Why Conduent Stock Was Slammed Friday

An underwhelming quarter and a worsened full-year outlook have some investors concerned.

Daniel Sparks
Daniel Sparks
Aug 9, 2019 at 12:34PM
Technology and Telecom

What happened

Shares of Conduent (NYSE:CNDT), a company that provides business process services, fell as much as 39.2% on Friday. As of 11:40 a.m. EDT, the stock was down about 35%.

The stock's pullback follows Conduent's second-quarter results, which included a significant year-over-year decrease in revenue and a lowered full-year outlook.

A chalkboard sketch of a downward sloping arrow.

Image source: Getty Images.

So what

Conduent's second-quarter revenue was $1.1 billion, down from $1.39 billion in the same period last year. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $114 million fell 7.3% when excluding the impact of divestitures.

Notably, Conduent said in its second-quarter earnings release that the company has suspended its CEO search as it conducts "a strategic and operational review of the company and each line of business."


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Now what

Conduent lowered its outlook for revenue and its adjusted EBITDA margin. Now the company expects fiscal 2019 revenue to decline 4% to 5%, down from a previous forecast for revenue to drop 3% to 4%. Furthermore, management guided for an adjusted EBITDA margin for the full year between 10.8% and 11.6%, below a previous estimate for 12% to 13%.

"Given continued pressure on the top-line and a more balanced approach on expense management initiatives, we've lowered our outlook for the year," explained Conduent CFO Brian Webb-Walsh in the company's second-quarter update. "We are focused on executing on our strategy to improving the trajectory of our business."