Unisys ((UIS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Unisys Corporation’s recent earnings call painted an overall optimistic picture, highlighted by significant growth in new business total contract value (TCV) and improved cash flow projections. Despite challenges in some areas such as Digital Workplace Solutions and Cloud Applications and Infrastructure Solutions, the company expressed confidence in its future growth, buoyed by strong client and analyst recognition.
Strong Sequential Revenue Growth
The fourth quarter for Unisys saw a robust 10% sequential revenue growth, both as reported and in constant currency. This growth contributed to a non-GAAP operating margin of 11.6%, demonstrating the company’s effective cost management and operational efficiency.
Improvement in Free Cash Flow
Unisys reported a notable improvement in free cash flow, with pre-pension free cash flow nearly doubling to $82 million in 2024. The outlook for 2025 is even more promising, with projections of approximately $100 million, indicating a strong financial position and improved liquidity.
Record New Business TCV
The company achieved record new business TCV in the fourth quarter, approximately $220 million, reflecting a 24% increase from the previous year. For the full year, TCV reached approximately $790 million, up 29% from 2023, showcasing Unisys’s success in securing new contracts.
Positive Client and Analyst Recognition
Unisys received commendations from major firms such as Avasant, IDC, ISG, Everest, and NelsonHall, securing 16 leader designations across multiple service areas. This recognition underscores the company’s expertise and reputation in the industry.
Rising License and Support Revenue Expectations
The company has raised its License and Support (L&S) revenue expectations to approximately $390 million in 2025 and $400 million in 2026, with an average expected gross margin of about 70%. This reflects the company’s confidence in its ability to generate consistent revenue from its existing and future offerings.
Decline in Digital Workplace Solutions Revenue
The Digital Workplace Solutions segment experienced an 8.2% decline in revenue year-over-year for the fourth quarter, with a full-year decline of 4.2%. This highlights an area where the company faces challenges and may need to strategize for recovery.
Challenges in Cloud Applications and Infrastructure Solutions
Revenue from Cloud Applications and Infrastructure Solutions fell by 5.2% year-over-year in the fourth quarter, impacted by lower third-party technology revenues and project volume timing. Addressing these challenges will be crucial for future growth in this segment.
Impact of Legal and Environmental Costs
Unisys resolved several legal matters in 2024 that had previously hampered cash flow. This resolution is expected to alleviate financial pressure and contribute positively to future cash flow.
Forward-Looking Guidance
Looking ahead, Unisys is optimistic about 2025, anticipating a pre-pension free cash flow of around $100 million. The company has increased its L&S revenue forecasts to $390 million in 2025 and $400 million in 2026, with a gross margin of approximately 70%. Continued growth in new business TCV is expected, with a 24% increase noted in the fourth quarter and a 29% rise for the full year compared to 2023.
In conclusion, Unisys Corporation’s earnings call reflected an optimistic outlook, primarily driven by growth in new business TCV and improved cash flow projections. Despite facing declines in certain segments, the company remains confident in its strategic initiatives and market positioning, supported by strong client and analyst recognition. Investors and market observers will be keen to see how Unisys navigates both the opportunities and challenges in the coming year.
