Unisys Corporation FY Conference Summary Company Overview - **Company**: Unisys Corporation (NYSE: UIS) - **Industry**: IT Solutions - **Market Size**: $1.6 trillion global IT services market with a mid to high single-digit CAGR [1][2] - **Revenue**: Approximately $2 billion [2] - **Employees**: About 16,000, including 8,000 engineers [2] - **Client Base**: 700 clients across 50+ countries, with top 50 clients having an average relationship of over 20 years [3] Core Business Segments 1. **Cloud Solutions**: - Management of cloud environments and hybrid infrastructure [4] - Focus on data modernization and cybersecurity [4][5] - Significant public sector expertise, with about half of the cloud segment being public sector clients [5] 2. **Digital Workplace Solutions**: - Recently recognized as a global leader in digital workplace services by Gartner [6] - Focus on mid-sized enterprises with revenues between $1 billion and $5 billion [5] 3. **ClearPath Forward**: - Generates about $430 million in revenue with a 70% gross margin [10] - Proprietary software operating systems that are highly integrated into clients' IT environments [11] - Contracts are based on consumption, driving revenue as clients modernize their applications [12] Financial Performance - **Adjusted EBITDA**: Approximately $290 million for 2024 [2] - **Free Cash Flow**: About $55 million [2] - **Revenue Volatility**: Noted a large contract slipping from Q3 to Q4, affecting revenue guidance [15] Strategic Focus - **Profitability and Cash Flow**: Aiming to improve profitability in service segments while maintaining high-margin ClearPath Forward business [18] - **Cost Reduction**: Streamlining corporate functions and reducing SG&A costs [19] - **Pension Management**: Plans to eliminate pension liabilities within 3-5 years, redirecting cash flow to shareholders [32] Growth Strategy - **Client Expansion**: Strong track record of expanding services with existing clients and attracting new clients [20] - **Partnerships**: Collaborating with major technology companies like Amazon, Dell, and Microsoft to enhance service offerings [17] - **AI Integration**: Investing in AI to improve service delivery and operational efficiency [25][28] Market Trends and Challenges - **Complex IT Ecosystem**: Increasing complexity in IT environments due to emerging technologies like AI, which creates opportunities for IT service providers [26] - **Cloud Migration Hesitance**: Clients are reconsidering the necessity of moving to the cloud due to high costs and data control concerns [36][37] Conclusion - Unisys is positioned as a stable player in the IT solutions market with a focus on long-term client relationships, high-margin services, and strategic growth through partnerships and technology integration. The company is actively managing its financial structure to enhance shareholder value while navigating the complexities of the evolving IT landscape.

Financial Data and Key Metrics Changes - Third quarter revenue was $460 million, a decline of 7.4% year over year or 9% in constant currency [26] - Non-GAAP operating profit was $25 million, with a non-GAAP operating margin of 5.4% [32] - The company generated $20 million of free cash flow in the third quarter, an improvement from $14 million in the prior year period [34] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue was $125 million, down 5.8% year over year [27] - Cloud Applications and Infrastructure (CA&I) revenue was $180 million, a 6.8% decline compared to the prior year [28] - Enterprise Computing Solutions (ECS) revenue was $133 million, a 13.9% year-over-year decline [29] Market Data and Key Metrics Changes - The total contract value (TCV) for new business in the third quarter was $124 million, in line with solid levels from the second quarter [9] - The pricing environment remains competitive, with clients seeking to share in AI cost savings [10] Company Strategy and Development Direction - The company is focused on improving delivery and operational efficiency to navigate macroeconomic uncertainties [4] - There is a commitment to executing a pension strategy aimed at removing U.S. pension liabilities [5] - The company is investing in AI-driven productivity solutions and workforce optimization to enhance delivery efficiency [8][17] Management's Comments on Operating Environment and Future Outlook - Management noted that revenue was impacted by timing issues, including a shift of a large license and support renewal to the fourth quarter [6] - Concerns about federal funding and the ongoing U.S. government shutdown have affected client project initiation [6][57] - The company expects to generate approximately $110 million of pre-pension free cash flow for the full year [39] Other Important Information - The company received recognition as a leader in cloud services for mid-market enterprises and was named to Time Magazine's 2025 list of the world's best companies [23][24] - The trailing 12-month signings amounted to approximately $2 billion, translating to a book-to-bill ratio of 1.1x [29] Q&A Session Summary Question: How is AI impacting overall P&L? - Management indicated that AI is helping reduce delivery costs, improving margin profiles, and increasing consumption rates in the L&S business [41][42] Question: What is enabling margin performance despite revenue shortfall? - The increase in L&S revenue and successful renewal activity with higher margin profiles are contributing to margin performance [44][45] Question: What is the demand for cloud spending, particularly on AI? - Demand for AI applications is strong, but the adoption is sensitive due to security and other factors [51][52] Question: Update on public sector demand amid government shutdown? - There has been a pause in project work in the U.S. public sector, with some areas showing constant demand [56][57] Question: Is pricing pressure a new development? - Pricing pressure has been ongoing, with competitors undercutting prices, but the company remains disciplined in contract negotiations [58][59]

Summary of Unisys ClearPath Forward Investor Education Event Company Overview - **Company**: Unisys - **Focus**: ClearPath Forward operating systems and ecosystem, which includes ClearPath Infrastructure, Products, Industry Solutions, and Services [2][4] Key Points and Arguments ClearPath Forward Ecosystem - ClearPath Forward is a vital part of Unisys, providing secure, high-volume data processing environments for clients [5][11] - The ecosystem supports various industries, including finance and travel, with capabilities for real-time processing and high transaction volumes [16][17] - ClearPath Forward accounts for approximately 20% of Unisys's annual revenue [10] Client Relationships and Market Position - Unisys has long-standing relationships with ClearPath clients, often spanning decades, indicating strong client retention and loyalty [6][41] - Over 90% of Fortune 500 financial institutions rely on mainframes, highlighting the importance of ClearPath in enterprise operations [25][26] Technological Advancements - The ClearPath ecosystem is evolving to include AI capabilities, quantum computing-resistant security, and enhanced data processing features [10][38] - Future developments will focus on zero trust architecture, quantum-safe cryptography, and AI-driven threat detection [38] Financial Performance - ClearPath Forward's revenue has shown consistent growth, with projections increasing from $365 million to $400 million [67] - The company maintains a high renewal rate of over 95%, indicating strong client satisfaction and minimal churn [68] Deployment Options - ClearPath offers multiple deployment options, including on-premise, private cloud, public cloud, and hybrid solutions, allowing clients flexibility in managing their data and applications [18][19] Value-Added Solutions - Unisys provides around 30 solutions to enhance data access and utilization, including ePortal, Data Exchange, and A/B Suite, which support AI and analytics [22][23] Important but Overlooked Content - The ClearPath Forward ecosystem is designed to minimize risks associated with service migrations, ensuring clients can modernize without significant disruptions [41] - The total cost of ownership for replicating the ClearPath environment is high, making it a less attractive option for clients considering migration [35] - The integration of AI into the ClearPath ecosystem is seen as a way to unlock further value from existing data, enhancing operational efficiency [27][59] Conclusion - Unisys's ClearPath Forward is positioned as a foundational offering that combines security, performance, and resilience, essential for critical enterprise workloads [42] - The company is committed to ongoing modernization and technological advancements to meet future client needs while maintaining its core strengths [39][42]

Unisys (UIS) FY Conference Summary Company Overview - Unisys is a global IT services company operating in a $1.6 trillion market with high single-digit growth [3][4] - The company has approximately 16,000 employees, including 8,000 engineers, and serves around 700 clients across more than 50 countries [3][4] - Unisys generated nearly $2 billion in revenue, approximately $300 million in adjusted EBITDA, and over $50 million in free cash flow in 2024 [4] Business Segments - Unisys operates in three segments: 1. **Cloud Applications and Infrastructure Solutions**: Focuses on managed cloud services, application development, and cybersecurity [5][6] 2. **Digital Workplace**: Provides outsourced IT support and manages technology experiences for clients [7][8] 3. **Enterprise Computing**: Includes proprietary software (ClearPath Forward) used for mission-critical workloads in various industries [9][10][11] Financial Performance and Strategy - The company aims for 150 basis points of annual gross margin expansion in its XLNS solutions, having achieved 600 basis points since 2022 [25] - Unisys has implemented a cost reduction program, removing $30 million to $40 million from its SG&A base [26] - The company plans to execute $600 million in annuity purchases over the next two years to reduce pension liabilities [41] Pension Management - In June, Unisys issued $700 million in senior secured notes to refinance existing debt and contribute $250 million to its pension plans, reducing the pension deficit from $500 million to $250 million [34][35] - The company aims to eliminate its U.S. qualified defined benefit plans over the next three to five years [31][42] AI and Innovation - Unisys is leveraging AI to enhance service delivery and reduce costs, with a focus on improving employee productivity [22][23][45] - The company is developing knowledge management capabilities to address challenges in AI implementation and ensure data quality [57][59] Future Outlook - Unisys anticipates generating $100 million in pre-pension cash flow, with potential growth to $140 million as EBITDA increases to $300 million over the next six years [61][66] - The company plans to use future cash flows for debt reduction, organic growth investments, and returning capital to shareholders [68][71] Key Takeaways - Unisys is positioned for growth in the IT services market, with a strong focus on innovation and client relationships [4][18] - The company's strategic initiatives in pension management and AI integration are expected to enhance financial stability and operational efficiency [31][22] - Future financial performance will be closely tied to successful execution of its growth strategies and management of pension liabilities [34][42]

Financial Data and Key Metrics Changes - In Q2 2025, total revenue was $483 million, a 1.1% increase year over year and a 12% increase sequentially [26][9] - Non-GAAP operating profit margin increased to 7.6% from 6.1% in the prior period, driven by higher L and S revenue and improved operational efficiency [35] - Adjusted EBITDA was $61 million, with an adjusted EBITDA margin of 12.7%, representing a 50 basis point margin expansion year over year [35] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) revenue was $138 million, a 4.6% increase year over year, with a 13% sequential growth driven by new business and ramping volumes in high-end storage field services [27][28] - Cloud Applications and Infrastructure (CAI) revenue was $185 million, a 4.9% decline year over year, but grew 2% sequentially [29] - Enterprise Computing Solutions (ECS) revenue was $140 million, an 8.2% increase year over year, with L and S revenue at $88 million, up 7.7% year over year [30] Market Data and Key Metrics Changes - The company reported a slight increase in total contract value (TCV) based on higher renewal levels, with first half new business TCV up 15% compared to 2024 [12] - The backlog at the end of Q2 was $2.9 billion, up 5% year over year, indicating a strong pipeline for future revenue [31] Company Strategy and Development Direction - The company is focused on enhancing long-term shareholder value by removing pension volatility and improving financial flexibility [8] - Continued investment in AI and operationalizing it to scale delivery, shifting from a labor-augmented model to a technology-led model [15][16] - The ClearPath Forward strategy aims to modernize hybrid infrastructure and applications while unlocking valuable data [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic and geopolitical uncertainties but expressed confidence in achieving full-year objectives [11] - The company expects a strong inflection in revenue growth in Q4, driven by increased L and S revenue and project work [47] - Management noted that while some revenue items may moderate in Q3, the overall contract value remains intact [11] Other Important Information - The company made a $250 million discretionary pension contribution, reducing its U.S. pension deficit dollar for dollar [7] - Cash balances were $301 million as of June 30, reflecting the use of cash for pension contributions [39] - The company received recognition as one of the Global Top 100 Most Loved Workplaces, highlighting its commitment to workforce empowerment [24] Q&A Session Summary Question: Can you break down the components of the change in your new revenue guidance for 2025? - Management indicated that the tempering of guidance was largely due to macroeconomic uncertainties and backlog conversion challenges, but they expect overall contract value to remain stable [51][54] Question: Can you elaborate on the DWS volumes and progress in ramping the high-performance compute business? - Management noted that DWS volumes have stabilized, with increased activity in high-end storage and network services, and they are well-positioned to capitalize on these trends [57][59] Question: What is your ability to add new logos in this environment? - Management expressed confidence in their pipeline for new logos, with a 15% increase in new business TCV in the first half of the year, indicating strong market resonance for their offerings [71][72]