Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unisys Corp (UIS, Financial) achieved strong growth in new business total contract value (TCV), driven by sustained momentum in new logos.
- The company expects enhanced delivery and operational efficiencies to provide a path above the midpoint for profitability guidance.
- Unisys Corp (UIS) has a significant pipeline of device subscription services (DSS) opportunities, with new contracts signed in the quarter.
- The company launched its first post-quantum cryptography solution, expanding its security portfolio.
- Unisys Corp (UIS) was recognized as a leader in attack surface management and achieved titanium partner status with Dell, enhancing its market presence.
Negative Points
- First quarter revenue was down 11.4% year over year, primarily due to Ex-L&S renewal timing.
- The company's non-GAAP operating profit margin decreased to 2.8% from 7.1% in the prior period.
- There is ongoing macroeconomic and geopolitical uncertainty, including tariffs and trade restrictions, affecting client decision-making.
- The company experienced lower discretionary volumes in the Digital Workplace Solutions (DWS) and Cloud Applications & Infrastructure (CA&I) segments.
- Unisys Corp (UIS) reported a net income loss of $30 million for the first quarter.
Q & A Highlights
Q: Can you elaborate on the factors driving the Ex-L&S revenue upside, and how much of it is due to improved volumes versus earlier than expected renewals?
A: Mike Thomson, CEO and President, explained that the Ex-L&S volume has been consistently increasing due to data usage, repatriation in the market, and AI efforts requiring more data. This platform is a significant data source, leading to increased consumption. Additionally, there have been longer contract extensions, indicating a strong client commitment. The company is confident in the Ex-L&S ramp for the rest of the year, with growth and margin improvements expected as most revenue is embedded in the backlog.
Q: What are the sequential growth assumptions for Ex-L&S and LNF in 2025?
A: Mike Thomson stated that they expect sequential growth every quarter, with increases in Q2, Q3, and Q4. The growth is supported by backlog and pipeline visibility, with an uptick in field services volumes, particularly in higher-margin infrastructure work. The Ex-L&S component is expected to have a 35% front half and 65% back half split, with significant contracts in Q4 contributing to 2026 cash flow.
Q: Are you positioned to benefit from AI-related data center build-outs and maintenance?
A: Mike Thomson confirmed that Unisys is well-positioned to benefit from AI-related data center activities. The company has been investing in training and hiring in anticipation of revenue from OEM contracts signed last year. The enterprise storage work began in March and is expected to continue ramping up.
Q: How confident are you in achieving your 2026 targets given the current macroeconomic uncertainties?
A: Mike Thomson expressed confidence in meeting the 2026 targets, as outlined in their 2023 investor day. Despite some macroeconomic uncertainties, the company has not seen significant hesitation from customers, and the pipeline and backlog are growing, indicating strong demand for their solutions.
Q: Are there any strategic changes under your leadership, and how do you assess the quality of your pipeline and backlog?
A: Mike Thomson stated that the strategy remains consistent, focusing on market awareness, solution distinction, and associate development. The pipeline and backlog are strong, with no need for culling. The company has a rigorous qualification process, and the pipeline is more mature, indicating a higher likelihood of closing deals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
