Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unisys Corp (UIS, Financial) achieved a 25% year-over-year increase in new business signings for the first half of 2024, indicating strong market demand for its solutions.
- The company reported a significant improvement in Ex-L&S gross margin, with a 350-basis point increase over the prior year, positioning it well for future profitability.
- Unisys Corp (UIS) has successfully signed more than three times the new logo TCV in the first half of 2024 compared to all of 2023, showcasing effective sales and marketing strategies.
- The company is experiencing strong growth in its Digital Workplace Solutions (DWS) and Cloud Applications & Infrastructure (CA&I) segments, driven by new business signings and recurring managed services.
- Unisys Corp (UIS) is leveraging AI and machine learning to enhance client solutions, with promising opportunities in AI-related consulting and data services, indicating a forward-looking approach to technology integration.
Negative Points
- Unisys Corp (UIS) reported a net loss of $12 million in the second quarter of 2024, although this was an improvement from the previous year's loss.
- The company's free cash flow was negative $19 million in the second quarter, primarily due to the timing of L&S collections, indicating cash flow challenges.
- Excluding license and support, the company's revenue was flat year-over-year, highlighting potential challenges in revenue growth outside of its L&S segment.
- The overall pipeline declined 7% quarter over quarter, driven by timing issues and strong conversion of new logo opportunities, which may impact future growth.
- Unisys Corp (UIS) faces ongoing legal and environmental costs, although these are expected to decline in the coming years, they currently impact cash flow and profitability.
Q & A Highlights
Q: Is the positive mix shift in margins a lasting factor, or is it unique to this year?
A: Peter Altabef, Chair and CEO, explained that the positive mix shift is enduring. The company is seeing margin improvements across both traditional and next-generation businesses. Mike Thompson, President and COO, added that strong pricing power and improved delivery in traditional business are contributing to this positive trend.
Q: Are environmental and legal costs expected to drop by 50% or more, as previously indicated?
A: Peter Altabef confirmed that the outlook remains unchanged, with significant reductions expected. Debra McCann, CFO, reiterated that these reductions are crucial for improving free cash flow conversion, with a 50% reduction anticipated by 2026.
Q: Can you provide insights into the AI and machine learning work with a restaurant client and its potential scale?
A: Peter Altabef noted that the project is moving towards production with a significant client, indicating potential for substantial scale. Mike Thompson highlighted the data-rich environment and the project's North American scope, suggesting significant future opportunities.
Q: What percentage of new business signings include a generative AI component, and how is AI integrated into your services?
A: Peter Altabef stated that AI, including both generative and traditional AI, is infused throughout the company's solutions. While specific revenue from generative AI isn't tracked separately, AI is a core part of their service offerings.
Q: How do you view the competitive environment and your pricing power?
A: Peter Altabef mentioned that Unisys is maintaining its estimated gross margins and differentiating itself in the market. The company is successfully charting its own path, focusing on its unique identity and solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
