Conduent Inc. (CNDT:NASDAQ) yesterday announced second quarter 2020 financial results for the period ended June 30, 2020.
The company's CEO Cliff Skelton remarked, "We continued to make progress in the second quarter as a result of the hard work from our associates and support from our clients. Our Government segment performed particularly well this quarter, driven by larger volumes in the Government payments space and our Transportation business proved to be more resilient than anticipated. New business signings showed significant growth on top of last quarter's strong results and our pipeline is now stronger than it has been in a long time...We remain focused on positioning the company for long-term growth, while taking the time to build a sustainable base of business."
The company advised that Q2/20 revenue exceeded estimates due to better than expected results in the Government and Transportation segments. The firm stated that revenue was somewhat lower compared to Q2/19 due to prior year lost business and COVID-19 related impacts.
Conduent noted that it experienced higher than expected activity in its Government business mainly from "increased volumes in its Supplemental Nutrition Assistance Program and Pandemic Supplemental Nutrition Assistance Program (SNAP and P-SNAP) and Unemployment Insurance pre-paid cards offerings."
The company mentioned that though it tolling business is still below historical pre-COVID-19 levels, it did recover some and the rest of its Transportation segment was impacted slightly less than expected. The firm stated that its Commercial business segments which include Transaction Processing, Healthcare and HR Services offerings were negatively impacted by COVID-19.
The firm highlighted that in Q2/20 it achieved strong sales performance with $623 million in new business signings, a 90% increase over Q2/19 and a 92% increase over Q1/20. Conduent noted that this represents the strongest signings quarter for the company since its spin-off as a standalone public company. The company explained that the new business signings were with a diverse mix of customers across its Commercial, Government, and Transportation business segments.
The company pointed out that it is remains on target to overachieve on the FY/20 $100 million cost reduction program and continues to focus on efficiency, growth and quality projects as part of its strategic transformation program that aims to improve client performance optimization and retention and to enhance service level agreement monitoring.
For Q2/20 the company reported revenue decreased by 8.6% to $1,016 million, compared to $1,112 million in Q2/19. The firm posted a much lower GAAP net loss in Q2/20 of $51 million, compared to a GAAP net loss of $1,029 million in Q2/19. The company additionally listed that diluted EPS from continuing operations in Q2/20 was ($0.25), compared to diluted EPS of ($4.94) in Q2/19.
Conduent's CFO Brian Webb-Walsh commented, "Our focus on delivering for clients while managing our costs is clearly showing in our results. We performed well in the second quarter and our business showed resiliency in the face of the COVID-19 pandemic. We also now expect to overachieve on our $100M cost program for 2020. Given current trends, we anticipate Q3/20 revenue to be $960 million to $1.01 billion and an Adjusted EBITDA margin of between 10.0-11.5% in Q3/20."
Conduent is based in Florham Park, N.J., and delivers what it calls mission-critical services and solutions on behalf of businesses and governments. The firm's solutions and services are designed and implemented to automate workflow, improve efficiency, reduce costs and enable revenue growth. The company advised that its clients include most of the Fortune 100 companies and over 500 government entities and that "its differentiated services and solutions improve experiences for millions of people every day, including two-thirds of all insured patients in the U.S., 11 million employees who use its HR Services, and nearly 9 million people who travel through toll systems daily."
Conduent started off the day with a market capitalization of around $472.5 million with approximately 209.1 million shares outstanding and a short interest of about 2.5%. CNDT shares opened 70% higher today at $3.86 (+$1.60, +70.80%) over yesterday's $2.26 closing price. The stock has traded today between $3.61 and $4.65 per share and is currently trading at $3.99 (+$1.73, +76.55%).
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