Conduent Incorporated (NASDAQ:CNDT) Q1 2023 Results Conference Call May 3, 2023 9:00 AM ET

Company Participants

Giles Goodburn - Vice President of Investor Relations

Cliff Skelton - President and CEO

Steve Wood - CFO

Operator

Greetings, and welcome to the Conduent First Quarter 2023 Earnings Announcement. At this time, all participants are in a listen only mode [Operator Instructions]. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Giles Goodburn, Vice President of Investor Relations.

Giles Goodburn

Thank you, operator. And thanks, everyone, for joining us today to discuss Conduent's first quarter 2023 earnings. We hope you had a chance to review our press release issued earlier this morning. Joining me is Cliff Skelton, our President and CEO; and Steve Wood, our CFO. Today's agenda is as follows: Cliff will provide an overview of our results and a business update; Steve will then walk you through the financials of the quarter, as well as providing our financial outlook; Cliff will then offer his closing comments. This call is being webcast and a copy of the slides used during this call as well as the press release were filed with the SEC this morning on Form 8-K. This information as well as the detailed financial metrics package are available on the Investor Relations section of the Conduent Web site. During this call, we may make statements that are forward-looking. These forward-looking statements reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. Information concerning these factors is included in Conduent's annual report on Form 10-K filed with the SEC. We do not intend to update these forward-looking statements as a result of new information or future events or developments except as required by law. The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with US GAAP, they should be viewed in addition to and not as a substitute for the company's reported results. For more information regarding definitions of our non-GAAP measures and how we use them, as well as the limitations to the usefulness for comparative purposes, please see our press release.

And now I would like to turn the call over to Cliff.

Cliff Skelton

Thank you, Giles, and good morning, everyone. Thanks for joining Conduent's Q1 earnings call. We appreciate you being here today. As is our custom, provide some high level comments about the quarter and characterize some of the nuance and timing of revenue, EBITDA, sales, et cetera. And Steve, of course, will go into a bit more depth. As you can tell, we've shifted our perspective here as we migrate to a new set of sell-side analysis and thus, we'll forego immediate questions following earnings. But as always, folks should feel free to reach out to our Investor Relations team with any kind of follow-up questions. First, let's start with a quick view of the numbers. Despite some onetime events, and Steve will talk about those, in Q1, core run rate revenue beat our internal expectations due to increased volume, specifically in our Government and Commercial businesses, partially offset by client-driven revenue milestone changes in our Transportation business and a prior period adjustment in our Government business, both of which somewhat muted that positive growth in volume. These volume trends have continued, and we do believe they will, should help bolster the remainder of 2023. Again, Steve will get into the details, but this is all part of the top line growth expectation that we previewed in our investor briefing in late March. As we've discussed in the past, that net ARR number which was higher year-over-year again at $108 million is a leading indicator regarding our growth trajectory. We're certainly and especially pleased with improvements in client retention. However, outrunning that government stimulus volume from 2021 and 2022 takes some time. Slowly but surely, we're outrunning the past and landing in that sweet spot growth range we previously laid out for you.