Conduent Unveils ASCEND Plan: AI Push, Divestitures and 10% Margin Target

Key Points

• Conduent plans to divest its transportation businesses for $234 million in gross proceeds, using most of the cash to reduce debt while lowering capital intensity and off-balance-sheet exposure.
• The ASCEND plan targets at least $120 million in cost reductions and adjusted EBITDA margin growth from 6.5%-7.6% in 2026 to approximately 10% by 2028, alongside a return to low- to mid-single-digit revenue growth.
• Conduent is making AI central to its commercial and government-services strategy, targeting major productivity gains by 2028 while expanding healthcare, financial, enterprise and Medicaid offerings.

Conduent NASDAQ: CNDT outlined its ASCEND 2026-2028 strategy at its investor day, presenting a plan centered on divesting its transportation businesses, reducing costs, strengthening its commercial and government operations, and expanding the use of artificial intelligence.

Chief Executive Officer Harsha V. Agadi said the company is positioning itself as an “AI-led, technology-enabled” business-process-services partner for government and commercial clients. He said the company’s strategy has three stages: reset and stabilize, simplify operations, and execute the ASCEND plan.

Agadi said Conduent serves 46 of 50 U.S. states, 31 Fortune 100 companies, eight of the top 15 U.S. health plans and four of the top 10 U.S. banks. The company’s top 20 clients have been customers for more than 20 years on average, according to Agadi. He also said Conduent has approximately 46,000 employees, down from roughly 60,000 at the start of the year.

Transportation divestitures and financial targets

Chief Financial Officer Giles Goodburn said the company’s financial presentation excluded public transit and tolling operations, which Conduent is divesting. The transactions carry a headline value of $234 million in gross proceeds, plus a retained stake in Quarterhill, the buyer of the tolling business. Conduent expects to receive nearly $200 million of proceeds at closing before year-end, with remaining proceeds to be received over time, primarily through transit-related holdbacks.

Goodburn said tax leakage and transaction costs are expected to be less than $10 million, and that proceeds will predominantly be used to reduce debt. The divestitures also are expected to reduce capital intensity and remove a substantial portion of Conduent’s off-balance-sheet exposures. During the question-and-answer session, Goodburn said Conduent has more than $500 million of off-balance-sheet instruments, with about 80% tied to transportation contracts.

Following the divestitures, Conduent expects 2026 revenue of $2.15 billion to $2.25 billion and adjusted EBITDA margins of 6.5% to 7.6%. The company expects revenue to be flat in 2027 before returning to low- to mid-single-digit growth in 2028. Conduent is targeting approximately 150 basis points of adjusted EBITDA margin expansion annually, reaching about 10% in 2028.

The company also expects to execute at least $120 million of cost reductions, about half of which are expected to come from workforce-related actions. Goodburn said roughly $30 million of savings will be resident in 2026, with $90 million accruing through 2028. Longer term, Conduent said it expects to progress toward 15% adjusted EBITDA margins and to convert at least 20% of adjusted EBITDA into free cash flow.

Commercial and government growth initiatives

Kimberly Marshall, Conduent’s chief commercial officer, said the company has established a commercial operating model designed to standardize opportunity qualification, specialize around selected markets and scale offerings with demonstrated demand and economics. She said client and sales-team coverage has risen 60% over the past 10 months, new-business pipeline has increased 12% year to date, and new-logo pipeline has grown 106%.

Conduent’s commercial priorities are healthcare operations, financial operations and enterprise operations. Marshall said the company aims to build annual qualified commercial pipeline to $1 billion by 2028, with new-logo clients accounting for 30% of the total pipeline.

George Wehbe, president of Commercial Solutions, said commercial adjusted EBITDA margin improved 120 basis points in the first half of 2026. He said the segment sees an annualized expense-reduction opportunity of $80 million in 2027 through leadership changes, fewer management layers, consolidated functions, vendor reductions and work on underperforming accounts.

In Government Solutions, President Anna Sever highlighted Conduent’s cloud-native Conduent Medicaid Enterprise System, or CMdS. The platform recently replaced a 24-year-old legacy system in New Mexico and supports about 900,000 Medicaid enrollees. Conduent also announced a multiyear renewal in Virginia supporting approximately 1.6 million Medicaid enrollees.

Sever said Conduent’s government pipeline is approximately $2.7 billion for 2027, while its five-year pipeline exceeds $17 billion. She said the company estimates the government addressable market at $18.4 billion, where Conduent currently has roughly 5% penetration, and cited a $41 billion federal health and civilian-agency market as another expansion opportunity.

AI deployment and productivity targets

Conduent’s leaders repeatedly identified AI as a key element of its growth and margin strategy. Narayanan Sundaresan, chief information and technology officer, said the company plans to embed AI in client solutions while redesigning internal workflows, migrating more infrastructure to hyperscale cloud providers, building a data lake and expanding security controls.

Wehbe said Conduent has already deployed AI-assisted code review, reducing peer-review time by 70%, and used AI to accelerate a legacy-code migration project that traditionally would have taken three to six months into less than four weeks. By the first quarter of 2028, the company is targeting a 30% to 40% improvement in AI-enabled software-engineering throughput, 10% to 15% less effort in selected operational workflows, and twice the migration speed to current product platforms.

The company also cited results from its Conni AI platform, including 86% of inquiries resolved without a human agent, ninefold higher consumer engagement, 21% fewer live-agent interactions and a 24% reduction in average handle time in a healthcare use case.

Agadi said Conduent is focused on moving beyond its recent restructuring and demonstrating more consistent execution. “This is a new Conduent,” he said, emphasizing growth, accountability, cost discipline and portfolio focus.

About Conduent (NASDAQ:CNDT)

Conduent Incorporated NASDAQ: CNDT is a business services and technology company that provides digital platforms, transaction processing and business process services to government agencies and commercial organizations. Its solutions are designed to help clients manage customer interactions, administrative workflows, payments and other high-volume, mission-critical processes.

The company's government services include public benefits administration, healthcare and Medicaid support, child support services, workforce and student loan programs, and other public-sector operations.

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