Conduent Q3 2025: Loss Narrows Amid AI Push

Conduent Reports Mixed Q3 Results Despite Strategic AI Integration

Florham Park, New Jersey-based business process solutions provider Conduent Incorporated (CNDT) released its Q3 2025 earnings report on November 7, revealing a complex financial landscape amid ambitious technological transformations. The company, which serves government agencies and commercial clients, posted a net loss of $46 million but highlighted significant progress in operational efficiency and artificial intelligence integration.

Conduent's third-quarter revenue reached $767 million, falling short of analysts' expectations of $794.3 million. This represents a 5% year-over-year decline from the $807 million reported in Q3 2024. Despite the revenue shortfall, the company demonstrated improved profitability metrics, with adjusted EBITDA increasing 25% year-over-year to $40 million, boosting the adjusted EBITDA margin to 5.2%.

Key Strategic Developments

While the headline figures show challenges, Conduent emphasized several strategic initiatives driving long-term transformation:

• Successful Debt Refinance: The company completed a debt restructuring that extended maturity dates and enhanced financial flexibility, maintaining $264 million in cash reserves alongside $198 million in unused credit capacity.
• AI Integration: Conduent deployed generative AI across its proprietary platforms, enhancing document processing, customer experience management, and fraud prevention systems. These improvements are designed to streamline both internal operations and client services.
• New Business Momentum: The company secured $111 million in new business signings, with a notable contract win from the Richmond Metropolitan Transportation Authority for a Pay-by-Plate toll collection system.

"Q3 represents not only a quarter where we met guidance on Adjusted Revenue and Adjusted EBITDA Margin, but also the continuation of our drive toward year-over-year revenue growth," said President and CEO Cliff Skelton. "Our Public Sector businesses had a particularly strong quarter, despite the cyclical nature of government funding and the Federal government shutdown."

Financial Challenges and Outlook

Conduent faces persistent headwinds, including a pre-tax loss of $38 million compared to a $159 million profit in Q3 2024, primarily due to losses from asset divestitures. Operating cash flow also deteriorated, moving from -$13 million to -$39 million year-over-year.

Looking ahead, the company projects full-year revenue between $3.05 billion and $3.1 billion, with an adjusted EBITDA margin target of 5%-5.5%. Portfolio rationalization efforts have achieved 87% of the $1 billion capital allocation goal, with continued focus on cash generation and sales pipeline expansion.

Risk Factors and Market Position

Despite its strategic initiatives, Conduent's financial health shows warning signs. The Altman Z-Score of 0.22 places the company in the distress zone, indicating potential bankruptcy risk within two years. However, its low price-to-sales ratio of 0.12 suggests potential undervaluation, with analyst targets set at $7.03.

The company operates across three key segments: Commercial Industries, Government Services, and Transportation. Its U.S.-centric operations face challenges from government funding cycles and competitive pressures in the technology sector.

"We remain focused on cash generation, sales, and expanding our pipeline opportunities especially within our current client base, while maintaining more than ample liquidity through cash reserves and a recently renewed credit facility."
— Cliff Skelton, President and CEO

The Path Forward

Conduent's Q3 results reflect a company at a crossroads, balancing immediate financial pressures with long-term technological investments. The successful debt refinance and AI deployments provide a foundation for recovery, while the continued expansion of operations in the Philippines indicates growth potential in customer experience solutions.

Investors will closely monitor the company's ability to convert operational improvements into sustained revenue growth, particularly as it approaches the midpoint of its fiscal year and navigates ongoing volatility in both public and private sectors.