CONDUENT Inc
For the period ended Dec 31, 2025. Filed Feb 19, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 19, 2026
CNDT$1.42-13.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0001677703-25-000029
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-19.
0001677703-26-000024
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 199 previous paragraphs and 191 current paragraphs.
123 unchanged; 42 reworded; 26 added; 33 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
•Transportation– Our Transportation segment provides government agencies and transportation authorities around the world with systems, support and revenue-generating solutions serving toll and fare collections as well as mobility and digital payments that help streamline operations and increase revenue to government and transportation agencies. With and expanded focus on sustainability and enhancing the quality of life for citizens and communities around the world, our solutions help reduce congestion and greenhouse emissions, while creating seamless travel experiences for consumers throughout transportation ecosystems.
Current report
Our emphasis on growth, quality, and efficiency, launched in 2020 and reinforced in our 2023 investor briefing, continued throughout 2025, the final year of our three-year plan. We executed against this strategy by focusing on targeted-growth areas within each business advancing the second phase of our portfolio rationalization strategy to improve our earnings profile and maintained a balanced capital allocation framework that included making internal investments in our solutions, pre-paying debt and repurchasing common shares.
Current report
We expect this approach will continue positioning Conduent to become a more agile company with the potential for improved margins, stronger free cash flow, and a more resilient capital structure.
Current report
•Debt Refinancing– In 2025, we successfully completed refinancing of the Company's revolving credit facility and paid off the remaining $82 million balance of the Company's Senior Secured Term Loan A ("Term Loan A"). Refer to Note 10 – Debt in the Consolidated Financial Statements for additional information.
Current report
•Share Repurchases – During the second, third and fourth quarters of 2025, we repurchased 9.2 million shares of our common stock for $25 million under the current $50 million Board-authorized share repurchase program.
Current report
•Portfolio Rationalization – We started executing the second phase of our portfolio rationalization plans, prioritizing assets that are capital-intensive or have a negative impact on our earnings profile; and during 2025, we received the remaining cash proceeds that were tied to previously announced divestitures.
Current report
•AI Experience Center – We launched the AI Experience Center to support client engagement and provide a structured environment for evaluating and demonstrating Conduent's AI-enabled capabilities.
Current report
Cyber Event
Current report
On January 13, 2025, the Company experienced an operational disruption and learned that a threat actor gained unauthorized access to a limited portion of the Company’s environment (the "January 2025 Cyber Event"). Upon
Current report
detection, the Company activated its cybersecurity response plan with the help of external cybersecurity experts to contain, assess, and remediate the incident. The Company restored the affected systems and returned to normal operations within days, and in some cases, hours. The disruption did not have a material impact to the Company’s operations.
Current report
As part of its ongoing investigation, the Company determined that the threat actor exfiltrated a set of files associated with a subset of the Company’s clients. Due to the complexity of the files, the Company engaged cybersecurity data mining experts to conduct a detailed analysis of the affected files to identify the personal information contained therein. This detailed analysis confirmed that the data sets contained a significant number of individuals’ personal information associated with our clients’ end-users. Upon completion of this time intensive data analysis, the Company notified impacted clients concerning their affected end-users. The Company is working with affected clients to determine next steps as required by federal and state law, including individual and regulatory notifications that began in October 2025 and are anticipated to be concluded by early 2026. The Company monitors the dark web regularly and has no evidence of any personal information associated with this event being released on the dark web. The Company has also notified federal law enforcement authorities of the incident.
Current report
While the Company did not experience material impacts to its operating environment or costs from the event itself, the Company recorded a $25 million non-recurring charge in the first quarter of 2025 related to the event based on the notification requirements described above. We have made cash disbursements of $17 million through December 31, 2025 and expect to make an additional $8 million of cash disbursements during the first half of 2026 related to these notification requirements. Any notification expense in excess of these amounts up to the coverage limit are anticipated to be covered by the cyber insurance policy that the Company maintains. The Company may experience costs beyond notification, but is not able to determine or predict whether the ultimate costs beyond notifications could exceed any applicable coverage limit. See also Note 15 – Contingencies and Litigation to our Consolidated Financial Statements of Part II, Item 8 to this 10-K.
Current report
It is possible that future risks and uncertainties resulting from the January 2025 Cyber Event, including those related to impacted data, litigation, reputational harm, and regulatory actions, could adversely affect the Company’s financial condition or results of operations. See also Part I, Item 1A (Risk Factors).
Current report
SG&A for 2025 decreased 9%, compared to the prior year, primarily driven by a $9 million benefit from the recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019 as well as cost efficiencies in our corporate functions. These were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event.
Current report
Depreciation and amortization for 2025 decreased 5% compared to the prior year, primarily due to the sale of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. This decrease was partially offset by increased amortization of deferred contract costs related to new projects that went live in 2025.
Current report
Litigation settlements (recoveries), net for 2025 and 2024 were not material. Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.
Current report
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S. The legislation contains certain provisions related to the full expensing of U.S. research and development costs and other depreciable property. The legislation also includes changes to the determination of the amount of U.S. interest expense that is deductible for U.S. tax purposes. The acceleration of deductions as a result of anticipated elections the Company will make for the current year following the OBBBA has increased current year net operating loss ("NOL"). The NOL has created a deferred tax asset that required a valuation allowance for U.S. GAAP purposes in 2025. The NOL can be carried forward indefinitely.
Current report
Commercial segment revenue for 2025 decreased by 6%, compared to the prior year, driven by contract losses and lower volumes, partially offset by new business ramps and multi-year licensing agreements with existing customers.
Current report
Commercial segment profit and Adjusted EBITDA for 2025 decreased compared to the prior year primarily due to the revenue drivers noted above and higher fixed technology overhead, partially offset by cost efficiencies and the impact of lower depreciation due to the prior year write-off of internal use software and fully amortized assets.
Current report
Government segment revenue for 2025 decreased, compared to the prior year, primarily due to contract losses, lower volumes and the impacts from a U.S. federal government shutdown during the fourth quarter of 2025, as well as the completion or extension of several implementations. These declines were partially offset by ramp of new business.
Current report
Government segment profit, Adjusted EBITDA and Adjusted EBITDA margin for 2025 increased compared to the prior year. Government segment Adjusted EBITDA margin increased by 270 basis points compared to the prior year, primarily due to cost efficiencies and lower expenses resulting from AI-enabled fraud prevention activities in our Government Services business.
Current report
Transportation revenue for 2025 increased compared to the prior year, primarily driven by a contract amendment with a Transit Solutions customer, increased volumes and favorable exchange rate movements. These increases were partially offset by the non-retained portion of a Road Usage Charging contract, and lower activity across certain smaller projects.
Current report
Transportation segment profit and Adjusted EBITDA for 2025 increased compared to the prior year due to the revenue drivers mentioned above and the absence of costs to transition the non-retained portion of a Road Usage Charging contract.
Current report
Unallocated Costs for 2025 decreased compared to the prior year primarily due to a $9 million recovery of legal costs from one of our insurance carriers related to the previously disclosed State of Texas matter that settled in February 2019, as well as cost efficiencies in our corporate functions. These factors were partially offset by $25 million of direct response costs related to the January 2025 Cyber Event and increase in medical expenses resulting from higher claims costs.
Current report
The net increase in cash flow used in operating activities of $23 million was primarily related to unfavorable working capital changes and cash outflows related to the January 2025 Cyber Event, partially offset by lower cash tax outflows and lower net interest payments.
Current report
•Direct response costs - cyber event. This represents costs related to investigating, remediating and responding to the January 2025 Cyber Event.
Removed paragraphs (33)
Previous report
•Transportation– Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients. We deliver mission-critical tolling, transit and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless experiences for travelers. We help transportation agencies contend with rising urbanization and mobility, the need for system efficiency and an increased focus on transportation infrastructure.
Previous report
Our intense emphasis on growth, quality, and efficiency, beginning in the first quarter of 2020, resulted in a strengthened foundation. Building on this solid foundation, during 2023, we held an investor briefing outlining our three-year strategy. We continue to execute on this strategy and remain focused on accelerating growth and enhancing value for our stakeholders. We intend to achieve this by doubling down on key themes outlined in the 2023 investor briefing including focusing on key growth areas within each of our businesses, continuing our portfolio rationalization strategy, divesting certain solutions which have either scarcity value outside of Conduent or are capital intensive relative to their growth opportunity, and taking a balanced approach to allocating capital including internal investments in our solutions, pre-paying debt and repurchasing common shares.
Previous report
We believe this strategy has resulted and will continue to result in a more nimble and faster growing Conduent with modest levels of net leverage, enhanced valuation, and a stronger balance sheet.
Previous report
•Leadership Updates – In 2024, we continued to enhance our leadership team and appointed a new Group President of the Commercial segment and a new Head of Government Solutions.
Previous report
•Strategic Growth Efforts – During 2023, we continued to see opportunities in our Government Healthcare segment, particularly with our cloud-native Medicaid Claims solution, and we now have a number of significant implementations underway in the space. Our pipeline of opportunities remains strong in this area. We also continued to make progress with our Immediate Payments offering, laying the marketing and educational foundation with our existing clients, and enhancing our partnership strategy. We were the first organization to
Previous report
execute transactions over the newly implemented FedNow capability and we anticipate an acceleration of new business signings to occur in 2024.
Previous report
•New Business Signings – Successfully attained the highest Total Contract Value ("TCV" as defined in Metrics section below) in several years, with an increase of 20% versus 2022. This was predominantly driven by the $1 billion TCV deal in our Transportation segment, with the State of Victoria, Australia. This is our largest TCV deal in the history of Conduent and continues to grow our international presence.
Previous report
•Share Repurchases – The Board of Directors authorized a share repurchase program, granting approval for us to repurchase up to $75 million of our common stock over the next three years. In 2023, 9 million shares were repurchased under this program. This program was completed in September 2024.
Previous report
SG&A for 2024 decreased 1%, compared to the prior year, primarily driven by the impact of the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. Cost efficiencies were partially offset by costs to transition away from a technology vendor. We expect SG&A to decline in 2025 as a result of cost actions to be implemented throughout the year.
Previous report
Depreciation and amortization for 2024 decreased 23% compared to the prior year. This decrease was primarily driven by the impact of the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses, a prior year write-off of capitalized software costs in our Commercial segment totaling $25 million, older assets becoming fully depreciated and planned lower capital investments in the past few years.
Previous report
(1)2023 includes costs related to the closure of one of our Commercial segment operations in Europe.
Previous report
(2)Includes costs in 2024 and 2023 incurred for disengagement from a significant IT outsourcing provider.
Previous report
Litigation settlements (recoveries), net for 2023 primarily consisted of a $26 million reversal of reserves due to the settlement of the Cognizant matter and an $8 million reversal of reserves related to our former student loan business. There were no individually significant items in 2024. Refer to Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.
Previous report
In the fourth quarter of 2024, we implemented an internal reorganization in which we sold a portion of our top tier foreign holding company to a lower tier subsidiary. This transaction and a subsequent tax election to treat the holding company as a partnership resulted in recognition of a built-in capital loss for tax purposes that offset capital gains from divestitures resulting in net tax savings of $59 million. The determination of the tax characteristic of this transaction requires management to make judgments about the application of tax laws and regulations. The United States Internal Revenue Service could determine a different tax treatment that would have an adverse impact on the Company. However, the Company has obtained advice from its third-party advisor concluding that the current tax treatment should prevail on its merits.
Previous report
Commercial segment revenue for 2024 decreased, compared to the prior year, driven by lost business and lower volumes in certain industries within our client base, partially offset by new business ramp.
Previous report
Commercial segment revenue for 2023 decreased, compared to the prior year, driven by lost business, lower volumes in certain industries within our client base and non-repeating items in the prior year, partially offset by new business ramp.
Previous report
Commercial segment profit and Adjusted EBITDA for 2024 increased compared to the prior year primarily due to new business ramp and cost efficiencies, partially offset the impact of lost business and lower volumes. Commercial segment profit also benefited from the absence of the prior year impact of a write-off of capitalized software totaling $25 million stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution as well as fully amortized assets.
Previous report
Commercial segment profit for 2023 decreased compared to the prior year driven by a write-off of capitalized software totaling $25 million described above. Commercial segment Adjusted EBITDA for 2023 was unchanged from the prior year.
Previous report
Government segment revenue for 2024 decreased, compared to the prior year, attributable to lost business, primarily in our Government Healthcare business, and lower volumes in our Government Services business due to the change in funding mechanism for the Electronic Benefits Transfer ("EBT") programs, partially offset by new business ramp.
Previous report
Government segment revenue for 2023 decreased, compared to the prior year, primarily driven by lost business from prior years, non-repeating federal stimulus revenue in the prior year and the impact of an out of period adjustment of $7 million in the first quarter of 2023. These were partially offset by the ramping of new business in Government Healthcare solutions, higher volumes in Government services solutions and a contractual change to a client implementation positively impacting revenue recognition.
Previous report
Government segment profit and Adjusted EBITDA for 2024 decreased compared to the prior year, primarily due to the impact of lost business and the lower volumes mentioned above and the absence of a $17 million reversal of liabilities due to the settlement of the Cognizant matter in the prior year, partially offset by cost efficiencies.
Previous report
Government segment profit for 2023 decreased slightly compared to the prior year and was impacted by lost business, the high margin non-repeating federal stimulus revenue in the prior year and the out of period adjustment in the first quarter of 2023 as well as by higher depreciation driven by the deployment of our new modularized CMdS platform in our Government Healthcare Solutions business.
Previous report
Government segment adjusted EBITDA for 2023 decreased slightly compared to the prior year due to the Government segment profit drivers, excluding depreciation, mentioned above. These were partially offset by the $17 million reversal of reserves due to the settlement of the Cognizant matter, a contractual change to a client implementation positively impacting revenue recognition and cost efficiency.
Previous report
Transportation revenue for 2024 increased compared to the prior year, primarily driven by the ramp of new business and improved operational performance with fewer delays from extended completion timelines compared to the prior year, partially offset by lost business, a Tolling customer price decrease and lower volumes.
Previous report
Transportation revenue for 2023 decreased compared to the prior year, primarily driven by extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue, the completion of smaller projects in our Transit solutions service offering and lost business from prior years, partially offset by new business and favorable exchange rate movement, particularly the Euro.
Previous report
Transportation segment profit and adjusted EBITDA for 2024 decreased compared to the prior year. This was primarily due to a Tolling contract with decreased price and lower volumes attributable to a portion of the contract not being retained. This was partially offset by improved operational performance and reduced impact from extended implementation timelines compared to the prior year.
Previous report
Transportation segment profit, adjusted EBITDA and adjusted EBITDA margin for 2023 all decreased primarily due to extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue and the completion of smaller projects in our Transit solutions service offering.
Previous report
The increase in revenue, segment profit and Adjusted EBITDA for 2023 was primarily due to higher interest rates positively affecting the BenefitWallet business in 2023.
Previous report
Unallocated Costs for 2024 decreased compared to the prior year primarily due to cost savings from insourcing certain technology functions, lower networking and corporate IT costs and lower depreciation costs as certain data center assets became fully depreciated.
Previous report
Unallocated Costs for 2023 increased compared to the prior year primarily due to the prior year reflecting the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, and vendor credits earned in the prior year.
Previous report
Metrics
Previous report
The net decrease in cash flow provided by operating activities of $139 million was primarily related to lower Adjusted EBITDA due to divestitures and higher cash taxes, partially offset by improved accounts receivable Days Sales Outstanding and lower cash interest expense.
Previous report
Table of Contents
Reworded paragraphs (42)
Previous wording
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2024 and 2023, unless stated otherwise.
Current wording
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2025 and 2024, unless stated otherwise. The discussion of 2023 items and related year-over-year comparisons as of and for the years ended December 31, 2024 and 2023 are found in Item 7 of Part II of our Form 10-K for the year ended December 31, 2024.
Previous wording
We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 56,000 associates, process expertise and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.
Current wording
We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 51,000 associates, process expertise and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.
Previous wording
Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of December 31, 2024. In 2024, approximately 14% of our revenue was generated outside the U.S.
Current wording
Headquartered in Florham Park, New Jersey, we have operations in 24 countries as of December 31, 2025. In 2025, approximately 16% of our revenue was generated outside the U.S.
Previous wording
•Commercial– Our Commercial segment provides business process services that span our clients' business processes end-to-end from the front-office to the back-office for a variety of commercial industries. These solutions are both cross-industry and industry-specific in nature. Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees.
Current wording
•Commercial– Our Commercial segment provides business process services that span our clients' business processes end-to-end from the front-office to the back-office for a variety of commercial industries. These solutions are both cross-industry and industry-specific in nature. Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and deliver better experiences for their consumers and employees.
Previous wording
processing, payment services and case management. In this segment, we help governments respond to changing rules for eligibility and increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment.
Current wording
•Government– Our Government segment provides government-centric services and solutions to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing, eligibility and enrollment processing, payment services and case management. In this segment, we help governments respond to changing rules for eligibility and keep pace with increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and adapt to an evolving regulatory environment.
Previous wording
•Divestitures – In 2024, we completed three divestitures as part of our portfolio rationalization strategy. During the second quarter, we completed the transfer of the BenefitWallet Portfolio for a total purchase price of $425 million and completed the sale of the Curbside Management and Public Safety businesses with a purchase price of $230 million, $50 million of which is deferred to the first half of 2025. During the third quarter, we completed the sale of the Casualty Claims Solutions Businesses with a purchase price of $224 million. Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale in the Consolidated Financial Statements for additional information.
Current wording
•Divestitures – In 2024, we completed three divestitures as part of our portfolio rationalization strategy - the BenefitWallet Portfolio, the Curbside Management and Public Safety businesses and the Casualty Claims Solutions businesses. Refer to Note 4 – Divestitures in the Consolidated Financial Statements for additional information.
Previous wording
•Debt Prepayment – In 2024, we utilized a portion of the proceeds from the closing of our divestitures to voluntarily prepay all of the principal ($502 million)of the Term Loan B and $137 million of the Term Loan A. Refer to Note 10 – Debt in the Consolidated Financial Statements for additional information.
Current wording
•Debt Prepayment – In 2024, we utilized a portion of the proceeds from the closing of our divestitures to voluntarily prepay all of the principal of the Term Loan B and a portion of the Term Loan A.
Previous wording
•Icahn Share Repurchase – During the second quarter of 2024, we entered into a purchase agreement with Carl C. Icahn and certain of his affiliates pursuant to which we purchased an aggregate of approximately 38 million shares of our common stock, at a price of $3.47 per share, for an aggregate purchase price of approximately $132 million. We utilized a portion of the proceeds from the closing of our divestitures to fund the purchase. Refer to Note 16 – Common Stock and Preferred Stock in the Consolidated Financial Statements for additional information.
Current wording
•Icahn Share Repurchase – During the second quarter of 2024, we entered into a purchase agreement with Carl C. Icahn and certain of his affiliates pursuant to which we purchased their entire holdings or an aggregate of approximately 38 million shares of our common stock. We utilized a portion of the proceeds from the closing of our divestitures to fund the purchase.
Previous wording
•Share Repurchases – In 2024, we completed our previously approved $75 million share repurchase program and bought back a total of 14 million shares of common stock.
Current wording
•Share Repurchases – In 2024, we completed our previously approved $75 million share repurchase program.
Previous wording
Revenue for 2024 decreased 10%, compared to the prior year, over half of which was due to the impact of the BenefitWallet Portfolio transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. In addition to the divestitures impact, lost business across our three segments was partially offset by new business ramp.
Current wording
Revenue for 2025 decreased 9%, compared to the prior year, approximately 57% of which was due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. In addition to the divestitures impact, lost business and lower volumes contributed to the decrease and were partially offset by new business ramp, higher equipment sales and positive impacts from a contract amendment with a customer in the Transportation segment.
Previous wording
Cost of services for 2024 decreased 5%, compared to the prior year, approximately three quarters of which was primarily driven by the impact of the transfer of the BenefitWallet Portfolio and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. In addition to the divestitures impact, lower expenses on lower revenues and cost optimizations contributed to the decrease and were partially offset by the absence of a $17 million benefit from reversal of liabilities due to the settlement of the Cognizant matter in the prior year. We expect Cost of services to decline in 2025 as a result of cost actions to be implemented throughout the year.
Current wording
Cost of services for 2025 decreased 9%, compared to the prior year, primarily due to the impact of the BenefitWallet Transfer and the sales of the Curbside Management and Public Safety Solutions and Casualty Claims Solutions businesses. In addition to the divestitures impact, lower expenses on lower revenues and continued cost optimization initiatives across segments contributed to the decline.
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We engage in a series of restructuring programs related to downsizing our employee base, reducing our real estate footprint, exiting certain activities, outsourcing certain internal functions, consolidating our data centers and engaging in other actions designed to reduce our cost structure and improve productivity. The following are the components of our Restructuring and related costs:
Current wording
We engage in a series of restructuring programs related to optimizing our employee base, reducing our real estate footprint, exiting certain activities, outsourcing certain internal functions, consolidating our data centers and engaging in other actions designed to reduce our cost structure and improve productivity. The following are the components of our Restructuring and related costs:
Previous wording
(3)Relates to approximate headcount reductions worldwide associated with Severance and related costs.
Current wording
(1)Relates to approximate headcount reductions worldwide associated with Severance and related costs.
Previous wording
Interest expense represents interest on long-term debt and the amortization of debt issuance costs. The decrease in Interest expense for 2024, compared to the prior year, was driven primarily by lower debt balances as we utilized proceeds from divestitures closed in 2024 to voluntarily prepay all of our Term Loan B and a portion of our Term Loan A. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information.
Current wording
Interest expense represents interest on long-term debt and the amortization of debt issuance costs. The decrease in Interest expense for 2025, compared to the prior year, was primarily due to the 2024 voluntary prepayments of the entire Term Loan B balance outstanding and a portion of the Term Loan A balance with proceeds from divestitures. The remaining Term Loan A balance was repaid at the execution of Amendment No. 3 to the Credit Facility. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information.
Previous wording
The goodwill impairment for 2024 is related to the write-down of the Transportation reporting unit's goodwill arising from the annual goodwill impairment test. The impairment in 2023 is related to the write-down of the carrying value of the Commercial reporting unit. This resulted from the evaluation of goodwill triggered by entering into the Custodial Transfer and Asset Purchase Agreement to transfer our BenefitWallet Portfolio. Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on these impairments.
Current wording
The goodwill impairment for 2024 is related to the write-down of the Transportation reporting unit's goodwill arising from the annual goodwill impairment test. Refer to Note 7 – Goodwill to the Consolidated Financial Statements for additional information on this impairment.
Previous wording
Our 2024 divestitures resulted in gains of $721 million. Additionally, we recorded a $3 million gain adjustment related to a prior year divestiture following the partial settlement of the Skyview matter. This financial statement line also includes professional fees and other costs associated with both consummated and non-consummated transactions totaling $30 million and $10 million in 2024 and 2023, respectively. The 2024 amount also includes a $2 million reimbursement of previously incurred legal fees related to the partial settlement of the Skyview matter. Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.
Current wording
Our 2024 divestitures resulted in gains of $721 million. Additionally, we recorded a $3 million gain adjustment related to a prior year divestiture following the partial settlement of the Skyview matter. (Gain) loss on divestitures and transaction costs, net also includes professional fees and other costs associated with both consummated and non-consummated transactions totaling $9 million and $28 million in 2025 and 2024, respectively. Refer to Note 4 – Divestitures and Note 15 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.
Previous wording
Other (income) expenses, net for 2024 and 2023 primarily includes interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains). The increase in 2024 is primarily due to interest income of $8 million related to the partial settlement of the Skyview matter. Refer to Note 15 – Contingencies and Litigation in the Consolidated Financial Statements for additional information.
Current wording
Other (income) expenses, net for 2025 and 2024 primarily include interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains). In 2025, interest income on invested cash was lower due to lower available cash and foreign currency transaction losses were higher due to unfavorable movements in foreign exchange rates, primarily the weakening of the U.S. dollar against certain foreign currencies during the year. In 2024, Other (income) expenses, net also included interest income of $8 million related to the partial settlement of the Skyview matter. Refer to Note 15 – Contingencies and Litigation in the Consolidated Financial Statements for additional information.
Previous wording
The 2024 effective tax rate was 15.5%, compared to 10.7% for 2023. The 2024 rate was lower than the U.S. statutory rate of 21% due to favorable permanent adjustments from the internal reorganization and outside basis on a stock sale partially offset by the non-deductible Transportation reporting unit goodwill impairment, tax reserves and geographic mix of income. The 2023 rate was lower than the U.S. statutory rate of 21%, primarily due to the non-deductible Commercial reporting unit goodwill impairment, geographic mix of income and return to provision adjustments, partially offset by tax benefits related to tax settlements and reversal of reserves.
Current wording
The 2025 effective tax rate was (6.1)%, compared to 15.5% for 2024. The 2025 rate was lower than the U.S. statutory rate of 21% primarily due to valuation allowances, geographic mix of income and discrete taxes. The 2024 rate was lower than the U.S. statutory rate of 21%, primarily due to favorable permanent differences from an internal reorganization and outside basis on a stock sale partially offset by non-deductible Transportation reporting unit goodwill impairment, tax reserves and geographic mix of income.
Previous wording
Excluding the impact of the internal reorganization, divestitures, goodwill impairment, amortization of intangible assets, restructuring costs and certain discrete tax items, the normalized effective tax rate for 2024 was 21.2%. The 2023 rate was 107.3% excluding the impact of goodwill impairment, amortization of intangible assets, restructuring, litigation reserve releases and certain discrete tax items. The rate was anomalous due to small adjusted pre-tax loss and tax which is a result of geographic mix of income and valuation allowances against losses in certain jurisdictions resulting in no tax benefit.
Current wording
Excluding the impact of amortization, restructuring, divestitures, transaction costs, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for 2025 was 25.4%. The normalized effective tax rate for 2024 was 21.2% excluding the impact of the internal reorganization, divestitures, goodwill impairment, amortization of intangible assets, restructuring costs and certain discrete tax items. The 2025 rate is higher than the 2024 rate due to increased estimated tax credits and geographic mix of income.
Previous wording
Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments:
Current wording
Our financial performance is based on Segment Profit (Loss) for the following three segments:
Previous wording
Divestitures include our BenefitWallet Portfolio and our Casualty Claims Solutions businesses (both of which were reclassified from our Commercial segment) and our Curbside Management and Public Safety Solutions businesses (which was reclassified from our Transportation segment). For the year ended December 31, 2022, Divestitures also includes our Midas business, which was sold in the first quarter of 2022.
Current wording
Divestitures include our BenefitWallet Portfolio and our Casualty Claims Solutions businesses (both of which were reclassified from our Commercial segment in 2024) and our Curbside Management and Public Safety Solutions businesses (which was reclassified from our Transportation segment in 2024).
Previous wording
The section below provides a comparative discussion of our financial performance by segment between the years ended December 31, 2024 and 2023. The comparative discussion of our financial performance by segment between the years ended December 31, 2023 and 2022 is also included to reflect the impact of reclassifying divested businesses from our Commercial and Transportation segments as described above.
Current wording
The section below provides a comparative discussion of our financial performance by segment between the years ended December 31, 2025 and 2024. See Item 7. MD&A - Operations Review of Segments in our Annual Report on Form 10-K for the year ended December 31, 2024 for a comparative discussion of our financial performance by segment between the years ended December 31, 2024 and 2023.
Previous wording
(1) The 2024 amount represents a termination for convenience fee related to the termination of Convergint as a subcontractor for our State of Victoria contract. The 2023 amount represents a termination for convenience fee related to the termination of a contract with a significant IT outsourcing provider. Both the 2024 and 2023 items are reported in Cost of Services on the Consolidated Statements of Income.
Current wording
(1) The 2024 amount represents a termination for convenience fee related to the termination of Convergint as a subcontractor for our State of Victoria contract and is reported in Cost of Services on the Consolidated Statements of Income.
Previous wording
The decrease in revenue, segment profit and Adjusted EBITDA for 2024 was due to the BenefitWallet Portfolio, the Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions businesses being included for a full year in the prior year period whereas their results were only included until the date of their transfer and sale, as applicable, in 2024.
Current wording
The decrease in revenue, segment profit and Adjusted EBITDA for 2025 as compared to the prior year was due to the transfer of the BenefitWallet Portfolio and the sales of the Curbside Management and Public Safety Solutions businesses and Casualty Claims Solutions businesses in 2024.
Previous wording
The total new business pipeline at the end of December 31, 2024 and 2023 was $22.2 billion and $22.8 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages. This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required.
Current wording
The total new business pipeline at the end of December 31, 2025 and 2024 was $3.2 billion and $3.1 billion, respectively. Total new business pipeline is defined as total new business ACV pipeline of deals at or beyond the qualified prospect stage. Beginning in the first quarter of 2025, we transitioned our measure of sales pipeline from TCV to ACV to align with our primary sales metric and have recast all prior period comparatives to reflect this change. This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required. New business pipeline levels were stable year over year and were not a primary driver of period-over-period revenue or Net ARR performance.
Previous wording
Net ARR Activity is a metric that is defined as Projected Annual Recurring Revenue ("ARR") for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results. The metric annualizes the net impact to revenue. Timing of revenue impact varies and may not be realized within the forward 12-month timeframe. The metric is for indicative purposes only. This metric excludes non-recurring revenue signings. This metric is not indicative of any specific 12-month timeframe.
Current wording
Net ARR Activity is a metric that is defined as Projected Annual Recurring Revenue ("ARR") for contracts signed in the prior 12 months, less the annualized impact of any client losses, contractual volume and price changes, and other known impacts for which the Company was notified in that same time period, which could positively or negatively impact results. The metric annualizes the net impact to revenue. Timing of revenue impact varies and may not be realized within the forward 12-month timeframe. The metric is for indicative purposes only. This metric excludes non-recurring revenue signings. This metric is not indicative of any specific 12-month timeframe. Net ARR results during the year, including in the second, third and fourth quarters, were primarily influenced by the cadence of renewals and client losses, rather than new-business performance.
Previous wording
As of December 31, 2024 and 2023, total cash and cash equivalents were $366 million (of which approximately $140 million was cash in foreign locations) and $498 million (of which approximately $143 million was cash in foreign locations), respectively. We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $11 million has been utilized for letters of credit as of December 31, 2024. The amount of borrowings outstanding under the Revolving Credit Facility at each quarter-end may be limited by our leverage covenant. In February 2025, the Company borrowed $50 million under the Revolving Credit Facility for working capital purposes.
Current wording
As of December 31, 2025 and 2024, total cash and cash equivalents were $233 million (of which approximately $115 million was cash in foreign locations) and $366 million (of which approximately $140 million was cash in foreign locations), respectively. We also have a $357 million Revolving Credit Facility (reducing to $187 million in October 2026) for our various cash needs, of which $109 million has been utilized for borrowings and $25 million has been utilized for letters of credit as of December 31, 2025. The amount of borrowings outstanding under the Revolving Credit Facility at each quarter-end may be limited by our leverage covenant. In January 2026, the Company borrowed an additional $25 million under the Revolving Credit Facility for working capital purposes.
Previous wording
As of December 31, 2024, there was a total of $608 million of outstanding borrowings under our Term Loan A and Senior Notes, of which $14 million was due within one year. Additionally, as of December 31, 2024, we had $10 million of finance lease and other debt due within one year. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information regarding our debt.
Current wording
As of December 31, 2025, there was a total of $520 million of outstanding borrowings under our Senior Notes, none of which was due within one year. Additionally, as of December 31, 2025, we had $22 million of finance lease and other debt due within one year. We have the ability and intent to refinance the amount outstanding under our Revolving Credit Facility on a long-term basis; therefore all amounts outstanding as of December 31, 2025 are classified as long-term on our Consolidated Balance Sheets. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information regarding our debt.
Previous wording
The increase in cash provided by investing activities of $888 million was primarily due to the proceeds from our 2024 divestitures of $830 million and proceeds from the settlement of the Skyview matter related to notes receivable of $21 million. In addition, there was a planned decrease in capital spending in the current year.
Current wording
The decrease in cash provided by investing activities of $823 million was primarily due to the proceeds from our divestitures of $830 million and proceeds from the settlement of the Skyview matter related to notes receivable of $21 million in 2024. In addition, there was a planned increase in capital spending in the current year of $25 million. The 2025 period includes $50 million of cash received related to the non-interest-bearing note from the Curbside Disposal Group divestiture.
Previous wording
The increase in cash used in financing activities was mainly driven by the $642 million early repayment of Term Loan B and Term Loan A utilizing funds received from our divestitures. In addition, $132 million was utilized to purchase all of the common shares owned by the Icahn Parties.
Current wording
The decrease in cash used in financing activities was mainly driven by the $642 million early repayment of Term Loan B and Term Loan A in 2024 utilizing funds received from our divestitures. In addition, in 2024 $132 million was utilized to purchase all the common shares owned by the Icahn Parties. The 2025 period includes a $25 million drawdown on our revolving line of credit for working capital purposes.
Previous wording
The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2024, 2023 and 2022 was $7 million, $(4) million and $54 million, respectively. The net impact from the sales of accounts receivable represents the difference between current and prior year fourth quarter accounts receivable sales adjusted for the effects of collections prior to the end of the year.
Current wording
The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2025, 2024 and 2023 was $(18) million, $7 million and $(4) million, respectively. The net impact from the sales of accounts receivable represents the difference between current and prior year fourth quarter accounts receivable sales adjusted for the effects of collections prior to the end of the year.
Previous wording
We believe our balances of cash and cash equivalents, which totaled $366 million as of December 31, 2024, along with cash generated by operations and amounts available for borrowing under our Revolving Credit Facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
Current wording
We believe our balances of cash and cash equivalents, which totaled $233 million as of December 31, 2025, along with cash generated by operations and amounts available for borrowing under our Revolving Credit Facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
Previous wording
As of December 31, 2024, we had total outstanding debt, including Finance leases, with floating and fixed rates totaling $646 million, of which $24 million was due within 12 months. Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $192 million, of which $43 million is due within 12 months. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information.
Current wording
As of December 31, 2025, we had total outstanding debt, including finance leases, with floating and fixed rates totaling $691 million, of which $22 million was due within 12 months. Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $162 million, of which $44 million is due within 12 months. Refer to Note 10 – Debt to the Consolidated Financial Statements for additional information.
Previous wording
In the ordinary course of business, we enter into operating lease arrangements for certain equipment and facilities. As of December 31, 2024, total fixed lease payables were $226 million, of which $65 million was due within 12 months. Refer to Note 6 – Leases to the Consolidated Financial Statements for additional information.
Current wording
In the ordinary course of business, we enter operating lease arrangements for certain equipment and facilities. As of December 31, 2025, total fixed lease payables were $182 million, of which $61 million was due within 12 months. Refer to Note 6 – Leases to the Consolidated Financial Statements for additional information.
Previous wording
We have committed to purchasing certain materials and services to support our operations. The total of these commitments was $348 million as of December 31, 2024, of which $147 million is due within the next 12 months.
Current wording
We have committed to purchasing certain materials and services to support our operations. The total of these commitments was $603 million as of December 31, 2025, of which $202 million is due within the next 12 months.
Previous wording
As more fully discussed in Note 15 – Contingencies and Litigation to the Consolidated Financial Statements, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property law; employment law; the Employee Retirement Income Security Act ("ERISA"); and other laws and regulations. In addition, guarantees, indemnifications and claims may arise during the ordinary course of business from relationships with suppliers and customers. Nonperformance under a contract including a guarantee, indemnification or claim could trigger an obligation of the Company.
Current wording
As more fully discussed in Note 15 – Contingencies and Litigation to the Consolidated Financial Statements, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning: securities law; governmental entity contracting, servicing and procurement law; intellectual property law; employment law; the Employee Retirement Income Security Act ("ERISA"); data privacy and cybersecurity laws; and other laws and regulations. In addition, guarantees, indemnifications and claims may arise during the ordinary course of business from relationships with suppliers and customers. Nonperformance under a contract including a guarantee, indemnification or claim could trigger an obligation of the Company.
Previous wording
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto. In preparing our Consolidated Financial Statements, we have made our best estimates and judgments of certain amounts included in the Consolidated Financial Statements giving due consideration to materiality. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Senior management has discussed the development and selection of the critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Board of Directors. We consider these as critical to understanding our Consolidated Financial Statements, as their application places the most significant demands on management's judgment, since financial reporting results rely on estimates of the effects of matters that are inherently uncertain. In instances where different estimates could have reasonably been used, we disclose the impact of these different estimates on our operations. In certain instances, the accounting rules are prescriptive; therefore, it would not have been possible to reasonably use different estimates. Changes in assumptions and estimates are reflected in the period in which they occur. The impact of such changes could be material to our results of operations and financial condition in any quarterly or annual period.
Current wording
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto. In preparing our Consolidated Financial Statements, we have made our best estimates and judgments of certain amounts included in the Consolidated Financial Statements giving due consideration to materiality. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Senior management has discussed the development and selection of critical accounting policies, estimates and related disclosures included herein with the Audit Committee of the Board of Directors. We consider these as critical to understanding our Consolidated Financial Statements, as their application places the most significant demands on management's judgment, since financial reporting results rely on estimates of the effects of matters that are inherently uncertain. In instances where different estimates could have reasonably been used, we disclose the impact of these different estimates on our operations. In certain instances, the accounting rules are prescriptive; therefore, it would not have been possible to reasonably use different estimates. Changes in assumptions and estimates are reflected in the period in which they occur. The impact of such changes could be material to our results of operations and financial condition in any quarterly or annual period.
Previous wording
Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated adverse events or conditions impacting revenues, cash flows or profitability, unanticipated competitive activities and acts by governments and courts. Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information regarding our goodwill policies.
Current wording
Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors, supply costs, unanticipated adverse events or conditions impacting revenues, cash flows or profitability, unanticipated competitive activities and acts by governments and courts. Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 7 – Goodwill to the Consolidated Financial Statements for additional information regarding our goodwill policies.
Previous wording
Based on our quantitative assessments, we concluded that the fair value of our Government reporting unit exceeded its carrying value and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill for this reporting unit. If we used different assumptions for discount rates or long-term organic growth rates in this annual assessment, our calculated fair values of our Government reporting unit could be higher or lower which could result in a goodwill impairment. Refer to Note 7 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on the impairment of the remaining goodwill in our Transportation reporting unit.
Current wording
Based on our quantitative assessments, we concluded that the fair value of our Government reporting unit exceeded its carrying value and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill for this reporting unit. If we used different assumptions for discount rates or long-term organic growth rates in this annual assessment, our calculated fair values of our Government reporting unit could be higher or lower which could result in a goodwill impairment.
Previous wording
We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in our Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded in our Consolidated Balance Sheets and provide valuation allowances as required. We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Gross deferred tax assets of $241 million and $253 million had valuation allowances of $95 million and $100 million at December 31, 2024 and 2023, respectively.
Current wording
We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in our Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded in our Consolidated Balance Sheets and provide valuation allowances as required. We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Gross deferred tax assets of $310 million and $241 million had valuation allowances of $151 million and $95 million at December 31, 2025 and 2024, respectively.
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Previous report — wording carried elsewhere
•Government– Our Government segment provides government-centric services and solutions to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction