Dear Shareholders,

“We now have the opportunity to define a new brand, new operating model and new culture.”

— Ashok Vemuri, Chief Executive Officer

It’s a privilege to write my first shareholder letter to you as we embark on a new chapter as Conduent Incorporated. 2016 was a year of great change and transition. It was our last full year as part of Xerox Corporation, where we balanced both our ongoing business operations and the completion of the many activities related to our separation and spin-off as a new, standalone company.

I joined in July 2016 because I saw tremendous potential across the assets in our portfolio, our deep client relationships and our talented people. I also saw the opportunity to transform our operation into a global enterprise and industry leader. We have much work ahead of us. And in this letter, I’ll outline some of what we plan to achieve in the near future.

Since coming on board, I’ve frequently described our company as a “multi-billion-dollar start-up.” This means that while this organization has existed for several decades, we now have the opportunity to define a new brand, new operating model and new culture in support of our turn-around and future operations. In fact, much of the improved performance and value we intend to create will come from greater standardization and focus across our portfolio. Instead of a disparate structure of loosely organized businesses, we’re approaching our work ahead with an eye toward building “one company.” Following is a summary of the major ways in which we are transforming our company and some of the associated outcomes we are targeting.

Deepen Client Relationships.

We are fortunate to have marquee clients supporting our business, including 76 of the Fortune 100 and every state in the United States. Our portfolio covers a wide range of industries and government services. Much of our future growth will stem from deepening our client relationships through greater service-line coverage. We’ve re-aligned our selling and client management strategies to accelerate selling across key accounts going forward. Over time, we expect to return to growth as our client relationships expand to consume more of our offerings.

“Conduent has a bold ambition — to be the leading business services partner to organizations worldwide.”

Become an Employer of Choice.

As a services-based company, our intellectual capital — our workforce — is a strong differentiator. We also are executing a range of changes to create a working environment that enables each employee to be productive and to perform to his or her fullest potential. Important steps have been standardizing our tools and processes and identifying ways to enable faster decision making.

Act as One Company.

We are aggressively moving from a highly fragmented set of P&Ls to a “one company model and culture” intended not only to create efficiency but also to establish a culture and operating model that create competitive advantage. With over 90,000 employees across the globe, we must operate from common values that shape the way we operate and create value for our clients and investors.

Lead with Process-based Innovation.

New technologies have dramatically changed our competitive and operating landscape, but we are now at a point where technology availability is increasingly democratized. Going forward, enterprises will attain new levels of operational performance through the vertical integration of business processes across standardized technology platforms. Conduent is extremely well-positioned to capitalize on this new operational paradigm. We already have highly successful platform-based offerings in transportation, government services, human resources and learning, with more to come.

Be a Responsible Citizen.

As a major employer in several countries around the world, Conduent must role-model what it means to be a leading citizen in our communities. Over time, we plan to stand up systems that better enable our company to contribute our time and resources to improve the communities in which we live and operate.

“I’m confident this first chapter will be one of many in our successful future.”

Financial Outlook

Successful execution of our change agenda is key to improving our operational and financial performance. Per the presentation that we shared at our 2016 Investor Conference, this will take some time, but we remain confident in the financial goals we’ve communicated thus far. Our focus is on revenue stabilization, margin improvement and free cash flow generation. We expect to drive growth in all three areas over time. We’ll target high-return opportunities with the benefit of cash flow expansion. We have continued to make steady progress on our strategic transformation program — as indicated in the improvement of our operating margins. There are many key productivity and operating initiatives under way, and we are on track to achieve targeted savings of $700 million by the end of 2018. Other areas we’re improving include remediating unprofitable contracts, reducing our facilities footprint and streamlining our IT infrastructure. Conduent is a company with a bold ambition — to be the leading business services partner to organizations worldwide. While we have work to do, it is all in areas within our reach and control. With our aggressive change agenda and transformation program, loyal clients and great people, I’m confident this first chapter will be one of many in our successful future.


Ashok Vemuri
Chief Executive Officer
Conduent Incorporated