Unisys ((UIS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Unisys Corporation painted a balanced picture of the company’s current financial health and future prospects. While there were notable improvements in operating profit margin guidance and increased revenue expectations in the License and Support (L&S) segment, challenges such as revenue decline and pricing pressures from competitors were also highlighted. The company is navigating through a complex landscape with both opportunities and hurdles, particularly in the public sector affected by the U.S. government shutdown.
Increased Non-GAAP Operating Profit Margin Guidance
Unisys has shown confidence in its ability to meet or exceed the midpoint of its improved non-GAAP operating profit margin guidance, set between 8% and 9%. This positive outlook reflects the company’s strategic initiatives to optimize operations and enhance profitability, despite the competitive pressures it faces.
Improved L&S Revenue Expectations
The company is on track to surpass its original expectations for the License and Support segment, with projected revenues of $430 million for the current year. This figure is $40 million above the initial forecast, indicating strong performance and demand in this area.
Significant U.S. Pension Liability Reduction
In a significant financial maneuver, Unisys executed an annuity purchase in September, successfully removing over $300 million of U.S. pension liabilities. This move represents a substantial step towards achieving its target of reducing $600 million in pension liabilities by the end of 2026.
15% Increase in Total Contract Value
Unisys reported a robust 15% year-over-year increase in total contract value, driven by strong renewals outside of the L&S segment. This growth underscores the company’s ability to secure and maintain valuable contracts, contributing positively to its financial outlook.
Strong Industry Recognition
The company has earned significant accolades, being recognized as a leader in cloud services and cybersecurity. Additionally, Unisys was featured in Time Magazine’s 2025 list of the World’s Best Companies, enhancing its reputation and industry standing.
Revenue Decline
Despite these positive developments, Unisys faced a 7.4% decline in third-quarter revenue year-over-year, or 9% in constant currency. This decline highlights the challenges the company faces in maintaining revenue growth amidst a competitive and evolving market.
Impact of U.S. Government Shutdown on Public Sector
The recent U.S. government shutdown has introduced uncertainty around federal funding, leading to a slowdown in the public sector. This has particularly impacted the company’s Cloud Applications and Infrastructure Solutions revenue, posing a challenge to its growth in this segment.
Pricing Pressure
Unisys is experiencing aggressive pricing tactics from competitors, who are undercutting prices based on optimistic assumptions about AI-related efficiencies. This competitive landscape presents a challenge to maintaining market share and profitability.
Forward-Looking Guidance
Looking ahead, Unisys remains optimistic about its financial trajectory. The company expects to meet or exceed its improved non-GAAP operating profit margin guidance and generate $110 million of pre-pension free cash flow for the full year. It has already met its increased L&S revenue expectations for 2025 and projects an average of $400 million in annual L&S revenue from 2026 through 2028. Despite revenue headwinds, Unisys is committed to delivering on its profit and free cash flow priorities while continuing to innovate and optimize operations.
In summary, Unisys Corporation’s earnings call reflects a company that is navigating through both opportunities and challenges. While there are positive strides in profit margins and industry recognition, the company faces hurdles such as revenue decline and competitive pricing pressures. The forward-looking guidance suggests a cautious optimism, with a focus on maintaining profitability and operational efficiency in the coming years.