Conduent Incorporated (CNDT) Earnings Call Transcript & Summary

Welcome, everyone, to Conduent's 2023 Investor Event. Thank you for taking the time to join us today. We're live from our headquarters in New Jersey and are excited to share with you our expectations for the next chapter of the Conduent journey. Joining me today to do that are Cliff Skelton, our President and CEO; Steve Wood, our CFO; our 3 business unit presidents, Randall King, President of Commercial Solutions; Lou Keyes, President of Transportation Solutions; Mark King, President of Government Solutions. We're also joined by Kathy Mertes, Global Head of Digital Payments. Before we start, some housekeeping. This call is being webcast, and a copy of the slides used during this call were filed with the SEC on Form 8-K this morning. We will be taking questions at the end of this presentation. Questions can be submitted during the event by using the Ask A Question functionality in the lower left of the webcast. I would also like to direct you to our cautionary statements on Pages 2 and 3 of the presentation. This event contains statements that are forward-looking, which reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ from the materiality of the statements. 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. 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. More information regarding definitions and reconciliations of our non-GAAP measures can be found in the appendix of this presentation. Let's start with a brief video. [Presentation]

And now I'd like to welcome on stage our President and CEO, Cliff Skelton.

Thank you, Giles. Good to see everyone today. Thank you for joining Conduent's 2023 Investor Briefing. It's great to have you with us. We happen to be broadcasting live from Conduent's headquarters here in New Jersey. So forgive us for any stumbles as we go along. Why don't we start by a brief overview of the agenda. I'll talk a little a bit about the company overview and the opportunity we see ahead of us. Our 3 business unit presidents will come up one at a time and talk about their business with a little more in-depth view. They'll talk about the details of their business. They'll talk about the uniqueness of their business, and they'll talk about where they're investing for the future. Then Kathy Mertes, our Head of Digital Payments, will come up and talk about something really special for us that we're going to focus on today which is our integrated payments hub and how that separates us from the competition. Steve Wood will then come up and give you an overview of the next 3 years, the financial expectations over the next 3 years, the growth expectations, et cetera. And then at the end, Steve and I will talk about some enhancements to that growth rate, some enhancements to those valuation expectations, and we'll give you some promise for a better future for Conduent. And of course, Q&A at the end. So some key takeaways. What would really like you to take away when you leave this session today. First, we've repaired and strengthened our foundation, and I'll talk about why that had to happen here in a minute. Second, we have very unique value propositions, things that make us different than the competition, aligned to attractive markets and market opportunities. Steve, as I said, is going to talk about the financial outlook and what you can expect from that baseline financial situation into the future. And then finally, that future rationalized portfolio that I said we would layer on top to accelerate growth and increase value. Along the way, we want you to get exposure to our experienced management team, a team that we're very proud of. And when I say experienced, I mean it and you'll see that when they come up today and talk to you in a little fireside chat. Now I would be remiss if I didn't start with saying, of course, shareholder value is the utmost importance. It's our mission. We're going to leverage our strengths, like everyone does, and we're going to expect outcomes that will drive shareholder value going forward and we hope you will see that as we go along today. So let's start with the first key takeaway, the repaired and strengthened foundation. But I'll start with a little history where did the company come from, and then we'll talk about where the company is going to, a little history. The company was founded in 1988 by Darwin Deason as ACS. Now Darwin and his team did a fantastic job acquiring and rolling up companies to grow inorganically. That doesn't mean they integrated those companies or those technologies or those capabilities. That doesn't mean there were synergies. It means they rolled them up, and they did a fantastic job, which is why it was so attractive to Xerox in 2010. And when Xerox acquired it, they had a couple of acquisitions, 1 divestiture of their IT outsourcing business to Atos, but there really wasn't a lot of reinvestment in the company or the technologies. So consequently, when the company was spun off as Conduent in 2017, we had a bit of an identity crisis. We didn't quite understand who we were. My predecessor said, look, we're a digital company. Well, of course, we were a digital company. We're still a digital company. But what we found is a foundation in ill repair. We found some things that needed to be invested in that just hadn't been invested in, whether it was a customer, the associate, the shareholder or technology writ large. We had some work to do. So let me give you a little description of that situation. At the time in 2019 when I got here in June, clients like confidence. Operations and technology like predictability and stability. That would cause inadequate client representation, our culture lacked collaboration and team spirit, and we had inadequate internal planning discipline. That all meant that we had inadequate system uptime, something really important to our clients. Sales were not growing, we're outpacing client attrition. You're going to have client attrition when you don't have that client referenceability I just talked about. Client referenceability means you can't sell more and you can't retain more. And associate attrition was at an all-time high. We had to do something about it. So we did. 3 years ago, we began a maniacal focus on our clients. We rebuilt our technology infrastructure. We drove operational excellence. We instilled process discipline. And most importantly, we strengthened the talent and the culture in the company. Without talent, you really can't do any of these things. So 3 years later, what were the results? 90% reduction in technology-related incidents and think of that for a minute. When there's an incident or an outage, there's downtime. The inverse of downtime is obviously uptime. What do clients expect for their customers? Uptime. So we really had to focus on this. It was perhaps the most critical thing we focused on to help turn the company around and establish a strengthened foundation. We improved our service level performance by 20%. Some of that was due to the technology improvement. Some of that was due to operational excellence focus. In 3 years, our Net Promoter Score improved by 30 points. And we doubled our sales between 2019 and 2020, and we continue to ratchet that up every year since, and we'll do it again this year. We were recognized by GM and Toyota Financial as Supplier of the Year and received a Supplier Excellence award. That would have never happened in 2019. It would have never happened, trust me. I talked to many of these clients. We also were recognized by some industry leaders, NelsonHall, Everest Group, Gartner, GovTech 100. The lower left of this slide shows you an example of some of the accolades we got from some of those assessment groups. ISG Provider Lens assessed us in our customer experience services digital operation and gave us an upper right quadrant leader score. Not only that, the upper right quadrant of the upper right quadrant in the leader category. From a culture perspective, we were recognized by Newsweek as the top 100 most loved workplaces. Now think about that 3 years ago when we had massive associate attrition and dissatisfaction in our associate base. Three years later, we're in the top 100 by Newsweek, recognized in other areas as well, disability index scores, the best place to work for women, LGBTQ and the best employer for diversity writ large. Things we're really proud of and continue to be proud of today and things we have to work on. Now this foundation, while we say it's repaired and strengthened, it's never finished. It will never be good enough. It will always be in refinement mode. We have many things more to do, but the heavy lifting is behind us. So we're quite proud of where we've come to. But now you're going to say, that's great, Cliff. Where are you going? Where are you going? What about now? What about the future? What about the next 3 years? What's unique about you? We have some unique value propositions we'd like to talk to you about. So a lot of times I talked to many of you that are even on the video today listening. And you'll see the trouble I have with Conduent is, I don't understand how to compare you to the competition. You're a little confusing to me. You're a little diverse. So in an attempt to simplify, I'll start and then our leaders will come up and fine-tune it. Think of this company is divided in half. We have a Commercial sector, and we have a Public sector. Within that commercial sector, we have a Commercial business, just under $2 billion in revenue. In simple terms, it's 3 lines of sub-businesses within the Commercial business. It's customer experience management, it's business operation solutions, scanning, indexing, those kinds of things; and it's casualty or workers' comp and health care solutions. In our Government space, 3 as well: government health care, payments and child support. Think of that as all the entitlement payments that go to the millions of people that need it in the United States; and then finally, eligibility and enrollment. Think of that as Medicaid eligibility, call centers that take those calls and in some cases enrolling those constituents in the programs. That's about $1.1 billion, $1.2 billion in revenue. And then finally, our Transportation business, the other half of our public sector business. Road usage charging, tolling, toll boost, transponders, systems of records, billing, collections. Transit, second sub-business: buses, trains, subways, turnstiles, those sorts of things that you can imagine in mass transit. And then finally, public safety and curbside: red light cameras, speed cameras, parking enforcement and the systems of record behind that, that keeps everything rolling and manages the customer service for all that work. That's between $700 million and $800 million in revenue. And in simple terms, that's what we do. Now there's lots underneath, and we're going to get to that here in a minute. But meanwhile, we're all over. We're in some of the biggest companies in the world. You can see that on the left side of the page. And we are very lucky to have those folks as clients. In the public sector and part of the commercial sector, we're all over the globe. We're in 47 out of 50 states. We're in D.C. and Puerto Rico and 23 countries across the world, mostly in Transportation, but also as I said, in Commercial. So it's ubiquitous, but there's more we can acquire. There's more to address. If you just look at the products and services we have today, just in our current geographic footprint, it's about $200 billion of addressable market, growing at about 4%. And. But then when you look at some of the adjacencies, for example, in our workers' comp business, adjacent to bill payer things like auto accidents or nurse triage or client -- or care management. When you throw that into the mix, it adds another $25 billion to $225 billion. And then we spread out the geography and say, where are we not today that we could be, that addressable market expands all the way to $300 billion. Now on the right side of the page, you see how it distributes for just the 200. There's huge opportunity over the course of the next 3 years for us, and we're going to get after it. So I was a client of Conduent. I was a client of many companies like Conduent prior to coming here. And I believe I know what our clients want. And what the clients want meets with what we have to contribute, the results are fantastic. Let me take you through those 3 tranches. What do clients want? Well, first of all, many, many of our clients are driving transformation. They need help. They always need improved customer experience. They want to look good inside their companies. And when we can help them make their end customers look good, those clients and those representatives within our client base are going to want to stay with us. We have to drive customer experience. And then, of course, the end-to-end offerings that we have to increase value. In the Government space, as always, like everywhere they want efficiency. But importantly, they want security, especially in the payments space. In the health care space, modularity is critical. The Center for Medicaid and Medicare Services has mandated that we have modularity in the government health care space for Medicaid services. We have to enable that, and there's huge upside. Mark King will be here in a minute to talk to you about that and, of course, enhanced customer or citizen experience. Transportation is pretty simple, safety and efficiency in the patron experience. Now by the way, in the transportation world, we're also generating revenue for those states and local governments. So a lot to be had there as well. Now what about what we do to meet that demand? It's simple. If I simplify it, it seems simple anyway. We enhance those customer experiences across multiple channels. The normal channels you might imagine, digital and otherwise, calls, e-mails, chat, print, mail, et cetera, et cetera. Every way that an end customer might need to contact their clients, we're there to enhance customer experience. We digitize and manage documents. Think of that as mail rooms with reams and reams of inbound paper that we'll scan, we'll index, we'll file, we'll store, and we'll send those files to our clients so that they can do their work in their back office. They don't want to do all that work. We do that for them. We administer and process digital payments. Again, Mark King is going to talk to you about this, but we do millions and millions of payments across principally the United States for entitlements. Again, we're going to get a little deeper on some new capabilities and payments for real-time payments and real-time disbursements in a minute when Kathy Mertes comes up. We automate health care-related claims, a big deal. We streamline the back office administrative functions, accounts payable, accounts receivable, procurement. And then finally, principally in the Transportation space, we provide hardware technology and system integration. We do all that. Now when the demand meets the capabilities, that's when the magic happens. That's when the outcomes happen. That's what we're talking about here. Increased sales for our clients, improved customer experience and satisfaction and employee satisfaction, faster commutes, improved convenience, accuracy, faster processing, very important, secure payments, decreased fraud, reduced cost, greater revenue, as I talked about, especially in Transportation and as always, increased efficiency and agility. In today's economy, efficiency is critical. We help them with that. That's the magic. That's the magic our clients get when it's a good match. And we have a lot of really good matches and more to come inside of Conduent. So you might say tell me who's running this stuff. I mean, you're the CEO. Let's get a little closer to our associates. Let's get a little closer to the clients with a description of the business unit presidents. Now on the screen, you see 3 business unit presidents. Let's start with Randall King. The phrase I would use best to describe Randall is operational excellence. He spent 32 years at a large financial institution, one of the biggest in the world. He spent all of his time there driving operational excellence, customer experience and transformation. That's his sweet spot, and that's what we need in the Commercial business. Lou Keyes, spent 30-plus years in technology-led business solutions and professional services. He spent a lot of time driving growth, account relationships and sales. That's what we need in the Transportation business. Mark King, 30 years in financial services and fintech. He doesn't like it when I say it, but he's an expert in risk management and fraud because he doesn't want me to call him one trick pony. He's not. He's also an expert in payments. Those are the key things we need in the Government business. So we've got the right leaders at the right time with the right experience, and they're doing a great job. To top that off, we have a fantastic leader in our global payment space, Kathy Mertes. She spent 30 years in banking and payments, most recently at BNY Mellon. Why would she come here? I'll let her describe that to you here in a minute. But I'll tell you what she finds at Conduent is an opportunity that no one else has. And she's bringing that industry experience to bear here in a company that's not financial services, but we can bring financial service and payment capabilities to our end points, and that's what we're going to talk about. That experience is invaluable. So with that, I'm going to get you a little flavor to each 1 of these 4 folks, let them tell you about their businesses, let them tell you about them and what they do and give you a little exposure to a fireside chat to each of them one at a time. Let's start with Randall King. Randall come on up, if you would. Great to see you.

Thank you. Nice to see, Cliff.

So Randall, as we look at your business, I gave a 40,000-foot view of Commercial. Many of our investors might say, get a little deeper, get a little more granular, tell me a little more. So help me out, what -- a little more about the Commercial business.

Well, we're excited, and I'm really excited to be here today to talk about the great momentum we have in the Commercial space. And as you said, we were approximately $2 billion or half of the Conduent revenue base, and it's driven by over 600 clients and 44,000 teammates globally, so we operate at scale.

Big company, yes.

Absolutely. And the way you can look at the commercial business, as you said, is in 3 groups. We have the customer experience management team that does voice, chat, e-mail, text, digital self-service, print and mail. And we do that at scale, 1.3 billion transactions annually and growing. And then we have our business operations solutions that manages processes, including HR processes for other large companies and across many industries. And they do things, like you said, document and data management, where we do, for example, 3.6 billion captures of documents, including handwritten notes that we can take and with our AI and optical character recognition and technology, we can drive that through straight throughput processing, and that data is captured later on.

It's really interesting because you use the word technology. And a lot of folks think, well, we're a services organization. We have people. Your mess for less is a phrase that people used to use in the old days. But we're technology led. Some of the things you have are technology leading and technology-led solutions, right? You just described a couple of them.

Yes. There's great technology literally throughout our entire portfolio that we bring to bear for our clients. If you look at areas like finance and accounting and where we manage account receivables, we have over $3 billion of managed spend. And we have employer solutions where we support things like health and welfare and administrative plans -- health care plans and we administrate pension, and we administer 401(k) and including health savings accounts and flexible spend accounts. So large business in the business operations solutions space. And then, of course, we have casualty and health care solutions, where we have our workers' compensation platform, one of the biggest where we do bill review and ensure that insurance companies are paying the right amount for procedures.

Again, technology led, right? We've got AI, we've got machine learning. This is a big, broad business, but we shouldn't think of it as only a people business.

Oh, absolutely not. In some cases like that, we have one of the largest technologies in the business driving it.

Right, right. So speaking of that, what sets us apart? If you think about us, we don't really have one competitor because we're so broad. We have multiple verticalized competitors. Who would look at us and say, that's why they're special? How would you describe that?

Well, I think back to your history slide and the amount of integration we've done, we're one Conduent for one client now. And if you think about our competitors, in many cases, we're not bringing one tool in the toolbox, we bring the whole garage.

I love that metaphor by the way.

I'll use it again.

Yes, good.

But we have the entire end-to-end value chain of a client where we can add value, front office, middle office, back office. We have an umbrella of solutions. We can stitch those together and create innovative solutions or offers to help solve problems for clients that many can't, I believe. And then if you add on to that, the technology that we've been talking about, that our clients use every day for mission-critical parts of their business, like having 60-plus percent of the U.S. workers' compensation market where we're doing that bill review and even some of our competitors use our products.

That's really interesting.

Yes.

Not only do we have the best technology, it's proven because our competitors are using it.

Right, right. And then you have areas where we've really been innovative in like the pharma space, where we've been able to, again, knit together all these disparate processes that clients have. Integrate that, create a technology such as IntelliHealth which is a CRM platform. We use that to help patient assistant programs where clients are signing up for sponsored prescription drugs at some of the biggest pharmas in the world, and we use that and what used to take days now only takes minutes. Great patient outcomes.

Awesome. Yes.

And then the last thing I would say, think about scale. You've talked about it in your remarks. We're in 20 countries. We can service language, we can service operations, we can service delivery. You combine that scale with the technology and our ability to go after the end-to-end value chain, it makes for very sticky relationships and makes Conduent a great choice as a partner.

The way I love to express that scalability issue is we can go to a client and say, look, we can take the fewest number of items you need to manage to the most you can possibly throw at us. And we can handle it up and down the value chain. So yes, that's awesome. Listen, we -- no one has unlimited resources. We certainly don't, but no one does. I don't care who you are. Everyone has to prioritize. Everyone has to focus. Everyone has to say, well, where can I grow fastest? And that's where I'm going to put my bandwidth and that's where I'm going to put my resources. What would you say that means for you?

Well, let me quickly cover 4 points on that. Number one is customer experience.

Yes. Wasn't that long ago when we didn't pay much attention to it.

That's true. And in fact, it's a powerful base for us. Number one, it's a growing market, and it's a staple for client outsourcing. And if you think about opening the door to the broader set of Conduent solutions, the customer experience space is perfectly set for that. And then we've invested in technology, cloud based. We have a cloud based CXNow solution. And what's great about that, that allows small and middle market clients to have the access to the same great CX technology there is out there at a great cost and at a quick ramp. So I see that as a wonderful space we'll continue to invest in.

Good.

Then our finance, accounting and procurement suite of solutions. There's not a company I've met that's still not looking for more cost efficiency. And if you think especially...

Especially now, yes.

Yes, exactly. And then review -- you think about reviewing invoices or whether you're ensuring supplier payments are correct or you're ensuring that contract terms are being met effectively. We have decades of experience in that. Back to your chart, decades of experience and we're good at it.

Think of the responsibility. We have great technology, but you're handling their money for billions and billions and billions of transactions. It's critical. That's why it's kind of sticky.

Right. Very sticky relationship. And then we add on top of that new technology like our FastCap product, which with low cost of entry, we can go and help clients find duplicative payments or out of contract payments, things that we can do at a very low cost, and it's a shared outcome model where we win when the clients win, which is -- that's terrific. And then third, I would say the health care and pharma suite of solutions. Look, the health care space continues to grow. There's a lot of focus. There's a lot of change, obviously focused on improving patient outcome and so are we. So in our space, we do claims processing, dental, medical or vision...

End to end.

End to end. And we adjudicate those claims for many companies. We've added Medicare Advantage to our suite of functionality. So we're very excited about that. And then in the pharma space, we have a new medical information solution that we've done for one of the largest pharma companies in the world. And on 1 platform, we're able to integrate 130 countries, 67 languages and get it all integrated in one space where they can have better analytics, better compliance and of course, better patient outcomes.

We do a lot of work in specialty drug management, right, where drug companies are trying to get the less fortunate folks drugs they couldn't otherwise get, that's a pretty important platform in the pharma space.

Yes, and very important to us. We want to make sure we do the best job possibly for our -- for those patients and their clients. And then over all of this, we have great technology, and you mentioned it, the integrated payment hub. It's a great bolt-on capability. We're already in a huge base of clients. We know the work. We know the opportunity where we can go to them with something that can really help them save money, derisk and improve customer experience, whether that's refunds, reimbursements or other...

In pharma, for sure.

Yes.

Right?

For example, pharma is a great space for that or in another is in automotive. We have a pilot we just started with General Motors to help them get reimbursements to their customers for one of their processes, and we're really excited because it's going to help them get money to their customers quicker, which will improve their experience, and it will help take out processing paper checks, which is costly and manual in output.

I'll love it, I'll love it. Listen, you've got a complex business. but you've narrowed it down to what you're focused on most. You've narrowed it down to what you have as your value prop. Bright roads ahead, long roads ahead. It's going to be awesome.

Well, thank you.

Thank you.

And a big thank you to all our teammates all over the world, taking care of our clients and each other.

Good job, Randall. Thank you.

Thank you.

Thank you. So now if I might, I'll bring Lou Keyes up to talk about Transportation and a little bit of the same venue and Lou come on up.

Good morning.

Good to see you.

Good to see you.

How you're doing today?

Great. Good, good.

Listen, the same venue, we are pretty ubiquitous in Transportation compared to the competition. Like Randall and frankly, even like Mark's business, a lot of verticalized compares. Break it down, simplify it for our investors and potential investors in terms of what Transportation does, where you conduct business, how does it work?

Happy to. Thanks for having me on today. I appreciate it very much. We have a large global business. Over $700 million in revenue, as you mentioned before. We're in 23 countries around the globe. And we have over 3,800 teammates taking care of clients and their business issues every single day. We think about our business in 3 categories. One is road usage charging. Think of that as the roadside solutions, tolling, gantries, the technology, that registers those toll tags as you're moving through a system. We actually have the back-office system as well that processes all that data in all those transactions that are going through the system. And then we have a collections administration capability so we can actually take the payments and process those on behalf of our clients.

I know we're going to get to it in a minute, but a lot of bills flowing through that system, right?

A lot of bills, Cliff. Over 11.8 million tolling transactions every single day.

Right. Lot of bills associated with those transactions.

Yes. That's almost half the volume of the top 10 tolling agencies combined.

Big.

Then we have transit, right, which you mentioned earlier, buses, trains, subways. This is a very interesting business for us. We have everything from open payments to the technology that is deployed from a ticket vending machine, that kiosk that may sit at the bottom of the subway where you can actually put your money in, purchase a ticket, ticket is issued and then you go on with your travels. We have an entire design and engineering capability in-house where we design that equipment, and then we have it made to our and our client specifications. In addition to that, we also have account-based ticketing systems that is that back office again that registers all of that entire transaction through the time of inception through payment. So we're excited. We're really excited about what we can do here, especially around mobility and the ability to plan trips and take payments and help some of our passengers or citizens get from point A to point B, despite the mode of travel that they've chosen.

It seems what's unique here is this account-based fare collection. That's where the puck is going, right, as opposed to you got a prepaid card and you can only use it for the subway. Talk about that just a little bit.

Yes. So there's usually 2 types. There's a card-based system where all the intelligence is sitting on the card, right? Cliff Skelton, you have $100 on your account, you tap on and that's it. An account-based ticketing system like we've deployed, the intelligence is in the cloud. They know with that card when we tap that it's Cliff Skelton, but how much Cliff Skelton has on his account is all sitting in the cloud? How they pay for those fares is sitting in the cloud. It's just a different model it could be.

Where he would use it. Yes, yes. Got it. Makes sense.

And we have huge scale in this area. We process over 100 million transit tickets every single day in this business as well.

Big international presence.

Big international presence. We developed the capability there many, many years ago, and we think a lot of global opportunity as well.

Got it.

And then we have public safety and curbside, think of public safety as an enforcement whether that's speed and speed cameras or red light cameras, and then we have our parking capability, which is essentially curbside, citation management, permit issuance, permit administration. This is a big business for us. It helps our clients keep citizens safe and make sure that they're also getting the kind of feedback they need to on where they need to put those parking meters and various cameras to be able to keep people safe to keep people moving. And again, huge scale, 8.7 million citations and delinquent revenue payments are collected each year by Conduent on behalf of our clients.

You have an example of how the red light camera stuff works?

I got a great example. I mean I, for one, have been in this situation. You may have a child that has run through a red light. And the way that it works, we snap the picture of that in fraction. We mail a ticket on behalf of our clients. That ends up coming in the mail addressed to whoever is registered to the car. And if it's intercepted, like it's like it's been done in my house, you don't get that until the day before sometime the day of when that payment is actually due or you're going to rack up huge fees.

You have to bring it up. I have 2 young daughters, and I've actually seen that mail.

You have?

At our house, yes. Thank you for bringing that.

So we -- I have the ability, though, with -- and we're going to get to it is through our real-time payments channel to actually be able to process that violation payment immediately. So an end consumer, your son, your daughter, your child will be able to avoid all those fees or you on their behalf.

Got it. Got it. Well, speaking of that kind of thing, talk about our competitive advantages, the uniqueness. We think we're special. How are we special?

We do. We ask our clients this question all the time. And they tell us principally 3 things. One is the complete end-to-end market coverage we have. All 3 of those segments that we just discussed, we are the only provider that can provide all of that capability across all of those 3 categories. Why is that important? There's knowledge sharing, there's technology sharing, there's innovation that can be leveraged from our parking business to our public safety business, from our transit business to our tolling business. Another perfect example our home state, New Jersey. We have a large New Jersey client that happens to have both our transit as well as our tolling capability. And through an app, they're able to pay for their transit fares bus ticket using their tolling account.

That's new.

Very new, and we're super excited about that. It makes it very simple for the passengers.

Nice.

Complete end-to-end coverage there, real-time payments or payments, we think is another enormous opportunity for us. You talked about it, Randall talked about it.

Kathy is going to talk about it.

Kathy is going to talk about it. We think it's a great opportunity. Moving -- we have the ability to move faster. The transactions are less expensive. We're able to provide a more efficient experience for our clients and the citizens that are responsible for. So lowering the costs for clients. The interchange fees, they get to avoid. The ACH payments, they get to avoid. All those fees they don't have to worry about. And then it reduces the passenger fees as well.

And we're going to get into why your our competition can't do this.

That's exactly right.

When Mark and Kathy come up.

It really is a true differentiator for Conduent in Transportation. And then the third area is the superior back-office capability. And we touched on that a minute ago with things like account-based ticketing systems. We consider those systems to be the systems of record in this value chain. And we not only have 1 or 2, but we have them in all categories. We have one for transit. we have one for tolling. We have one for public safety, and we have one for parking. And no other company can bring all of those to bear on behalf of a client to solve their business issues.

It's a great point. Lots of vendors can provide people in a seat to answer the phone. Ours comes with a back office system of record. That's what makes us unique.

It does. And we can scale, right? We can scale from a couple of thousand accounts all the way up to 10 million.

Yes. Yes. Well, so where are you putting your money? Where do you see the growth? Growth, growth, growth. Where is it coming from?

We think all 3 categories, all 3 segments have great growth opportunity for us. But you're right, we can only double down in a couple of areas at any one time. We've chosen payments as well as expansion. Expansion, both geographically as well as solution based. So let me just step through this. So payments, we heard a little bit about that earlier in a couple of use cases. We actually have $12 billion in payments each year flowing through our systems that we're administering. We think that's a perfect addressable market for our payments capability solution. So we're super excited about that. And there's many, many use cases in our...

And as we're talking about it doesn't make us a fintech or a payment processor. It means we're a payment enabler.

Exactly. That's exactly right. And then expansion, both -- let's start with geography. We have fantastic capabilities, as you mentioned, transit, deep-rooted, decades of experience in Europe for transit. We're now taking that transit capability to other strategic countries and including the United States. So we've already ported this technology to a couple of large clients. We're looking forward to doing that.

We're deeply embedded in Europe. We're not as deeply embedded in the U.S. or other parts of the globe, right?

That's right. And the reverse is true with like our tolling business. We have a very strong U.S.-based tolling business, and it's in high demand throughout the world. Perfect example is Highways England. It's a large tolling contract that Conduent was awarded, and we're currently implementing it now. We're super excited about it.

I'll love it. Lots on a horizon for the Transportation business.

There is.

And you're the right leader for the business. So thank you.

Cliff, well, do you want me to cover these solutions?

Yes, let's go.

We've got one thing that I would say around expanded or enhanced solutions is, let's say, congestion management as an example, rather than just traditional tolling and transit. Congestion management is where the market really is going. And we...

That's sort of part of the Smart City model, right?

You've said it. But we have to chunk that down into more bite-size pieces. Smart City is such a broad definition. So congestion management, large metropolitan cities are trying to do a couple of things. They're trying to decrease the amount of vehicles, the number of vehicles going into their cities. They're also trying to keep emissions down at the same time.

And we can track the car so we can track emissions because we know which cars elicit the most emissions and where they are.

We can. That's a very good example. And so we can help these cities charge fees that generate revenue for them that disincentivize as much traffic and reduce the emissions in those local cities from anywhere from L.A. to New York to London. Everyone's talking.

So you're optimistic?

I'm very optimistic.

Awesome. Thank you, Lou. Great talking to you today.

Thank you, you too, Cliff. Thank you.

Sure. So why don't we get to Government solutions, we'll bring Mark King up and talk a little bit about his business, what he sees ahead of us, why he is so optimistic as well and what you're proud of?

Thank you, Cliff.

So Mark, like the others, I flew pretty high level by your business. In aviation terms, we call it 40,000 feet kind of as high as we want to fly. Get a little lower altitude.

20,000 or 15,000?

20 or lower. Yes, exactly.

Thanks, Cliff. Look, what I would say about the Government business is it's a great business with good margins and impressive scale. We operate at the federal, the state and municipal levels, but are primarily focused at the state. We have 3 operating groups. So kind of as your earlier comments, pretty straightforward, we have our health care business, our payments business and our eligibility and enrollment. In the government health care space, we administer Medicaid and pharmacy benefits for the states. And last year, we processed about 588 million claims. So a good measure for our scale. Similar in the payments, we do a lot of different payment programs for SNAP, which I believe, most people would call food stamps, but we have a variety of others TANF, unemployment insurance, child support..

TANF stands for?

Temporary Assistance for Needy Families. And probably down year-over-year on the -- due to COVID runoff, but still, we disbursed over $100 billion in benefits last year.

Are these mostly on prepaid cards?

Primarily.

But otherwise as well.

Otherwise as well.

Okay. Got it.

And then in the eligibility enrollment, we support the states and their agencies to process the applications and help determine if applicants meet the criteria for the various programs and also provide self-service portals and customer care via phone. Last year, we supported 32 million U.S. residents across the program.

I know we're going to get into it here in a minute, but that government health care Medicaid suite of products is fast growing, right?

Yes. One of our fastest...

Lot of transactions.

Yes, high velocity, and we're very excited about that space.

So go a little deeper on that because I know that's part of what you think is a competitive advantage for us. Again, we don't have a single compare. You've got basically 3 compares. So what's unique?

Yes. That's interesting because we have competitors we run into in this space and competitors we run into that space. But very few, if any, like us, that work across the broad spectrum. So an advantage for us, I think, because we see across more than others. I would say differentiation wise, to your point, it really does come down to our client base, which I believe Kathy will talk to the end points we connect to and our market-leading innovations in health care and payments and finally, the diverse solution offerings we can provide. But from a client base perspective, we have direct relationships with 45 of the 50 states. By example, of just connectivity, we process 43% of the food stamp payments in the U.S. And look, we have 50 years in the health care space, 35 years in payments. We know our clients and our clients know us. And that's a great spot for us to bring market-leading innovations, as you were pointing out in health care, I believe we're the first to market with a truly cloud-native Medicaid offering that meets the new federal guidelines...

For claims modularity, yes.

For claims. And claims processing, and we do the accounts payables and receivables and federal reporting, But our new capabilities meet the new federal guidelines. They're interoperable and represent 0 technical debt for our clients. So it's a great area for us.

A lot of people say cloud native, but they're not really, right?

Many times, you can take old system and retrofit them from the cloud. Ours is built from the ground up for the cloud. On the payment side, I think it's equally appealing for us from a differentiation perspective with all the efforts around real-time payments. We have a strategic partnership with BNY Mellon Bank, which provides us today access to the real-time payment network from the clearinghouse. And later this year, we'll have instant payments via FedNow from the Federal Reserve. We actually have multiple early pilots in progress with our state clients. We're very excited about the space. And of course...

It's interesting. All 3 of you talked about payments and the integrated payment hub, and that's why Kathy is going to come up in a minute. But in the Government space, it's particularly important for things like disaster relief, right?

Absolutely. I'll give you an example in a moment that I think will make the point. But yes, I mean, there are innovative ways to use it, not just for cost, but actually better client experience or constituent experience in my space.

Got it, got it.

And of course, all of these differentiations we bring with our wraparound capabilities that others, I don't think have as much of.

Yes. Well, so Mark, where are we putting our money here? You have pretty high margins compared to other businesses. We see a bright horizon in terms of growth opportunity and pipeline and runway. Where are you doubling down?

It's hard not to be excited about the health care space. With the new federal mandates, we have basically a market reset. So it limits or reduces incumbent advantage and everyone has to show up with new systems and new capabilities. And that pairs well with the investments that we've made, I think the market is paying attention to it, Cliff. We have multiple new logo awards, along with an add-on and renewal. And so we're -- we have momentum. And multiyear, we have a $6 billion pipeline. So we're very favorable on the health care market.

We need to get after that?

Yes. Well, I think payments is similarly opportunistic for us. We've been delivering payment vehicles successfully for decades. And now we can -- on top of that, layer on tokenized payments via Zelle, the mobile wallets and the instant payments later this year via FedNow. We just continue to build depth and opportunity in that space. And some of the market is changing. For example, in the electronic benefit transfer space, it's a lot of words there, EBT as we typically call it...

Closed loop.

Yes. They're looking for more approaches around risk mitigation. So EMV like approaches on cards...

Chip cards.

Chip cards and account validation services for greater risk mitigation. So that's also a very interesting space for us. But really, I think what's most interesting is innovation. It's what are you doing tomorrow that you're not doing today. And a great example of that is, and I know all of us are seeing it in the news and around disasters, natural disasters. And I know you have quite a few in the part of the country you live in. And how do you -- how does an agency or a program provide benefit to a citizen or a resident if the mail box is no longer standing or the street is inaccessible...

You can't get to a bank.

Or the family has been displaced. And we're excited about our rapid assistance program because we think that digital payments as part of a broader program can bring a better and more enhanced constituent experience.

Already a lot of interest from several states, right?

Yes. Very much, very much.

Now look at your payments business is 2 parts. The traditional payments, which you are enhancing with chip and otherwise. And then the second half, which just is real-time payment, real-time payment network, et cetera, right? Is that the way you think of it?

Absolutely. And who knows what creative ways in partnership with our clients that we'll find to apply it going forward. That's the most exciting part of it for us.

Great. Well, I think we'll transition to the second part of that payment opportunity. But Mark, thank you. Lots of great runway ahead.

Thank you, Cliff.

Thank you. So Kathy. Kathy Mertes, come on up.

Thank you.

Good to see you.

Exciting to be here.

Thanks for being here.

Absolutely.

So all 3 of our business unit presidents are quite optimistic, a lot of weight on your shoulders. You and Rob Houser are leading this effort for us. Tell me what would prompt a 30-year banker and I was a banker. So a 30-year banker to come to Conduent which is not a bank, it's not a fintech, not a payments business strictly. What are you thinking?

Well, it's clear that we have a significant differentiation with this integrated payments hub. And really, that's what attracted me. So Conduent has been touching billions of payments every year for decades. But we're not just talking of payments, we're delivering. So as a direct result of our clients asking us for assistance with their customers and how can they deliver these new more modern payment types, we launched our digital payments hub last year, which is now -- the integration portion of what we're talking about is key I guess.

I got you. So if we talk about the hub, we're not a payments business, we're not fintech. We're not regulated that way, but we are a payments facilitator. Talk about how we do that, the APIs, the connect points, how does that work?

Right. Through a very simple API, we are allowing our clients to have access to these new payment types in an array of them, which really reduces cost, generates greater efficiencies and in a very secure manner. But what's really exciting is we've done that pre-integration work. So when Lou talked about real-time payment request for paid messaging and how consumers can better activate payments to tolling authorities, we've done that prework.

So if I were to simplify it, you and the technology team develop the hub, we then built the pipes to the endpoints, the bills, the end users. You, from your experience, help build the pipes to the payment processors, real-time payment processors.

That's right.

That ecosystem doesn't exist. And correct me if I'm wrong, but the way I understand it is any company like ours can build the first part of it, but they can't get to the second part of it. Any fintech company can build a second part of it, but they can't get to the end users in the second part. We've got the whole enchilada, right?

That's right. And really, what we're doing is we're delivering more of Conduent, and we're adding value to our clients along the way.

Got it. Talk about the 3 primary ways that this real-time payment or the new network capabilities would work?

Yes, absolutely. So we've been focusing on 3 primary use cases, as you alluded to, which is business or government to consumer. We heard Mark talk about rapid assistance and how we want to make sure that our government clients, when they need to get funds out to constituents can do so in a very effective and efficient manner.

Would that mostly be Zelle?

That tokenized payments with Zelle, yes.

Okay.

So we don't even need banking instructions. We're able to assist them in a very efficient manner.

E-mail, phone number...

That's right. Exactly.

Got it.

The other use case that we're really excited about as well is business to business, and we're seeing a tremendous opportunity to help our clients pay their vendors. Sadly, there's been some fraud in the areas of accounts payable. So we want to take that burden away from our clients and take care of what Randall was highlighting with his finance accounting and procurement discussion where we can leverage a network of over 500,000 vendors to help our clients pay their vendors in a very secure manner.

And then the third one would be toll you want to pay -- you weren't -- you didn't have a transponder, you went through a toll booth, you need to pay the bill.

That's exactly right.

That's the third one, right?

Yes. Helping those consumers pay our clients in a very efficient manner. Real-time, 24/7, 365 days a year.

Soon to be, we hope to send them an alert on a mobile phone.

Yes.

They click on it, pay now, boom, it's done.

Absolutely.

Saves the interchange for the clients, et cetera, et cetera.

Right.

Right. It's exciting. It's time to get it done, though, right? I mean, nobody can do this. It's so -- we're so privileged to have something that nobody else has. And I know that -- like I said, there's a lot of weight on all of our shoulders to get it done, you included. So thanks for your expertise.

My pleasure. Thank you.

All right, Kathy. Thank you. Good to see you.

You, too.

So you heard about our unique solutions. You heard about the business units. You saw who was leading them. You heard about our foundation. It's time to look at the financials. It's time to look at this forward look as to where we're going with the business from a baseline perspective. And of course, we got the person that did all the work to figure that out to talk about revenue growth, margin accretion and cash generation. I'd like to bring Steve Wood up to talk about the financials. Steve?

Thank you, Cliff.

Yes.

Hope everyone's well. And a lot of familiar names on the webcast, thanks for taking the time to join us today. Look, I'm told quite often that Conduent is a complicated story. And so I hope not to compound that for you today. I'm going to try and simplify it down to a few key drivers and show you how if you look back and forwards. You'll see that an improving set of drivers is contributing towards the financial outlook that reflects the outcomes of the work we've been doing to fix the foundation of our company and lay a solid platform for future growth. There's 4 takeaways that I'd like to leave you with today as part of this review, call this our base case or our business as usual case. And then Cliff is going to join me, and we'll talk about some additional items that are in the consideration set for us to continue to accelerate value. The first takeaway is that we continue to improve year-over-year sales performance. We've delivered double-digit growth over the past 3 years, and we expect sales performance to continue to grow strongly. The second takeaway is that more than ever, we're acutely aware of the impact that past poor operational quality and technical stability has had on our ability to retain our clients and their confidence in us. The tail of poor quality has been far longer than we anticipated. The third takeaway is that the foundational work we have done provides us now with a clearer picture on how those client losses normalized during our outlook period and result in us driving revenue growth, expanding margins and improving cash flow conversion. The final takeaway is that even in this base case, you'll see that we have an opportunity to deploy excess capital while maintaining a strong balance sheet and modest levels of net leverage. So let's turn to the next slide, and we'll go through the financial agenda. I'm going to unpack the key financials as we examine the walk from 2019 to 2022. And the reason for doing that is it takes out almost all of the noise from COVID, stimulus, FX and interest rates and should give you a clearer picture and a clearer compare as to the effect of 3 key hydraulics: wins, losses and volume changes on our base business. And I'll walk our adjusted EBITDA over that same time frame and show you a side-by-side walk to adjusted free cash flow. And then we'll compare that historic view to the outlook period from 2023 to 2025 and compare the effect of those same key 3 drivers as we work to deliver revenue growth, in addition to its impact on adjusted EBITDA and adjusted free cash flow. And then I'll put that together into an outlook for the medium term and a view as to the available capital to deploy against that business as usual case. And then Cliff is going to join me, and we'll share some additional thoughts on opportunities to accelerate that value. But before we do that, let's ground ourselves in the look-back period, turn the page and examine the 3 key revenue hydraulics. What is clear here is that for the past 3 years, we've been able to grow sales quite consistently, both annual contract value and annual recurring revenue. The former has grown for the last 3 years at a 13% CAGR and the latter at an 8% CAGR. And these CAGRs avoid pulling in 2019, which was a substandard sales year, and that gives a more reasonable comparison when we think about future growth trajectories. What is also very clear from this middle chart is that our business has had a revenue attrition problem and one that we've been working very hard to address across all facets of the business, Cliff talked about many of those earlier. The tail of poor quality, as I said, is long, and it's probably longer than even we expected. As we have looked back at the reasons for this attrition, we've been able to build a clearer vintage analysis of those losses and isolate their root causes to prior periods when our delivery was not what it needed to be. Very few businesses, especially one like ours, can outrun losses approximating to 7% to 9% of revenue annually, despite the strong and improving sales performance. The good news is that we see these losses beginning to normalize in our outlook period. And we believe that the foundational quality we have built into the business should put us into a position of growth. It's just taken us a little bit longer than we expected. The third hydraulic to point out is our organic volume, call that same-store sales. I don't think of Conduent as a business that should have a significant set of secular headwinds. More on that later. But over the past 3 years, we've seen modest organic headwinds compounded by 2 additional factors. Firstly, there was some volume that just went away in COVID, it never came back, some did, but some didn't, mainly in the Commercial segment. And secondly, we've had the situation that I've called out in earnings with a couple of our largest clients normalizing their post-pandemic volumes and experiencing their own organic reductions in calls and some of that has fed through to us. We do see that normalizing as we move forward, but it's inherently unpredictable. Let's turn to the next slide now, and we'll piece that together into our revenue walk. So clearly, from 2019, you can see the effect of these vintage losses and what it's done to our business and on our ability to grow. And it's completely central to our thesis of returning our business to growth that we can move these losses to a more normalized level in our outlook. As I said earlier, no recent amount of sales effort could outrun this, and we're confident that our sales trajectory is the right one moving forwards. It's also important to remember that we have a high base of annuity revenue, recurring revenue. Yes, there's some project revenue in our large Government health care implementations and in the Transportation segment. But overall, these are in the margins, and we're a high percentage annuity revenue company. The key takeaway I want to leave you with here is, if you believe as we do that we have fixed the foundation and this translates to more normalized levels of losses, then we are on the right path. Let's turn to the next slide, and we'll look at adjusted EBITDA over the same time frame. We see the effect of these vintage losses not only in our revenue but how this has affected and flowed through to adjusted EBITDA. We refer to this internally as our margin replacement cycle. The effect of somewhere in the region of $900 million in attrited client revenue over the look pack period has had a margin drag that we've had to work really hard to mitigate. We've done that not only in the business segments where we've streamlined operations, leveraging AI and machine learning to link previously disparate processes together but also in our infrastructure and real estate footprints. Our data center optimization program and improved stability posture has allowed us to reduce unit cost while improving quality. And at the same time, we've moved significant numbers of our associates into a more permanent hybrid work-from-office, work-from-home model. And that's allowed us to reduce our real estate footprint by around 20%, and that represents about 1.3 million square feet. And we're not done on any of these fronts yet. We remain convicted that there's ample opportunity to continue to rationalize our expense base, thereby providing value to our clients and proving returns to our shareholders. More to come on that later. So let's turn the page now and look and see how that's impacted adjusted free cash flow conversion over the same time horizon. You can see back in 2019, capital expenditure was in aggregate more than $250 million. Now this view includes both capital expenditure that hits investing cash flow and operating cash flow. And going forward, we're going to adjust our guidance metric to provide a combination of those 2. We've worked hard to bring down CapEx in aggregate over the past few years to an approximate $180 million in 2022. And as you'll see later, it's going lower beyond 2022. Conduent is a very diverse company with a lot of different solutions, and there's some level of duplication. We've initiated strategies to migrate clients onto fewer platforms and to make many more of those platforms, multi-tenant and cloud enabled, thereby allowing us to reduce both operating expense and maintenance capital outlay and allow us to continue to invest in the go-forward solutions. Our restructuring program is largely centered around the transformation initiatives that Cliff referenced in his initial section. And those have drastically improved foundational quality and stability. Central to this has been 2 programs: our data center optimization program and our real estate footprint consolidation. The data center optimization program has seen us close 23 of our targeted 42 sites since 2019 with 11 sites currently in progress. The program is expected to conclude by 2025. And as I said earlier, our real estate consolidation program has seen us reduce about 20% of our real estate square footage since 2019. Moving on to cash taxes. Those are impacted by geographic mix of income and timing of deductions for tax purposes. In the non-GAAP reconciliations in the appendix, you can see we removed the impact of tax payments related to the Midas sale and insurance recovery in 2022. And while we're discussing taxes, it's important to note that our effective tax rate is elevated in 2022 and 2023 due to the mix of foreign versus domestic earnings. As overall pretax income increases, we'll see this effective tax rate come down as we begin to deliver higher levels of domestic pretax profits. Generally, we continue to expect there to be some level of drag in working capital, but this can vary a lot based on mix of revenue and structure of individual deals. And finally, on this page, the CARES Act payroll tax repayments are at this point complete. Let's turn to the next slide. So having seen that historical context, I now want to give you those same views of our business across the outlook period, 2023 to 2025. Again, we'll look at the key revenue hydraulics, our revenue and EBITDA walks and compare our adjusted free cash flow outcomes. We'll look at the strength that we have on our balance sheet. And then I'll give you a view as to what this looks like as an exit rate in 2025. And finally, I'll show you what this means in terms of deployable capital over the outlook period. Cliff will then join me, and we'll talk about opportunities, as I said earlier, to accelerate against this base case. Let's now turn the page and look at the revenue hydraulics again. Firstly, if we look at sales, you can see that we expect to be able to continue to grow our ACV and ARR sales performance over the outlook period. We expect signings of annual recurring revenue to grow approximately 6% to 8% per year over the outlook period. And we expect annual contract value to grow 8% to 10% per year over the outlook period. The reason for the difference in these numbers is because some of the opportunities that Lou and Mark articulated in their segments should come with strong upfront project implementation revenues. Specifically, these would be in areas such as Government health care and Transportation. These outlook CAGRs are less than we have achieved in the past 3 years. And internally, our targets are higher. As a final comment on sales, we do expect lumpiness from quarter-to-quarter and by segment. As an example of this, Q4 2022 was very strong in Government sales. We are expecting Q1 2023 sales to be lighter than last year, but we have a strong pipeline for Q2 and the remainder of 2023. Secondly, looking at our vintage analysis of losses, we see a much clearer path to reduce levels of losses in 2024 and beyond. With the purple and gray bars denoting losses with a vintage of 2021 and later, we now have a clearer line of sight to lower levels of losses. Baked into our guidance for this year, in 2023, we're running off revenue of close to $100 million related to 2 government contracts where the decisions to leave were rooted a number of years back, both also happened to have been included in our net ARR metric in 2021 and 2022. Our expectation is that our underlying quality and stability should now translate to a loss churn rate of somewhere between 3% and 5% of annual revenue. Finally, on this slide, we do expect lost organic volumes to normalize. We believe the effect of a couple of our largest clients normalizing their post-pandemic volumes has largely run its course in 2023. And obviously, we don't, at this point, expect to see a repeat of the COVID volume losses. So our working assumption in planning is that we're expecting modest volume degradation. And typically, that doesn't come from losing a client but then finishing a particular work stream with us. Or in some cases, we share volume with other providers. And so as we continue to improve our SLAs and our service delivery, we expect to be able to minimize these effects. Let's turn the page now and look at how these play into our revenue as we walk 2022 to 2025. So you can see there in the first 2 bars, the loss impacts I referred to on the last slide and also the effect on organic volumes. We continue to expect to have about the same level of price compression. This is predominantly in our Government and Transportation businesses where we are typically in longer-term fixed price contracts that have a natural level of compression at renewal. And you can see also there the effect of ramped revenue within the base business at a level that's about 14% above the level of revenue that we ramped between 2019 and 2022. Additive to this is our expectation over the outlook period to ramp additional revenue from the strategic growth themes that our 3 presidents and Kathy Mertes talked about earlier, digital payments, including leveraging our real-time payments hub across multiple existing solutions in all 3 of our businesses, further penetration of our modular cloud-native CMDS Medicaid solution, geographic and solution expansion within our Transportation business and selective geographic expansion for our Commercial business. We expect the combined impact of these growth initiatives as well as continued impact in improving our base business will incrementally see us ramping approximately 30% more revenue in the outlook period than in the look back period. And that's in line with how I've communicated our expectations of growth in ACV and ARR over the period. At our 2025 exit rate, we expect the impacts of these growth initiatives to be contributing somewhere in the region of 50 to 100 basis points of growth into that exit rate. On the far right-hand bar of the chart, this represents the residual of PSNAP revenue. That's a grow-over for us in 2023, and we sized that for you at about $40 million. In aggregate, over the 3-year outlook, this represents a 1% increase. But obviously, that's taking into account our guidance of 2.6% down in 2023 with recovery beyond that. And as you'll see later, we're expecting our 2025 exit rate of growth to be in the range of 3% to 4%. Let's now turn to the next slide and look at the walk on adjusted EBITDA. Our base case expectation is to grow our adjusted EBITDA roughly sequentially to a range of between 10.5% and 11.5% by 2025. The puts and takes on that work are expected to be a net improvement in the business segment margins from improved mix, with contributions from strategic revenue and continued efficiency work across operations. There's an offset within the revenue volume mix bar from a headwind from an expected lower level of fall-through from BenefitWallet margin, assuming a lower interest rate environment. Our modeling assumptions on this are in the appendix. We continue to expect modest headwinds from price compression. Within our expense base, we continue to see opportunities to rationalize technology and real estate expenses. And we have line of sight to more than $50 million in real estate and technology savings over the outlook period. We anticipate a modest offset to this from investments in talent and benefits. And again, on the right-hand side of the waterfall is the margin impact from the PSNAP revenue that rolls off in 2023 as well as some onetime benefits that we don't currently expect to repeat in the outlook period. Let's now turn and we'll walk the side-by-side compare of the 2023 and 2025 adjusted free cash flow conversion. You can see there that we expect the total capital expenditure, including those pieces hitting both investing and operating cash flows, are going to be held at a fairly constant value of around $160 million annually in each period. At this level, we expect to be able to deploy an aggregate of about $150 million of that capital expenditure to support strategic initiatives and growth with the balance supporting existing product enhancements or said differently, maintenance CapEx. We expect the majority of the current restructuring programs to be concluded within the outlook period. There's a higher level of restructuring in 2023 due to the closure of an international site relating to one of our larger clients. This was anticipated and baked into how we guided 2023. And we're also taking the opportunity to accelerate the termination of certain real estate and technology contracts. Moving on to interest. Our cash interest expense here is shown illustratively to have been reduced by voluntary repayments on our term loan A and term loan B. It's important to note that this is for illustrative purposes only. It does not automatically mean this will be the use of excess cash, and we'll talk more on that a little bit later. We expect cash taxes in 2023 to benefit from the 2018 federal refund, which we hope will finally arrive this year. Taxes during this outlook period are impacted by the geographic mix of income and the impact of timing of deductions for tax purposes. As an example, the 2017 Tax Cut and Job Act legislation currently requires the capitalization of research expenses, limits the deductibility of interest expense and phases out bonus depreciation deduction and that impacts cash taxes through the outlook period. Finally, on this slide, we expect that net working capital will continue to be a modest drag as we fund ongoing growth. Let's turn now to the next slide and begin to wrap up this segment covering our base case. We're expecting our 2025 exit rate to reflect a 3% to 4% organic revenue growth, a 10.5% to 11.5% adjusted EBITDA margin and adjusted free cash flow conversion as a percentage of adjusted EBITDA in the range of 20% to 25%. Importantly, we expect all 3 of our businesses to be in growth. Commercial and Government growing approximately 3% annually and Transportation 4% annually. Let's now look at how this flows into our net leverage and deployable capital. We have no significant contractual debt maturities to deal with until 2026. And this gives us quite a lot of flexibility to delever the business should we choose to do so over the outlook period. We also have access to the almost entire amount of our $550 million revolving credit facility. And in aggregate, clearly, that's over $1 billion of total liquidity. Turning to the next slide. You can see here illustratively, through 2025, we expect having this base case alone up to approximately $500 million of excess capital to deploy, representing 71% of our current market value. Now before we get too far ahead of ourselves, let's remember that there's still a base amount that we need in the business to fund growth and working capital. I've said that I'd like that to be in the range of $300 million to $400 million. And certainly, in our Transportation and Government segments, there's a level of working capital drag associated with growth that we need to take into consideration and can be hard to predict. That being said, we recognize the need to get some level of declaration around this excess capital. And with that thought, I'll now conclude this base case review, and Cliff is going to come up and join me, and we're going to talk about how we're going to further accelerate that as we look to make further rationalization in the portfolio and continue our pursuit to unlock value. Cliff?

Steve, thank you. Great presentation. A great look at the baseline portfolio, what we can expect over the course of the next 3 years, where you see the emphasis points on, et cetera. So you might be asking what more can we do? What more can we do to accelerate that growth rate? What more can we do to enhance that value proposition? We think there is more we can do. We think a future rationalized portfolio and smart capital allocation approach can add a lot of value here and accelerate the growth. So a little bit of background. This portfolio analysis has been ongoing since we got here, certainly since I got here. But the level of detail is increased over time. We've always believed and you know better than I do, that the sum of the parts valuation is superior to the value of Conduent, for sure. But a couple of key components here. Staying the course for our turnaround through the change in market conditions had to be the highest priority. It was most important and it had to stay most important over the course of the last 3 years. However, we've done a more recent portfolio examination. We've gone deeper solution by solution by solution. And our conclusion is that everything in our portfolio can grow, but with significant variation in the opportunity, and I'll talk about that here in a minute. That all said, our conclusion is that time is now. Our foundation work is complete, at least the heavy lifting of it is complete. The refinement is never complete, as I said upfront. Our client buying patterns are far more evident. We now know our clients better than we ever had. We know how sticky they are and we know when they're not sticky, we know how long it takes for them to onboard, we know how long it takes for them to offboard. Therefore, our growth trajectories are far more better understood now, solution by solution by solution. And we've done a lot more work on the investment needs and the prioritization of those investment needs, again, solution by solution. That all said, we've discovered that the time is now to do something to add to that growth rate that we talked about a minute ago or Steve did. So how did we approach it? We put some considerations in the consideration set. We looked at the growth opportunities, again, solution by solution and the timing for that growth. Importantly, we looked at bandwidth, leadership bandwidth and investment requirements by solution in order to get to the growth rate that we expected. We looked at external scarcity value, as you would expect we would. We looked at interesting market dynamics, such as interest rates, which are affecting some of our business units and solutions. We looked at outsourcing trends, technology trends. Importantly, we looked at internal synergies because we know we have to drive margin expansion. That can happen through synergies internally with the current solutions that we have today. And also importantly, we looked at external synergies. Where can these solutions add synergy capabilities outside of Conduent? We put it all in the mixer, and we came up with a conclusion. And our conclusion is that our portfolio is just too wide and too diverse as it is today. Some of these solutions are just going to take too long. We don't have the patience to wait for it to grow at the rate we expect it to grow or it requires too much investment or too much bandwidth or too much new leadership to get to the point we needed to get to. As I mentioned a minute ago, some of these solutions -- and again, you know this well, they'll command a higher multiple than Conduent commands today. Now we asked ourselves, do we have the resolve? The Board asked us and asked themselves, do we have the resolve to do this? And we believe that the Midas suite disposition is a proof point. It's one proof point, it's a small one, but it's a proof point that we are willing to take action and we're going to. Now what are those actions? We prioritized the portfolio into buckets, a growth bucket, an optimization bucket and a rationalization bucket. And we then more clearly articulated the best use of proceeds. I'll talk about that here in a minute. And we are finalizing and have finalized some of that sequence into a timing of events. And we have some near-term conclusions, near-term meeting in the next year or so. Those are the actions we've taken. Now what does it mean? What do we think that potential outcome could be in this rationalization effort in the next year or so? We think it generates between $500 million and $700 million of new potential divestiture proceeds. We think with smart and appropriately deployed capital, as you can imagine, we think there's an enhanced valuation. We believe what remains is a more nimble, faster-growing Conduent, which will enhance that 3% to 4% organic growth trajectory that Steve talked about a minute ago. Net-net, you add it up with that $250 million that we already are going to generate from the baseline case, we're talking $1 billion of net new capital available. Now that's $1 billion or 142% of our market cap today, deployable, significant for us. So I know you're going to ask, and we've asked ourselves, okay, so what? What are you going to do with it? The best way to answer that question, we believe, is to define what we first know we're not going to do with it. And then we can talk about what we're going to do with it. What we're not going to do with it is add to our internal investment thesis. Our internal investments, we think, are about right for the current company or a future company that might be a little bit smaller, and we're not going to change that. We're not going to be more aggressive there. We see no need for large-scale acquisitions. More diversity is not a good thing. Refined diversity and growth execution is the model we're looking for. We don't need a big acquisition to do that. And frankly, we don't need the distraction. And you never say never. That's the way we look at it for the next year. What does that leave? You know better than I do probably, two things: debt reduction and return to shareholder. Now you're going to say, okay, what are you going to do? Well, what I'm going to do is it depends what we're going to do and the Board is going to do is it depends. It depends on the sequence, and it depends on, if the sequence executes like we think it will execute, we'll incrementally and tactically make those decisions as we go along because the product can make a difference. Our debt covenants can make a difference. The characterization of the solution that we might disposition makes a difference in where we put those proceeds and when we put them back to shareholders or back to debtholders. But I can tell you, that we're going to make those decisions incrementally over the course of the next year or so. We have a plan that can be deviated from, but it's a plan, and we will execute against that plan. Now if I'm saying that's great, I'm an investor in Conduent, I'm going to stay an investor in Conduent, let's say you do that, Cliff. What am I left with as an investor? What are you running? What is the profile of the company look like? Why are you optimistic about it? We told you about a lot of things we're optimistic about. And a lot of those things will still be here, we believe, growing at a much faster rate. We'll ask Steve to come back and talk a little bit about what is the pro forma financial situation look like for what we might call "RemainCo" because we think we've got a model here?

Absolutely. So Cliff, as you and I both know, we're still early in this renewed vigor to look at the portfolio. We've done a lot of planning work, yes. And we've got strong alignment now both internally and with the Board, but the rubber is really going to meet the road here as we begin to spool up and get ready to transact on some of these things. And there's a lot of work to do, and that needs to be paced. We've still got a business to run, we've still got clients to serve, and we've still got associates to take care of. And look, we've put this investor briefing together today very inexpensively. We're doing it, as Cliff, you said at our own HQ, our own internal teams have produced all the materials. And by the way, thank you to everybody behind the camera. Really great job from both our internal teams and our communication partners in bringing this together on a shoe string. And so I do expect that we'll come back again and give periodic updates as we move along this journey over the next few years. Suffice to say, I don't think there's going to be a 5-year gap from the next time that you see in here Conduent management in front of you.

I can promise the listeners of that.

That being said, let's take a look at this slide, and let's kind of pro forma a sort of short size as to what this might look like, laid out against the base case exit rate that I showed you earlier. Now look, you heard Cliff's comments. The intent here is to work towards making Conduent a leaner and more agile company, focused on fewer things, growing slightly faster, growing with more predictability with less capital intensity and definitely less breadth to pro forma that you -- for you in terms of an adjusted revenue outcome at the 2025 exit rate. I'd say I'd size that right now in the range of $3.3 billion to $3.6 billion. And we see this having at least a point of impact on our adjusted revenue growth. Cliff feels in this that we're being a little bit conservative.

Well, Steve, my formative views were formed as a fighter pilot, yours as an accountant, you can imagine which one of us is more aggressive and which one of this is damping down the game plans.

Absolutely. But I think what we can agree on and what we say is that we feel really good about this providing an incremental lift to the underlying growth rate of our business. Now obviously, adjusted EBITDA margin impact is going to be dependent on a number of factors. There are a lot of different EBITDA margin and multiple businesses inside of Conduent. And so mix is going to be an important factor in this. But also stranded cost takeout and length of TSAs as we transact these things is also an important part of that rubric. So for now, we're arranging this as a pro forma 2025 exit rate to be in the range of 9.5% to 10.5% adjusted EBITDA margin. But look, that's clearly coming with a lot of excess capital to deploy, Cliff, along the lines that you articulated earlier. So Cliff, with that, I'm going to hand it back to you to wrap up.

Steve, thank you. That's a view we think we can do to put some icing on this thing. So I said upfront, this is what you should expect to hear. I believe you heard it. We'll just reiterate what I think you heard, and I hope you heard. We've repaired and strengthened our foundation. We needed to. We had to, and we had to get that done first. We now find ourselves in a position with unique value propositions, aligned to the attractive market opportunities with real growth opportunities. Steve gave you a review of the baseline financials, what can you expect on normal course and speed. And you should expect that. And we will execute or make sure we try to execute against that plan. And then to layer on top, we believe there's a future rationalized portfolio. We know we're too diverse. We know their scarcity value. We know we can do something about it. We've proven we can and we will do more. Along the way, you got a view of our experienced management team, the folks leading this work. And there are many others, you didn't get exposure to that we're quite, quite proud of that they're are doing a lot of really heavy lifting across the company. So those are you takeaways. I think we're going to get ready for some Q&A. I'm going to bring Giles back up to talk to you about a video that we're proud of, and then we'll get going with question and answer. Giles?

Thanks, Cliff.

Thank you.

Thanks, Cliff, Steve, Randall, Lou, Mark and Kathy. So that concludes the formal part of the presentation. Before we get into Q&A, we're going to show a short video demonstrating our digital payment capabilities with our strategic partner, BNY Mellon. We'll be back momentarily. [Presentation]

Okay. Welcome back. We're now going to start the Q&A component.

So Cliff, Steve, a lot of questions coming in about capital allocation. So let's start there.

I'm surprised.

Steve, you had approximately $600 million of cash on the balance sheet at the end of the year and mentioned you only need about $400 million operationally. Given where the current stock price is and the cost of the debt, why are you deploying excess capital now?

Yes. Look, the important thing to think to realize when you think about that $300 million to $400 million is it's very much a normalized rate. And it was a 2025 exit rate. And so the other thing to remember, and people who sort of look at our financials and study our financials will know that we're a consumer of cash typically in the first half of the year, and then we tend to be a generator of cash in the second half of the year. And so I think we just not to get a little bit too far in front of us. I mean, we've still got a business to run. We still got growth to make sure we are enabled. We're not sailing in completely calm waters in terms of the macro environment. And so I think there's a level of pacing that's associated with this that ties in with some of the narrative that Cliff talked about is that, hey, we're going to get on and do these things, but it's over the next year or so. And so I want us to thread carefully into 2023, certainly in the first half. And then I think, as we get into these transactions and we see more of the certainty around the timing of them, then I think it becomes a different narrative in the second half of the year and beyond. Cliff?

Well, look, I mean, lumpiness in normalization means there's peaks and valleys that you got to prepare for in a relatively uncertain economic environment with a lot of change going on for us. And you saw that fourth section in our narrative that there's a lot we intend to do over the course of the next year. Dry powder is important. And there's a big difference between $100 million of available deployment cash and $1 billion. So be patient with us.

So let's put on that front a little further, Cliff. Should the expectation be that we'll start to deploy capital when we execute the first transaction? Or are we waiting until we've done 3, 4 transactions and deploying $1 billion order one?

Look, that's obviously a joint Board decision, not a unilateral decision by me or us. But I think that is an option that we should consider as probably the prioritized option. We're not going to wait until 2025 to deploy capital, if that's your question. Yes -- so the answer is yes. But the decisions are made at the Board level.

Yes. So continuing the theme, rationalizing the portfolio, you're putting timing to one side, how are you thinking about the distribution of those funds between shareholders and debtholders, as you mentioned on a previous slide? What's the timing? And is there a priority as it relates to that?

In terms of deployment of capital?

Correct, yes.

Well, it comes, like I said, in a planful, timed, tactical, sequence, depending on what we sell and whether we sell what we think goes first, first. So the answer is the timing is over the course of the next year or so. But the sequence of that timing is something we're just going to have to wait to describe to the investors.

Yes. And I think in terms of the prioritization of that, I think we want to maintain balance, right? We recognize the need to be balanced. We recognize and like Conduent as a relatively modestly levered business. We think that's an appropriate level. Clearly, our -- some of our debts gone a little bit expensive. Now there is a very natural offset for us internally in terms of our BenefitWallet business, which is, as many of our listeners and watchers know, is a business where we generate essentially interest, which becomes revenue from a significant amount of float on that business. And so that's a very natural hedge against our debt. But I do think the overall -- our overall posture is one of balance as we go through this.

Yes. And as Steve said, part of our debt is floating, interest rates are up. Certainly, I think our investors who want us to balance the reduction in that where appropriate against the return to shareholders and the way we return to shareholders. So we're going to be very planful.

So Steve, I think you mentioned there's still a lot of work to do internally. How far along are we in the rationalization process? And when should we start to see the first transaction?

What we've done -- as I said in my prepared remarks here, we've done an awful lot of planning work and that's planning work that's been going on for several months across all of the business teams. To get this much clearer view, Cliff mentioned it in his remarks, we've got a far better view of the portfolio than we've ever had before. We've got a far better view of the different margin, multiple growth trajectories of the portfolio. And so that's put us in a position and primed us to be at a point where we can come here today with a degree of confidence around the things that we are going to transact on. I think, Cliff, will add on to this, but you can never be certain, but I can tell you that we're ready.

Yes. I would add on to it by saying we're serious, we have outside help, we have the support of the Board and we have things that we have on the docket. I can tell you that, for sure.

So as you think about the docket, what types of solutions are in that rubric for the opportunity? And getting a couple of questions here around Transportation. Is that still potentially on the Board to be spun off at some point if it grows?

You got some -- I know those sneaky investors that are trying to trap me, and I appreciate it. Look, I can't go into exact details. What I would tell you is I wouldn't -- I would never say never, but I wouldn't envision a big bang. I would envision probably at least in the near term, 2 out of our 3 sectors could be influenced, but more than likely not the entirety of anything. That would be an earmark.

Okay. So let's switch gears a little, few other questions coming through. One question around concentration. So with such a large concentration of health care insurance do you see opportunities to develop client relationships with larger hospitals and physician practices so that you're at both ends of the year.

Here's the way I would answer the question. And our business unit President, Randall King, can potentially answer that with a little more detail. But when we sold the Midas suite of products, we basically told ourselves, strategically, we're not really in the provider business. Midas was in the provider business. We're in the payer business. So when it comes to payers, there's certainly some opportunities within the hospital system to support payers as it relates to paying into those hospital systems. But not as it relates to the other angle, which is the hospital systems outward work -- outbound work. We're not in that business.

So do you see any, I guess, disruptive competition coming from any of the insurtechs and fintechs across the portfolio of products that we've got? How are you thinking about that?

So look, as I said during the narrative, we're not in the fintech business. We're not a regulated -- financially regulated other than payment card industry regulation and health care regulations. We're not regulated as a financial entity, and we don't intend to be. We're not a payment processor. We don't intend to be. So where we compete with fintechs is a very narrowed prepaid and ACH business in the Government space. There, we compete, but we've always competed. There's nothing new there. So when we talk about this new integrated payments hub, it's not a competitive environment with fintechs. What it does is it connects to fintechs because we have those endpoints, and we can connect to fintechs or banks, and we're facilitators. So no, I don't see a lot of disruption from fintechs into our space beyond what we've already always had. We're in competition in that one narrowly focused area of prepaid cards.

Okay. Steve, getting a few financial questions coming through. As you think about the losses that you talked about in that bar graph, is 2025 the end of the blue or the legacy component of losses there?

It's the end of the blue as we know it. I mean we put a lot of work into that vintage analysis, and we looked hard and deep into the root causes. And so as far as we can tell, we see this normalized pattern emerging of this sort of 3% to 5% when you look at the vintages that were represented by the gray and purple bars on the chart. And so I think, at this point, again, we look to our foundational quality and we look to the operational stability that's been sort of enhanced and repaired across all of our businesses. And we say that, that ought to translate to that more normalized level of attrition and not at the elevated attrition that we just found -- just had a much longer tail associated with it. So to summarize the answer to the question is, yes, I do believe that, that is the tail, and we have an expectation that those losses are going to normalize down into that level.

Your predictability is much improved, right, Steve. We now know the tail of poor service, and we know how long that tail runs off. We know that it takes years to run off just like it takes years to run up. So it's much more predictable now than it was.

That's right. Its predictability is on both sides, right? We know that in the Government and the Transportation business it takes a long time to ramp clients, but it also takes a long time to offer our clients. And so seeing this coming and seeing the tail of it is something that we do believe now that we've got our arms around and so that's leading us to have the confidence to set that expectation, and it is an expectation. It's an expectation of our businesses to continue to enhance and develop their client care with that increased level of stability, that's going to allow us to have those, I'd say, more normalized levels of churn.

And that gives you confidence that we're not thinking about any additional large losses as we go forward.

We're working very hard.

We don't never say never. But we're very confident in the analysis that Steve has done.

How about price? In those graphs or in the walk, I think it was, you talked about price compression. What's driving that price compression given the inflation environment we are in the moment?

Yes. The inflationary environment helps us on the Commercial side and on the Commercial side typically is, as many of our investors know, we're in shorter-cycle contracts. They turn quicker. And generally, there's an ability to drive price conversation with -- associated with wage inflation and other things that are going on. In the Government segment and in the Transportation segment is, again, as most people know it, our contracts are a lot longer, and they're typically fixed price. And that has good and bad things. The good thing is that we've got clearly long revenue site to us in the future, and we've got opportunities to really work hard because they're fixed price on improving margins during the course of the contracts. And we work -- and we're extremely good at driving margin expansion during those contracts. But there is a natural level of expectation in Government and Transportation that at renewal points, there's going to be an element of price compression. So I said in my prepared remarks that, that's very concentrated in the Government and Transportation segment. And I view it as a very natural part of how we contract and how we renew in those sort of public sector arenas.

Okay. Switching to net leverage. Do the net leverage figures on Slide 53 indicate you're now targeting a medium- or long-term leverage below the 2 to 2.5 range that we've previously articulated.

I think what it indicates is that we continue in this higher interest rate environment to focus on net leverage and attempt to try and be very modest about our leverage as we move forwards. I'd stop short of giving target ranges for that. You know that we're operating right now in the sort of high 1.8, 1.9, something like that. And so that's nice. But clearly, there's an elevated interest rate environment. And so that very much plays into Cliff, I and the Board's decisions as we think about how we deploy capital going forward in terms of how we'll manage that. But I don't want to update any ranges at this point because, clearly, we're going to go through a period now where there's going to be, I'd say, some opportunity to change some things here quite dramatically. And so at the point at which we communicate what the priorities are, we'll communicate what we think the leverage outcomes are going to be as part of that.

Okay. So Cliff, switching gears to implementations. Experienced a couple of delays in some of our larger implementations in 2022. What's giving you the confidence that, that's fixed and with some of the government -- large government deals that we've done in the end of 2022 that we'll implement those successfully?

It's a great question. I mean implementation historically has been one of our Achilles heels, and it's a source of a lot of client discontent, if you will. But we spend a lot of time focused on it and a lot of time assigning leadership to it. We now have a COO model that is intently focused on it, especially in some of the big implementations we're underway with now. But implementations, the opportunities to win or lose in implementations have really historically even -- especially in 2022, 3 components to it. One is our ability to perform and communicate with the clients adequately on the expectations in the scope. One is the clients' receptivity to give us what we need in a timely fashion and one is supply chain. Supply chain was a problem in 2022. The rest of it's controllable, but it's a 2-way street. We've got to 100% make sure our end of the Street is spotless as close to perfection as we can get. And we got to make sure that the clients understand that if there are delays, we're going to document when it's on their side. So we're -- all those things are things we're working on, the process flow, the project management leadership, et cetera, et cetera. So look, it's -- we've had some delays. Some of those were supply chain related. Some of those were us and some of those were the clients, but way better than it was 3 years ago. So never say perfection. This is a work in progress. And -- but we're a lot better. And we're, as I said, intently focused on it.

Switching to sales growth. I think Randall was talking about the opportunity to sell more solutions into our existing client base. How much of that growth is do you think is coming internally versus new logos externally?

Look, I'm going to put a wet finger in the air because it's always going to depend and there will always be some deviation from it. But what I would say in the Commercial space, our opportunities are more profound in our current client base, new solutions, add-on products and services. Better account management means more penetration. That's low-hanging fruit. That's where we're going to get the next year and 2 of sales more rapidly. It's different in the public sector. The public sector is very RFP driven. Yes, there are add-ons, but typically, those are change controls and project changes, et cetera, et cetera, more difficult to get add-on and new capabilities. It's RFP driven, and it's more predictable. So what -- the answer I would say is 2/3, 1/3. In the Commercial space, our opportunities, I would say, are 2/3 more focused on our current client base. But that doesn't mean we don't have new logo capabilities where we have some geographic expansion, we've got some industry expansion. We're all over the new logo space in Commercial, but we think the low-hanging fruit is in the current portfolio, not so much in the public sector, in Government. It's 2/3 the other direction, 2/3 from RFPs, 1/3 from the current client base.

And then as you think about the strategic revenue that Steve had on one of his slides where do you see that coming from?

Like payments?

Yes, exactly.

Well, I mean, it's coming from all 3 lines of business. Now our challenge right now is we've got to show the client base. Most of it is coming from our internal client base. We've got to show them that they have bills and disbursements and reimbursements available right now for real-time payments and real-time disbursements. We've got to get out in the field and say, you're missing out. You're missing out on reduced costs and improvements for your end users. And that's where it's all going to come from. And I think there's a lot of opportunity we just got to get after it.

Yes, absolutely. So the payments stuff, Cliff, that you've talked about, I think, also, let's think about the modular cloud native, CMDS Medicaid solution. Mark King talked about the sort of market opportunity that's there over the sort of medium term with the CMS mandate driving a lot of opportunity in a very, very significant pipeline in that area. I think as we look around the globe, we see many places where there are some interesting projects in the Transportation arena. And we continue -- so we continue to kind of pursue all of those. And then I think there's an element in a Commercial business of some potential opportunities to do some selective geographic expansion. So I think this isn't -- I don't want to sort of listeners to go away and think about they're just being one thing. We've really assembled here, I think, half a dozen or so really interesting themes that we're going to double down on in terms of growth. And I think the group presidents all sort of outlined them in terms of 1 or 2 now. There was a consistent payments theme in all of those, but it certainly wasn't the only thing.

Yes. If you simplify, you think, in Transportation, there's certainly geographic opportunities, unequivocally. In Commercial, there's industry and geographic opportunities unequivocally. In Government, there's the Medicaid suite of solutions, the CMDS product that Mark talked about. We're not the market leader there. But the market is wide open now because of the new CMS rules, and we can now take market share, and we're after that, and it's looking very promising. So that would be in that space. And then from a real-time payments, it's in all 3 places. That's a simple way to look at what I think we need to do next.

Good. So we've probably got time for a couple more questions. We have got a lot of people that have asked and we'll follow up individually post the event. So last couple of questions. Cliff, sounds like you're really excited about the opportunity in payments. How are you thinking about the market for the integrated payments hub? And I think you've already talked a little bit about the key competitors in that space. But what does -- how do you think about that generally?

Well, first of all, the integrated payments hub is not a solution. It's a solution enabler. The solution is at the endpoints. The real-time payment is not the solution anyway either. That's an enabler for the event that takes place at the endpoint, the bill or the disbursement. And so it's very difficult to say what's the market opportunity there. That's one of the things we're looking at right now. But here's what we know. We know we've got a hub that connects these real-time payment networks and the banks, whether it's FedNow for the smaller banks or whether it's real-time payment network through BNY Mellon. We know we have connectivity for all 3 ways that Kathy talked about, a bill, a disbursement or a vendor payment. We know that we have end points that generate millions of opportunities. Lou talked about the millions of transactions, which then translate to millions of bills that have to be paid just in the Transportation business alone. We haven't even tapped the Commercial business or the Government business on bills yet. So we know that's a big opportunity. And then we know that there are disbursements going from all 3 state and local governments in both Transportation and Government as well as the Commercial units disbursing all kinds of payments to end users In the Commercial space. And we know that there's this disaster relief that we can help with in the Government space. So it's a long-winded way of saying we know the universe is big, and we know the universe is in our portfolio today. We don't know what that means yet in terms of numbers. We do have pricing now. We're having conversations. We have 3 or 4 clients that are already buying. We've had dozens of clients that are interested. We've got to get the ball rolling and accelerate it. So it's big. How big? It probably manifest in real pay dirt in 2024 and is incrementally advancing us in 2023.

Okay. And last question. So presidents talked about some of the areas that they're doubling down on. And we've covered a lot today. What are you most excited about as Conduent enters the next chapter of its journey?

Well, look, we're at a place that we frankly never have been before. We've executed on a lot of the heavy lifting. That's behind us. Again, never perfect, but the heavy stuff is behind us. We have more client confidence, we didn't have that before. We've got cultural and talent improvement, we never had that before. We've got some new and promising products in geographies, we never had that before. And we've got some rationalization efforts underway that can drive more cash and simplify the portfolio. You put it in a nutshell, and that's just -- it's just no better time to be Conduent. I mean, my belief is we're undervalued. I guess that's arguable. But at the end of the day, look, this is an exciting time. It's not just fix the operation now. It's very optimistic about where we're going.

Good. Perhaps a couple of closing comments.

Yes. Look, -- we're -- first of all, thank you. Thank you for being here. Thanks to the folks that put this on. Like I said, we're in a special place. We have a supportive Board. We now have loyal clients, much more loyal than they ever were in the past. We've got a dedicated and hardworking workforce. We have all those things I just mentioned. It's a great time to be Conduent. So thanks to the investors that have already bought in to that value proposition. Here's and cheers to those that I hope will. And thank you for being here. It's been a pleasure, and we're fired up. I'll use my southern language and just say, let's go get it done. Thank you. Thank you, everyone.