Company: CNDT
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001677703-25-000152
Chunk: 7

Company: CONDUENT Inc
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 2
Chunk 7
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 the nine months ended September 30, 2025 was (3.4)%, compared to 25.2% for the nine months ended September 30, 2024. The September 30, 2025 rate was lower than the U.S. statutory rate of 21%, primarily due to valuation allowances and geographic mix of income.

The effective tax rate for the nine months ended September 30, 2024 was higher than the U.S. statutory rate of 21%, primarily due to state and local taxes and geographic mix of income, partially offset by a favorable permanent difference on gain from divestitures, tax benefit from valuation allowances and audit settlement reserve releases. 

Excluding the impact of amortization, restructuring, divestiture, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for the nine months ended September 30, 2025 was 29.0%. The normalized effective tax rate for the nine months ended September 30, 2024 was 19.7%, primarily due to excluding the impact of the gain from divestitures, restructuring costs, amortization of intangible assets, litigation reserve releases, audit settlement reserve release, valuation allowance and other discrete tax items.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBA") was signed into law in the U.S. The legislation contains certain provisions related to the full expensing of U.S. research and development costs and other depreciable property. The legislation also includes changes to the determination of the amount of U.S. interest expense that is deductible for U.S. tax purposes. The acceleration of deductions as a result of anticipated elections the Company will make for the current year following the OBBA has increased current year forecasted net operating loss ("NOL"). The NOL has created a deferred tax asset that required a valuation allowance for U.S. GAAP purposes that was increased in the third quarter of 2025. The NOL may carryforward indefinitely. 

In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax, known as Pillar Two. This alternative minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on our financial results of operations for the current period. We continue to monitor legislative developments, as well as additional guidance from countries that have enacted legislation.

Operations Review of Segment Revenue and Profit

Our financial performance is based on Segment