Please ensure Javascript is enabled for purposes of website accessibility

Why Conduent Stock Cratered Today

By Evan Niu, CFA - May 9, 2019 at 1:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The business process outsourcing company missed on earnings and its CEO is stepping down.

What happened

Shares of Conduent (CNDT 2.60%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Conduent Incorporated Stock Quote
Conduent Incorporated
CNDT
$4.93 (2.60%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.