CONDUENT IncCNDT
CONDUENT Inc Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets, Net
Goodwill
The following table presents the changes in the carrying amount of goodwill, by reportable segment:
| (in millions) | Commercial | Government | Transportation | Total | ||||||||||||||||||||||
| Balance at December 31, 2022 | $ | 287 | $ | 611 | $ | 57 | $ | 955 | ||||||||||||||||||
| Foreign currency translation | — | 12 | 6 | 18 | ||||||||||||||||||||||
| Impairment | (287) | — | — | (287) | ||||||||||||||||||||||
| Assets Held For Sale | — | — | (35) | (35) | ||||||||||||||||||||||
| Balance at December 31, 2023 | $ | — | $ | 623 | $ | 28 | $ | 651 | ||||||||||||||||||
| Foreign currency translation | — | (14) | — | (14) | ||||||||||||||||||||||
| Impairment | — | — | (28) | (28) | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | — | $ | 609 | $ | — | $ | 609 | ||||||||||||||||||
| Gross goodwill | $ | 2,198 | $ | 1,363 | $ | 608 | $ | 4,169 | ||||||||||||||||||
| Accumulated impairment | (2,198) | (754) | (608) | (3,560) | ||||||||||||||||||||||
| Balance at December 31, 2024 | $ | — | $ | 609 | $ | — | $ | 609 | ||||||||||||||||||
2024 Impairment Testing and Impairment Charge
The Company performed its annual goodwill impairment test as of October 1, 2024 for the Government and Transportation reporting units. This testing did not identify any goodwill impairment for the Government reporting unit and, accordingly, no impairment charge was recorded. However, the testing identified a $28 million goodwill impairment for the Transportation reporting unit, which was primarily due to a reduction in projected cash flows from new customer contract signings and increased delivery costs. This represents a full impairment of goodwill for the Transportation reporting unit.
2023 Impairment Charge
In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase Agreement") to transfer its BenefitWallet Portfolio, which was reported within the Company’s Commercial segment. Since the Purchase Agreement did not represent a disposition of a business, no goodwill was allocated to the BenefitWallet Portfolio related to this transaction.
Consequently, the Purchase Agreement was identified as a triggering event for the Commercial reporting unit that required the Company to evaluate goodwill for impairment. This evaluation resulted in a full impairment of the Commercial reporting unit's goodwill, totaling $287 million. The impairment charge was primarily driven by the Purchase Agreement and was recognized in the third quarter of 2023.
The fair values of the goodwill impairment charge were estimated based on a determination of the implied fair value of goodwill, leveraging the results from the Income Approach and Market Approach, and are designated as level 3 of the fair value hierarchy.
In connection with the Commercial reporting unit impairment assessment, the Company first performed a recoverability assessment of long-lived assets and concluded that such assets were not impaired.
2022 Impairment Charge
In the fourth quarter of 2022, the Commercial reporting unit experienced lower than expected new customer contract signings, and an unexpected softening of the future business pipeline for certain solutions. Management believed these were driven by macroeconomic conditions present in the fourth quarter of 2022. The combination of these factors led management, in December 2022, to review the Commercial reporting unit and further evaluate the portfolio. These factors triggered the need for management to perform an interim goodwill impairment assessment for this reporting unit as of December 31, 2022, which resulted in a pre-tax impairment charge of $358 million.
Intangible Assets, Net
Net intangible assets were $14 million at December 31, 2024, substantially all of which is recorded in the Company's Commercial segment. Intangible assets were comprised exclusively of Customer relationships as follows:
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||
| (in millions, except years) | Weighted Average Amortization | Gross Carrying Amount | Accumulated Amortization | Net Amount | Gross Carrying Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||||||||||||||||
| Total Intangible Assets | 14 years | $ | 36 | $ | 22 | $ | 14 | $ | 85 | $ | 53 | $ | 32 | |||||||||||||||||||||||||||||||
In 2024, intangible assets with a net book value of $13 million were divested in connection with the sale of the Casualty Claims Solutions business. Amortization expense related to intangible assets was $5 million, $7 million and $13 million for the years ended December 31, 2024, 2023 and 2022, respectively. Amortization expense is expected to approximate $3 million in 2025, $2 million in 2026, $2 million in 2027, $1 million in 2028 and $1 million in 2029.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 19, 2025 | Showing above |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 10, 2017 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.