
Litigation Settlements (Recoveries), Net Litigation settlements (recoveries), net for 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter and an $8 million reversal of reserves related to our former student loan business. There were no individually significant items in 2024.
Through a dedicated global team of 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 a team of approximately 59,000 people as of December 31, 2023, servicing customers from service centers in 26 countries.
Through a dedicated global team of approximately 56,000 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 December 31, 2024.
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 their consumers and employees. • Government – Our Government segment provides government-centric business process services to U.S. federal, state and local and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services.
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees. • Government – Our Government segment provides government-centric services and solutions to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction CNDT 2024 Annual Report 31 Table of Contents processing, payment services and case management.
Macroeconomic and Geopolitical Uncertainty Given the nature of our business and our global operations, the effects of global macroeconomic and geopolitical uncertainty could have a materially adverse effect on our business, results of operations and financial condition.
This program was completed in September 2024. Macroeconomic and Geopolitical Uncertainty Given the nature of our business and our global operations, the effects of global macroeconomic and geopolitical uncertainty could have a materially adverse effect on our business, results of operations and financial condition.
These were partially offset by the $17 million reversal of reserves due to the settlement of the Cognizant matter, a contractual change to a client implementation positively impacting revenue recognition and cost efficiency. Government segment adjusted EBITDA margin for 2023 increased compared to the prior year mainly due to the mix of adjusted EBITDA variances mentioned above on lower revenue.
Government segment adjusted EBITDA for 2023 decreased slightly compared to the prior year due to the Government segment profit drivers, excluding depreciation, mentioned above. These were partially offset by the $17 million reversal of reserves due to the settlement of the Cognizant matter, a contractual change to a client implementation positively impacting revenue recognition and cost efficiency.
The total of these commitments was $312 million as of December 31, 2023, of which $104 million is due within the next 12 months.
The total of these commitments was $348 million as of December 31, 2024, of which $147 million is due within the next 12 months.
At December 31, 2023, our material cash requirements include the following contractual and other obligations. CNDT 2023 Annual Report 41 Table of Contents Debt As of December 31, 2023, we had total outstanding debt, including Finance leases, with floating and fixed rates totaling $1,300 million, of which $34 million was due within 12 months.
At December 31, 2024, our material cash requirements include the following contractual and other obligations. Debt As of December 31, 2024, we had total outstanding debt, including Finance leases, with floating and fixed rates totaling $646 million, of which $24 million was due within 12 months.
Our pipeline of opportunities remains strong in this area. We also continued to make progress with our Immediate Payments offering, laying the marketing and educational foundation with our existing clients, and enhancing our partnership strategy.
We also continued to make progress with our Immediate Payments offering, laying the marketing and educational foundation with our existing clients, and enhancing our partnership strategy.
Our MD&A is presented in seven sections: • Overview; • Financial Information and Analysis of Results of Operations; • Metrics; • Capital Resources and Liquidity; • Critical Accounting Estimates and Policies; • Recent Accounting Changes; and • Non-GAAP Financial Measures.
Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A is presented in seven sections: • Overview; • Financial Information; • Metrics; • Capital Resources and Liquidity; • Critical Accounting Estimates and Policies; • Recent Accounting Changes; and • Non-GAAP Financial Measures.
Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations. • Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
In this segment, we help governments respond to changing rules for eligibility and increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment. • Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
The Net ARR Activity metric for the trailing twelve months for each of the prior five quarters was as follows: (in millions) December 31, 2023 $ 62 September 30, 2023 103 June 30, 2023 137 March 31, 2023 108 December 31, 2022 114 Capital Resources and Liquidity As of December 31, 2023 and 2022, total cash and cash equivalents were $498 million (of which approximately $143 million was cash in foreign locations) and $582 million (of which approximately $111 million was cash in foreign locations), respectively.
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 December 31, 2024 $ 92 September 30, 2024 46 June 30, 2024 (47) March 31, 2024 6 December 31, 2023 49 CNDT 2024 Annual Report 40 Table of Contents Capital Resources and Liquidity As of December 31, 2024 and 2023, total cash and cash equivalents were $366 million (of which approximately $140 million was cash in foreign locations) and $498 million (of which approximately $143 million was cash in foreign locations), respectively.
This was predominantly driven by the $1 billion TCV deal in our Transportation segment, with the State of Victoria, Australia. This is our largest TCV deal in the history of Conduent and continues to grow our international presence.
This was predominantly driven by the $1 billion TCV deal in our Transportation segment, with the State of Victoria, Australia.
We do not anticipate a material impact based on current guidance. CNDT 2023 Annual Report 36 Table of Contents Operations Review of Segments Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments: • Commercial, • Government, and • Transportation.
Operations Review of Segments Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments: • Commercial, • Government, and • Transportation.
In 2023, approximately 11% of our revenue was generated outside the U.S. Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate. These three segments are: • Commercial – Our Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries.
In 2024, approximately 14% of our revenue was generated outside the U.S. Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate.
CNDT 2023 Annual Report 44 Table of Contents Based on our quantitative assessments, we concluded that the fair value of our Government and Transportation reporting units exceeded their respective carrying values and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill as of October 1, 2023.
Based on our quantitative assessments, we concluded that the fair value of our Government reporting unit exceeded its carrying value and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill for this reporting unit.
Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items: • Amortization of acquired intangible assets.
Adjusted EBITDA CNDT 2024 Annual Report 45 Table of Contents Margin is Adjusted EBITDA divided by revenue. Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization and contract inducement amortization adjusted for the following items: • Amortization of acquired intangible assets.
The rate is anomalous due to small adjusted pre-tax income and tax which is a result of geographic mix of income and valuation allowances against losses in certain jurisdictions resulting in no tax benefit. The 2022 rate was 34.3% excluding the impact of amortization, restructuring, the divestiture of the Midas business, insurance recoveries, goodwill impairment and discrete tax items.
The rate was anomalous due to small adjusted pre-tax loss and tax which is a result of geographic mix of income and valuation allowances against losses in certain jurisdictions resulting in no tax benefit.
Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures in the Consolidated Financial Statements for additional information. • Strategic Growth Efforts – During 2023, we continued to see opportunities in our Government Healthcare segment, particularly with our cloud-native Medicaid Claims solution, and we now have a number of significant implementations underway in the space.
Significant 2023 Actions • Strategic Growth Efforts – During 2023, we continued to see opportunities in our Government Healthcare segment, particularly with our cloud-native Medicaid Claims solution, and we now have a number of significant implementations underway in the space. Our pipeline of opportunities remains strong in this area.
Unrecognized tax benefits were $10 million, $12 million and $23 million at December 31, 2023, 2022 and 2021, respectively. Refer to Note 15 – Income Taxes to the Consolidated Financial Statements for additional information regarding deferred income taxes and unrecognized tax benefits. Loss Contingencies We are currently involved in various claims and legal proceedings.
Unrecognized tax benefits were $19 million, $10 million and $12 million at December 31, 2024, 2023 and 2022, respectively. Refer to Note 14 – Income Taxes to the Consolidated Financial Statements for additional information regarding deferred income taxes and unrecognized tax benefits.
CNDT 2023 Annual Report 37 Table of Contents (in millions) Year Ended December 31, Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) and Adjusted EBITDA 2023 2022 2021 Income (Loss) Before Income Taxes $ (332) $ (127) $ (25) Reconciling items: Amortization of acquired intangible assets 7 13 135 Restructuring and related costs 62 39 45 Interest expense 111 84 55 Loss on extinguishment of debt — — 15 Goodwill impairment 287 358 — (Gain) loss on divestitures and transaction costs, net 10 (158) 3 Litigation settlements (recoveries), net (30) (32) 3 Other (income) expenses, net (3) (1) 6 Segment Pre-Tax Income (Loss) $ 112 $ 176 $ 237 Segment depreciation and amortization 260 220 218 Abandonment of internal project — — 32 Other adjustments (1) 6 — — Adjusted EBITDA $ 378 $ 396 $ 487 (1) Represents a termination for convenience fee related to the termination of a contract with a significant IT outsourcing provider, which is reported in Cost of Services on the Consolidated Statements of Income.
(in millions) Year Ended December 31, Adjusted EBITDA and Segment Profit (Loss) Reconciliation to Income (Loss) Before Income Taxes 2024 2023 2022 Adjusted EBITDA $ 172 $ 378 $ 396 Reconciling items: Segment depreciation and amortization (202) (260) (220) Other adjustments (1) (4) (6) — Segment Pre-Tax Income (Loss) $ (34) $ 112 $ 176 Reconciling items: Amortization of acquired intangible assets (5) (7) (13) Restructuring and related costs (46) (62) (39) Interest expense (75) (111) (84) Loss on extinguishment of debt (8) — — Goodwill impairment (28) (287) (358) (Gain) loss on divestitures and transaction costs, net 696 (10) 158 Litigation settlements (recoveries), net (9) 30 32 Other (income) expenses, net 13 3 1 Income (Loss) Before Income Taxes $ 504 $ (332) $ (127) (1) The 2024 amount represents a termination for convenience fee related to the termination of Convergint as a subcontractor for our State of Victoria contract.
If we used different assumptions for discount rates or long-term organic growth rates in these annual assessments, our calculated fair values of our reporting units could be higher or lower which could result in a goodwill impairment. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions.
If we used different assumptions for discount rates or long-term organic growth rates in this annual assessment, our calculated fair values of our Government reporting unit could be higher or lower which could result in a goodwill impairment.
Cash Flow Analysis The following summarizes our cash flows for the two years ended December 31, 2023, as reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements: Year Ended December 31, Change (in millions) 2023 2022 2023 vs. 2022 Net cash provided by (used in) operating activities $ 89 $ 144 $ (55) Net cash provided by (used in) investing activities (93) 173 (266) Net cash provided by (used in) financing activities (81) (131) 50 Operating Activities The net decrease in cash flow provided by operating activities of $55 million was primarily related to the absence of the $38 million of insurance recoveries related to the State of Texas matter in 2022, higher net cash interest payments, the negative impact of the sales of accounts receivable as described below and higher restructuring payments, all partially offset by lower cash income taxes.
Cash Flow Analysis The following summarizes our cash flows for the two years ended December 31, 2024, as reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements: Year Ended December 31, Change (in millions) 2024 2023 2024 vs. 2023 Net cash provided by (used in) operating activities $ (50) $ 89 $ (139) Net cash provided by (used in) investing activities 795 (93) 888 Net cash provided by (used in) financing activities (877) (81) (796) Operating Activities The net decrease in cash flow provided by operating activities of $139 million was primarily related to lower Adjusted EBITDA due to divestitures and higher cash taxes, partially offset by improved accounts receivable Days Sales Outstanding and lower cash interest expense.
Signings Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. TCV is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.
Total Contract Value ("TCV") is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons are not a good measure of renewal performance.
We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $2 million has been utilized for letters of credit as of December 31, 2023. On February 11, 2022, we repaid the then-outstanding borrowing under the Revolving Credit Facility of $100 million.
We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $11 million has been utilized for letters of credit as of December 31, 2024. The amount of borrowings outstanding under the Revolving Credit Facility at each quarter-end may be limited by our leverage covenant.
This represents goodwill impairment charges related to entering the agreement to transfer the BenefitWallet portfolio. • (Gain) loss on divestitures and transaction costs. Represents (gain) loss on divested businesses and transaction costs. • Litigation settlements (recoveries), net represents settlements or recoveries for various matters subject to litigation. • Other charges (credits).
This represents goodwill impairment charges arising from annual or interim goodwill testing. • (Gain) loss on divestitures and transaction costs. Represents (gain) loss on divested businesses and transaction costs. • Litigation settlements (recoveries), net represents settlements or recoveries for various matters subject to litigation. • Loss on extinguishment of debt.
Executive Summary During the first quarter of 2023, we held an investor briefing to communicate the next chapter in the Conduent journey. Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation.
Executive Summary Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation. Building on this solid foundation, during 2023, we held an investor briefing outlining our three-year strategy. We continue to execute on this strategy and remain focused on accelerating growth and enhancing value for our stakeholders.
The following are the components of our Restructuring and related costs: Year Ended December 31, (in millions, except headcount in whole numbers) 2023 2022 Severance and related costs $ 29 $ 14 Data center consolidation costs 9 10 Termination, insourcing and asset impairment costs (1) 24 13 Total Net Current Period Charges 62 37 Consulting and other costs (2) — 2 Restructuring and Related Costs $ 62 $ 39 Reduction in headcount (3) 700 800 __________ (1) 2023 costs represent costs incurred for disengagement from a significant IT outsourcing provider.
The following are the components of our Restructuring and related costs: Year Ended December 31, (in millions, except headcount in whole numbers) 2024 2023 Severance and related costs (1) $ 21 $ 29 Data center consolidation costs 5 9 Termination, insourcing and asset impairment costs (2) 16 24 Total Net Current Period Charges 42 62 Consulting and other costs 4 — Restructuring and Related Costs $ 46 $ 62 Reduction in headcount (3) 600 700 __________ (1) 2023 includes costs related to the closure of one of our Commercial segment operations in Europe.
(3) Adjusted to remove Midas new business signings. The total new business pipeline at the end of December 31, 2023 and 2022 was $24.8 billion and $22.6 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.
(2) Non-recurring revenue signings are for contacts shorter than one year. The total new business pipeline at the end of December 31, 2024 and 2023 was $22.2 billion and $22.8 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.
In addition, we are required to make certain assumptions and estimates regarding the current economic environment, industry factors and the future profitability of our businesses. When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected financial information and discount rates that are developed using market participant-based assumptions.
CNDT 2024 Annual Report 43 Table of Contents When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected financial information and discount rates that are developed using market participant-based assumptions.
We believe this renewed focus on our portfolio rationalization strategy will result in a more nimble and faster growing Conduent with modest levels of net leverage, enhanced valuation, and significant excess capital to be deployed over time.
We believe this strategy has resulted and will continue to result in a more nimble and faster growing Conduent with modest levels of net leverage, enhanced valuation, and a stronger balance sheet. Significant 2024 Actions • Divestitures – In 2024, we completed three divestitures as part of our portfolio rationalization strategy.
Depreciation and Amortization Depreciation and amortization for 2023 increased 15% compared to the prior year. This increase was primarily driven by the write-off of capitalized software costs totaling $25 million, stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution.
Commercial segment profit also benefited from the absence of the prior year impact of a write-off of capitalized software totaling $25 million stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution as well as fully amortized assets.
Divestitures includes our Midas business, which was sold in the first quarter of 2022. 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.
Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments. The section below provides a comparative discussion of our financial performance by segment between the years ended December 31, 2024 and 2023.
Other (Income) Expenses, Net Other (income) expenses, net for 2023 and 2022 primarily includes interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains). Income Taxes The 2023 effective tax rate was 10.7%, compared to (43.9)% for 2022.
Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters. Other (Income) Expenses, Net Other (income) expenses, net for 2024 and 2023 primarily includes interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains).
CNDT 2023 Annual Report 43 Table of Contents Goodwill Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred.
Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 2 – Revenue to the Consolidated Financial Statements for additional information regarding our revenue recognition policies. Goodwill Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred.
CNDT 2023 Annual Report 40 Table of Contents As of December 31, 2023, there was a total of $1,263 million of outstanding borrowings under our Term Loan A, Term Loan B and Senior Notes, of which $18 million was due within one year.
In February 2025, the Company borrowed $50 million under the Revolving Credit Facility for working capital purposes. As of December 31, 2024, there was a total of $608 million of outstanding borrowings under our Term Loan A and Senior Notes, of which $14 million was due within one year.
Investing Activities The decrease in cash provided by investing activities of $266 million was primarily due to the proceeds from the divestiture of the Midas business in the prior year. This was partially offset by planned decreased capital spending in the current year.
Investing Activities The increase in cash provided by investing activities of $888 million was primarily due to the proceeds from our 2024 divestitures of $830 million and proceeds from the settlement of the Skyview matter related to notes receivable of $21 million. In addition, there was a planned decrease in capital spending in the current year.
The goodwill impairment for 2022 related to the write-down of the carrying value of the Commercial reporting unit. Refer to Note 8 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on these impairments.
Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on the impairment of the remaining goodwill in our Transportation reporting unit. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions.
The 2022 rate was negative and lower than the U.S. statutory rate of 21%, primarily due to pre-tax book loss, an increase in taxes due to the geographic mix of income and non-deductible expenses, primarily driven by book and tax basis difference in the Midas divestiture goodwill and the Commercial reporting unit goodwill impairment.
The 2024 rate was lower than the U.S. statutory rate of 21% due to favorable permanent adjustments from the internal reorganization and outside basis on a stock sale partially offset by the non-deductible Transportation reporting unit goodwill impairment, tax reserves and geographic mix of income.
Year Ended December 31, 2023 vs. 2022 (in millions) 2023 2022 $ Change % Change Revenue $ 3,722 $ 3,858 $ (136) (4) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 2,888 3,018 $ (130) (4) % Selling, general and administrative (excluding depreciation and amortization) 458 440 $ 18 4 % Research and development (excluding depreciation and amortization) 7 7 — — % Depreciation and amortization 264 230 34 15 % Restructuring and related costs 62 39 23 59 % Interest expense 111 84 27 32 % Goodwill impairment 287 358 (71) (20) % (Gain) loss on divestitures and transaction costs, net 10 (158) 168 (106) % Litigation settlements (recoveries), net (30) (32) 2 (6) % Other (income) expenses, net (3) (1) (2) 200 % Total Operating Costs and Expenses 4,054 3,985 69 Income (Loss) Before Income Taxes (332) (127) (205) Income tax expense (benefit) (36) 55 (91) Net Income (Loss) $ (296) $ (182) $ (114) CNDT 2023 Annual Report 34 Table of Contents Revenue Revenue for 2023 decreased 4%, compared to the prior year, primarily due to lost business from prior periods and non-repeating items in the prior year including recognition of the revenue benefit associated with an annual minimum volume commitment contract with a large client in our Commercial segment and federal stimulus revenue in our Government segment.
Year Ended December 31, 2024 vs. 2023 (in millions) 2024 2023 $ Change % Change Revenue $ 3,356 $ 3,722 $ (366) (10) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 2,730 2,888 $ (158) (5) % Selling, general and administrative (excluding depreciation and amortization) 455 458 $ (3) (1) % Research and development (excluding depreciation and amortization) 6 7 (1) (14) % Depreciation and amortization 204 264 (60) (23) % Restructuring and related costs 46 62 (16) (26) % Interest expense 75 111 (36) (32) % Loss on extinguishment of debt 8 — 8 n/m Goodwill impairment 28 287 (259) (90) % (Gain) loss on divestitures and transaction costs, net (696) 10 (706) n/m Litigation settlements (recoveries), net 9 (30) 39 (130) % Other (income) expenses, net (13) (3) (10) 333 % Total Operating Costs and Expenses 2,852 4,054 (1,202) Income (Loss) Before Income Taxes 504 (332) 836 Income tax expense (benefit) 78 (36) 114 Net Income (Loss) $ 426 $ (296) $ 722 Revenue Revenue for 2024 decreased 10%, compared to the prior year, over half of which was due to the impact of the BenefitWallet Portfolio transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses.
We deliver mission-critical public safety, mobility and digital payment CNDT 2023 Annual Report 32 Table of Contents solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment.
We deliver mission-critical tolling, transit and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless experiences for travelers. We help transportation agencies contend with rising urbanization and mobility, the need for system efficiency and an increased focus on transportation infrastructure.
Segment Profit and Adjusted EBITDA Commercial segment profit for 2023 increased compared to the prior year and was positively impacted by higher interest rates positively impacting our BenefitWallet business and cost efficiency, partially offset by a write-off of capitalized software totaling $25 million stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution.
Commercial segment profit for 2023 decreased compared to the prior year driven by a write-off of capitalized software totaling $25 million described above. Commercial segment Adjusted EBITDA for 2023 was unchanged from the prior year.
Commercial segment adjusted EBITDA and adjusted EBITDA margin for 2023 also increased compared to the prior year primarily driven by the segment profit drivers mentioned above, partially offset by the impact of reduced revenue and the non-repeating items in the prior year.
Segment Profit and Adjusted EBITDA Commercial segment profit and Adjusted EBITDA for 2024 increased compared to the prior year primarily due to new business ramp and cost efficiencies, partially offset the impact of lost business and lower volumes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollars using the year-end exchange rates, was approximately $789 million at December 31, 2023. Interest Rate Risk Management The consolidated weighted-average interest rates related to our total debt for 2023 approximated 8.58% for 2021 Term A Loan due 2026, 9.78% for 2021 Term B Loan due 2028, 6.20% for 2021 Senior Notes due 2029 and 9.03% for finance lease obligations.
Biggest changeDollars using the year-end exchange rates, was approximately $525 million at December 31, 2024. Interest Rate Risk Management The consolidated weighted-average interest rates related to our total debt for 2024 approximated 9.37% for Term Loan A, 6.20% for the Senior Notes and 8.70% for finance lease obligations.
Foreign Exchange Risk Management Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at December 31, 2023, the potential change in the fair value of foreign currency-denominated assets and liabilities in each entity would not be significant because all material currency asset and liability exposures were economically hedged as of December 31, 2023.
Foreign Exchange Risk Management Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at December 31, 2024, the potential change in the fair value of foreign currency-denominated assets and liabilities in each entity would not be significant because all material currency asset and liability exposures were economically hedged as of December 31, 2024.
Recent market events have not caused us to materially modify or change our financial risk management strategies with respect to our exposures to foreign currency risk. Refer to Note 12 – Financial Instruments to the Consolidated Financial Statements for additional discussion on our financial risk management.
Recent market events have not caused us to materially modify or change our financial risk management strategies with respect to our exposures to foreign currency risk. Refer to Note 11 – Financial Instruments to the Consolidated Financial Statements for additional discussion on our financial risk management.
A 10% appreciation or depreciation of the U.S. Dollar against all currencies from the quoted foreign currency exchange rates at December 31, 2023 would have an impact on our cumulative translation adjustment portion of equity of approximately $79 million. The net amount invested in foreign subsidiaries and affiliates, primarily in the U.K. and Europe, and translated into U.S.
A 10% appreciation or depreciation of the U.S. Dollar against all currencies from the quoted foreign currency exchange rates at December 31, 2024 would have an impact on our cumulative translation adjustment portion of equity of approximately $53 million. The net amount invested in foreign subsidiaries and affiliates, primarily in the U.K. and Europe, and translated into U.S.
The fair values of our fixed rate financial instruments are sensitive to changes in interest rates and at December 31, 2023, a 10% increase in market interest rates would decrease the fair values of such financial instruments by approximately $18 million.
The fair values of our fixed rate financial instruments are sensitive to changes in interest rates and at December 31, 2024, a 10% increase in market interest rates would decrease the fair values of such financial instruments by approximately $15 million.
A 10% decrease in market interest rates would increase the fair values of such financial instruments by approximately $19 million. CNDT 2023 Annual Report 48 Table of Contents
A 10% decrease in market interest rates would increase the fair values of such financial instruments by approximately $15 million. CNDT 2024 Annual Report 47 Table of Contents
As of December 31, 2023, we did not have any borrowings outstanding under our 2021 Revolving Credit Facility maturing 2026. As of December 31, 2023, $743 million of our total debt of $1,300 million carried variable interest rates.
As of December 31, 2024, we did not have any borrowings outstanding under our 2021 Revolving Credit Facility maturing 2026. As of December 31, 2024, $88 million of our total debt of $646 million carried variable interest rates.

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