Greetings, and welcome to the Conduent First Quarter 2022 Earnings Announcement. [Operator Instructions]. It is now my pleasure to introduce your host, Giles Goodburn, Vice President of Investor Relations. Thank you. Giles, you may begin.

Thank you, operator, and thanks, everyone, for joining us today to discuss Conduent's First Quarter 2022 Earnings. We hope you had a chance to review our press release issued earlier this afternoon. Joining me today is Cliff Skelton, our President and CEO; and Steve Wood, our CFO. Today's agenda is as follows: Cliff will provide an overview of our results and a business update. Steve will then walk you through the financials for the quarter as well as providing a financial outlook. After that, we will take your questions. This call is being webcast. A copy of the slides used during this call as well as the press release were filed with the SEC this afternoon on Form 8-K. This information as well as the detailed financial metrics package are available on the Investor Relations section of the Conduent website. During this call, we may make statements that are forward-looking. These forward-looking statements reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. Information concerning these factors is included in Conduent's annual report on Form 10-K filed with the SEC. We do not intend to update these forward-looking statements as a result of new information or future events or developments, except as required by law. The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with U.S. GAAP, they should be viewed in addition to and not as a substitute for the company's reported results. For more information regarding definitions of our non-GAAP measures and how we use them as well as the limitations to their usefulness for comparative purposes, please see our press release. And now I'd like to turn the call over to Cliff.

Thanks, Giles. Good afternoon, everyone, and welcome to Conduent's Q1 earnings review. We appreciate everyone joining us today. Turning to Slide 4. You're going to hear several important things from us today, starting with the fact that we had a solid quarter. Steve Wood is going to take you through the details, but we earned $960 million in revenue, $107 million in EBITDA and achieved an 11.1% EBITDA margin. Importantly, it was one of the best, in fact, the best first quarter since spin for total contract value sales at $464 million, up 32% year-over-year and 58% sequentially. We also had an improvement in annual contract value, which we'll see when we get into the details in a minute. You can see on Slide 5 that we also received a lot of recognition, including, but not limited to, GM Supplier of the Year for the second year in a row and other great accolades from advisory firms and other industry analysts. This recognition demonstrates the significant improvement we made across all 3 of our business segments and the company in general. After Steve's detailed presentation on the financials, I'm going to take you through the fine points of what you may have read in one of our press releases that we have decided to separate our Transportation business. Our expectation at this point is that we will focus on spin versus sale. I'm going to talk about the rationale for this decision. We're approaching this effort through a very disciplined set of routines around both Transportation and the other 2 remaining segments of Conduent in what will become 2 public companies. We're excited about what we think will be a great outcome for both entities. So with that, let me turn it over to Steve, and let him take you through the details of the financial and sales results for the quarter, reaffirm our full year outlook for 2022, and then I'll come back and talk more about Transportation and the separation. Of course, we'll take questions at the end. So Steve, why don't you take it from here?

Thanks, Cliff. As we have done in the past, we are reporting both GAAP and non-GAAP numbers. I would like to point out that certain non-GAAP measures adjust for the Midas divestiture. This is similar to past practice. The reconciliations are in our filings and in the appendix of the presentation. Let's turn to Slide 6 and discuss our key sales metrics. As Cliff mentioned, we had our strongest first quarter for overall TCV sales attainment, a 32% increase over Q1 2021. It was also up sequentially 58% versus Q4 2021. Both our Transportation and Commercial segments were up strongly both year-over-year and sequentially. Our Government segment was slightly lower, but its pipeline of late-stage deals remains strong. New business ARR was also up 14% over Q1 2021. In 2022, we launched an enhanced integrated sales model to optimize the balance between near-term and long-term revenue needs and changed our sales compensation models to further incentivize these outcomes with a primary focus on annual contract value. As a reminder, we define ACV as total contract value, or TCV, divided by term. While our ACV reduced 20% as compared to 2021, this impact was driven by the onetime government stimulus volumes in Q1 2021 as well as another onetime volume item for a large client that we no longer record in our sales metrics. Removing these presents a more apples-to-apples view of our ACV. Under this view, ACV grew 12% as compared to Q1 2021. The sales metric trend on the following slide has the same breakout, so you can see the upcoming effect in Q2. The net ARR activity metric, our combined measure of wins, losses, pricing effects and other contractual changes, was positive for the sixth quarter. As a reminder, this trailing 12-month measure does not predict the timing…

Thanks, Steve. So as you can imagine, we're really proud of the progress we've made with client recognition, industry recognition, revenue, EBITDA, margin and sales. As I mentioned, of significant importance is the announcement we made for our Transportation segment, where we said in previous press releases that we were going to separate the business and consider either a spin or a sale. This is covered in our earnings press release, but we're indexing primarily on spinning Transportation to create 2 public entities as opposed to a sale at this point in time. We looked closely at the analysis of spin versus sale, including the tax advantages of a spin. Our conclusion was that it didn't make sense to kick off an official process to sell with bankers and all the anticipation that goes with it. As a reminder, this is a great business. It has scarcity value. It has unique software and technology value. It has fantastic clients that we've dedicated the last few years to retain and grow. It has the ability and opportunity to team with others and integrate payments and other opportunistically valuable technology. Again, we like this business and simply decided to take advantage of this growth opportunity on behalf of our own shareholders in the most tax-efficient manner possible. While other opportunities may surface and could be entertained, we are focusing our efforts on spin and to set ourselves up to grow 2 very different public entities. The spin will create 2 industry-leading, focused companies. The Transportation business will become a pure-play industry leader, a company with truly multimodal assets, and the only Transportation business in the market that can play into all areas of global transit, tolling, parking and public safety. It will have extensive international scale, an experienced team, market-leading technology assets…

[Operator Instructions]. Our first question comes from Puneet Jain with JPMorgan.

So Transportation revenue in this quarter came in below our expectations. But you, I think, Steve, you said that you expect some of the delayed work to come back in later quarters this year. So how much confidence you have, like what visibility you have in some of that work coming back and the trend rates improving in that business? And your guidance also, the full year guidance, given what you expect for Q2, implies a significant ramp up on a sequential basis in 3Q and 4Q. So is that also like the sequential ramp that you expect in second half of this year? Does that also depend on Transportation volume coming back in the second half?

Yes, Puneet, thanks for that. So look, yes, the Q1 -- thinking about Q1, first of all, I mean, most of the effects that took place in Q1 were well understood, the prior year losses, the onetimer that existed in the prior year that gave the compare, an element of challenge and also some FX drag in it. The project component of it is something that we do expect to come back. Some of it will come back in the second quarter. Some of it will come back in the latter quarters of the year. But yes, we do expect that to catch up. Thinking about Q2, and you mentioned the sort of step-up in the revenue on a sequential basis. On a constant currency basis, my expectation for Q2 is that we'll be somewhere close to flat year-over-year on the top line. Because some of that ramp, some of those projects are coming back, and some of that ramp is starting to take place. One thing to remember about the Transportation business is it had a really, really good sales year last year and in the latter part of 2020 with 3 large tolling contracts that are starting to build into our run rate now as we get into the second half of the year. So what you're going to see sequentially as we go through the year with Transportation is the effect of that ramp building in Q2 and in Q3 again. And then obviously, we've got the effect of a good strong sales quarter this quarter also sort of feeding into it. So right now, our overall view, going back to my prepared remarks, is that on a full year basis, I'm not seeing any reason for us to change our view of the segment-level full year revenue outcomes. We remain confident on the business on a full year basis.

Yes, Puneet, as Steve said, we expected the lumpiness that we're seeing. The timing could have gone either way between Q1 and Q2. And you're always going to see a little bit of that, primarily in the international transit business. It's a little more consistent and leveled out in the tolling business. But that's -- it's par for the course in transit, so it's going to recover.

Understood. And then in Transportation business with the upcoming spin-off, how should we think about potential dis-synergies from those actions, not just in terms of customer accounts, but also in terms of internal capabilities? Like if there were any cross-selling of capabilities of one business unit into others. And if you can also talk about potential impact of a spin-off. Does that create near-term distractions in your Transportation business?

So it's a great question. We're early in the process. We see very few dis-synergies, if you will. It's a stand-alone business. There are really no cross-functional clients across segments from Transportation. There is some infrastructure that we'll need to segregate. There's a lot of project work that will need to take place to stand up a new public company and make sure we look at the corporate functions and decide how we divide those up. We'll have -- we've already established a project team to go do that work, to look at the as is and the to be in the environment. But we see very, very few dis-synergies. We see only upside to this opportunity. Steve, any comments on that?

No, I would echo that. I think internally, the business is quite well segmented already. And beyond the fact that there are obviously certain costs that go with running a public company.

Yes. And just to pile on a little bit, Puneet. We -- obviously, in the press release where we said we were going to separate was, frankly, almost complete positive response from our client base. And so they see this enhanced management focus, they see more tailored operating model, they see easier peer compares, they see focused capital management as all positives for this. So from a client perspective and a growth opportunity, it's all upside for us. We just got to go do the work.

Our next question is from Bryan Bergin with Cowen.

This is Zack Ajzenman on for Bryan Bergin. Just wanted to dig in a bit more on Transportation, perhaps bigger picture. Maybe can you talk about the sustainable growth outlook for the business, understanding there's some lumpiness. But perhaps rolling it up across each of the underlying pieces could give us maybe a better feel of a sustainable growth outlook there. Also looking to kind of get a sustainable base it will build. So perhaps you can remind us on any ongoing legacy loss wind downs within the business.

Yes. Yes. So look, we think, on a stand-alone basis, there's a lot of opportunity. We looked very closely, as you might imagine, in spin versus sale. We looked at public company compares. We looked at growth rates both in a blue sky and a gray sky. We looked at potential partnerships. We looked at the fact that we haven't integrated things like payments, which we're clearly very close to being able to do. We looked at the tax implications, obviously, of spin versus sale. And then we looked at -- like I said, we looked at the current envisioned growth rates of low single digits. Today, without any of those tack-ons or potential tuck-ins or potential partnerships that I just alluded to, low single digits with low teens on margins. And we see upside to both of those. But that's kind of where we see the base business right now in the transportation space with significant upside to that as we execute on the strategy that I just described. So I'm not sure if that answered your question. So again, repeating, low single-digit growth rates is what we see the base business doing. Low teens on margin, both with upside enhancement opportunity in the first 3 years of the spin.

That's helpful. And on some deal slippage that was called out last quarter and perhaps on bookings, too, any update on the status of the deals that were pushed out into 4Q? We've seen obviously some announcements in recent months. But it sounds like, perhaps, there was some other pushouts, perhaps in transport, that is expected to be more back-ended. Curious if COVID is still an overhang as it relates to the pace of client decision-making? And anything more broadly on kind of the characterization of client willingness here to sign deals.

Yes. In the second half of your transport question, I didn't get to which was really client attrition. And frankly, a lot of what we were worried about just 2 years ago has all been cleaned up in terms of client attrition. There's one large state client that has not finished making their decisions. But by and large, we know where the puck is going on attrition. And we've renewed all that we had hoped to renew. And so we have a lot of increased confidence in terms of client retention in the Transportation business. With respect to deals that slid into Q1, most of those deals were associated with Commercial business. There was one in the Transportation business as well. And so we have high confidence that it's still timing across Q1 -- Q4 to Q1, and Q4 even to Q2. And so I would say 15% to 20% of the great sales quarter we had in Q1 was some of those that slipped from Q4 to Q1. But even notwithstanding that, we had a really solid quarter in Q1 in sales, and we expect to have a pretty good Q2. So more to come there. Steve?

Yes. The only thing I'd just reiterate what Cliff said there around sales. In the year, we talked about the fact that there were some deals that pushed from Q4 to Q1. But we baked that into our expectations in Q1, and we exceeded those expectations. So we're off to a good start in terms of our sales yet.

But that would not be dominated by Transportation, Zack, just to be clear. Some of those -- most of those are in the commercial space.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Clifford Skelton for any closing comments.

Thank you, operator. I appreciate everybody joining. As you can see it's, we think, a really good quarter. We think the announcement and clarity around spinning is really important to our clients and to our team. That clarity and focus for our bandwidth in the project is really important to us. I think you should have confidence as investors that we're going to get this right for the remainder of the year. So thank you all for joining. I appreciate your time today, and I hope everybody has a great remainder of the day today. Thanks.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.