Conduent's Turnaround Plan Shows Early Promise with Q1 Profit Surge

FLORHAM PARK, N.J. – May 11, 2026 – Conduent Incorporated (Nasdaq: CNDT) today announced first-quarter financial results that suggest its aggressive transformation strategy is beginning to bear fruit, delivering significant year-over-year improvements in profitability and cash flow despite a continued decline in overall revenue.

The global business process services company reported a 3.7% revenue drop to $723 million for the quarter, missing some analyst expectations on the top line. However, the underlying financial metrics painted a picture of strengthening operational discipline. The company’s pre-tax loss narrowed by $29 million to $(27) million, while Adjusted EBITDA climbed 32.4% to $49 million, boosting the Adjusted EBITDA margin by 190 basis points to 6.8%.

Newly appointed CEO Harsha V. Agadi, who took the helm in January, framed the quarter as a pivotal moment for the company. “Q1 2026 marked the start of a rapid and sustainable transformation at Conduent,” Agadi stated in the release. He highlighted the development of a new cost reduction and technology optimization strategy as a key driver, which contributed to the improved margins and a striking $50 million year-over-year improvement in cash flow from operating activities.

These results signal a potential turning point for Conduent, which is navigating a multi-year effort to streamline its operations, shed non-core assets, and find a stable path to growth.

Public Sector Strength Provides a Bedrock

While the company’s overall revenue contracted, its government-focused segments provided a crucial foundation of stability and growth. The Government segment saw revenues climb by approximately $10 million, while the Transportation segment grew by about $3 million compared to the prior-year period. Company officials attributed this performance to solid demand and strong execution.

This resilience is underscored by several significant, long-term contract renewals that lock in future revenue streams and deepen Conduent’s role as a critical partner for public agencies. The company secured a renewal for its Medicaid Enterprise Systems and Fiscal Agent Services for up to 14 years, extending a multi-decade partnership to modernize essential healthcare claims and payment operations. Additionally, a five-year renewal for a state child support program’s collections unit extends another 25-plus-year relationship and enhances the program's digital payment capabilities.

These wins, coupled with being named to the GovTech 100 list for the fifth consecutive year, reinforce Conduent's entrenched position in the public sector market, which is characterized by long sales cycles but highly durable contracts.

A Balancing Act: Managing Commercial Decline with Strategic Cuts

The primary drag on Conduent's top line came from its Commercial segment, where revenue fell 10.2% to $361 million. The company attributed a significant portion of this decline to ongoing volume reductions from one of its largest clients, a persistent headwind. However, even within this challenging segment, the company’s new operational focus was evident. The Commercial segment's Adjusted EBITDA actually increased by $3 million to $43 million, a testament to aggressive cost management and efficiency programs.

This reflects the core of the new leadership's strategy. Agadi has initiated a comprehensive plan to achieve $100 million in cost reductions over the next 18 months. This financial discipline is paired with decisive organizational changes, including a move in April to streamline the Commercial organization's leadership to “sharpen accountability and accelerate decision-making,” with the new structure reporting directly to the CEO.

“Portfolio optimization remains a critical pillar of our turnaround,” Agadi noted, signaling that more divestitures are likely. This follows the 2024 sale of three businesses that generated approximately $800 million in net proceeds, which were used to pay down debt and simplify the company’s focus. Conduent anticipates proceeds from further divestitures in 2026 could exceed $200 million.

Building the Pipeline for a Return to Growth

While managing current revenue pressures, Conduent is simultaneously laying the groundwork for future growth. The company reported that its qualified new business pipeline expanded to $3.5 billion, up from $3.2 billion a year ago, with notable strength in the government sector. New Business Annual Contract Value (ACV) signings were $114 million for the quarter, a modest increase of $5 million year-over-year.

Management is focused on converting this pipeline into tangible growth by revamping its go-to-market strategy, which includes cross-selling to its extensive existing client base and a renewed push into the federal government space. Industry recognition from firms like NelsonHall and Everest Group, which named Conduent a “Leader” in healthcare payer operations, may help bolster this sales momentum.

Looking ahead, Conduent projects full-year 2026 revenue between $2.8 billion and $2.9 billion with an Adjusted EBITDA of $160 million to $190 million. More importantly, the company stated it sees a “clear path to positive adjusted free cash flow” in 2027, a key milestone for investors.

Agadi summarized the path forward with a clear list of objectives. “Our priorities are clear: accelerating execution, enforcing financial discipline, reducing our cost structure, optimizing the portfolio, converting pipeline into growth, and simplifying the organization. In Q1, we made meaningful, sustainable progress across each of these priorities, and we are building momentum as we move forward.”