Unisys(UIS)2022-04-28 18:36Financial Data and Key Metrics Changes - The company's revenue declined by 12.4% year-over-year, which was in line with expectations, while on a constant currency basis, the decline was 10.3% [39][40] - Non-GAAP net loss was $27.3 million or $0.41 per diluted share compared to non-GAAP net income of $29.8 million or $0.46 per diluted share in the prior year [60] - The total company backlog as of March 31 was down slightly to $2.9 billion from $3 billion at year-end [49] Business Line Data and Key Metrics Changes - Digital Workplace Solutions (DWS) annual contract value (ACV) grew 65% year-over-year, while revenue was impacted by exited non-strategic contracts [13][44] - Cloud and Infrastructure (C&I) revenues grew 7% year-over-year, with cloud revenue specifically increasing by 43% year-over-year [18][47] - Enterprise Computing Solutions (ECS) revenue was $121 million, slightly better than internal expectations, but lower year-over-year due to fewer contracts scheduled for renewal [40][48] Market Data and Key Metrics Changes - Total company ACV grew 43% year-over-year, with total company total contract value (TCV) up 5% year-over-year [23] - The DWS pipeline increased by 14% year-over-year and 29% sequentially, while the C&I pipeline grew 40% year-over-year [24][25] - The weighted average expected gross margin associated with contracts signed in the first quarter was higher than the prior year period [25] Company Strategy and Development Direction - The company is focusing on enhancing its solution portfolio and increasing market awareness to drive new business signings and wallet share from existing clients [11][41] - A new branding strategy is underway, expected to roll out in the second half of the year to differentiate the company in the market [28] - The company is deploying an account-based marketing strategy to target high-value prospects and increase revenue from existing clients [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the significant increase in new business signed in the first quarter and expects momentum to accelerate in the second half of the year [37][38] - The company anticipates improving revenue trends as it moves beyond the headwinds of exited contracts [48] - Management acknowledged the competitive labor market and is focusing on talent attraction and retention initiatives [29][31] Other Important Information - The company received an upgrade from MSCI to an A rating and achieved an 80% reduction in greenhouse gas emissions, exceeding its 2026 objective five years early [32][33] - The CFO announced his transition to a new role as president and COO, with a new CFO set to join the company [34][35] Q&A Session Summary Question: What drove the increase in ACV and pipeline? - Management noted that the revenue decline was expected, and the increase in ACV was driven by a diverse set of deals rather than a few large contracts [70][76] Question: Are you pursuing sole source deals or competitive bids? - A significant portion of signings are expansion extensions, which tend to be sole source, while larger deals are mostly competitively bid [86] Question: Is the revenue guidance impacted by DWS client softness or weaker license renewals? - The guidance reflects both factors, with a notable impact from the existing client base's conversion appetite [87] Question: How is the competitive environment changing? - The company does not have operations in Russia or Ukraine but is looking to recruit IT professionals from Ukraine [92] Question: How did the contract scope evolve with the client? - The contract began as an ECS relationship and expanded to include DWS and C&I solutions, showcasing successful cross-selling efforts [96]