Conduent’s Troubling Trajectory: Can AI and Cost Cuts Rescue a Declining Revenue Base?

Conduent (CNDT) is walking a tightrope. The company’s latest earnings report reveals a persistent struggle with profitability despite ongoing efforts to streamline operations and leverage the power of AI. While management points to improving trends in its Government and Transportation segments, a concerning decline in revenue and a widening net loss raise serious questions about the sustainability of its turnaround strategy. Investors are left to weigh ambitious margin targets against a stark reality of shrinking top-line performance.

Revenue Under Pressure: A Declining Trend

Trailing twelve-month revenue has fallen from $3.6 billion in Q2 2024 to $3.1 billion as of Q3 2025, a significant contraction that underscores the challenges Conduent faces in maintaining its market position. This decline isn’t limited to a single quarter; quarterly revenue has steadily decreased from $828 million in Q2 2024 to $767 million in Q3 2025. The company’s Commercial segment, alongside Government, experienced year-over-year declines in the second quarter of 2025, signaling broad-based weakness. This revenue erosion fuels skepticism about Conduent’s ability to consistently generate growth, particularly given its reliance on episodic contracts.

Profitability Plummets Despite Cost Control Efforts

The financial picture is even more concerning when examining profitability. While adjusted EBITDA margins have shown some improvement – reaching 5.4% for the full year 2025 – this hasn’t translated into net income. In fact, the company has swung from a $22 million profit in the trailing twelve months ending Q2 2024 to a $159 million loss in the period ending Q3 2025. The EPS story is equally bleak, moving from a profit of $1.09 in Q2 2024 to a loss of $0.31 in Q3 2025. This divergence between margin ambitions and actual earnings is a key point of concern for investors, highlighting the urgency of translating cost controls and automation initiatives into tangible bottom-line results.

The AI and Portfolio Optimization Gamble

Conduent’s management is betting heavily on AI-driven process improvements and portfolio streamlining to reverse these trends. The company highlights a $517 million fresh business ACV for the full year 2025, suggesting some success in securing new contracts. Still, the question remains whether these new deals will be sufficient to offset the revenue decline and drive meaningful profitability. The success of this strategy hinges on the speed and effectiveness of implementing AI solutions and optimizing the portfolio, a process that inherently carries execution risk.

Valuation Disconnect: Opportunity or Illusion?

Despite the challenging financial performance, Conduent’s valuation appears remarkably low. Currently trading at a price-to-sales (P/S) ratio of 0.1x, it significantly underperforms its peers (0.8x) and the broader US Professional Services industry (1.1x). Analysts estimate a DCF fair value of around $6.60 per share, almost five times the current trading price of $1.35. This substantial gap suggests the market may be undervaluing Conduent’s potential, but it also reflects the considerable uncertainty surrounding its turnaround prospects. A projected revenue level of $3.4 billion and earnings of $241.5 million by 2028, as cited by analysts, underpin the $7.00 price target, but achieving these figures will require a dramatic shift in performance.

Navigating the Risks and Opportunities

Conduent’s situation presents a classic value investing dilemma. The company’s depressed valuation and potential for improvement, driven by AI and cost controls, are attractive. However, the persistent revenue decline, ongoing losses, and execution risks demand a cautious approach. Investors should closely monitor the company’s progress in stabilizing revenue, improving profitability, and converting its sales pipeline into tangible earnings. The ability to smooth out contract-driven volatility and demonstrate sustainable margin expansion will be critical in determining whether Conduent can unlock its full potential.

For those seeking more resilient investment opportunities, exploring companies with stronger financial profiles and lower risk scores may be prudent. Simply Wall St offers a range of tools and analysis to help investors assess risk and identify potential opportunities.

What are your thoughts on Conduent’s turnaround prospects? Share your insights in the comments below!

The Shifting Global Order: How Trump’s Policies Are Accelerating China’s Rise

The world is undergoing a dramatic geopolitical realignment. Data from Focaldata reveals a startling trend: under Donald Trump’s second presidency, the United States is becoming increasingly isolated on the world stage, even as China’s influence is expanding. The number of countries strongly aligned with the US has plummeted from 46 to just seven, a collapse unprecedented in recent history. This isn’t simply a shift in preference; it’s a fundamental restructuring of global power dynamics.

The UN as a Geopolitical Barometer

Focaldata’s analysis, based on UN General Assembly voting records, provides a compelling proxy for geopolitical alignment. Countries that consistently vote similarly on contested resolutions tend to share common interests. By measuring the correlation between voting patterns and those of the US and China, researchers have mapped a clear trajectory: the geopolitical center of gravity is moving away from Washington and towards Beijing. This shift isn’t driven by a surge in pro-China sentiment, but rather by a growing divergence in US voting patterns from its traditional allies.

Key Flashpoints: Ukraine, Gaza, and Beyond

Several key votes at the UN have highlighted this growing divide. In February 2025, the US aligned with Russia, Belarus, and North Korea to vote against a resolution condemning Russia’s actions in Ukraine – a move that shocked many of its allies. Similarly, the US voted against a resolution calling for the protection of civilians in Gaza, siding with Israel while the vast majority of Western nations supported the resolution. China voted in favor. These decisions, along with US opposition to resolutions on environmental issues, health, and migration that garnered broad international support, have eroded trust and driven nations towards Beijing.

Europe’s Drift and the UK’s Reassessment

The impact of this shift is particularly pronounced in Europe. NATO and European states, historically the bedrock of American global influence, are now voting less reliably with the US. The UK’s alignment with the US has reached its lowest level since records began, coinciding with a renewed interest in thawing relations with Beijing. Canada, South Korea, Japan, and Germany have also significantly deviated from US voting patterns in recent years. The combined economic power of countries aligned with China now surpasses that of those aligned with the US – a reversal of the situation during the Obama and Biden administrations.

Did you grasp? Only Argentina and Israel remained consistently aligned with the Trump White House in 2025, according to Focaldata’s analysis.

The Economic Implications: A Growing Divide

The shift in geopolitical alignment is closely linked to economic realities. Fastest-growing economies are increasingly clustering closer to Beijing, particularly in Asia, Africa, and Latin America. When weighted by historic GDP levels, the center of gravity has been slowly moving towards China for the past 30 years. With China’s outsized influence among these rapidly developing economies, Flynn predicts the global center of gravity could move into Chinese territory by the late 2030s.

What Does This Mean for the Future?

The implications of this shift are far-reaching. A less US-centric world order doesn’t necessarily mean a more chaotic one, but it does require a recalibration of strategies for businesses and policymakers alike. Companies may demand to diversify their supply chains and consider the geopolitical risks associated with aligning too closely with any single power. Governments will need to navigate a more complex landscape, forging novel alliances and adapting to a multipolar world.

Frequently Asked Questions

Q: Is this shift irreversible?

A: While the current trend is strong, geopolitical alignments are not fixed. A change in US policy or a significant shift in China’s approach could alter the trajectory. However, the underlying factors driving this realignment – including diverging interests and a perceived decline in US reliability – suggest the trend is likely to continue for the foreseeable future.

Q: What are the implications for businesses?

A: Businesses should assess their exposure to geopolitical risks and diversify their operations to reduce dependence on any single country or region. Understanding the evolving alignment of nations is crucial for making informed investment decisions.

Q: How will this affect international cooperation on global challenges?

A: A more fragmented world order could make it more difficult to address global challenges such as climate change, pandemics, and economic instability. Increased cooperation between China and other nations may be necessary to fill the void left by a less engaged US.

Q: What role will the Global South play in this new order?

A: The Global South, particularly countries in Asia, Africa, and Latin America, are increasingly becoming key players in the evolving geopolitical landscape. Their economic growth and strategic importance will likely offer them greater leverage in shaping the future world order.

What are your predictions for the future of US-China relations? Share your thoughts in the comments below!