Unisys(UIS) - 2025 Q2 - Quarterly Results

Executive Summary Unisys achieved strong sequential revenue and profitability growth in 2Q25, strategically addressing U.S. pension volatility and debt, while adjusting full-year guidance Key Highlights Unisys reported strong sequential improvement in both revenue and profitability for 2Q25, with total revenue up 1.1% year-over-year and 11.8% quarter-over-quarter. The company also took strategic steps to mitigate U.S. pension volatility through a significant discretionary contribution and debt refinancing, while adjusting full-year revenue guidance to flat and raising non-GAAP operating profit margin guidance 2Q25 Key Financial Highlights | Metric | Value | YoY Change | QoQ Change | | :-------------------------------- | :---------- | :--------- | :--------- | | Total company revenue | $483.3 million | 1.1% | 11.8% | | Ex-L&S revenue | $395.7 million | (0.1)% | 9.6% | | Operating profit margin | 6.3% | +140 bps | | | Non-GAAP operating profit margin | 7.6% | +150 bps | | - The company significantly reduced future cash contribution volatility within its U.S. qualified defined benefit pension plans following changes to its pension asset investment strategy and a discretionary contribution of $250 million[5] - The discretionary contribution was funded using a combination of $50 million cash on hand and $200 million of proceeds from the company's issuance of $700 million senior secured notes due 2031, with the remaining proceeds used to refinance existing $485 million senior secured notes due 2027[5] - The company tempered the mid-point of full-year constant currency revenue guidance to flat YoY while raising full-year non-GAAP operating profit margin guidance to a range of 8.0% to 9.0%[5] CEO and CFO Commentary CEO Michael Thomson expressed satisfaction with sequential growth, improved profitability, and strong License and Support solutions consumption, attributing progress to AI investments. CFO Deb McCann highlighted the successful capital structure transformation, which reduced U.S. pension volatility and enhanced liquidity by extending debt maturity and renewing the asset-backed revolver - CEO Michael Thomson noted pleasure with sequential growth and improved profitability, continued strong consumption in License and Support solutions, and the advancement of growth and efficiency priorities through investments in agentic and generative artificial intelligence capabilities[4] - CFO Deb McCann stated that the capital structure transformation removed substantially all volatility from U.S. pension contributions and established a clearer path to fully removing U.S. pension obligations, while solidifying liquidity by extending major debt maturity to 2031 and renewing the undrawn asset-backed revolver[4] Financial Performance - Second Quarter 2025 Unisys reported 2Q25 revenue growth and improved operating profit, with varied segment performance, significant pension funding, debt refinancing, and a decrease in TCV Consolidated Financial Results Unisys reported a 1.1% YoY revenue increase to $483.3 million in 2Q25, with significant QoQ growth. Operating profit margin improved by 140 bps YoY to 6.3%, driven by cost reduction actions. The company recorded a net loss of $20.1 million, impacted by a $6.8 million loss on debt extinguishment Revenue Analysis Total revenue for 2Q25 increased 1.1% YoY and 11.8% QoQ to $483.3 million. Ex-L&S revenue was relatively flat YoY, decreasing 0.1%, but grew 9.6% QoQ. License and Support (L&S) revenue saw a 6.7% YoY increase 2Q25 Revenue Performance | Metric | 2Q25 | 2Q24 | YoY Change | QoQ Change | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue | $483.3M | $478.2M | 1.1% | 11.8% | | Revenue (constant currency) | | | 1.0% | | | Ex-L&S Revenue | $395.7M | $396.1M | (0.1)% | 9.6% | | Ex-L&S Revenue (constant currency) | | | (0.4)% | | | L&S Revenue | $87.6M | $82.1M | 6.7% | | | L&S Revenue (constant currency) | | | 7.7% | | Profitability Analysis Operating profit margin improved to 6.3% (140 bps YoY), primarily due to cost reduction benefits and lower professional services expenses. Gross profit margin slightly declined by 30 bps YoY to 26.9%, with Ex-L&S gross profit margin decreasing 110 bps YoY due to higher cost reduction charges 2Q25 Profitability Metrics | Metric | 2Q25 | 2Q24 | YoY Change | | :-------------------------- | :----- | :----- | :--------- | | Gross profit | $130.0M | $129.9M | 0.1% | | Gross profit percent | 26.9% | 27.2% | (30) bps | | Ex-L&S gross profit percent | 17.6% | 18.7% | (110) bps | | Operating profit | $30.3M | $23.6M | 28.4% | | Operating profit percent | 6.3% | 4.9% | 140 bps | | Non-GAAP operating profit percent | 7.6% | 6.1% | 150 bps | - Operating profit margin improvement was primarily driven by lower expense due to realized benefits from the company's cost reduction actions and reduced professional services expense[9] Net Loss Unisys reported a net loss attributable to Unisys Corporation of $20.1 million in 2Q25, compared to a $12.0 million loss in 2Q24. This loss included a $6.8 million loss on debt extinguishment. Non-GAAP net income was $13.8 million 2Q25 Net Loss and Non-GAAP Net Income | Metric | 2Q25 | 2Q24 | | :------------------------------------ | :------ | :------ | | Net loss attributable to Unisys Corp. | ($20.1M) | ($12.0M) | | Non-GAAP net income attributable to Unisys Corp. | $13.8M | $11.0M | - The net loss attributable to Unisys Corporation included a loss on debt extinguishment of $6.8 million related to the repurchase, satisfaction and discharge of the 6.875% Senior Secured Notes due 2027[9] Segment Performance In 2Q25, Digital Workplace Solutions (DWS) and Enterprise Computing Solutions (ECS) segments showed revenue growth and improved gross profit margins, while Cloud, Applications & Infrastructure Solutions (CA&I) experienced a revenue decline Digital Workplace Solutions (DWS) DWS revenue increased 4.5% YoY (4.6% in constant currency) to $138.1 million, primarily due to new business and higher hardware revenue. Gross profit margin improved by 70 bps YoY to 16.9% due to delivery improvements and labor cost savings DWS 2Q25 Performance | Metric | 2Q25 | 2Q24 | YoY Change | | :-------------------- | :----- | :----- | :--------- | | Revenue | $138.1M | $132.1M | 4.5% | | Revenue (constant currency) | | | 4.6% | | Gross profit percent | 16.9% | 16.2% | 70 bps | - DWS revenue increase was primarily driven by new business, including higher hardware revenue. Gross profit margin improvement was primarily driven by delivery improvement and labor cost savings initiatives[11] Cloud, Applications & Infrastructure Solutions (CA&I) CA&I revenue declined 4.5% YoY (4.9% in constant currency) to $185.2 million, mainly due to lower volume with public sector clients. Gross profit margin slightly increased by 10 bps YoY to 20.8% CA&I 2Q25 Performance | Metric | 2Q25 | 2Q24 | YoY Change | | :-------------------- | :----- | :----- | :--------- | | Revenue | $185.2M | $193.9M | (4.5)% | | Revenue (constant currency) | | | (4.9)% | | Gross profit percent | 20.8% | 20.7% | 10 bps | - CA&I revenue decline was primarily driven by lower volume with clients in the public sector[12] Enterprise Computing Solutions (ECS) ECS revenue increased 7.3% YoY (8.2% in constant currency) to $140.2 million, driven by the timing of software license renewals, integrated systems purchases, and higher volume in specialized managed services. Gross profit margin improved by 20 bps YoY to 53.5% ECS 2Q25 Performance | Metric | 2Q25 | 2Q24 | YoY Change | | :-------------------- | :----- | :----- | :--------- | | Revenue | $140.2M | $130.7M | 7.3% | | Revenue (constant currency) | | | 8.2% | | Gross profit percent | 53.5% | 53.3% | 20 bps | - The increase in ECS revenue was primarily driven by the timing of software license renewals and integrated systems purchases, as well as higher volume in specialized managed services[13] Balance Sheet and Cash Flows Unisys's cash and cash equivalents decreased by $75.7 million, primarily due to a $50 million cash contribution to its U.S. pension plans. The company completed a $700 million senior secured notes offering to refinance existing debt and fund a significant pension contribution, extending its major debt maturity to 2031 and renewing its revolving credit facility Cash Position and Pension Funding Cash and cash equivalents decreased by $75.7 million to $300.8 million as of June 30, 2025, largely due to a $50 million cash contribution to U.S. pension plans. Free cash flow decreased significantly YoY by $318.0 million, primarily due to pension contributions and working capital changes Cash and Cash Equivalents | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :------------------------ | :------------ | :----------- | :------- | | Cash and cash equivalents | $300.8M | $376.5M | ($75.7M) | Cash Flow Metrics | Metric | 2Q25 | 2Q24 | YoY Change | | :-------------------------- | :------- | :----- | :--------- | | Cash (used for) operations | ($316.2M) | $2.7M | ($318.9M) | | Free cash flow | ($336.5M) | ($18.5M) | ($318.0M) | - Cash and cash equivalents decreased primarily due to the $50 million in cash used to fund a portion of the discretionary contribution of $250 million to the company's U.S. defined benefit pension plans[14] - Free cash flow decreased by $318.0 million YoY, primarily due to cash contributions to the company's U.S. defined benefit pension plans and changes in working capital[15] - During 2Q25, the company made cash contributions of $278.2 million to its global defined benefit pension and postretirement plans, including the discretionary contribution of $250 million to its U.S. defined benefit pension plans, compared to $4.7 million in the prior-year period[17] Debt and Liquidity Management Unisys issued $700.0 million of 10.625% Senior Secured Notes due 2031, using proceeds to repurchase and satisfy existing 2027 Notes and contribute $200 million to pension plans. Concurrently, the company extended its secured revolving credit facility maturity from October 2027 to June 2030, enhancing its liquidity position - In June 2025, the company completed a private placement offering of $700.0 million aggregate principal amount of its 10.625% Senior Secured Notes due 2031[16] - The net proceeds from the issuance of the 2031 Notes, together with cash on hand, were used to repurchase outstanding 2027 Notes, satisfy and discharge remaining 2027 Notes, and contribute $250 million to the company's U.S. defined benefit pension plans[16] - Concurrently with the issuance of 2031 Notes, the company amended its existing secured revolving credit facility to extend the maturity from October 2027 to June 2030 and modify certain other terms and covenants[18] Other Business Metrics Total Contract Value (TCV) for 2Q25 decreased 5% YoY to $437 million, primarily due to a shift in timing of Ex-L&S New Business signings, partially offset by Ex-L&S renewals. Backlog increased YoY to $2.92 billion 2Q25 Total Contract Value (TCV) | Metric | 2Q25 | 2Q24 | YoY Change | QoQ Change | | :------------------ | :----- | :----- | :--------- | :--------- | | Ex-L&S New Business | $122M | $215M | (43)% | (64)% | | Ex-L&S Renewals | $266M | $144M | 85% | 250% | | L&S Renewals | $49M | $103M | (52)% | 133% | | Total company TCV | $437M | $462M | (5)% | 1% | - Total company TCV for 2Q25 decreased 5% YoY, primarily driven by a shift in timing in Ex-L&S New Business signings, partially offset by Ex-L&S renewals[21] - Backlog increased YoY and was $2.92 billion for the second quarter of 2025 compared to $2.79 billion for the second quarter of 2024[21] Financial Outlook Unisys updated its full-year 2025 guidance, tempering revenue growth expectations while raising non-GAAP operating profit margin targets 2025 Financial Guidance Unisys updated its full-year 2025 guidance, tempering constant currency revenue growth to a range of (1.0)% to 1.0% YoY (mid-point flat) while raising non-GAAP operating profit margin guidance to 8.0% to 9.0% Full-Year 2025 Financial Guidance | Metric | Revised Guidance | Prior Issued Guidance | | :-------------------------------- | :--------------- | :-------------------- | | Revenue growth in constant currency | (1.0)% to 1.0% | 0.5% to 2.5% | | Non-GAAP operating profit margin | 8.0% to 9.0% | 6.5% to 8.5% | - The revised guidance assumes L&S revenue of approximately $430 million and relatively flat Ex-L&S constant currency revenue growth[22] Supplemental Information This section provides conference call details, definitions of non-GAAP financial measures, forward-looking statements, and an overview of Unisys's global technology solutions Conference Call Details Unisys will host a conference call on Thursday, July 31, 2025, at 8 a.m. Eastern Time to discuss the second quarter 2025 results, with live webcast and replay options available - Unisys will hold a conference call with the financial community on Thursday, July 31, 2025, at 8 a.m. Eastern Time to discuss the results of the second quarter of 2025[23] - The live, listen-only webcast, as well as the accompanying presentation materials, can be accessed on the Unisys Investor Website at www.unisys.com/investor[23](index=23&type=chunk) - A webcast replay will be available on the Unisys Investor Website shortly following the conference call, and a phone replay will be available until August 14, 2025[24] Non-GAAP Financial Measures and Definitions This section provides definitions for various non-GAAP financial measures used in the report, such as constant currency, backlog, TCV, non-GAAP operating profit, EBITDA, adjusted EBITDA, non-GAAP net income/EPS, free cash flow, pre-pension and postretirement free cash flow, adjusted free cash flow, L&S, and Ex-L&S. These measures are used to provide supplemental information and enhance comparability by excluding certain unusual or non-recurring items - Constant currency is used to view business results without the impact of fluctuations in foreign currency exchange rates, facilitating comparisons of business performance from one period to another[25] - Backlog represents the estimated amount of future revenue to be recognized under contracted work, serving as a useful metric and indicator of contracted revenue to be realized in the future[25] - Total Contract Value (TCV) represents the initial estimated revenue related to contracts signed in the period, serving as a useful leading indicator of the company's ability to generate future revenue over time[25] - Non-GAAP operating profit, EBITDA, adjusted EBITDA, non-GAAP net income (loss), non-GAAP diluted earnings (loss) per share, free cash flow, pre-pension and postretirement free cash flow, and adjusted free cash flow are non-GAAP measures that exclude certain items not indicative of ongoing operations, such as pension expense, debt extinguishment, legal matters, and cost-reduction activities, to enhance comparability and transparency[26][29] - Excluding License and Support (Ex-L&S) measures exclude revenue, gross profit, and gross profit margin related to software license and support services to isolate the impact of these areas, which can be significant and timing-impactful[26] Forward-Looking Statements The release contains forward-looking statements based on management's current expectations and assumptions, which are subject to various risks and uncertainties beyond Unisys's ability to control or estimate precisely. These statements include projections for revenue growth, margin expansion, AI investments, TCV, backlog, and full-year financial guidance - This release contains forward-looking statements regarding future developments and their potential effect upon Unisys, including projections or expectations of revenue growth, margin expansion, achievement of operational efficiencies, investments in solutions and artificial intelligence, TCV, backlog, and full-year 2025 financial guidance[27] - Unisys cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond Unisys' ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants[27] - Unisys does not assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events, except as required by applicable law[27] Company Information Unisys is a global technology solutions company that provides cloud, AI, digital workplace, logistics, and enterprise computing solutions, helping clients for over 150 years - Unisys is a global technology solutions company that powers breakthroughs for the world's leading organizations[32] - Its solutions include cloud, AI, digital workplace, logistics, and enterprise computing, helping clients challenge the status quo and unlock their full potential[32] - Unisys has been helping clients for more than 150 years[32] Unaudited Financial Statements This section presents unaudited consolidated statements of income, balance sheets, cash flows, segment results, and GAAP to non-GAAP reconciliations for 2Q25 Consolidated Statements of Income (Loss) The consolidated statement of income (loss) for 2Q25 shows total revenue of $483.3 million, operating income of $30.3 million, and a net loss attributable to Unisys Corporation of $20.1 million Consolidated Statements of Income (Loss) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $483.3 | $478.2 | $915.4 | $966.0 | | Operating income | $30.3 | $23.6 | $35.4 | $41.3 | | Net loss attributable to Unisys Corporation | ($20.1) | ($12.0) | ($49.6) | ($161.5) | | Basic loss per share | ($0.28) | ($0.17) | ($0.70) | ($2.34) | | Diluted loss per share | ($0.28) | ($0.17) | ($0.70) | ($2.34) | Segment Results & Ex-L&S Breakdown This section provides detailed revenue and gross profit percentages for DWS, CA&I, and ECS segments, as well as a breakdown of License and Support (L&S) and Excluding License and Support (Ex-L&S) revenue and gross profit for 2Q25 and YTD25 Segment Revenue and Gross Profit Percentages | Segment | 2Q25 Revenue | 2Q25 Gross Profit % | 2Q24 Revenue | 2Q24 Gross Profit % | | :------------------------------------ | :----------- | :------------------ | :----------- | :------------------ | | Digital Workplace Solutions (DWS) | $138.1M | 16.9% | $132.1M | 16.2% | | Cloud, Applications & Infrastructure Solutions (CA&I) | $185.2M | 20.8% | $193.9M | 20.7% | | Enterprise Computing Solutions (ECS) | $140.2M | 53.5% | $130.7M | 53.3% | License and Support (L&S) vs. Excluding License and Support (Ex-L&S) Breakdown | Metric | 2Q25 | 2Q24 | YTD25 | YTD24 | | :------------------------ | :----- | :----- | :------ | :------ | | L&S revenue | $87.6M | $82.1M | $158.7M | $175.3M | | Ex-L&S revenue | $395.7M | $396.1M | $756.7M | $790.7M | | L&S gross profit | $60.3M | $55.7M | $103.6M | $120.5M | | Ex-L&S gross profit | $69.7M | $74.2M | $133.9M | $145.4M | | L&S gross profit percent | 68.8% | 67.8% | 65.3% | 68.7% | | Ex-L&S gross profit percent | 17.6% | 18.7% | 17.7% | 18.4% | Consolidated Balance Sheets The consolidated balance sheet shows total assets of $1,796.6 million and total liabilities and deficit of $1,796.6 million as of June 30, 2025. Key changes include a decrease in cash and cash equivalents and an increase in long-term debt, offset by a decrease in long-term pension and postretirement liabilities Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :------------------ | | Cash and cash equivalents | $300.8M | $376.5M | | Total current assets | $895.7M | $979.3M | | Total assets | $1,796.6M | $1,872.3M | | Total current liabilities | $539.8M | $628.0M | | Long-term debt | $692.7M | $488.2M | | Long-term pension and postretirement liabilities | $551.9M | $816.4M | | Total Unisys Corporation stockholders' deficit | ($221.5M) | ($283.4M) | | Total liabilities and deficit | $1,796.6M | $1,872.3M | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used for operating activities was ($282.9) million, net cash used for investing activities was ($10.0) million, and net cash provided by financing activities was $190.3 million. This resulted in an overall decrease in cash, cash equivalents, and restricted cash of ($81.6) million Consolidated Statements of Cash Flows Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used for) provided by operating activities | ($282.9M) | $26.5M | | Net cash used for investing activities | ($10.0M) | ($46.8M) | | Net cash provided by (used for) financing activities | $190.3M | ($11.9M) | | Decrease in cash, cash equivalents and restricted cash | ($81.6M) | ($44.0M) | | Cash, cash equivalents and restricted cash, end of period | $309.0M | $352.7M | GAAP to Non-GAAP Reconciliations This section provides detailed reconciliations from GAAP to non-GAAP measures for net income/loss, diluted EPS, free cash flow, EBITDA, and operating profit, highlighting adjustments for items like pension expense, debt extinguishment, legal matters, and cost reduction activities Net Income (Loss) and EPS Reconciliation Reconciliation shows adjustments from GAAP net loss to non-GAAP net income, primarily by adding back pension and postretirement expense, loss on debt extinguishment, and other non-recurring items. This resulted in a non-GAAP net income of $13.8 million and non-GAAP diluted EPS of $0.19 for 2Q25 2Q25 Net Income (Loss) and EPS Reconciliation | Metric | 2Q25 (GAAP) | Adjustments | 2Q25 (Non-GAAP) | | :------------------------------------ | :---------- | :---------- | :-------------- | | Net loss attributable to Unisys Corp. | ($20.1M) | | | | Pension and postretirement expense (net of tax) | | $21.4M | | | Loss on debt extinguishment (net of tax) | | $6.8M | | | Certain legal matters, net (net of tax) | | $0.7M | | | Environmental matters (net of tax) | | $0.9M | | | Cost reduction and other expenses (net of tax) | | $4.1M | | | Non-GAAP net income attributable to Unisys Corp. | | | $13.8M | | Diluted loss per share (GAAP) | ($0.28) | | | | Non-GAAP diluted earnings per share | | | $0.19 | Free Cash Flow Reconciliation Reconciliation from cash used for operations to free cash flow and adjusted free cash flow, showing significant impact from pension and postretirement funding. For 2Q25, free cash flow was ($336.5) million, and adjusted free cash flow was ($49.4) million 2Q25 Free Cash Flow Reconciliation | Metric | 2Q25 | 2Q24 | YTD25 | YTD24 | | :------------------------------------ | :------- | :----- | :------- | :----- | | Cash (used for) provided by operations | ($316.2M) | $2.7M | ($282.9M) | $26.5M | | Free cash flow | ($336.5M) | ($18.5M) | ($323.3M) | ($14.6M) | | Pension and postretirement funding | $278.2M | $4.7M | $287.6M | $12.4M | | Pre-pension and postretirement free cash flow | ($58.3M) | ($13.8M) | ($35.7M) | ($2.2M) | | Adjusted free cash flow | ($49.4M) | ($8.0M) | ($21.1M) | $9.3M | EBITDA Reconciliation Reconciliation from GAAP net loss to EBITDA and Adjusted EBITDA. For 2Q25, EBITDA was $28.6 million, and Adjusted EBITDA was $61.4 million, with adjustments primarily for pension expense, debt extinguishment, and other non-operating items 2Q25 EBITDA Reconciliation | Metric | 2Q25 | 2Q24 | YTD25 | YTD24 | | :------------------------------------ | :----- | :----- | :------ | :------ | | Net loss attributable to Unisys Corp. | ($20.1M) | ($12.0M) | ($49.6M) | ($161.5M) | | EBITDA | $28.6M | $35.6M | $33.6M | ($68.6M) | | Pension and postretirement expense | $22.0M | $12.4M | $43.9M | $159.0M | | Loss on debt extinguishment | $6.8M | — | $6.8M | — | | Adjusted EBITDA | $61.4M | $58.4M | $101.6M | $123.7M | | Adjusted EBITDA as a percentage of revenue | 12.7% | 12.2% | 11.1% | 12.8% | Operating Profit Reconciliation Reconciliation from GAAP operating profit to non-GAAP operating profit, adjusting for certain legal matters, cost reduction and other expenses, and pension and postretirement expense. For 2Q25, non-GAAP operating profit was $36.8 million, resulting in a non-GAAP operating profit percent of 7.6% 2Q25 Operating Profit Reconciliation | Metric | 2Q25 | 2Q24 | YTD25 | YTD24 | | :-------------------------- | :----- | :----- | :------ | :------ | | Operating profit | $30.3M | $23.6M | $35.4M | $41.3M | | Certain legal matters | $0.1M | $3.1M | $0.6M | $10.4M | | Cost reduction and other expenses | $6.0M | $2.3M | $11.9M | $11.3M | | Pension and postretirement expense | $0.4M | $0.3M | $0.8M | $0.7M | | Non-GAAP operating profit | $36.8M | $29.3M | $48.7M | $63.7M | | Non-GAAP operating profit percent | 7.6% | 6.1% | 5.3% | 6.6% |