Conduent (NASDAQ:CNDT) executives used the company’s fourth-quarter 2025 earnings call to outline early priorities under new CEO Harsha Agadi, while also reviewing year-end results that showed improving profitability and sales momentum in parts of the business despite lower full-year revenue and negative adjusted free cash flow.
New CEO frames turnaround priorities and promises more detail at Analyst Day
Agadi, who said he has been in the role for less than 30 days, described Conduent as “a turnaround story” and said it was too early to present a fully detailed long-term plan. He committed to “full transparency and cadence,” including plans to host an Analyst Day in New York City where investors can hear directly about strategy, priorities, and execution.
- Move faster with decision-making and execution, with clear accountability.
- Apply “maximum financial discipline” to capital allocation with an emphasis on revenue growth, margin expansion, and free cash flow generation.
- Lower the cost structure, including reducing corporate overhead (particularly SG&A) and reviewing technology spend and the company’s technology stack.
- Continue portfolio rationalization by reviewing every business and categorizing each as “fix, sell, or grow,” with proceeds from sales used first to reduce debt.
- Improve conversion from the company’s qualified annual contract value (ACV) pipeline, which management said stands at $3.2 billion.
- Simplify the organization by reducing layers and complexity and increasing accountability with clearer P&L ownership.
Sales metrics improve, led by Government and Transportation
CFO Giles Goodburn said Conduent signed $152 million of new business ACV in the quarter, one of its highest quarters in recent years and up 11% versus Q4 2024. Full-year 2025 new business ACV was $517 million, up 6% from 2024.
Goodburn noted that, on a full-year basis, Government segment new business ACV rose 50% and Transportation increased 14% versus 2024. Commercial segment new business ACV declined 15%, though management pointed to “encouraging signs” in cross-selling: new capability ACV—described as selling new products to existing clients—was up 60% year over year.
For the quarter, Conduent signed 14 new logos and 20 new capabilities. For the full year, it signed 41 new logos and 87 new capabilities. Management said full-year 2025 new business total contract value (TCV) increased 16% versus 2024, driven by Government and Transportation. The qualified ACV pipeline remained $3.2 billion, up 4% year over year, with Government pipeline up 29% and an in-year 2026 qualified pipeline “almost double” where it was at the beginning of 2025.
2025 revenue declines, but adjusted EBITDA and margins rise
Goodburn reported full-year 2025 adjusted revenue of $3.04 billion, down from $3.18 billion in 2024, a decline of 4.2%. He said Conduent ended the year with Q4 adjusted revenue growth in two of its three segments, with Government up 1.8% and Transportation up 1.9%, and said both were positioned for growth in 2026.
Adjusted EBITDA improved to $164 million for 2025 from $124 million in 2024. Adjusted EBITDA margin was 5.4%, up 150 basis points year over year and “towards the top end” of guidance, according to Goodburn. Q4 adjusted EBITDA margin was 6.5%, up 250 basis points versus Q4 2024 and up 130 basis points sequentially from Q3.
Segment performance: Commercial pressured; Government and Transportation show momentum
In the Commercial segment, full-year 2025 adjusted revenue was $1.5 billion, down 5.9% from 2024. Goodburn said volume declines at the company’s largest commercial clients accounted for about 40% of the revenue decline, while the remaining top 10 commercial clients grew in aggregate during 2025. Commercial adjusted EBITDA was $154 million, with a 10.2% margin that fell 30 basis points year over year. Goodburn said cost efficiency efforts “weren’t enough to offset” the impact of lower revenue.
Government segment adjusted revenue was $922 million, down 6.3% for the year. Goodburn attributed the decline primarily to the completion or winding down of large implementation projects, which he said the company expects to replace in 2026. He highlighted Q4 Government revenue growth of 1.8% and said management was confident the segment could deliver full-year 2026 revenue growth. Government adjusted EBITDA was $221 million with a 24% margin, up 270 basis points versus 2024; management credited AI initiatives and efficiency programs that reduced fraud, labor, and telecom expenses.
Transportation segment adjusted revenue increased 3.9% to $609 million for the year. Adjusted EBITDA was $18 million, with a 3% margin that improved 300 basis points versus 2024. Goodburn cited strong equipment sales and a contract amendment in the international transit business.
Unallocated costs totaled $229 million, down 10.2% year over year, driven by corporate cost efficiency and recovery of legal costs, which more than offset higher U.S. employee healthcare claims activity.
Cash flow, leverage, and portfolio actions in focus
Conduent ended 2025 with about $243 million of total cash on the balance sheet. Adjusted free cash flow was negative $130 million for the year, though Q4 adjusted free cash flow was positive $28 million, which Goodburn said was lower than expected due to timing. He said contract amendments delayed by a government shutdown were signed and billed, but cash collection is now expected later in Q1 or early in Q2, contributing to reduced contract assets and higher accounts receivable at year-end.
The company’s net leverage ratio decreased to 2.8x, driven by higher EBITDA. Capital expenditure for the year was 3.4% of revenue, in line with expectations.
During Q&A, Agadi provided additional detail on how he expects to evaluate businesses for “fix, sell, or grow,” citing factors such as growth potential in the sector, predictability and sustainability of EBITDA margins, capital requirements and free cash flow, and whether a business has a defensible “moat” given rapid technological change. He also said the company must move away from trying to be “everything to everybody,” emphasizing discipline about which services Conduent will and will not pursue.
On Commercial, management said there is work to do and Agadi said he is reviewing leadership for the segment while engaging directly with clients, including what he described as “at least one phone call a day” with clients. He said Conduent is instituting a weekly regimen focused on revenue generation across segments and may narrow Commercial focus to select sectors where it is strongest.
Agadi also addressed potential AI disruption risk, saying he could not precisely quantify it given his short tenure but estimated “rough guess” exposure of 15%–20% of the business, calling it a moving target. He advocated partnering with smaller AI “disruptors” that can bring cost and accuracy benefits, potentially sharing economics with clients. Goodburn added that Conduent is also using AI across platforms, including in benefits enrollment, tolling-related capabilities such as license plate recognition and occupancy detection, and fraud-related work in Government.
Looking ahead, executives said they expect to provide a more detailed update on portfolio rationalization and full-year 2026 guidance with Q1 results in early May. Agadi said he is “fixated” on free cash flow and expects to show progression, while noting he was not providing guidance on the call.
About Conduent (NASDAQ:CNDT)
Conduent Incorporated is a global provider of diversified business process services with a focus on delivering digital platforms and automation solutions. The company serves clients across a variety of industries including healthcare, transportation, public sector, financial services and human resources. By combining technology-enabled services with data analytics and artificial intelligence, Conduent helps organizations streamline operations, enhance customer experiences and improve overall efficiency.
Key offerings from Conduent encompass customer engagement and transaction processing, digital payment solutions, eligibility and enrollment services for health and welfare programs, and workforce management tools.
