UNISYS CORP Q1 FY2025 earnings call

• Execution against strategy to enhance free cash flow by optimizing delivery, improving cash conversion efficiency, and expanding solutions.
• Strong growth in new business TCV driven by sustained momentum in new logos.
• Field service volumes increased, with higher margin infrastructure volumes.
• PC refresh cycle expected to support field service volumes.
• DSS signings, including a large new logo win with a global technology supplier and a new scope contract with a biotech client; added EasyVista and Freshworks to DWS Alliance ecosystem.
• CA&I focused on application modernization, security (e.g., signed contracts with financial and Latin American clients), and AI adoption; launched Post-Quantum Cryptography solution and Service Experience Accelerator.
• Workflow optimization efforts, including nearly doubling campus hiring and upskilling workforce.
• Diverse solution portfolio with low client concentration and anchored in non-discretionary spend.

In constant currency terms, Digital Workplace Solutions (DWS) segment revenue declined 7.5% year-over-year to $119 million. Cloud Applications and Infrastructure Solutions (CA&I) segment revenue decreased 3.3% year-over-year to $177 million. Enterprise Computing Solutions (ECS) segment revenue was down 11.2% year-over-year to $119 million. Excluding license and support, specialized services and next generation compute solutions within ECS grew 9.2% in the first quarter. First quarter total contract value was $434 million, with $337 million from new business signings, and backlog was $2.9 billion, up 2% sequentially and 4% year-over-year.

• Reiterated total company constant currency revenue growth guidance of 0.5% to 2.5% and non-GAAP operating profit margin guidance of 6.5% to 8.5% with a path above the midpoint.
• Expect Ex-L&S revenue to ramp in the second half of 2025 with a 35-65 split front half to back half.
• Pre-pension free cash flow expected to be approximately $100 million for 2025.
• License and support revenue expected to be ~$410 million in 2025, offsetting Ex-L&S delays.

• Macro and geopolitical uncertainty including tariffs and trade restrictions.
• Impact on timing of new business signings and revenue generation.
• Low direct revenue exposure to US federal government and relatively low exposure to higher risk client sectors like automotive and retail.

Q: Discuss the L&S upside and Ex-L&S sequential growth.

A: Mike Thomson noted L&S has seen consistent consumption and deals extending, with Ex-L&S expected to ramp in Q2, Q3, and Q4 with improved volumes and margin.

Q: Confidence in 2026 targets.

A: Mike Thomson stated no change in confidence level, with trajectory aligned to 2023 investor day plans.

Q: Strategic focus and pipeline quality.

A: Mike Thomson talked about continued focus on market awareness, solution distinction, and workforce development, with pipeline growing and deals in later stages, indicating better quality and win rates.