Executive Summary

Q4 revenue was $800M and Adjusted Revenue was $800M; Adjusted EBITDA was $32M with a 4.0% margin, finishing on the high end of expectations. Quarterly Adjusted Revenue and Adjusted EBITDA increased for the past three quarters, while GAAP diluted EPS was $(0.09) and Adjusted diluted EPS was $(0.15) .
FY 2025 guidance: Adjusted Revenue $3.10B–$3.25B, Adjusted EBITDA margin 4.5%–5.5%, and Adjusted Free Cash Flow $0M–$40M; management targets ~8% exit EBITDA margin with revenue $3.20B–$3.30B, and interest expense ~$38M at exit rates .
Sales KPIs were constructive: New Business ACV $137M in Q4 and Net ARR Activity (TTM) $92M; pipeline strength and improved retention underpin outlook momentum .
Balance sheet de-risking remains a catalyst: net adjusted leverage ratio 1.6x, total GAAP debt down to $639M, cash $377M; the $75M buyback program completed (52M shares in FY24) .

What Went Well and What Went Wrong

What Went Well

Sequential improvement and margins at the high end: “Quarterly Adjusted Revenue improved sequentially for the past three quarters and Adjusted EBITDA also increased over the past three quarters” (CEO) .
Portfolio actions strengthened balance sheet and share count: FY24 divestitures generated ~$780M after-tax proceeds; prepaid $639M term loans; repurchased 52M shares, including ~38M from Icahn affiliates .
AI execution driving operational outcomes: CEO cited live GenAI use cases reducing fraud (account takeover early warning), accelerating document automation for healthcare, and Tier-1 HR portal support deflecting human intervention .

What Went Wrong

Top-line and profit contraction YoY: Q4 revenue declined 16.1% YoY to $800M and Adjusted EBITDA fell 52.9% YoY to $32M; Adjusted EBITDA margin compressed 400 bps to 4.0% .
Government segment headwinds weighed: FY24 Government Adjusted Revenue down ~10% and Adjusted EBITDA down ~35% YoY, driven by a healthcare contract termination, lower SNAP volumes, and pricing adjustments (lapping by Q2’25) .
Free cash flow still negative for the year: FY24 Operating Cash Flow $(50)M and Adjusted Free Cash Flow $(59)M; Q4 improved to Adjusted FCF $62M but FY remained negative .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$953	$807	$800
Adjusted Revenue ($USD Millions)	$851	$781	$800
Adjusted EBITDA ($USD Millions)	$68	$32	$32
Adjusted EBITDA Margin (%)	8.0%	4.1%	4.0%
GAAP Diluted EPS ($)	$0.02	$0.72	$(0.09)
Adjusted Diluted EPS ($)	$0.03	$(0.14)	$(0.15)

Segment breakdown (FY 2024):

Segment	Adjusted Revenue ($USD Millions)	Adjusted EBITDA ($USD Millions)
Commercial	$1,606	$169
Government	$984	$210
Transportation	$586	$0
Unallocated Costs	—	$(255)

Key KPIs and cash metrics:

KPI / Metric	Q2 2024	Q3 2024	Q4 2024
New Business ACV ($USD Millions)	$142	$111	$137
Net ARR Activity (TTM, $USD Millions)	$(49)	$46	$92
Adjusted Free Cash Flow ($USD Millions)	$(55)	$(6)	$62
Cash and Cash Equivalents ($USD Millions)	—	$404	$366 (cash) / $377 incl. restricted cash
Total GAAP Debt ($USD Millions)	—	—	$639
Net Adjusted Leverage Ratio (x)	—	1.4x	1.6x

Notes: Total GAAP debt includes current and long-term debt; cash row shows reported cash and, separately, cash plus restricted cash .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Revenue ($USD Billions)	FY 2025	N/A	$3.10–$3.25	New
Adjusted EBITDA Margin (%)	FY 2025	N/A	4.5%–5.5%	New
Adjusted Free Cash Flow ($USD Millions)	FY 2025	N/A	$0–$40	New
Capex ($USD Millions)	FY 2025	N/A	~$80	New
Restructuring ($USD Millions)	FY 2025	N/A	~$25	New
Segment growth (midpoint)	FY 2025	N/A	Commercial ~+2%, Government ~−4%, Transportation ~+1%	New
Exit-rate targets	2025 Exit	N/A	Rev $3.20–$3.30B; EBITDA margin ~8%; Interest expense ~$38M; Capex ~$80M; Adj FCF $60–$80M	New

FY 2024 context: The company had guided Adjusted Revenue $3.185–$3.215B and Adjusted EBITDA margin 3.75%–4.0% in Q3; FY 2024 actuals were Adjusted Revenue $3.176B and margin 3.9% .

Earnings Call Themes & Trends

Topic	Q2 2024 (Previous Mentions)	Q3 2024 (Previous Mentions)	Q4 2024 (Current Period)	Trend
AI/technology initiatives	Microsoft Azure OpenAI pilots in fraud detection; document automation; cyber-response concepts	AI augments complex CX; portfolio ~500 patents; tech-led offerings	GenAI “Conni” launched; live revenue/expense use cases across payments fraud, healthcare docs, HR portal	Expanding deployments
Portfolio rationalization	BenefitWallet, Curbside/Public Safety sales; Casualty Claims sale announced; debt paydown; share repurchase	Casualty Claims sale closed; continued opportunistic dispositions	“Further portfolio rationalization considerations underway” (CEO update)	Continuing
Government segment	Three discrete headwinds (contract termination, SNAP volumes, pricing); lapping by mid-2025	Ongoing headwinds; margin impact; stability expected post-lap	Guidance embeds Government down ~4% in 2025; stability building; growth beyond 2025	Easing into H2’25
Transportation	Australia transit ramp offsetting tolling scope/price reset; margin reset	Breakeven EBITDA; operational performance improving	Expected to grow in 2025; project progress cited	Stabilizing/uptrend
Offshoring/efficiency	Capacity investments; cost programs >90% actioned	Added ~2,500 offshore seats; margins accretive	Cost programs and stranded cost removal driving >100 bps margin uplift in 2025	Positive
Debt/leverage/share count	Prepaid $300M; repurchased 43.3M shares including Icahn block	Paid down Term Loans; buybacks; leverage to ~1.5x then ~1x exit	Net leverage 1.6x; $539M RCF availability; $377M cash	Improved balance sheet
Macro/policy	Stable macro assumption; election impact limited on core programs	Policy changes viewed as limited near term	Stable macro embedded; public-sector demand oriented to efficiency/offload	Stable

Management Commentary

“We said 2024 would be a trough, and it was… Q4 adjusted revenue improved sequentially again, and both Q4 and year-end adjusted EBITDA margins finished on the high end of expectations” (CEO) .
“We remain bullish on achieving expectations in 2025… opportunities for a further rationalized portfolio” (CEO) .
“In 2025, we expect adjusted EBITDA margin to be in the range of 4.5% to 5.5% with an exit rate of around 8%” (CFO) .
“We continue to leverage GenAI across our portfolio… for fraud… document automation… human capital portals” (CEO) .

Q&A Highlights

AI monetization/use cases: Early warning fraud detection in payments; healthcare document automation through OCR + GenAI; HR portal Tier-1 support deflection; CX language modulation to expand offshore delivery .
Margin trajectory drivers: >100 bps uplift primarily from stranded cost removal post-divestitures and ongoing operational efficiencies; pricing/mix levers and natural fall-through with growth .
Capital allocation: Debt levels now “comfortable”; remaining divestiture proceeds to arrive in April 2025; balanced approach among debt reduction and potential repurchases as EBITDA recovers .
Sales pipeline/ARR: Expect better ACV year in 2025; add-on revenue books in-year; churn trending down supports positive Net ARR .
Government outlook clarification: Revenue headwinds from discrete items lap by Q2’25; stability thereafter; FY25 down due to timing, with growth expected as exiting 2025 into 2026 .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA) for Q4 2024 could not be retrieved due to SPGI request-limit errors; therefore, beat/miss vs Street cannot be determined from our data set at this time [SPGI error in tool]. Values would be retrieved from S&P Global when accessible.
Given the absence of consensus data in this report, any estimate-driven comparisons are intentionally omitted to avoid unsupported inferences.

Key Takeaways for Investors

Sequential operating improvement with Q4 margin at the high end of expectations and three consecutive quarters of Adjusted Revenue and Adjusted EBITDA increases provides near-term confidence into FY25 .
FY25 guide implies stabilization with modest growth (Commercial up ~2%, Transportation up ~1%) and Government headwinds lapping mid-year; monitor conversion of pipeline and retention continuation .
Margin story is credible: stranded cost removal, offshoring, pricing/mix and efficiency initiatives underpin 4.5%–5.5% FY25 margin and ~8% exit target; this is the core multi-quarter re-rating lever .
Balance sheet de-risking continues to support equity value: net leverage ~1.6x, long-dated maturities, optionality from divestitures and buybacks completed; liquidity robust with large undrawn revolver .
AI initiatives are moving from pilots to product (Conni) with tangible outcomes in fraud reduction, automation, and customer experience, creating incremental revenue opportunities and cost efficiencies .
Watch risks: Government program pricing/volumes, execution on large implementations, and any Direct Express contract developments that could affect segment mix/margins (timelines suggest long transition if changes occur) .
Near-term trading lens: positive narrative catalysts include further portfolio rationalization, capex discipline (~$80M), and Q1 sales momentum; absence of Street consensus in this report limits immediate beat/miss calls, but internal guide and sequential trends are constructive .

CONDUENT Inc (CNDT)·Q4 2024 Earnings Summary