Unisys Earnings Call: Mixed Sentiment Amid Growth and Challenges

Unisys ((UIS)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Unisys Corporation presented a mixed sentiment, reflecting both optimism and caution. The company celebrated significant achievements in new business growth and partnerships, alongside improvements in cash flow. However, these positive developments were tempered by notable revenue declines and challenges in specific segments, exacerbated by macroeconomic uncertainties.

Significant Growth in New Business TCV

Unisys reported a remarkable increase in new business Total Contract Value (TCV), reaching $337 million in the first quarter. This figure represents a more than 50% sequential rise and an over 80% year-over-year increase, primarily driven by the acquisition of new logos.

DSS Contract Wins

The company secured a major new logo win with a global technology supplier, providing quarterly procurement and services for 380,000 devices across 14 countries. Additionally, Unisys signed a DSS contract with a biotech client, covering over 21,000 devices globally.

Recognition and Partnerships

Unisys achieved ‘disrupter’ status in AI services according to Avasant and was named a leader in attack surface management by NelsonHall. The company also reached titanium partner status with Dell, highlighting its strong industry partnerships and recognition.

Strong Pre-Pension Free Cash Flow

The first quarter saw a pre-pension free cash flow of $23 million, marking an $11 million increase year-over-year. This improvement was largely attributed to better working capital dynamics.

Improvement in Operating Expenses

Operating expenses declined by approximately $16 million year-over-year, with Selling, General and Administrative (SG&A) expenses down nearly 14% from the previous year.

Revenue Decline

Unisys experienced a revenue decline in the first quarter, with total revenue at $432 million, down 11.4% year-over-year. This was primarily due to the timing of Ex-L&S renewals.

DWS Segment Challenges

The Digital Workplace Solutions segment faced challenges, with revenue declining 7.5% year-over-year to $119 million in the first quarter, attributed to lower field service volumes and reduced discretionary project work.

CA&I Segment Revenue Decline

The Cloud, Applications & Infrastructure Solutions segment also saw a revenue decline of 3.3% year-over-year, reaching $177 million, due to lower volumes with existing clients and anticipated scope reductions in traditional infrastructure.

Impact of Macroeconomic Factors

Macroeconomic factors led to delayed client decision-making, affecting the timing of new business signings and in-year revenue generation.

Low Non-GAAP Operating Margin

The first quarter non-GAAP operating profit margin was reported at 2.8%, a decrease from 7.1% in the prior period. This was due to low Ex-L&S revenue resulting from the timing of client contract renewals.

Forward-Looking Guidance

Unisys reiterated its full-year guidance for constant currency revenue growth and non-GAAP operating profit margin. The company expects enhanced delivery operational efficiencies and increased license and support revenue, aiming for profitability above the midpoint of the guidance range. With a strong backlog of $2.9 billion and a pre-pension free cash flow target of approximately $100 million, Unisys anticipates sequential revenue improvement throughout the year.

In summary, the Unisys earnings call highlighted a balanced view of the company’s current performance and future prospects. While there are significant achievements in new business growth and partnerships, challenges remain in revenue generation and segment-specific issues. The company’s forward-looking guidance suggests a positive outlook, with expectations for improved operational efficiencies and revenue growth.