Unisys(UIS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $432 million, down 11.4% year over year as reported and 8.5% in constant currency, primarily due to license and support renewal timing [24] - First quarter adjusted EBITDA was $40 million, with a margin of 9.3% [32] - First quarter net income was negative $30 million, translating to a diluted loss of $0.42 per share [33] - First quarter pre-pension free cash flow was $23 million, up $11 million year over year [33] Business Line Data and Key Metrics Changes - Digital Workplace Solutions segment revenue declined 7.5% year over year to $119 million, primarily driven by lower field service volumes [26] - Cloud Applications and Infrastructure Solutions revenue declined 3.3% year over year to $177 million, affected by lower volumes with existing clients [27] - Enterprise Computing Solutions revenue was down 11.2% year over year to $119 million, due to license and support renewal timing [28] Market Data and Key Metrics Changes - First quarter new business total contract value (TCV) was $434 million, including $337 million from new business signings, up more than 50% sequentially and more than 80% year over year [9] - Backlog at the end of the first quarter was $2.9 billion, up 2% sequentially and 4% year over year [29] Company Strategy and Development Direction - The company is focused on enhancing free cash flow by optimizing delivery and improving cash conversion efficiency [6] - The ClearPath Forward 02/1950 strategy aims to expand and enhance the ecosystem of software and industry solutions [16] - The company is investing in technology, talent, and innovation to solidify its operating systems at the core of clients' IT operations [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full year revenue growth guidance and profitability guidance, despite macroeconomic uncertainties [18][78] - The company expects delayed client decision-making to have a marginal impact on revenue trajectory, but believes its diverse solution portfolio provides stability [19][21] - Management noted that clients are focused on modernizing applications and enhancing security, which supports growth in the security segment [12][13] Other Important Information - The company achieved titanium partner status at Dell, enhancing growth incentives and access to resources [17] - The first quarter gross profit was $108 million, with a gross margin of 24.9% [30] - The company is actively monitoring market conditions to opportunistically expand its debt structure and advance its pension mitigation strategy [39] Q&A Session Summary Question: What is enabling the L and S upside in revenues? - Management indicated that increased consumption and longer contract extensions are driving the upside in license and support revenues [44][46] Question: What types of sequential growth assumptions are needed in ex L and S and L and S? - Management expects increasing growth assumptions every quarter, with significant contracts expected in Q3 and Q4 [50][52] Question: How confident are you in your 2026 targets? - Management remains confident in meeting cash flow expectations and has not seen a decline in pipeline quality despite macro uncertainties [59][60] Question: How is the quality of the backlog assessed? - Management stated that the pipeline is growing and the quality is better aligned to solutions that the company can win, with no need for natural pairing [68][75]