Conduent's 2024 Earnings: EPS Surpasses Expectations Amidst Revenue Challenges

Conduent Incorporated (CNDT), a global technology-led business process solutions and services company, released its full-year 2024 earnings on February 12, 2025, reporting earnings per share (EPS) of $0.05, which exceeded analysts' expectations of $0.03 by 66.67%. Despite facing revenue challenges, Conduent managed to outperform EPS expectations, driven by strategic divestments, debt reduction, and operational improvements.

Conduent's revenue for the fourth quarter of 2024 was $800 million, falling short of the analyst estimate of $809.67 million. The full-year revenue was $3,356 million, slightly below the annual estimate of $3,365.67 million. The company faced a year-over-year revenue decline of 16.1% for the quarter and 9.8% for the year, reflecting challenges in maintaining its revenue base.

However, Conduent's GAAP net income for the fourth quarter of 2024 was $12 million, translating to a diluted EPS of $(0.09), which is above the analyst estimate of $(0.17). For the full year, Conduent achieved a GAAP net income of $426 million, with a diluted EPS of $2.23, surpassing the annual estimate of $2.10.

Financial Achievements and Challenges
Conduent achieved significant milestones in its strategic initiatives, including the completion of three divestitures: the BenefitWallet portfolio, Curbside Management, and Public Safety businesses. These divestitures contributed to a substantial reduction in debt by 50% compared to the end of 2023, enhancing the company's financial stability. The gains from these divestitures, along with a goodwill impairment in the prior year, primarily drove the increase in full-year pre-tax income to $504 million from $(332) million in the prior year.

Conduent's adjusted EBITDA margin for the fourth quarter of 2024 was 4.0%, down from 8.0% in Q4 2023, indicating a decrease in operational efficiency. The full-year adjusted EBITDA margin was 3.9%, compared to 7.4% in the previous year. This decline highlights the company's ongoing challenges in maintaining profitability amidst restructuring efforts.

Income Statement and Balance Sheet Insights
Conduent's income statement revealed a pre-tax loss of $82 million for the fourth quarter of 2024, compared to a loss of $4 million in the same quarter of the previous year. The full-year pre-tax income was $504 million, a significant improvement from a loss of $332 million in 2023, primarily driven by gains from divestitures.

The balance sheet showed a decrease in total assets to $2,599 million as of December 31, 2024, from $3,162 million at the end of 2023. This reduction was largely due to the divestitures and a decrease in cash and cash equivalents from $498 million to $366 million.

Cash Flow and Liquidity
Conduent reported cash flow from operating activities of $41 million for the fourth quarter of 2024, a significant drop from $122 million in Q4 2023. The full-year cash flow from operating activities was negative at $(50) million, compared to $89 million in 2023, indicating liquidity challenges.

The company's adjusted free cash flow for the year was $(59) million, reflecting the impact of restructuring and divestiture activities. Despite these challenges, Conduent's liquidity position remains strong, supported by long-dated debt maturities and a modest net leverage ratio.

Strategic Commentary
Cliff Skelton, Conduent President and Chief Executive Officer, stated, "2024 proved to be broadly in line with what we planned for. It was a year we said would be characterized by a continued shift to growth, with a focus on new leadership, a rationalized portfolio, improved industry recognition, and improved client retention. It was all of that and more, enhanced by divestitures with solid multiples and a 50% reduction in debt compared to year-end 2023."

Analysis and Outlook
Conduent's performance in 2024 reflects a strategic shift towards growth and portfolio rationalization. While the company faced revenue challenges, its focus on divestitures and debt reduction positions it for potential future growth. The decline in adjusted EBITDA margin highlights the need for improved operational efficiency. Looking ahead, Conduent remains optimistic about achieving its 2025 expectations, with plans to further rationalize its portfolio and remain focused on delivering outstanding service to its valued client base.



Explore the complete 8-K earnings release (here) from Conduent Inc for further details.