What happened

Shares of Conduent (NYSE:CNDT) have cratered today, down by 39% as of 12:40 p.m. EDT, after the company reported first-quarter earnings results. The business process outsourcing specialist missed expectations and its CEO is resigning.

So what

Revenue in the first quarter fell 19% to $1.16 billion, a little shy of the $1.17 billion in sales that analysts were modeling for. That translated into non-GAAP earnings per share of $0.14, compared to the market's expectations for $0.18 per share in adjusted profit. Excluding divestitures, revenue would have declined 4%. Conduent also closed its first acquisition, Health Solutions Plus, during the quarter.

Red stock chart going down

Image source: Getty Images.

In a statement, CEO Ashok Vemuri said:

This quarter, we continued to make investments in our operating and go-to-market model. We continued to show margin expansion despite facing growth challenges and pressure on our top line. The strong team we have built, the markets we operate in and our loyal client base, establishes a strong foundation upon which to build.

Now what

Vemuri also announced that he is stepping down as CEO amid an ongoing battle with activist investor Carl Icahn. Vemuri will remain CEO until the company can find a permanent successor, which is expected to happen by the third quarter. "It has been my privilege, as CEO of Xerox Business Services to separate, and then to lead as the first CEO of Conduent," Vemuri said. "We have made enormous progress -- standing up a public company, driving a significant transformation program in a relatively short period of time, laying the foundation to become a digital interactions company and resolving the legacy issues we inherited."

Conduent also cut its full-year guidance, and now expects 2019 revenue to decline 3% to 4% on a constant currency basis, compared to the previous outlook for revenue to grow 0.5% to 1.5% on a constant currency basis. On the conference call, CFO Brian Webb-Walsh said new business signings fell 39% in the first quarter and that the state of California did not renew a $140 million contract that expires in September.