A technology company that runs the behind-the-scenes operations for businesses and governments, handling customer-service calls, documents, Medicaid claims, benefit payments, and highway tolling for large enterprises and public agencies. It was spun off from Xerox in 2017, with roots tracing back to Affiliated Computer Services, which Xerox had bought earlier. Its name was coined to echo the word "conduit," reflecting its role as a channel connecting organizations to the people they serve.
Conduent exits Transportation, launches $100M+ restructuring, and revenue falls 12% to $531M on the loss of its largest Commercial customer.
Conduent is exiting the Transportation business and cutting costs after losing its largest Commercial customer. fell 12% to $531 million and the net loss widened to $116 million, driven by that customer loss and a $57 million operating loss that included . The company is now a smaller, two-segment business betting a new $100 million-plus savings program can restore profitability.
Key takeaways
fell 12% to $531 million, which management attributed primarily to the loss of the largest Commercial customer and lower volumes, partially offset by new business ramp.
The net loss widened to $116 million from $40 million a year ago, driven by a $57 million operating loss that included $18 million in tied to a newly launched cost-savings program.
The company announced the sale of its Transportation for $248 million and classified it as , removing the one segment that had been growing from continuing results.
Section summaries
Management's Discussion and Analysis
Revenue fell 12% YoY to $531M on contract losses; company launched a $100M+ savings restructuring and exited Transportation.
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Q2 2026 declined 12% to $531M, driven by the loss of the largest Commercial customer and lower volumes, partially offset by new business ramp.
The 2026 Restructuring Program was launched, targeting at least $100 million in annual savings, with $18 million in charges recorded in Q2 and an expected $75 million in total program costs.
narrowed 0.8 points to 18.1%, as cost of services declined more slowly than ; the prior-year quarter had benefited from the absence of a $17 million liability reversal from the Cognizant settlement.
was $7 million and was negative $2 million, an improvement from negative $15 million and negative $30 million a year ago, respectively.
What changed
Earlier filings flagged whether would stabilize once divestiture runoff was complete. Instead, revenue fell another 12% to $531 million, driven by the loss of the largest Commercial customer — a new that replaced the divestiture runoff management had said was largely complete.
The Transportation , previously the only growing segment and flagged as a margin concern after a Q1 2026 operating loss, is now being sold for $248 million and classified as , removing it from continuing results entirely.
The $3.5 billion new business pipeline flagged in Q1 2026 has not yet converted into reported sufficient to offset customer losses, as the Commercial — the largest remaining segment — saw revenue drop 13%.
remained negative at -$2 million, though this was an improvement from -$30 million a year ago; the company has now reported negative free cash flow in eight of the last nine quarters, and cash and equivalents held flat at $228 million.
What to watch
Whether the $100 million-plus annual savings target from the 2026 Restructuring Program begins to materialize in Q3 2026 margins, and whether the remaining $57 million in program costs pressures results further before savings arrive.
Whether the $248 million Transportation sale closes and the proceeds strengthen a balance sheet where cash has held at $228 million and fell 18% sequentially to $526 million.
Whether the loss of the largest Commercial customer leads to further declines in Q3 2026, or whether new business ramp — cited as a partial offset — begins to stabilize the segment's top line.
Whether the 7% equity stake in Quarterhill Inc. received in the Tolling sale generates fair value gains or losses, given the company now flags stock price volatility, illiquidity, and foreign currency exposure as new risks.
Commercial dropped 13% to $316M, with down 11% to $24M due to revenue declines and negative discrete impacts from penalties and price adjustments.
Government decreased 10% to $215M, and fell 15% to $51M, impacted by contract losses, lower volumes, and a prior-year favorable reserve reversal.
Total company was $16M (3.0% margin) vs. $23M (3.8% margin) a year ago, with Unallocated Costs improving due to the absence of prior-year cyber event costs and corporate efficiencies.
The company launched the 2026 Restructuring Program targeting at least $100M in annual savings and announced the sale of its Transportation for $248M, classifying it as .
Liquidity remains supported by $228M in cash and $190M available under a , though was near breakeven at $(1)M for the first half of 2026.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk from foreign currency exchange rates which could affect operating results, financial position and cash flows. We manage our exposure to this market risk through our regular operating and financing activities and, when appropriate, using derivative f…
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We are exposed to market risk from foreign currency exchange rates which could affect operating results, financial position and cash flows. We manage our exposure to this market risk through our regular operating and financing activities and, when appropriate, using derivative financial instruments. We utilized derivative financial instruments to hedge economic exposures, as well as reduce earnings and cash flow volatility resulting from shifts in market rates. We also hedge the cost to fund material non-dollar entities by buying currencies periodically in advance of the funding date. This is accounted for using derivative accounting.
Recent market events have not caused us to materially modify or change our financial risk management strategies with respect to our exposures to foreign currency risk. Refer to Note 8 – Financial Instruments in the Condensed Consolidated Financial Statements for additional discussion on our financial risk management.
During the reporting period, there have been no material changes to the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.
The information set forth under Note 12 – Contingencies and Litigation in the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference in answer to this Item.
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The information set forth under Note 12 – Contingencies and Litigation in the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference in answer to this Item.
New risk from minority stake in Quarterhill Inc. received in Tolling sale adds equity, FX, and control risks.
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The sale of the Tolling business includes a 7% equity stake in Quarterhill Inc., exposing us to stock price volatility and potential .
Liquidity of the Quarterhill shares may be constrained by low trading volume, contractual lock-ups, and securities law resale limits, which could depress the share price.
Quarterhill trades in Canadian dollars on the TSX, creating unhedged foreign currency exposure that can affect the U.S. dollar value of our stake.
As a minority holder with only board observer rights, we cannot control Quarterhill’s strategy, capital allocation, or integration of the Tolling business.
If Quarterhill fails to integrate the Tolling business or its financial condition deteriorates, our equity interest could materially decline in value or become worthless.