Core Insights - Unisys has been recognized as a Leader in Avasant's End-User Computing Services 2025-2026 RadarView for the third consecutive year, highlighting its strength in delivering end-user computing services that enhance user experience and drive business results [1] Group 1: Recognition and Ratings - Unisys received five-star ratings in both practice maturity and future proofing, indicating a strong position in the end-user computing services domain [1] - The Avasant report recognizes 29 providers through a detailed methodology focusing on practice maturity and future proofing, which includes a partner ecosystem and investments in innovation [1] Group 2: Service Innovations - Unisys enhances end-user support through generative AI, integrating AI-driven service desks, automated knowledge curation, conversational chatbots, and guided troubleshooting [1] - The company collaborates with partners on marketing initiatives, focusing on mid-market enterprises, including state and local governments, education, and clients in Latin America and Asia-Pacific [1] Group 3: Technology Solutions - Unisys provides persona-based virtual desktops powered by a hybrid data center and cloud-native platforms, offering cost predictability and AI-driven performance optimization [1] - The Intelligent PC Refresh solution uses real-time device health and performance insights to maximize device value and enable smarter lifecycle management [1] Group 4: Market Trends - Enterprises are rethinking end-user computing strategies to support hybrid work, address rising device complexity, and cope with cost pressures, aligning with Unisys's offerings [1] - Unisys's capabilities in Intelligent PC Refresh and device-as-a-service utilize real-time telemetry and analytics to optimize refresh cycles and improve asset utilization [1]

Company Overview - Unisys Corporation (UIS) has experienced a significant decline in stock price, down nearly 60% since the last analysis [1] Business Operations - The company focuses on maintaining core systems for large institutions while also assisting in the management and modernization of their IT environments [1]

Financial Performance - The company reported a net loss of $339.8 million, or $4.79 per diluted share, in 2025, compared to a net loss of $193.4 million, or $2.79 per diluted share, in 2024 [195]. - Revenue for 2025 was $1,950.1 million, a decrease of 2.9% from $2,008.4 million in 2024, primarily due to lower client volume in the Digital Workplace Solutions (DWS) and Cloud, Applications & Infrastructure Solutions (CA&I) segments [179]. - License and Support (L&S) revenue decreased by 0.8% to $428.1 million in 2025 from $431.5 million in 2024 [180]. - Excluding License and Support (Ex-L&S) revenue fell by 3.5% to $1,522.0 million in 2025 from $1,576.9 million in 2024 [181]. - Gross profit for 2025 was $549.3 million, with a gross profit margin of 28.2%, down from $585.9 million and 29.2% in 2024 [184]. - Operating profit decreased to $78.5 million in 2025 from $97.4 million in 2024, largely due to increased goodwill impairment charges [187]. Cost and Expenses - The company recognized net cost-reduction charges of $30.5 million in 2025, compared to $18.0 million in 2024, primarily related to workforce reductions [182]. - Interest expense rose to $53.4 million in 2025 from $31.9 million in 2024, attributed to a higher long-term debt balance and interest rates [188]. - Cash used for operating activities in 2025 was $140.0 million, a decline from cash provided by operations of $135.1 million in 2024, mainly due to contributions to defined benefit pension plans [212]. - Cash pension plan contributions totaled $343.7 million in 2025, including a discretionary contribution of $250 million to U.S. defined benefit pension plans [236]. - For the year ended December 31, 2025, the company recognized pension expense of $308.3 million, an increase from $182.8 million in 2024, with expectations of approximately $120 million for 2026 [260]. Revenue Segmentation - DWS revenue was $508.4 million in 2025, down 2.9% from $523.5 million in 2024, with a gross profit margin of 14.5% [198]. - CA&I revenue decreased by 4.1% to $732.8 million in 2025 from $764.4 million in 2024, while ECS revenue remained relatively flat at $628.9 million [199][201]. Debt and Financing - Total debt increased to $741.7 million at December 31, 2025, compared to $493.2 million at December 31, 2024 [215]. - The company completed a private placement offering of $700.0 million aggregate principal amount of the 2031 Notes in June 2025 [216]. - Cash provided by financing activities was $186.0 million in 2025, compared to cash used for financing activities of $18.1 million in 2024 [214]. - The Amended and Restated ABL Credit Facility provides for revolving loans and letters of credit up to an aggregate amount of $125.0 million [228]. - Availability under the credit facility was $92.2 million, net of letters of credit issued, as of December 31, 2025 [229]. Pension and Retirement Obligations - The company purchased a group annuity contract for approximately $316 million to transfer projected benefit obligations related to about 3,150 retirees, resulting in a pre-tax settlement loss of $227.7 million for the year ended December 31, 2025 [235]. - The company expects future total cash contributions to its global defined benefit pension plans of approximately $87 million in 2026, $105 million in 2027, and approximately $241 million from 2028 through 2030 [238]. - The discount rate for U.S. defined benefit pension plans was determined to be 5.73% at December 31, 2025, a decrease of 36 basis points from the previous year [256]. - The expected long-term rate of return on U.S. plan assets is assumed to be 4.85% for 2026, with a change of 25 basis points affecting pension expense by approximately $3 million [257]. - The calculated value of plan assets for U.S. qualified defined benefit pension plans was $1,351 million, while the fair value was $1,301 million at December 31, 2025 [257]. Goodwill and Impairment - The company conducted a quantitative goodwill impairment assessment for the DWS reporting unit, resulting in a goodwill impairment charge of $55.0 million due to the carrying value exceeding fair value [268]. - As of December 31, 2025, the carrying amounts of goodwill by reporting unit were $47.2 million for DWS, $54.5 million for CA&I, and $92.1 million for ECS, totaling $193.8 million [271]. - The CA&I reporting unit had a fair value in excess of book value, including goodwill, of 20% as of December 31, 2025 [269]. - The company continuously monitors macroeconomic conditions and market factors that could impact the fair value of reporting units, indicating potential for future non-cash impairment charges [270]. Cash and Liquidity - Cash and cash equivalents increased to $413.9 million at December 31, 2025, up from $376.5 million at December 31, 2024 [210]. - The company aims to manage interest rate risk by maintaining a balance between fixed and variable debt positions, with substantially all long-term debt at fixed rates as of December 31, 2025 [272]. Other Financial Obligations - The company had outstanding standby letters of credit and surety bonds totaling approximately $234 million related to performance and payment guarantees [243]. - Operating lease liabilities were $46.6 million, and finance lease liabilities totaled $41.2 million as of December 31, 2025 [241]. - The company expects to make payments of approximately $24.8 million in 2026 related to workforce reduction actions [242]. - The cumulative limitation on the utilization of certain tax attributes due to an ownership change is approximately $456 million as of December 31, 2025 [251]. Foreign Currency Exposure - The company is exposed to foreign currency exchange rate risks, primarily from currencies such as the Australian dollar and euro, which may adversely affect consolidated revenue and operating margins [274]. - The company ceased the use of foreign currency forward contracts in 2025, leading to expected increased volatility in its consolidated statement of income related to foreign currency denominated intercompany balances [275].

Financial Data and Key Metrics Changes - Fourth quarter revenue grew 5% year-over-year, resulting in a slight improvement in full year revenue projections, coming in above the revised midpoint [5] - Non-GAAP operating margin was 18% in the fourth quarter and 9.1% for the year, exceeding the top end of revised projections [5] - Full-year pre-pension free cash flow was $128 million, up 55% from the prior year, exceeding expectations [6] - Year-end cash balance increased to over $400 million, up almost $40 million year-over-year [6] - Net leverage improved to 2.8x compared to 3.0x at the end of 2024 [6] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue was $126 million in the fourth quarter, down 3.7% year-over-year, and $508 million for the full year, down 3.1% [24] - Cloud, Applications & Infrastructure Solutions (CA&I) revenue was $191 million in the fourth quarter, a decline of 4.1% year-over-year, and $733 million for the full year, down 4.8% [26] - Enterprise Computing Solutions (ECS) revenue was $237 million in the fourth quarter, up 14% year-over-year, and $629 million for the full year, relatively flat to 2024 [27] Market Data and Key Metrics Changes - Total company TCV was $2.2 billion for the full year, driven by strong growth in XLNS renewal signings and new scope bookings [29] - Trailing twelve-month book-to-bill was 1.1 times for the total company and 1.2 times for XLNS solutions [30] - Backlog at year-end was $3.2 billion, up 12% sequentially and 11% from the prior year [30] Company Strategy and Development Direction - The company continues to execute a consistent operating strategy, focusing on improved profitability and free cash flow [4] - Artificial intelligence (AI) is viewed as a long-term driver of demand for core solutions, with investments in solution development and delivery skills [14] - The company aims to capitalize on AI-related demand and strengthen partnerships to accelerate growth in XLNS solutions [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic headwinds impacting discretionary spending but remains optimistic about pipeline activity and client engagement [46] - The company expects a mid-single-digit decline in XLNS solutions for 2026, with a focus on adopting emerging technology within existing clients [46] - Management anticipates achieving positive XLNS revenue growth in 2027 based on current interactions with clients [48] Other Important Information - The company has reduced global pension deficits by $300 million-$450 million at year-end, improving near-term cash flows [7] - The company received significant recognition from Gartner, elevating its position in the Outsourced Digital Workplace Services Magic Quadrant [12] - The company was named to Forbes list of America's Best Midsize Employers in 2026 [13] Q&A Session Questions and Answers Question: How are AI and automated code modernization tools influencing the roadmap for ClearPath Forward? - Management believes that code modernization enhances the platform and will drive more demand for ClearPath Forward, viewing it as a positive development [51][52] Question: What is the outlook for bookings activity and the bookings mix for 2026? - Management indicates a strong backlog and expects a shift towards new scope expansion opportunities in the existing client base, with a focus on new logo expansion [58][60] Question: How does the company counter competitive pricing dynamics? - The company emphasizes value and quality in its go-to-market strategy, aiming to illustrate the value delivered to clients rather than competing solely on price [66][69]

Financial Data and Key Metrics Changes - Fourth quarter revenue grew 5% year-over-year, resulting in a slight improvement in full year revenue projections, coming in above the revised midpoint [5] - Non-GAAP operating margin was 18% in the fourth quarter and 9.1% for the year, exceeding the top end of revised projections [5][34] - Full-year pre-pension free cash flow was $128 million, up 55% from the prior year, exceeding expectations of $110 million [6][37] - Year-end cash balance increased to over $400 million, up almost $40 million year-over-year [6][38] - Net leverage improved to 2.8x compared to 3.0x at the end of 2024 [6][39] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue was $126 million in the fourth quarter, down 3.7% year-over-year, and $508 million for the full year, down 3.1% [24] - Cloud, Applications & Infrastructure Solutions (CA&I) revenue was $191 million in the fourth quarter, a decline of 4.1% year-over-year, and $733 million for the full year, down 4.8% [26] - Enterprise Computing Solutions (ECS) revenue was $237 million in the fourth quarter, up 14% year-over-year, and $629 million for the full year, relatively flat to 2024 [27] Market Data and Key Metrics Changes - Total company TCV was $2.2 billion for the full year, driven by strong growth in Ex-L&S renewal signings and new scope bookings [29] - Trailing twelve-month book-to-bill was 1.1x for the total company and 1.2x for Ex-L&S solutions [30] - Backlog at year-end was $3.2 billion, up 12% sequentially and 11% from the prior year [30] Company Strategy and Development Direction - The company continues to execute a consistent operating strategy, focusing on improved profitability and free cash flow while advancing its pension removal strategy [4] - Artificial intelligence (AI) is viewed as a long-term driver of demand for the company's solutions, with investments in solution development and delivery skills to capitalize on it [14][16] - The company aims to leverage AI to enhance service delivery and streamline IT operations, with a focus on partnerships with hyperscalers to promote AI adoption [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic headwinds impacting discretionary spending but remains optimistic about pipeline activity and client engagement [46][68] - The company expects a mid-single-digit decline in Ex-L&S solutions for 2026, reflecting a deeper push into emerging technology adoption [46] - Management is confident in achieving positive Ex-L&S revenue growth in 2027 based on current interactions with clients and pipeline activity [48] Other Important Information - The company has reduced global pension deficits by $300 million-$450 million at year-end, improving near-term cash flows [7] - The company was recognized as a global leader in Gartner's Magic Quadrant for Outsourced Digital Workplace Services, enhancing its market position [12] - The company plans to roll out its Service Experience Accelerator, an agentic AI framework, to about a third of its existing client base during 2026 [16] Q&A Session Summary Question: How are AI and automated code modernization tools influencing the roadmap for ClearPath Forward? - Management believes that code modernization enhances the platform and will drive more demand for ClearPath Forward, viewing it as a positive development [50][51][54] Question: What is the outlook for bookings in 2026? - Management indicates a strong backlog going into 2026 and expects a mix shift towards existing client scope expansion, with a focus on new logo opportunities [58][62] Question: How does the company counter competitive pricing dynamics? - Management emphasizes a go-to-market strategy focused on enhanced experience and value rather than competing solely on price, aiming to illustrate the value delivered to clients [66][70]

Financial Data and Key Metrics Changes - Fourth quarter revenue grew 5% year-over-year, resulting in a slight improvement in full year revenue projections, coming in above the revised midpoint [5] - Non-GAAP operating margin was 18% in the quarter and 9.1% for the year, exceeding the top end of projections and representing a 30 basis points annual improvement [5] - Full-year pre-pension free cash flow was $128 million, up 55% from the prior year, exceeding expectations of $110 million [6] - Year-end cash balance increased to over $400 million, up almost $40 million year-over-year [6] - Net leverage improved to 2.8x compared to 3.0x at the end of 2024 [6] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue was $126 million in Q4, down 3.7% year-over-year, and $508 million for the full year, down 3.1% [24] - Cloud, Applications & Infrastructure Solutions (CA&I) revenue was $191 million in Q4, a decline of 4.1% year-over-year, and $733 million for the full year, down 4.8% [26] - Enterprise Computing Solutions (ECS) revenue was $237 million in Q4, up 14% year-over-year, with full year revenue relatively flat at $629 million [27] Market Data and Key Metrics Changes - Total company TCV was $2.2 billion for the full year, driven by strong growth in XLNS renewal signings and new scope bookings [28] - Trailing twelve-month book-to-bill was 1.1 times for the total company and 1.2 times for XLNS solutions [29] - Backlog at year-end was $3.2 billion, up 12% sequentially and 11% from the prior year [29] Company Strategy and Development Direction - The company continues to execute a consistent operating strategy, focusing on improved profitability and free cash flow while advancing its pension removal strategy [4] - Artificial intelligence (AI) is viewed as a powerful long-term driver of demand for the company's solutions, with investments in solution development and delivery skills to capitalize on it [13] - The company aims to leverage AI to enhance service delivery and streamline IT operations, with a focus on developing solutions that can be standardized across clients [16][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges competitive pricing pressures and longer sales cycles but remains confident in the company's ability to maintain pricing discipline and deliver value [66] - The company expects a mid-single-digit decline in XLNS solutions for 2026, reflecting macro headwinds impacting discretionary spending [47] - Management anticipates positive XLNS revenue growth in 2027 based on interactions with clients and pipeline activity [49] Other Important Information - The company executed a pension annuity purchase that removed approximately $320 million of gross U.S. defined benefit pension liabilities in 2025 [7] - The company received significant recognition from Gartner, elevating it to a global leader position in their Outsourced Digital Workplace Services Magic Quadrant [12] - The company was named to Forbes list of America's Best Midsize Employers in 2026, reflecting a strong corporate culture [12] Q&A Session Summary Question: How are AI and automated code modernization tools influencing the roadmap for ClearPath Forward? - Management believes that code modernization enhances the platform but does not change the engineering challenges of running mission-critical workloads securely [52][54] Question: What is the outlook for bookings activity and the bookings mix for 2026? - Management indicates a strong backlog and expects a shift towards new scope expansion opportunities in the existing client base, with a significant total addressable market for new scope opportunities [62] Question: How does the company counter competitive pricing dynamics? - The company focuses on enhancing experience and value rather than competing solely on price, emphasizing the importance of demonstrating value to clients [69]

Core Insights - The company has successfully executed a pension removal strategy and streamlined corporate costs, resulting in a reduction of SG&A as a percentage of revenue by nearly 300 basis points over three years [1] - License and Support (L&S) revenue has seen substantial growth for the third consecutive year, exceeding expectations by nearly $40,000,000 due to increased client consumption and longer contract terms [1] - Improved market perception is attributed to heightened recognition from industry analysts, including a first-time 'Leader' ranking in Gartner's Magic Quadrant for Outsourced Digital Workplace Services [1] Financial Performance - Strategic renewals amounted to $1,700,000,000 in Total Contract Value (TCV), with many contracts including new scope expansions as clients prioritize delivery quality over competitive pricing [1] - The company has shifted its operational focus towards high-value infrastructure field services, such as liquid cooling for AI builds and enterprise storage, which provide higher margins compared to traditional PC maintenance [1] - The global pension deficit has been successfully reduced by $300,000,000 to $450,000,000 through discretionary contributions and annuity purchases, with a goal of full U.S. plan removal by 2029 [1]

Fourth Quarter & Full-Year 2025 Financial Results Mike Thomson Chief Executive Officer & President Deb McCann Chief Financial Officer FEBRUARY 24, 2026 Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Unisys cautions readers that the assumptions forming the basis for fo ...

Revenue Performance - Revenue for Q4 2025 was $574.5 million, representing a 5.3% year-over-year increase and a 2.7% increase in constant currency[4]. - Full-year 2025 revenue decreased to $1.95 billion, down 2.9% year-over-year and 3.3% in constant currency[6]. - Revenue for Q4 2025 was $574.5 million, an increase from $545.4 million in Q4 2024, while full-year revenue decreased to $1,950.1 million from $2,008.4 million in 2024[39]. - Total revenue for the year ended December 31, 2025, was $1,950.1 million, a decrease of 2.9% from $2,008.4 million in 2024[42]. - The company achieved revenue of $574.5 million in Q4 2025, an increase from $545.4 million in Q4 2024, but a decline from $2,008.4 million in the year ended 2024 to $1,950.1 million in 2025[55]. Profitability Metrics - Non-GAAP operating profit margin for Q4 2025 was 18.0%, an increase of 640 basis points year-over-year[4]. - Operating income for Q4 2025 was $76.6 million, compared to $48.6 million in Q4 2024, with a full-year operating income of $78.5 million down from $97.4 million in 2024[39]. - Consolidated net earnings for Q4 2025 were $19.8 million, a decrease from $30.5 million in Q4 2024, leading to a full-year net loss of $340.0 million compared to a loss of $193.2 million in 2024[39]. - Basic earnings per share for Q4 2025 was $0.26, down from $0.43 in Q4 2024, with a full-year loss per share of $(4.79) compared to $(2.79) in 2024[39]. - Non-GAAP net income attributable to Unisys Corporation was $63.4 million for Q4 2025, significantly higher than $26.6 million in Q4 2024, with a yearly increase from $44.0 million in 2024 to $68.3 million in 2025[51]. Cash Flow and Financial Position - Cash provided by operations in Q4 2025 was $104.9 million, up from $76.6 million in Q4 2024[19]. - Free cash flow for Q4 2025 increased by $30.1 million year-over-year, primarily due to lower net interest payments and increased license renewals collections[19]. - Cash and cash equivalents increased to $421.7 million as of December 31, 2025, from $390.6 million at the end of 2024[48]. - Long-term debt rose to $729.0 million as of December 31, 2025, compared to $488.2 million in 2024[46]. - Free cash flow for Q4 2025 was $85.8 million, up from $55.7 million in Q4 2024, while the yearly free cash flow showed a decline from $(217.6) million in 2025 compared to $55.3 million in 2024[53]. Contract Value and Backlog - Total Contract Value (TCV) for Q4 2025 was $1.149 billion, a 53% increase year-over-year[22]. - Backlog increased to $3.16 billion in Q4 2025, compared to $2.84 billion in Q4 2024, driven by Ex-L&S renewal signings[23]. - New Business TCV for FY25 was $491 million, a 38% decrease year-over-year[22]. - The company reported a backlog of contracted work, which is a key indicator of future revenue, although specific figures were not disclosed[28]. - Total Contract Value (TCV) is a significant metric for assessing future revenue potential, with new business TCV representing expansion and new contracts[28]. Future Guidance and Strategic Focus - The company provided 2026 revenue growth guidance of (6.5)% to (4.5)% in constant currency[23]. - The company anticipates revenue growth and margin expansion in 2026, with guidance provided during the conference call[30]. - Free cash flow generation is a focus area, with adjusted free cash flow metrics being highlighted for investor transparency[32]. - The company continues to invest in technology solutions, including cloud and AI, to drive future growth and operational efficiencies[35]. Pension and Other Expenses - The defined benefit pension plans funding deficit improved to $448.5 million, a reduction of $301.7 million year-over-year[18]. - The company reported a pension and postretirement expense of $22.2 million for Q4 2025, up from $11.1 million in Q4 2024, with a yearly expense of $309.0 million in 2025 compared to $182.2 million in 2024[55].

Core Insights - Unisys Corporation reported its financial results for Q4 and full year 2025, highlighting a solid cash balance and improved profitability metrics, despite a decline in overall revenue for the year [1][2]. Financial Performance - Q4 2025 revenue was $574.5 million, a 5.3% increase year-over-year (YoY), with a 2.7% increase in constant currency [1][2]. - Full year 2025 revenue decreased to $2.0 billion, down 2.9% YoY and 3.3% in constant currency [1][2]. - Operating profit margin for Q4 2025 was 13.3%, up 440 basis points YoY, while the non-GAAP operating profit margin was 18.0%, up 640 basis points YoY [1][2]. - Full year operating profit margin was 4.0%, down 80 basis points YoY, with a non-GAAP operating profit margin of 9.1%, up 30 basis points YoY [1][2]. Cash Flow and Liquidity - Cash provided by operations in Q4 2025 was $104.9 million, compared to $76.6 million in Q4 2024 [1][2]. - Full year cash used for operations was $140.0 million, which included a discretionary pension contribution of $250 million [1][2]. - Cash and cash equivalents at the end of 2025 were $413.9 million, an increase from $376.5 million at the end of 2024 [1][2]. Segment Performance - Digital Workplace Solutions (DWS) revenue for Q4 2025 was $126.4 million, a decline of 1.4% YoY [2]. - Cloud, Applications & Infrastructure Solutions (CA&I) revenue decreased by 1.1% YoY to $190.6 million in Q4 2025 [2]. - Enterprise Computing Solutions (ECS) revenue increased by 16.4% YoY to $236.8 million in Q4 2025, driven by software license renewals [2]. Pension and Liabilities - The defined benefit pension plans funding deficit improved to $448.5 million in 2025 from $750.2 million in 2024, a reduction of $301.7 million [1][2]. - The net loss attributable to Unisys Corporation for 2025 was $339.8 million, which included a non-cash pension settlement loss of $227.7 million [1][2]. Future Outlook - Unisys provided guidance for 2026, projecting revenue growth in constant currency to be between -6.5% and -4.5%, with a non-GAAP operating profit margin expected to be between 9.0% and 11.0% [2].