Core Insights - The report by Unisys highlights that organizations leveraging AI-enabled digital workplace services are achieving higher ROI, innovation, and employee retention amid economic uncertainty [1][2] Group 1: Performance Gap - Organizations investing in employee-centric AI-powered digital workplace services are twice as likely to exceed sales and revenue expectations compared to those that cut back [2] - An elite group termed "Productivity Leaders" demonstrates that prioritizing AI solutions and employee experience leads to measurable business results, while "Late Adopters" struggle [2] Group 2: Leadership Divide - IT leaders prioritize operational efficiency and are twice as likely as business executives to cite ROI, compliance, and productivity as key outcomes [5] - Business leaders focus on employee productivity, with only 32% believing digital tools work equally well for remote and in-office workers, compared to 67% of IT leaders [5] Group 3: AI-Enabled Support - Productivity Leaders recognize that generative AI (genAI) not only delivers business outcomes but also transforms how organizations manage technology disruptions [6] - 87% of Productivity Leaders consider genAI critical during downtime, compared to 35% of Late Adopters, and 92% report it reduces both downtime and IT workload [7] Group 4: Employee Experience - Productivity Leaders prioritize understanding employee needs when implementing AI solutions, with 96% aware of what employees want from technology, compared to 72% of Late Adopters [8] - They achieve greater gains in innovation (91% vs. 17%), improved cybersecurity (98% vs. 42%), and ROI (99% vs. 41%) [9]

Unisys 2025 Conference Summary Company Overview - **Company**: Unisys (NYSE: UIS) - **Industry**: IT Solutions and Services - **History**: Established over 150 years ago, Unisys has a long history of transformation and currently provides IT solutions primarily through two business segments: License and Support (LNS) and Everything Excluding License and Support (XLNS) [3][3]. Key Business Segments License and Support (LNS) - **Revenue Contribution**: Approximately 20% of total revenue, generating significant profit and cash flow [5][5]. - **Customer Base**: Major clients include airlines, cruise companies, and banks, utilizing the ClearPath Forward operating system for mission-critical operations [5][5]. - **Contract Structure**: Average contract duration is 4.5 to 5 years, with revenue recognized upfront upon contract signing. Support revenue is recognized over time [10][10][11][11]. - **2025 Revenue Guidance**: LNS revenue is guided at $430 million, raised from an initial estimate of $390 million due to hardware refresh needs from clients [12][14][14]. - **Gross Margin**: Expected gross margin for LNS is around 70%, though it may be slightly lower this year due to hardware sales [14][28][28]. Everything Excluding License and Support (XLNS) - **Revenue Contribution**: Represents 80% of total revenue, encompassing Digital Workplace Solutions and Cloud Applications and Infrastructure [30][30]. - **Market Dynamics**: Facing headwinds from unfavorable market conditions and IT budget constraints, leading to a projected 4% decline in XLNS revenue year-over-year [34][34]. - **Project Duration**: Outsourcing contracts typically last 3 to 5 years, while project work can vary in length [33][33]. Financial Performance and Guidance - **Free Cash Flow**: Pre-pension free cash flow guidance for the year is set at $110 million, with expectations to end the year with approximately $390 million in cash [42][46][46]. - **Pension Deficit**: Current pension deficit stands at $470 million, with plans to reduce it by $150 million to $200 million through annual contributions and annuity purchases [49][49][51][51]. - **Leverage Target**: The company aims to reduce leverage to approximately 2.5 times over the next few years, including pension debt [56][56]. Market Trends and Challenges - **AI Impact**: Increased usage driven by digital transformation and AI integration is expected to enhance consumption of Unisys's services, although some clients are currently hesitant to commit to long-term contracts due to uncertainty around AI solutions [21][37][39][39]. - **Government Funding**: The state and local business segment has been impacted by federal government shutdowns, causing delays in project work [36][36]. Strategic Focus - **Growth Areas**: Unisys is focused on expanding its XLNS segment, particularly in Digital Workplace Solutions, where it has received recognition from Gartner as a leader [58][62]. - **Cost Management**: The company is actively reducing SG&A expenses to maintain profitability despite revenue pressures [41][41]. Conclusion - **Overall Outlook**: Unisys remains optimistic about its core license and support business while navigating challenges in the XLNS segment. The company is well-positioned from a liquidity perspective and is focused on leveraging AI to enhance service delivery and operational efficiency [63][63].

Financial Performance - Second quarter revenue reached $483 million, exceeding expectations, with constant currency revenue growth of 1.0% year-over-year[7] - Sequential constant currency revenue growth was 8.5% for the total company and 6.5% in Ex-L&S revenue[7] - Gross margin was 26.9%, a decrease of 30 basis points year-over-year, while Ex-L&S gross margin was 17.6%, down 110 basis points year-over-year due to higher cost reduction charges[7] - The company is increasing non-GAAP operating margin guidance to 8.0% to 9.0% from a previous 6.5% to 8.5%[8] Sales Metrics - Total contract value (TCV) was $437 million, down 5% year-over-year, but up 5% year-to-date[8] - New business TCV was $122 million, down 43% year-over-year, but up 15% year-to-date[8] - Backlog increased to $2.9 billion, up 5% year-over-year[8] Capital Structure and Pension - The company issued $700 million in Senior Secured Notes[29] - A $250 million contribution was made to U.S Qualified Defined Benefit (QDB) Pension Plans[29] - Planning for $600 million of annuity purchases by year-end 2026[31]