Greetings. Welcome to the Conduent Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, David Chen, VP of Investor Relations. Thank you. You may begin.

Thank you, operator, and thanks everyone for joining us today to discuss Conduent's first quarter 2025 earnings. I'm joined today by Cliff Skelton, our President and CEO; and Giles Goodburn, our CFO. This call is being webcast, and a copy of the slides used during this call as well as the press release were filed with the SEC this morning on Form 8-K. This information as well as the detailed financial metrics package are available on the Investor Relations section of the Conduent website. During this call, we may make statements that are forward-looking. These forward-looking statements reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. Information concerning these factors is included in Conduent's Annual Report on Form 10-K filed with the SEC. We do not intend to update these forward-looking statements as a result of new information or future events or developments, except as required by law. The information presented today includes non-GAAP financial measures. Because these measures are not calculated in accordance with U.S. GAAP, they should be viewed in addition to and not as a substitute for the company's reported results. For more information regarding definitions of our non-GAAP measures and how we use them as well as the limitations to their usefulness for comparative purposes, please see our press release. And now I would like to turn the call over to Cliff.

Thank you, David. You've just heard a new voice in David Chen, our new Head of Investor Relations. David has been with the company for a few years and also heads up our mergers and acquisitions team. Given the continuation of our portfolio rationalization efforts, we thought a strong connection between M&A and IR was important. So welcome, David. Now as you can tell already, you'll also hear the voice of Giles Goodburn, our former Head of IR and FP&A who now succeeds Steve Wood as our Chief Financial Officer. Steve has done great work over the last four years, has been a critical confidant to me and has been preparing Giles for this position along the way as his successor. I'd like to thank Steve for his hard work, wise counsel, and strong leadership as he moves on to another phase in his career. As always, I'll preamble the quarter, turn it over to Giles for the detailed numbers, and I'll close with some strategic thinking on why we feel optimistic in what some may call uncertain times. Let me start by saying Q1 represented a strong start to the year for us. We feel good about the adjusted revenue print of $751 million and particularly good about adjusted EBITDA and EBITDA margin of $37 million and 4.9%, respectively. Nevertheless, we need to keep the pedal down in Q2 to meet those first half revenue expectations we laid out last quarter. We remain optimistic and still see Conduent achieving those guidance numbers and our 2025 exit rate metrics. New business signings were improved year-on-year, and we're expecting a relatively strong Q2 in sales. The good news is that while many suffer through macroeconomic uncertainty and the known and unknown effects of tariffs, we feel somewhat fortunate not to feel most of those headwinds. We only have one business, transportation, where we have very slight exposure to tariffs regarding equipment sales and implementations. But for the most part, we are insulated. Of equal or more importance is the fact that while government efficiency efforts may create headwinds for some, despite what may be the perception in the market, we see far more opportunity on the horizon given that nearly all of our government business is conducted at the state and local level, and some of the federal entitlement pushdown efforts like Medicaid and SNAP fraud reduction expectations play well for us as we roll out new and improved fraud prevention capabilities. I'll talk about that here in just a few minutes. Now for the past two years, we've discussed the character of the company as one of significant breadth, with breadth of products, services, industries, and public versus commercial segments, which comes with higher costs in the center, management bandwidth consumption, and higher technology costs. We've consistently stated that a comparison of scarcity value on the outside versus synergy and growth opportunities on the inside will help us craft our portfolio rationalization plan. We've said that the rationalization efforts will allow for accelerated growth and use of proceeds that can reduce debt, increase profitability, and/or free up cash and capital for other efforts, such as share buybacks and, in our case, buying out our activist shareholder. Over the past six months, we've considered where we are in the journey and concluded there are more assets to adjudicate, and the cost in the center can come down, coincident with running the company in a more segmented way. Let's turn to Slide 5 and talk about what we have done. We completed three divestitures in 2024, generating nearly $800 million of net proceeds. We said we'd deploy roughly $1 billion, and 85% of that target is complete, resulting in $639 million less debt and 61 million shares repurchased. Yet still, we believe there's more to do in 2025. We've targeted assets we think will generate another $350 million of proceeds, then surpassing our $1 billion target. Importantly, it's the capital deployment and the reduction in growth impediments that will add real value. While these potential rationalized assets would benefit greatly from the scale and synergies outside of Conduent, when the dust settles, we'll be in a far more opportunistic place. Slide 6 depicts that transformation journey, where we land on an optimized portfolio, two operating units serving different markets, a thin center with a strong balance sheet and positive growth. Meanwhile, in a minute, I'll describe why I'm excited about where we're doubling down with respect to talent, portfolio growth opportunities, and proof points for the future. But first, let me turn it over to Giles for the numbers.

Thanks, Cliff. As we have done in the past, we are reporting both GAAP and non-GAAP numbers. The reconciliations are in our filings and in the appendix of the presentation. Let's discuss our key sales metrics on Slide 7 and 8. We had a stronger start to the year in 2025 than we did in 2024, with first quarter new business ACV up 14% versus the prior year at $109 million. And with Q2 shaping up strongly, we expect to be well positioned at the midpoint of the year. In the quarter, we signed 10 new logos and expanded relationships with 20 existing clients through new capability sales. Government ACV was up sequentially again this quarter, and we believe this trend will continue in Q2. New business TCV was up 96% versus the prior year at $280 million, with approximately one-third of that TCV being generated by an eight-year deal in our international transit business with our client in Lima, Peru, which also helped drive the average contract length up to 4.2 years for the quarter. The net ARR activity metric, our combined measure of wins, losses, pricing effects, and other contractual changes was positive and sequentially higher again this quarter at $116 million. Our qualified ACV pipeline remained strong at $3.2 billion, which is up 16% year over year and 3% since the beginning of 2025. Both our government and commercial segments have grown their qualified ACV pipeline significantly over the last 12 months, positioning us well to hit our growth targets in the near term. Let's turn to Slide 9 and review our Q1 2025 P&L metrics. Adjusted revenue for Q1 2025 was $751 million compared to $821 million in Q1 2024, down 8.5% year-over-year. This was predominantly driven by our government segment, which we foreshadowed in Q4 earnings, and I'll discuss in more detail in a moment. Adjusted EBITDA for the quarter was $37 million compared to $36 million in Q1 2024. Our adjusted EBITDA margin of 4.9% is up 50 basis points year-over-year and sequentially higher versus Q4 2024. There were an unusually high number of one-time items in the quarter, which on a net basis and due to the mix of items drove almost the 0.5 point deterioration in revenue but had a positive impact on adjusted EBITDA margin of almost one point. Let's turn to Slide 10 and review the segment results. The Q1 2025 commercial segment adjusted revenue was $402 million, down 4.1% compared to Q1 2024. New business continues to outpace lost business in this segment. However, we are experiencing some volume degradation in our largest commercial client, which is driving revenues lower. We previously announced the decision to add around 2,500 additional seats of capacity in some of our offshore delivery centers, which will go live later this quarter. To date, we have increased approximately 1,500 revenue-generating seats in these geographies to fill some of that capacity. Adjusted EBITDA was down 11% year-over-year and adjusted EBITDA margin of 10% was down 70 basis points year-over-year. The drivers here were lower revenue, higher usage of central technology costs, and some residual impact of stranded costs as we complete the transition of the casualty claims business to the buyer. Government segment adjusted revenue for the quarter was down 16% at $216 million. Adjusted EBITDA was $38 million, down 31% year-over-year and adjusted EBITDA margin was 17.6%. We laid this out in the fourth quarter earnings, where we said total company revenue would be down in the first half of 2025, with most of the impact coming from the government segment in the first quarter. The primary driver here is the effect of a large government health care contract where the contract was terminated for reasons other than performance in Q1 2024, which at this point has now been fully lapped. This segment was also negatively impacted by approximately $8 million top and bottom by the one-time items I mentioned earlier, predominantly related to the establishment of reserves for operational service levels. Our Government Services business in partnership with Microsoft has been making strong progress with their investments in AI for earlier identification of fraud activity in our payments programs, and we are starting to see the return on these investments in our financials with decreasing fraud expense. This is just one of a number of solutions that could benefit our government clients as they look to drive efficiency and savings. Cliff will discuss this topic in more depth later in this presentation. The transportation segment adjusted revenue was $133 million, down 7.6% year-over-year, while adjusted EBITDA was $6 million in the quarter versus $1 million in Q1 2024. Segment adjusted EBITDA margin was 4.5% for the quarter, up 380 basis points versus Q1 2024. This segment benefited from stronger operational performance levels in the quarter and also from the absence of employee termination costs incurred in the prior year relating to the non-retained portion of a tolling contract. In the first quarter, our tolling business played an integral role in implementing congestion management pricing in New York City, the first of its kind in the United States, by facilitating the total transaction and payment processing through the market-leading Vector platform. This contributed to our Q1 financial results and also enables significant revenue for our clients. Unallocated costs were $47 million for the quarter versus $65 million in Q1 2024. This included an $8.5 million benefit from the recovery of legal costs from one of our insurance carriers related to the state of Texas matter that settled in 2019, as well as positive impacts from our cost efficiency programs across our corporate functions. Finally, in relation to the previously disclosed cyber event, while we did not experience material financial impact to our operations, we did incur $3 million and accrued $22 million of nonrecurring expenses in the first quarter related to the event based on potential notification requirements, and we do maintain a cyber insurance policy for any excess. Let's turn to Slide 11 and discuss the balance sheet and cash flow. We ended the quarter with approximately $293 million of total cash on the balance sheet, and our $550 million revolving credit facility was largely undrawn. As a reminder, we are generally a user of cash in the first half of the year with positive cash generation in the second half. Our adjusted free cash flow for the quarter was negative $74 million. This is significantly better than Q1 2024 when adjusting for the positive impacts of the tax refund and the operating cash flow from divested assets in the prior year. On April 30, we received the final payment of $50 million relating to the Curbside Management and Public Safety divestiture. This completes the receipt of proceeds from phase one of our divestiture program. Sequentially, our net leverage ratio went up from the prior quarter to 2.7 turns. We've said before that this will increase for the next couple of quarters as we annualize the divested adjusted EBITDA in the calculation, which will be partially offset by the sequential recovery in adjusted EBITDA as we work through our stranded cost and efficiency programs. Once this work is completed during the second half of 2025, you'll see this net leverage ratio returning to around 1.5 turns and then moving more towards the one turn we've previously outlined in our midterm outlook as we exit 2025. Capital expenditure for the quarter was 2.7% of revenue, and we have no concerns in meeting our near-term debt maturity commitments. Let's turn to Slide 12 and look at our 2025 outlook. Our full year 2025 outlook remains unchanged as we stated in Q4 earnings. The assumption built into this guide is one of broadly stable macroeconomic conditions. Since we established this guide in February, there has been significant uncertainty relating to tariffs on international trade. However, our exposure to trade tariffs is minimal and contained to very small elements of the supply chain in our Transit business supporting our U.S. clients. As a reminder, the majority of revenue in the Transit business is generated internationally with supply chains outside the U.S. The government segment is predominantly centered on state and local governments where we provide technology, eligibility, and payments programs that support essential services for their constituents. To date, we have not seen any material impact to these programs from the shifting federal administration landscape and remain engaged with our state and local clients. We expect Q2 2025 revenue to be sequentially higher than Q1, but slightly below Q2 2024 and adjusted EBITDA margin to be in the range of 4% to 4.5%. We continue to expect to post top-line growth in the second half of the year and margins to expand as we work through our cost programs. These outlooks have not been adjusted for any Phase II divestiture activity that Cliff discussed earlier and therefore, are representative of the company as it exists today. Lastly, I would like to thank Cliff and the Board for the opportunity they have given me as CFO of the company. And I would also like to thank Steve for his partnership over the last four years, and I wish him well in the future. That concludes the financial review of the first quarter 2025, and I'll hand it back to Cliff for his broader view of the business.

Thanks, Giles. Well, it was good to hear the continuation of a British accent from our CFO. The numbers just described while now executed represent what we've been foreshadowing for the last two years. We continue to be on track. Also, I thought it would be important to outline some other real opportunities going forward. If you'll turn to Slide 14, you'll see some of the non-financial performance proof points. Overall, AI and Gen AI remain at the forefront of what we're utilizing on behalf of our clients and their end users. As I've mentioned before, AI in our space is not hyped or sold. It's used to drive quality. We've rolled it out in our life-to-work portal, in our call centers, and in our payment fraud space, which I'll talk about here in a minute. In commercial, we're seeing the fruits of our labor with our new client partner enterprise sales model driving sales pipeline and clients evidenced by all-time high NPS scores and Supplier of the Year awards. We've also been tapped by many of our commercial clients to help them achieve their efficiency and cost reduction initiatives. The government business is turning the corner just as we said it would. Strong sales pipeline, improved retention, and new talent are lining up for the turnaround we were planning for. And in transportation, we're seeing particular progress in market share improvement in transit where our new fare gates and card tap-and-go fare collection capabilities are selling well. We recently finalized and signed our new scope and plan with our biggest flagship client in the state of Victoria and Australia, and new avenues are opening up in tolling as well. Just take a look at Governor Hochul's success in New York with congestion management pricing. That's our technology and many other states are watching closely as that is a perfect way to reduce congestion and drive revenue to the states. Now, let me focus for a minute on government efficiency, where, like in AI, there are perhaps a misconception or two. The reality is as follows. We work primarily for the state governments. While federal entitlement funds often flow through the states, entitlements haven't been challenged, and we get paid by states to help them administer those funds and the eligibility for them. As eligibility oversight increases, so does our work. By their very nature, entitlement programs are guaranteed programs, so the work we do is non-discretionary. Most of the limited federal work we do is as a subcontractor for the Direct Express program utilized primarily for social security benefit distribution. Again, a program that sees no signs of reduction regardless of what vendor the program relies upon. Meanwhile, the President did say he's not touching social security payments. Absent this subcontractor business, less than 1% of our revenue is contracted with the federal government. We provide support to states for SNAP, or food stamps, as well as Medicaid eligibility work. As you know, a good portion of Americans across the political spectrum rely on programs such as SNAP and Medicaid. Regardless, even if there is a reduction in funding pools, our business model is not dependent on funding per recipient. On the Medicaid side, we implement and manage states' Medicaid technology administration platforms and process eligibility requests and enrollment programs, both of which likely become more voluminous if eligibility and fraud are further scrutinized. Regarding SNAP, we earn revenue based on the number of cases, not the funding size per recipient. So here's the bottom line. If unemployment rises, it's an opportunity for us. If states increase their focus on Medicaid fraud and illegal recipients, it's an opportunity for us. If Medicaid expansion goes away, it's an opportunity for us to re-register end users. If work requirements get further scrutinized in Medicaid or unemployment insurance, it's an opportunity for us. And as payment programs work to eliminate paper checks through dose for efficiency purposes, it's an opportunity for us. Finally, turning to Page 15. The biggest opportunity for us is in fraud reduction at large. The administration's efforts to reduce fraud, waste, and abuse fall into areas we can help solution. For example, we have proven in our AI project in collaboration with Microsoft in our payment card business that we can drastically reduce fraud by increasing fraud detection before it happens. We increased fraud detection rates and account takeover efforts by 150%. Those in the Government Accountability Office are focused on fraud in government programs like Medicaid and SNAP. We believe there are value-added services around account takeover fraud prevention and strengthening eligibility determinations using this address verification AI tool. There are almost 42 million SNAP recipients in this country, representing roughly 12% of the population notwithstanding administrative costs. When fraud occurs, generally, the recipients suffer the monetary loss, not the government. We intend to help solve this problem with EBT chip cards and other fraud prevention capabilities being rolled out in our new card platform. We've now stood up a fraud prevention line of business where we intend to attack these problems in concert with administration efforts. Let me close by saying we're at a strategic inflection point in the following ways: our renewed portfolio rationalization plan, leveraging government opportunities, new go-to-market program in the commercial space, congestion management programs, tap-and-go and new fare gates and new fraud reduction business and more. Meanwhile, our 55,000 associates work hard every day to make Conduent the best in quality and efficiency across our technology and business processing outsourcing landscape. We have a strong suite of technology solutions that when coupled with our hard-working and dedicated associates provide outstanding results for our clients and their end users. In all cases, we want to be the best. Along the way, we intend to hit those 2025 exit rate marks and build the confidence we need in our current and potential investor base. Thank you for listening today. That concludes our program. And I'll now turn it over to the operator for questions.

Our first questions come from Pat McCann with NOBLE Capital. Please go ahead with your questions.

Hi, thanks for taking my questions. Congrats on the quarter and a real quick congrats to Giles on taking over as CFO.

Thanks, Pat.

Absolutely, Giles. And my first question had to do with what you were just talking about, Cliff, with regard to the government business. I understand, like what you said that much of your government business is at the state and local level albeit some of that flows from the federal government from federal programs. So I guess I'm wondering if you could give a little bit more detail as far as how some of these aspects of the push for efficiency in the government actually lead to an opportunity for you in that space rather than a detriment to your business there. Maybe I'll leave it at that for now.

It's a good question, Pat. There are two ways to answer it. A lot of federal funds for entitlements are distributed through the states, and both Congress and the President have indicated they won't interfere with entitlements. The administrative costs for the states present an opportunity for us. For instance, with SNAP, we have 21 states distributing food stamps, and we do not see that diminishing. Sixteen of those states have summer SNAP programs, most of which have been renewed. These funds are federal, but administrative costs are shared between the states and the federal government. Reviews are ongoing, but indications are that these programs will remain untouched. The opportunity lies in managing issues like fraud. The administration has acknowledged fraud, including individuals receiving Medicare benefits improperly and those obtaining unemployment insurance they shouldn't. Our opportunity is to identify those individuals who shouldn't be receiving these benefits and assist the states in resolving these issues, for which we will be compensated. We see this as potential growth. Regarding fraud, we've investigated address takeover fraud within our payment business and discovered many duplicate addresses leading to fraudulent payments. We anticipate similar fraud patterns with individuals receiving Medicaid benefits improperly due to duplicate addresses, which is a revenue opportunity for us. Additionally, there have been reports about MCOs being paid twice for the same Medicaid member because people don’t update their addresses when they move. These MCOs are receiving federal funds they don't rightfully deserve. Although they attempt to return excess funds, this represents another area where we can help uncover situations where the federal government is overpaying states or MCOs. This outlines our approach to addressing the problem.

Great. Thanks. And then I also wanted to touch on the cyber event. Could you say a little bit more about what actually happened, and I'm getting the sense you guys are pretty much maybe through it. Can you touch on that as well as is pretty much behind you now?

Well, look, all the costs of the cyber event are already baked into our P&L. And so that's number one. Number two is there was essentially no operational impact, virtually no operational impact to the cyber event. We were, in some cases, only down for a couple of hours. The environment was restored almost immediately. The issue we're dealing with is the records issue. How much PII and PHI, if any, has been exfiltrated? And that's a very complex process that we're underway with now with our clients. And so, yes, the event is behind us. All the aspects of what happened are behind us, all the protections and the vulnerabilities, if there were any were mitigated, but the examination of the data is still underway, and that's why we've put the reserve into the mix.

Great. Thanks so much. I will leave it there and jump back in the queue. Thanks a lot.

Thank you. Our next questions come from the line of Chris Sakai with Singular Research. Please proceed with your questions.

Yes. Hi, good morning. I'm in for Joichi. Given your progress in AI-driven solutions like fraud prevention and Gen AI assistance. Have you encountered any regulatory hurdles and deployment, particularly in sensitive government or healthcare applications?

Chris, we really haven't. We're using AI in a couple of different ways, much of it in the commercial space. But as I previously mentioned, with respect to fraud, we're also using it in the government space, primarily around fraud. In the commercial space, we use it for language smoothing, language translation, IVR enhancements, portal enhancements, and, as I said, for fraud reduction efforts in the public sector. But no, we really haven't encountered issues around privacy or mistakes from Gen AI. And we're not using it as a replacement for people. We're still heavily reliant on people, and where we're in the people business, we continue to see the same amount of need for people in the complex environments. And AI is not really and doesn't appear to be a substitute for that. So the answer to your question directly is no. We have not seen any regulatory hurdles in the way.

Okay, thanks for that. And you mentioned that your business is relatively insulated from macroeconomic and geopolitical shocks. Are there any less obvious second order effects such as shifts in client procurement cycles or changes in government funding priorities that you're monitoring closely?

We're not really experiencing that, Chris. I can tell you that what Giles and I mentioned was the one area of slight vulnerability for us is in our transportation business, transit specifically where we buy and deploy equipment for fare gates and the like. Most of that business is international country to country as opposed to international to the U.S. or China to the U.S. There's a little bit of transit business in the U.S., but very small in the grand scheme of things. So we're not really vulnerable to the tariff situation. With respect to other government programs, one of the decisions Congress made yesterday was that the Fed matching rate for Medicaid technology and technology implementations, where the federal government supplies 90% of the funding for all those implementations and technology in the Medicaid space at the state level, will not be touched. So we're not really feeling any hurdles to the progress that Giles laid out. In fact, as I mentioned, we see real opportunities.

I think the other piece, Chris, is that we maintain close relationships and close communication with our state and local government clients as well, so that we know what's going on with them and how we can support and help them as things move forward.

Okay, great. And then last for me, what criteria are you using to identify assets for divestiture, and how do you plan to balance future proceeds between debt reduction, reinvestment, and potential shareholder returns?

Let me take the first part of it, and the second part, I'll turn it over to Giles. Look, we've said all along that the secret sauce is to figure out how we can be not as wide or as diverse and be more focused on synergies and growth capabilities internally. By the same token, we believe there are synergies and scarcity value on the outside for some of our assets. And so the test we've put in place is where the scarcity values value opportunities. Where are the maximum multiples we can get if we look to divest? And versus what we can do internally with those same resources, and we've identified what we see as another roughly $350 million of opportunity along that process flow that we intend to pursue in 2025. But Giles, why don't you comment.

Yes. I think on the capital allocation side, it will be similar to the first phase. We will continue to maintain a balanced approach, as we only have $85 million of debt left on Term A. We will also keep making internal investments, which is what we did during Phase 1. If you look at some of the internal investments we've made, such as those related to AI, increasing capacity in some international delivery centers, and investments in our GHS Medicaid modularization platforms, as well as what we've done with our vector platform to support the New York congestion management pricing, it's clear we've invested significantly but been careful with how we allocate capital internally. You can expect to see similar characteristics in our capital allocation as we did in the first phase of the rationalization plan.

Okay, great. Thanks for the answers.

Chris, just one last point. Importantly, to follow on Giles' point, what it really provides for us is a remaining portfolio that's more nimble, easier to manage, lower costs in the center, and higher growth rates. That's the bottom line on where we want to land.

Thank you. Our next questions come from the line of Marc Riddick with Sidoti. Please proceed with your question.

Hi. Good morning.

Hi, Marc.

So first of all, congratulations both to Giles and David for the changes there and certainly look forward to continuing working with you there. Just wondering if you could start a little bit on the opportunity set and kind of dovetail the comment, Giles, is around the connection you state and local contacts and what have you. Maybe you could shed a little bit as to maybe what you're hearing from them and how that ties into the opportunities that you're seeing? I mean maybe it's a little early, but I was wondering if you're getting much in the way of feedback from your state and local contacts to the headlines and maybe what areas are taking the lead as far as priority of concern there?

It's a mixed situation, Marc. Some states are more progressive in collaborating with the administration to identify fraud and lower disbursement costs, while others are taking a more cautious approach. There are varied responses across states, though they all seek efficiencies. There’s a specific focus on improving the administration of federal funds, with details differing by state. For instance, a governor recently reached out asking for assistance with SNAP or food stamp fraud, as those affected by fraud are often the recipients of these funds. There are many cases of card schemes or address takeovers, causing frustration among states because their constituents are suffering losses from unreplenished funds. Utah is an example of a state actively working to improve with our new card platform featuring chip cards and fraud prevention tools. However, while some states are proactive, others are holding back to see how things develop. The $1 trillion cost reduction target is progressing slower than anticipated, with only about $155 billion of the $2 trillion reductions achieved thus far, leading to a cautious outlook among some states.

Thank you for that. I was wondering if you could discuss the year-over-year increase in new business wins and the factors driving that growth. Additionally, can you provide an update on the efforts to gain a larger share of customer spending? Was that initiative part of the new business wins, and what are your expectations for it moving forward?

Yes, Marc, I think there's a couple of things there. I think one is we've invested wisely in new talent in our sales organization with some element of new structure with client partners and getting closer to the clients and really driving more new capability opportunities through that group. And the second is some of the investments that we're making that we've discussed earlier around Medicaid and increasing the seat capacity out in some of our delivery centers. We're filling those up. Clients are still looking to us to help them solve some of their cost issues. And we continue to see that into the second quarter as well. So I think Q1, we were off to a relatively good start. Q2, we should be a little stronger, and we'll see that continue throughout the year.

And Marc, as I've mentioned before, new business can be categorized in three ways: acquiring new clients, providing new capabilities to existing clients, and generating additional volume from the same capabilities. This additional volume usually comes from our account management teams and has been fairly consistent, though some quarters have performed better than others. In Q1, we observed promising trends, and I anticipate even stronger performance in Q2, particularly regarding new clients and new capabilities. We are focusing on expanding our share of wallet, aiming for about 1.6 products per client in the commercial sector, and we believe this should ideally be doubled. That's why we have invested significantly in our client partner strategy, allowing client partners and enterprise sales executives to explore opportunities within our current client base. Many healthcare clients in the market are already with us, creating further expansion opportunities through our client partner and enterprise sales teams. We are just beginning this journey. While Q1 was a solid quarter for acquiring new clients, we recognize the need to increase this effort since new clients are vital for our future growth. Without attracting new clients, we won't have additional opportunities available. We're very focused on this and expect to see meaningful progress in Q2 and even more in the latter half of the year.

I just wanted to confirm that the leverage was at 2.7x at the end of the quarter, and with the $50 million received in April, that amount has already decreased from where it was at the end of the first quarter, correct?

Yes, that's correct, Marc. And we should see that net leverage can come down as the adjusted EBITDA for Q2, Q3, Q4 starts to increase with the cost efficiency programs that we've got going on. So, as I said, I think we'll see it trend towards more kind of 1.5 turns as we think about the second half of the year. And then as we exit 2025, we're targeting that 1 turn that we always put out there as a target.

A lot of those cost efficiency efforts, Marc, as you know, have lag effects to them. So that's the benefit we're going to see in the back half of the year.

Excellent. Thank you very much.

Thanks, Marc.

Thank you. We have reached the end of our question-and-answer session. And with that, we'd like to bring the call to a close. We do thank you for your participation. We wish you a great day. You may now disconnect.