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Image source: The Motley Fool. Thursday, July 30, 2026 at 8 a.m. ET Chief Executive Officer and President - Michael Thomson Chief Financial Officer - Debra McCann Vice President of Investor Relations - Michaela Pewarski Operator: Good morning, and welcome to the Unisys Corporation Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michaela Pewarski, Vice President of Investor Relations. Please go ahead. Michaela Pewarski: Thank you, operator. Good morning, everyone. Thank you for joining us. Yesterday afternoon, Unisys released its second quarter 2026 financial results. Joining me to discuss these results are Mike Thomson, our CEO and President; and Deb McCann, our Chief Financial Officer. As a reminder, today's call contains estimates and other forward-looking statements within the meaning of the securities laws. We caution listeners that these statements are subject to risks and uncertainties that could cause actual results to differ materially. These items can be found in our forward-looking statements section of yesterday's earnings release furnished on Form 8-K and in our most recent Form 10-K and 10-Q filed with the SEC. We do not assume any obligation to review or revise any forward-looking statements in light of future events. We will also refer to certain non-GAAP financial measures such as non-GAAP operating profit and adjusted EBITDA. These measures exclude certain unusual or nonrecurring items such as postretirement expense, cost reduction activities and other expenses the company believes are not indicative of ongoing operations. We believe these measures provide a more complete understanding of our financial performance, but they are not intended to be a substitute for GAAP. Reconciliations for non-GAAP measures are provided in the slides for today's call available on our investor website. With that, I'd like to turn the call over to Mike. Michael Thomson: Thank you, Michaela. Good morning, everyone, and thank you for joining us to discuss the company's second quarter 2026 results. The year is progressing well with the second quarter building on a good start to the year. As announced at our June Investor Day, we have increased our full year revenue guidance and second quarter came in ahead of the expectations we shared on our last earnings call. New business signings are again a bright spot, up more than 50% year-over-year in the second quarter and improved sequentially over the first quarter, which had been our strongest since 2024. Steady execution of our efficiency initiatives keeps us firmly on track for full year profit and cash flow. We continue investing to deploy our AI-infused solutions to our existing client base, enhancing AI fluency and proficiency and extending our platforms by building out our portfolio of Agentic assets to accelerate AI adoption in complex IT environments. That includes within our ClearPath ecosystem, where we are evolving both our core platforms to support AI capabilities and increasing the flexibility in using ClearPath data for connecting and powering enterprise AI workloads. Our investments are focused on converting today's demand into durable, high-value relationships that strengthen our conviction in our long-term value. We believe that value will become increasingly evident over time, especially as pension contributions translate to lower pension deficit, which will continue to improve our leverage position. Looking more closely at the second quarter performance, our revenue year-over-year decline of 2% was better than we anticipated last quarter due to a 2% growth in Technology Solutions and Services, or TS&S. As a reminder, TS&S represents the entire company, excluding ClearPath, and it reflects the renaming of [ L&S ] to more accurately represent the businesses included within that grouping. Upside in our Digital Workplace Solutions and Cloud Applications and Infrastructure segments span field services volumes, shorter cycle project work and increased hardware. We again saw some sequential improvement in clients undertaking project work and moving forward on their enterprise AI road map. Revenue was up across key solutions and applications, cybersecurity and data center field services, both sequentially and year-over-year. Demand accelerated for devices and services as clients contend with rising hardware costs stemming from memory shortages. We believe this supports the continued growth of our device subscription services or DSS offering as it is geared towards better asset management and reporting as well as better financial outcomes for our clients over time. We expanded Technology Solutions and Services gross margin by 170 basis points year-over-year, reflecting the results of ongoing investments in our technology, workforce and higher-value solutions. Looking at client signings during the quarter, new business TCV increased 57% year-over-year and 22% sequentially. Our sustained new business strength primarily reflects the generation of project work with our existing clients. Our win rates on new business with existing clients are up meaningfully for the first half of the year on both a TCV and a deal count basis. We have improved conversion on large and midsized opportunities, which we believe reflects our strengthening competitive position and acknowledgment of our portfolio and delivery capabilities. Follow-on opportunities are coming in shorter succession than in the past, and many of our notable wins were with newer clients where our relationships are expanding more quickly. For example, we recently expanded our relationship with a leading U.K.-based construction company with 2 wins in the second quarter. The client relationship is currently in its second year and will now provide our DSS offering, including intelligent refresh and life cycle services for their 10,000 devices and take on an Azure service and cloud governance as their Microsoft cloud solution provider. As another example, a community college system that became a Unisys client just last quarter signed a multiyear infrastructure services new scope based on the initial success of our Agentic modernization work. These cloud and infrastructure services solidify a recurring relationship with a top higher education institution, offering us significant white space opportunities. We continue to expand our presence in the rapidly growing need for AI infrastructure data center field services, which requires unique expertise in servers, liquid cooling and other equipment. In the quarter, a large OEM engaged us to provide full-time dedicated resident technicians to support an AI data center build-out and ongoing maintenance. Importantly, the client is funding advanced on-site training for the dedicated team as well as Unisys technicians rotating ahead of future anticipated volumes. This engagement is meaningful for our profile in the space where we were also recently recognized by Dell as their 2026 American Data Center Partner of the Year. We also signed a small expansion in high-value field services with a leading global telecommunications company to provide end-to-end deployment and support for Starlink antennas. Our field engineers will conduct site surveys, installation planning, cable routing assessments, testing and life cycle management beginning in Germany with plans to expand within Europe and beyond. Building on recent momentum in Australia, we signed a 6-year new scope contract with a global travel systems integrator to provide dedicated on-site engineers to maintain check-in kiosks, bags, tag, printers and passenger boarding systems in airports across the region. While 2026 has fewer large contract renewals scheduled, our AI-first approach is resonating and many clients are considering new scope opportunities into their renewals, which helps us maintain the relationship economics for us and allows our clients to share in a more efficient delivery profile. Looking at pipeline and demand trends, we saw double-digit sequential growth in new business pipeline with both existing and prospective clients. In digital workplace, we saw a broad-based influx in demand for our device subscription services as IT executives focus more urgently on offsetting the cost pressures that device price increases are putting on their budgets. Our DSS solution is purpose-built for this objective and transitioned clients from traditional capital purchases to flexible life cycle models. Using persona mapping, device telemetry and predictive analytics, we optimize across planning, procurement, warehousing, deployment and support. In cloud applications and infrastructure, we saw a pickup in application services requiring our central engineering capabilities and expertise in developing, modernizing and managing applications. The majority of this work now involves the creation and orchestration of AI agents where we have allocated highly skilled specialists. Several of our new application opportunities, including some large-scale transformations, come from our ongoing initiative to cross-sell modernization services into our ECS base of ClearPath clients. In ECS, we went live with our first endurance advisory engagement at a large financial institution and added several opportunities to the pipeline at other ClearPath clients. Endurance consulting projects involve developing initiatives for AI knowledge management, upskilling and skill sustainability that we use to enrich our own internal experience and where we see several key benefits. These engagements support retention and longevity by reinforcing skills at clients that manage ClearPath systems in-house while giving us a better understanding of their needs to inform our own product road map. We believe these initiatives will generate ancillary services revenues by identifying modernization opportunities within the ClearPath estate. The momentum in our pipeline is a function not only of demand trends and loosening budgets, but also a balance of consistency and agility in our go-to-market. Last quarter, I discussed how we adapted to the disruption AI was having on client decisions by rolling out rapid value assessments to create repeatable frameworks for understanding time to value and return on investment for key solutions. These frameworks are engaging more new logos and reaching out to them earlier in their AI journey, and we continue expanding our catalog. A consistent focus on existing initiatives like our alliance partnerships is also yielding results. And our partner-linked opportunities are generating a larger portion of the pipeline than they did a year ago. We're collaborating more closely with key partners on solution development where we can deliver outcomes for specific industry use cases relevant to both Unisys and our partners' clients. A vivid example is our deepening relationship with a key hyperscaler in higher education, working alongside our client, one of the largest university systems in the United States, we designated a bespoke application built with our partners' AI stack to assist overextended guidance counselors and improve student retention. Our partner is now training its own presales architects on the solution and making new introductions that open doors to apply a repeatable framework for co-developing and commercializing solutions and use cases with one of the largest global technology companies. In addition to client wins, our solutions are continuing to garner industry recognition. This quarter, we maintained our leader rankings in the market reports for data center services, cybersecurity and AI-enabled cloud infrastructure management published by analysts from ISG and Nelson Hall. I want to shift to discuss how we're investing in the foundations of future growth and as a diversified play on enterprises and mid-market AI orchestration. This encompasses developing solutions, delivery frameworks, partnerships and workforce skills to offer a standardized point of view while remaining platform-agnostic, optimizing for use cases or leveraging clients' existing technology investments. In the enterprise computing segment, we're continuing to deliver incremental modernization without disruption for clients that depend on ClearPath for mission-critical workloads. During the second quarter, we had a major release of a core operating system, which eases integration of data with third-party AI applications and new capabilities such as our AI developer toolkit. As with all major platform upgrades, we strengthened security, including the latest advancement in post-quantum cryptography. Quantum computing more broadly is an area where we've established expertise and a growing track record. In the second quarter, we moved into production a quantum fraud detection solution at Paysafe, an online payment platform based in the U.K. This solution pushes the bounds with its use of AI and machine learning and was developed through an ongoing partnership with the National Quantum Computing Center, or NQCC, and was partially funded by the U.K. government. We're seeking third-party validation from NQCC, which would establish Unisys as having one of a very few validated quantum production instances and lends its credibility in a highly regulated market. In digital workplace, our Agentic service desk is our solution for orchestrating an elevated and more automated IT support experience. We're currently in the deployment phase with a second group of clients, and these capabilities remain a key differentiator in client conversations. Agentic Service Desk embeds Agentic Workflows and intelligent automation directly into delivery and is deployed directly to the client's environment to maintain data sovereignty. This solution is a powerful example of our ability to operationalize AI at enterprise scale, providing more value at a lower cost. Our teams are working on new integrations for NexSync and TeamViewer platforms, so our AI agents can directly access telemetry and analytic data to lead to better outcomes by leveraging our clients' existing technology. We're also working on new voice capabilities using conversational AI, further enhancing the end user experience. Longer-term, service experience accelerator is designed to address a broader market beyond IT, orchestrating unified knowledge management for global capability centers, delivering centralized HR, finance and facility services. While early, we're now moving into production with a client on our first non-IT use case for human resources following a successful pilot during the quarter. On the field services side, as we invest in training and talent for high-value hybrid infrastructure and IoT devices, we're exploring partnerships with certain system integrators to scale faster. The system integrators we're working with design and manage data center build-outs for clients directly, but also use an array of subcontractors for execution. Our global footprint offers them the ability to consolidate field service capabilities with a single provider, making us a particularly attractive partner. In CA&I, we continue to enhance delivery of our intelligent operations platform and have established a new partnership with Antenna to improve AI operations governance and observability across AI agents and workflows and help optimize token use for clients. We are experiencing a broader architectural shift as clients weigh the question, where should I run my AI workloads, determining which AI workload belongs in the cloud, at the edge or on-prem, and whether you're solving for cost, latency, security or data sovereignty reasons are all part of the equation that we help clients solve. Our combined expertise across devices, applications and hybrid infrastructure makes us a natural orchestration partner for adopting AI in increasingly complex IT estates, especially as intelligent edge compute proliferates. Converting portfolio investments into client outcomes ultimately relies on the quality of our people and making the deliberate investments required for true AI workforce transformation. We continue to enrich our company-wide AI fluency and proficiency training programs with structured learning pathways, certification cohorts and role-based standards for major AI tools. This is being complemented by skills-first AI-driven talent architecture, a closed-loop system to capture skills and credentials, curated learning journeys and matching the right talent to the right work using AI at every step and continually learning from the outcomes. Our commitment to development is fundamental to our culture, and we are proud to share that Unisys has again been named one of Time Magazine's American's Best Companies for 2026 and moved up 42 rankings to #32 on the Economist 2026 Top 100 Most Loved Workplaces. This recognition, coupled with our low trailing 12-month attrition rate of 11.2% reflects our continued commitment to fostering a highly engaged and empowered workforce. With that, I'll turn the call over to Deb to discuss our financial performance in more detail. Debra McCann: Thank you, Mike, and good morning, everyone. My discussion today will reference slides from the supplemental slides on our website. I will discuss total revenue growth, both as reported and in constant currency and segment growth in constant currency only. I will also provide information on Technology Solutions and Services, or TS&S, to allow investors to assess the progress we are making outside of ClearPath, where software license revenue and profit recognition are tied to renewal timing and can be uneven between quarters. As a reminder, ClearPath revenue constitutes about 2/3 of the Enterprise Computing segment. As Mike discussed, second quarter revenue exceeded our expectations and was accompanied by a strong new business total contract value and pipeline momentum that supports the increase we made to our full year growth outlook in June. AI continues to be an important enabler across the business, strengthening our solution portfolio while also improving delivery efficiency, sales productivity and process automation. Investments in workforce, technology and high-value solution development have yielded stronger quarterly gross margin in Technology Solutions and Services, keeping us on pace for our 2026 profitability and free cash flow expectations. Our liquidity remains solid, and our pension contributions are translating to improvement in our global pension deficit, reducing debt and moving us toward our goal of fully removing our U.S. pensions. Looking at our results in more detail, you can see on Slide 7, the second quarter revenue was $474 million, a decrease of 2% year-over-year or negative 5.2% in constant currency, primarily due to the timing of ClearPath software license renewals. This was about $20 million above the outlook we provided last quarter, fully attributable to our Technology Solutions and Services, which generated $404 million of revenue, an increase of 2% compared to the prior year or a 1.3% decline in constant currency. Staying on Slide 7, I will now discuss second quarter revenue by segment and in constant currency terms. Digital Workplace Solutions revenue of $142 million declined 1.1% compared to the prior year, but better than expected. Revenue generated from recent new business signings and high-end storage field services was partially offset by declines from known attrition and lower PC field services volumes, which were anticipated. Incremental revenue had a higher mix of hardware, including components associated with device subscription services or DSS. DSS services have attractive margins, increased stickiness of client relationships and provide an attractive entry point for landing with new logos, though may have large components of lower-margin hardware revenue if Unisys procures the devices. Second quarter revenue in the Cloud Applications and Infrastructure Solutions segment was $184 million, a year-on-year decline of 3.2%, slightly better than we had anticipated last quarter. While project completions and prior year attrition were headwinds, delays on some ramp-downs provided incremental revenue upside. We are also seeing good growth in higher-value security and application services. Enterprise Computing Solutions revenue was $126 million in the second quarter, down 13.2% from the prior year period. ClearPath revenue of $70 million was in line with our expectations, down 22.9% year-over-year due to license renewal timing, fully accounting for the overall decline in the segment. As I mentioned earlier, ClearPath license revenue is recognized based on renewal timing, which can be uneven between quarters. In June, we increased our full year outlook for ClearPath revenue from $415 million to $425 million and have a high level of visibility into a strong second half of ClearPath revenue and profit. Specialized services and next-generation compute solutions, which make up the remainder of the ECS segment, grew 3%, led by increased volumes in managed services and business process solutions. Second quarter total contract value was $422 million, including $192 million of new business TCV, which is up 57% year-over-year. Year-to-date, we have signed $696 million of TCV, including $350 million of new business TCV, an increase of 52% compared to the first half of 2025. Trailing 12-month book-to-bill is 1.2x for both total company and TS&S, relatively flat sequentially. We exited the quarter with a backlog of $2.8 billion and a greater portion of in-year revenue assumed in our guidance is contracted and in backlog relative to this time last year. Moving to Slide 9. Second quarter gross profit was $117 million, a 24.8% gross margin compared to 26.9% last year, driven by timing of ClearPath renewals. TS&S gross profit was $78 million and gross margin was 19.3%, up 170 basis points on a year-over-year basis. The quarter included $3 million of nonsegment revenue with 100% profit flow-through, which benefited total company and TS&S gross margin by 50 and 60 basis points, respectively. As we disclosed last quarter, we will see the same size benefit in the third and fourth quarters, resulting from a first quarter transaction within our U.K. Business Process Solutions joint venture. Staying on Slide 9, I will now touch briefly on segment gross profit. DWS gross margin was 10.8% in the second quarter compared to 16.9% in the prior year. The decline reflects several factors, including the hardware mix and reduced volumes that I covered in my revenue discussion. But the larger impact was elevated near-term transition costs and upfront workforce investment on the highly complex transition of a first quarter win. This transition requires maintaining continuity of existing services while also deploying Agentic service desk and transforming delivery across thousands of restaurant locations without causing disruption. We view these investments as foundational to both the future margin expansion of the account and the successful execution of a flagship commercial deployment that can further differentiate Unisys in the market and illustrate our ability to deliver Agentic service desk at scale. CA&I gross margin was 25% in the second quarter, up 420 basis points year-over-year. Margin expanded due to delivery efficiencies and labor cost savings, but is expected to be lower in the second half, in part due to the timing of compensation and client transitions. ECS gross margin was 44.8% in the second quarter, down from 53.5% in the prior year, primarily due to the timing of ClearPath license renewals. Within the segment, ClearPath's gross margin was 56.7%, and we continue to expect an approximate 70% gross margin for the full year as increased license revenue in the second half will have high profit flow-through over a relatively fixed cost base. Moving to Slide 10. Second quarter GAAP operating loss of $33 million included a noncash goodwill impairment charge of $47.2 million. This is the remainder of the goodwill balance allocated to the DWS segment and reflects a slower pace of profitability improvement due to competitive pressures, pricing dynamics and near-term investments in delivery. This does not change our view of the margin potential in this segment. Non-GAAP operating profit margin was 5.3%, in line with the outlook we provided last quarter. On a year-to-date basis, SG&A of $187 million is down $3 million from prior year, and we are on track to achieve full year cost savings of $10 million to $20 million through technology-driven productivity gains and streamlining of our corporate functions. Second quarter net income was negative $95 million, translating to diluted loss of $1.31 per share. And on an adjusted basis, net income was negative $6 million or diluted loss per share of $0.08. Turning to Slide 11. Adjusted EBITDA was $54 million in the second quarter, an 11.3% margin. Cash from operations was negative $26 million and capital expenditures in the second quarter totaled $23 million, bringing year-to-date CapEx to $44 million. As a reminder, about half of our annual capital expenditures are relatively fixed levels of solution development for our ClearPath ecosystem. Free cash flow was negative $49 million in the second quarter compared to negative $337 million in the prior year period, which had included a $250 million discretionary contribution to our U.S. qualified defined benefit pension plans. In the second quarter, we made $29.2 million of a cash pension and $0.5 million of postretirement contributions. Moving to Slide 12. Our cash balance is $324 million as of June 30 compared to $414 million at year-end. We continue to maintain a strong liquidity position, underpinned by substantial cash on hand, an undrawn $125 million ABL facility and no meaningful debt maturities before 2031. At year-end, our global pension deficit was approximately $450 million. Based on market conditions and our year-to-date pension contributions, we estimate that as of June 30, our global pension deficit has improved by approximately $30 million from year-end. Net leverage, including year-end pension deficit is approximately 3.1x. Each year-end, we provide more detailed estimated projections for our deficit and expected global cash pension contributions relative to our quarterly updates. These projections change based on factors, including funding regulations and actuarial assumptions. We expect $40 million of global pension contributions in the second half of 2026 and estimate that our aggregate expected cash contributions in 2027 through 2029 remain essentially unchanged from our year-end projections. As a reminder, in 2025, we reallocated planned assets to remove substantially all volatility from our U.S. pension contributions, which increased certainty of future cash needs. With continued operational and financial execution, we expect cash contributions to translate into leverage reduction that will position us to fully remove our U.S. pensions by 2030. Turning to Slide 14. I will now discuss full year financial guidance and additional full year color. We are reaffirming the full year guidance range for revenue that we increased at our June Investor Day, which is a decline of 5% to 3.5%. Based on June 30, foreign exchange rates, this equates to a reported revenue decline of negative 2.6% to negative 1.1%. Guidance assumes TS&S revenue constant currency decline between 6% and 4% and full year ClearPath revenue of $425 million, which is consistent with the upward revisions made in June. We also continue to expect average annual ClearPath revenue of approximately $400 million for 2027 and 2028. We are reaffirming guidance for full year non-GAAP operating profit margin of 9% to 11%, which assumes a slight year-over-year increase in ClearPath gross margin, targeted TS&S gross margin improvement of 100 to 200 basis points and a $10 million to $20 million reduction in operating expense. Looking specifically at the third quarter, we expect approximately $450 million of total company revenue on a reported basis at FX rates as of June 30. This assumes approximately $370 million of Technology Solutions and services revenue and approximately $80 million of ClearPath revenue. This implies ClearPath revenue will exceed $200 million in the fourth quarter to achieve full year revenue of $425 million, and we expect with a high degree of confidence key large deals will close by year-end. We anticipate third quarter non-GAAP operating margin will be approximately 4%. We expect third quarter nonoperating items impacting GAAP net income of approximately $200 million, which primarily includes an estimate for the incremental noncash pension expense associated with a likely third quarter annuity purchase. We are contemplating a transaction that would remove approximately $200 million of pension liabilities from our U.S. qualified defined benefit plans, which would be funded by planned assets of a similar amount to the liabilities being removed. The noncash pension expense associated with the annuity would depend on the final size and structure of the transaction. Annuity purchases are part of our ongoing pension management strategy and are an avenue for transferring liabilities to third-party insurance companies at a lower cost relative to a full transfer. Our base case expectation for full year free cash flow is unchanged at approximately negative $25 million, which translates to approximately $75 million of pre-pension and post-retirement free cash flow. This assumes approximate payments of $85 million in capital expenditures, $70 million of cash taxes, $70 million of net interest payments, $30 million in aggregate environmental, legal and restructuring payments and $100 million of pension and postretirement contributions, approximately $25 million of which is expected in the third quarter. Before we open the line for questions, Mike has a few additional remarks. Michael Thomson: Thank you, Deb. We've covered a lot today, but I hope the 3 messages came through pretty clearly. First, performance of the business, including continual favorable trends in our ClearPath ecosystem are advancing us towards our key financial objectives, higher profit and free cash flow for investing in the business and funding ongoing pension contributions that will translate to leverage reduction and position us for future removal of our U.S. pensions by 2030. Second, we have a strong momentum in our go-to-market. Our solutions are aligned with key AI-driven demand trends, receiving more and more recognitions with clients and industry analysts, and we're winning work that moves us into higher-value areas of the market. And third, we're making the right investments today in people, technology and innovation to inflect, sustain and accelerate growth in the future. Operator, you may open up the line for questions. Operator: [Operator Instructions] The first question comes from Rod Bourgeois with DeepDive Equity Research. Rod Bourgeois: I want to start by asking about the client spending environment with all of the shifting priorities that have occurred. Clearly, IBM encountered some client spending issues in its recent quarter with heightened client costs on AI infrastructure crowding out some of their larger deals. So the question here is, to what extent are you seeing that dynamic across your businesses? And do you -- if that has been a dynamic, is it subsiding at this point or a continuing effect? Michael Thomson: Rod, it's Mike. Thanks for the question and great question. Obviously, very topical with the recent news from IBM. Look, I think we had mentioned even in some of my prepared remarks that we are seeing that dynamic. There clearly is a focus in the industry in regards to infrastructure, specifically RAM and the cost of RAM. And I think at least from my read of what we saw from IBM and clearly what happened in their earnings post that they see that same shift. And I think they were pretty bullish on, hey, a bunch of those things were timing and they ultimately cleared themselves up shortly thereafter. They also specifically noted, and again, something we're seeing, which was the positive consumption in their base, right? So I think they kind of reiterated that. You've seen that with our ClearPath as well, continued consumption increase. You saw, again, in the Investor Day, we bumped up our range from a guidance perspective due to that. So I think positive from that point of view. Certainly, from a market-facing perspective, that shift into infrastructure spend and maybe deferring some of the discretionary spend, I think, is a consistent trend we saw in the macros at the tail end of last year. And we mentioned at that time, we expected that trend to continue through at least the first half of this year, which we've seen and maybe extend a little more than that. But that's kind of baked into our thought process already. And then lastly, I would say, for us, at least, we see that as a little bit of an advantage. We talked and Deb mentioned the DSS pipeline and the growth in that DSS pipeline. Well, we think a lot of that is because we've got essentially IT executives that are prioritizing that spend, trying to lock in pricing before they see these continual price increases. And our DSS offering is really geared towards how we can have some economic value come back to those clients and give them kind of more life cycle view that's really geared on what their needs are, persona mapping, data telemetry, et cetera. So although the shift is to hardware spend and clearly, that's having some impact on the macros as it pertains to AI and/or project work, it is shifting to something where we think we've got a really strong offering to present to the market. So it's kind of a double-edged sword, but I would say that those are more temporary in nature as far as the deferral is concerned. And you saw by our strong new business postings that we're getting our share for sure of that work, and it is starting to loosen a bit. Rod Bourgeois: Okay. Great. And another timely topic in the AI world is the private AI with open weight models versus the adoption of frontier models. What adoption and client behavior patterns are you seeing and expecting on that front between open weight versus frontiers? Michael Thomson: Yes. Great question, Rod. Certainly, again, very timely. Look, I'll start with -- we almost don't care what side of the coin wins that battle. The fact of the matter is we're agnostic to the platform, and it's very specific to kind of client needs, right? If you're concerned around sovereignty and transparency of the model or data leakage or kind of IP protection or protecting your alpha, you're likely going to lean towards open source, open weight and do it in a private manner, right, so you can essentially [indiscernible] and be able to run that and keep control of it. If you've got really complex problems, that you need the larger frontier models for, well, then clearly, you're going to do that in a different manner. So look, I think in general, it is us helping our clients find the right model and the right infrastructure at the right time to fill a specific need. And consistent with how we treat and how we've treated whether it's hyperscalers or OEM providers, we're kind of agnostic to who they use in that stack and much more attuned to management of that hybrid infrastructure, understanding what it is they're trying to accomplish and understanding what's most important to them to help kind of shift their focus to the pros and cons of those various models. And again, it's really -- if you're really in a highly regulated, highly secure, you're going to want kind of that on-prem calculation mostly to protect your IP and maintain AI and data sovereignty. So it's really an interesting dynamic as it plays out in the market. But I do think regardless of kind of which option you select, there are a lot of things to be wary of, and I think it really helps our kind of go-to-market, I'll say, advisory and consultancy because we have deep understanding both industry vertical as well as client understanding of the hybrid infrastructure that exists. So we're better to really know how to steer that conversation. Rod Bourgeois: And is that activity showing up in your new business wins? Or is it mostly in the pipeline right now? Michael Thomson: Yes. Great follow-up. I would say, yes, in the new business wins, where we're seeing the most of the new business wins in CA&I, an example, is kind of the apps modernization and cybersecurity components of that, which are really based on this development and where that compute is going to happen. But the pipeline is strong as well in that space. So my comment around a little bit of the loosening of that discretionary kind of comes in those areas in particular. And so we're seeing a nice balance of that and clearly tying that into the training that we're doing with our associates and our go-to-market strategy with the rapid value assessments to really have that discussion kind of pull that out from normal day-to-day. And if nothing else becomes a point of spear to get in and have that dialogue with clients, show our innovation and then move on to the larger discussions on managed services on a more, I'll say, macro view. Operator: The next question comes from Mayank Tandon with Needham. Mayank Tandon: Mike, could you talk about pricing trends across your solution set, just given the flux in the market and some of the comments from some of the larger IT services companies, would love to get your thoughts on overall pricing trends and if the contracts are being structured in a different way than in the past, given some of the AI focus. So more like just a broad question around the overall pricing trends that you're seeing across your solution set. Michael Thomson: Yes. Great. Thanks, Mayank. Good to talk to you again. Yes, look, it's clearly been an issue over the course of the last year where we've had discussions on pricing. The terminology used is this AI deflation and kind of what it means. Clearly, for some of our solutions, there is price pressure on the top line. The nice thing, at least about us personally is last year, we did roughly $1.7 billion of renewals. So we got through a big chunk of that pricing pressure. By the time we exit this year, we'll be probably about 3/4 of the way through all our renewal cycles. So that's kind of behind us as far as the pricing pressure is concerned. We have actually been pleasantly surprised that we've been able to bring some new scope opportunities into the economics of those deals. So although the -- I'll say, the traditional pricing has been pressured and down, we've been able to augment that with kind of new scope opportunities to maintain the economics of that relationship and gives us an opportunity to illustrate our skills in other areas. So the pricing pressure is real. I think we've kind of baked it into our BAU at this point. It's clearly baked into kind of our modeling and our numbers. And again, we have been pretty good, I would say, 85%-ish good in being able to increase some scope to augment that price pressure and actually give us another entry point for growing the client relationship. So yes, it's real. We're about through it on our side, and we're seeing it as opportunity to expand our relationship with clients. Mayank Tandon: And then just a quick one for Deb on the guide. Deb, for 3Q, given the downtick in revenue relative to 2Q and also the non-GAAP operating margin, is that just a seasonal impact? Or are there more drivers behind that? That does mean that fourth quarter would obviously see a big step-up to get to the full year guide? So just curious on some of the nuances around the quarterly guidance. Debra McCann: Yes. So you're right. It is really just seasonal. And so Q3 will be a lighter quarter, particularly in ClearPath, right? So for ClearPath, with Q4 -- Q3 only being about $80 million, that means that Q4 would be close to $200 million to hit that $425 million. So this will have impact on the revenue in Q3. And also from a cash perspective, you'll see an impact because we do -- a fair amount of cash would come in from that Q4 ClearPath revenue. So you'll see kind of a big dip in free cash flow as well, but it will come in, in Q4. Michael Thomson: I would say, Mayank, on that, very consistent to last year. We had a pretty strong back half last year, really good visibility into that. That's not unusual for us in general, so that we have a really strong quarter throughout the year. So I do think, again, really good line of sight to that. I know there was some consternation last year in regards to the same thing, like things were back half weighted. And all of that came in, and we expect all of this to come in as well. So again, it's primarily ClearPath related. And of all the areas where we're bullish, that's the place where we're most bullish. Operator: The next question comes from Matt Dezort with William Blair. Matt Dezort: This is Matt on for Maggie Nolan. Congrats on the quarter. Mike, can I ask you about the data center opportunity? I know you were really excited about that at the Investor Day. You talked about a win in your prepared remarks. I'm just wondering if you can give us any more color on your opportunity there? What percent of your field services footprint is already up to speed on those skill sets and how the pipeline is building for the data center opportunity? Michael Thomson: Yes. Thanks, Matt, for the question. Yes, I am excited about the data center opportunity for our company in general. I think there are essentially kind of 3 elements to that, that are pretty interesting to us. I'll address them. You talked specifically about field services, so I'll hit that one first. Clearly, we have done a lot of work to ensure that our field services technicians are prepared for the influx of work, specifically as we talk about things build-out of AI data centers, liquid cooling, networking equipment, et cetera. So we feel pretty good that we've got a good bulk of our technical associates ready to go and geared up and trained. A lot of those folks, I mentioned the award we got from Dell as data center partner for the year of '26. So there's a big influx of work we get from that line of business. We do have some very interesting pipeline opportunities there. I talked a little bit about some of the Starlink opportunities. So I feel like between -- one of our core tenets of our strategy has been to continue to uplift the field services skills that we have. Historically, if I go back 5 years, it was predominantly PC break fix type work. Now we're well into data centers. We're moving into fast service restaurants. We're moving into other areas of the build, again, mentioning the Starlink opportunity here and moving up stack in the airports and things like that. So really like the way that's progressing and some really nice opportunities pipeline oriented to position us for growth in that space. And every one of those ends up being stronger margin and better utilization. So I am still bullish on that and do think that's on a path to really helping DWS become much more profit-oriented than they have been historically. The other 2 areas of data center opportunities is clearly data center service management, right, and the ability to orchestrate AI. Rod asked a question about private AI. That's really about a little bit about repatriation into the data center and managing kind of hybrid data center opportunities, and we're positioned well for that as well and especially, when you just think about most of our clients are hybrid infrastructure oriented. So that brings in kind of the application layer and the alignment to the data at the data center level. So lots of really interesting opportunities that are data center oriented. And as you know, there are billions of dollars being spent in that space, not only for the new build, but retrofitting other areas. So we feel like we're really well positioned that way. And very few field service-oriented data service center providers are global in nature, right? So we've already got people in essentially every country that's going to be seeing this growth. So we feel like if there's -- you're looking for a global partner instead of hundreds of local partners, there's very few phones you can pick up and call on, and we're one of those few. Matt Dezort: That makes sense. And then can I ask about DSS and hardware? I guess, are you able to quantify how much of the upside in the quarter was driven by hardware device support services versus obviously, CA&I outperformed too? And then how do you expect those 2 pieces to perform through the balance of the year? Michael Thomson: Yes. Thanks, Matt. Look, we haven't quantified the hardware component of that. But I would say we mentioned it because when you see pressure on the margin, a lot of times, it's because we're doing DSS deals that may have a larger hardware component in that deal, which has pressure or puts pressure on the margin percentage. But just -- if you keep in mind, part of our view here is margin dollars or profit dollars. They are coming with incremental profit dollars, but detrimental margin percentage. And it's really deal specific. And Deb mentioned in her prepared remarks that it's really determined on whether or not the client wants us to procure the devices for them. So many of the DSS deals we have in the pipeline is just our services component on it, and we're getting good margin on the DSS services piece of the business. So it's very much, I'll say, contract specific and very much geared towards whether or not we're playing the procurement role in the DSS offering, which is really geared to a client. So what we'll do is if there is any anomaly in any given quarter for a certain contract, we'll certainly call that out and make sure you guys are aware of it. But it's not like that's our target business plan that we want to go out and be the procurement partner there. In fact, we would prefer clients buy it themselves and that we just handle the services component of it. So right now, it's relatively small and probably has an outweighted portion of the margin movement than it does actual dollars. Deb, anything you want to add there? Debra McCann: No, I think you covered it. Operator: [Operator Instructions] The next question comes from Anja Soderstrom with Sidoti. Anja Soderstrom: I'm just curious with the license renewals, have you seen any changes there in the duration of those? Michael Thomson: No, we haven't actually. The duration has been very steady. Again, I think the trend, if anything, that we have seen in the past would be extension. I assume you're talking ClearPath when you -- as to that question. And if anything, what we're seeing is extension. But in this particular case, this is -- it's not extension oriented. It's primarily increased volumes, right, or consumption. Anja Soderstrom: Okay. And have you also seen any sort of changes to the competitive environment given the changes in the directions? Michael Thomson: Are you talking specific to ClearPath or just in the business in general? Anja Soderstrom: The business in general and AI... Michael Thomson: Yes. Look, I think there are plenty of new entrants into the space based on the -- whether it's [indiscernible] orientation or it's kind of AI boutiques coming into the space. I think that's bringing a lot of, I'll call it, noise or confusion. I think the bottom line, however, is for those folks to be successful, they actually have to know how to run the hybrid infrastructure because they're really talking about kind of bespoke technology for point solutions that have to sit in a full ecosystem. So if I said in any place we'd see them, it's probably in the apps modernization at the top end of the stack, but they have no managed services full stack capabilities. So for the bulk of our work, which is really managed service contracts, not too big an impact to us other than the confusion it causes on the front end. And then where we would see increased competition would be in kind of bespoke application modernization or bespoke solutions that might replace a piece of SaaS software or a [ COTS ] software, something in that vein. And there are literally hundreds of players in that space. Operator: Thank you. This concludes our question-and-answer session and the Unisys Corporation Second Quarter 2026 Financial Results Conference Call. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Unisys, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Unisys wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Unisys (UIS) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Unisys Corporation? Here are five stocks we like better. Q2 revenue fell 2% year over year to $474 million, primarily because of ClearPath software-license renewal timing, though results exceeded the company’s outlook by about $20 million. Adjusted EBITDA was $54 million, while Unisys reported a $95 million GAAP net loss including a $47.2 million goodwill impairment. New-business momentum strengthened: second-quarter new-business TCV rose 57% year over year to $192 million, supported by demand for AI services, project work, device subscriptions and data-center infrastructure. Unisys ended the quarter with $2.8 billion in backlog and a 1.2x trailing book-to-bill ratio. Unisys reaffirmed its 2026 outlook for a 3.5%–5% constant-currency revenue decline, a 9%–11% non-GAAP operating margin and approximately negative $25 million in free cash flow. Management expects ClearPath revenue to exceed $200 million in Q4 and is considering a pension annuity purchase that could reduce U.S. pension liabilities by about $200 million. 2 former tech trailblazers rising like a phoenix Unisys (NYSE:UIS) reported second-quarter 2026 revenue of $474 million, down 2% year over year on a reported basis and 5.2% in constant currency, as the timing of ClearPath software license renewals weighed on results. The company said revenue exceeded its prior outlook by about $20 million, driven by stronger-than-expected performance in Technology Solutions & Services. CEO and President Mike Thomson said the company’s new-business momentum remained a bright spot, with new-business total contract value, or TCV, rising 57% from a year earlier and 22% sequentially. He said demand for project work, AI-related services, field services and device subscription offerings supported results. → Microsoft Just Flipped the AI Spending Narrative Overnight Technology Solutions & Services, or TS&S, which includes the company’s operations outside of ClearPath, generated $404 million in revenue, up 2% from the prior-year period on a reported basis. In constant currency, TS&S revenue declined 1.3%. Digital Workplace Solutions revenue totaled $142 million, declining 1.1% in constant currency. Chief Financial Officer Deb McCann said revenue from recent business wins and high-end storage field services partially offset expected attrition and lower PC field-services volumes. The segment also benefited from hardware associated with Device Subscription Service, or DSS, engagements. → 2 Unique Space ETFs That Could Upend the Industry Cloud, Applications & Infrastructure Solutions revenue was $184 million, down 3.2% in constant currency. McCann said project completions and prior-year attrition were headwinds, though delayed client ramp-downs helped performance. The company reported growth in higher-value security and application services. Enterprise Computing Solutions revenue fell 13.2% in constant currency to $126 million. ClearPath revenue was $70 million, down 22.9% year over year, reflecting license renewal timing. McCann said the ClearPath decline fully accounted for the overall revenue decline in the enterprise computing segment, while specialized services and next-generation computing solutions grew 3%, led by managed services and business process solutions. → MarketBeat Week in Review – 07/27- 07/31 Total second-quarter TCV was $422 million, including $192 million of new-business TCV. For the first half, Unisys signed $696 million in total TCV and $350 million in new-business TCV, with new-business TCV up 52% from the first half of 2025. The company exited the quarter with $2.8 billion in backlog and a trailing 12-month book-to-bill ratio of 1.2 times. Thomson said the company is seeing increasing demand for its DSS offering as clients seek to manage higher device costs tied to memory shortages. He said DSS helps clients shift from conventional capital purchases to lifecycle-based models using device telemetry, persona mapping and predictive analytics. The company also cited several new business wins, including expanded DSS and Azure cloud-governance work for a U.K.-based construction company, a multi-year infrastructure-services contract with a community college system, and a data center engagement with a large original equipment manufacturer. Under the latter engagement, Unisys will provide dedicated resident technicians for an AI data center build-out and maintenance work. Thomson said Unisys is investing in technicians and training for AI data center services, including work involving servers, liquid cooling and networking equipment. He said the company believes its global field-services footprint could make it an attractive partner for system integrators managing data center build-outs across multiple countries. In its ClearPath business, the company released a core operating-system upgrade during the quarter intended to improve integration of ClearPath data with third-party AI applications. It also introduced an AI developer toolkit and updated security capabilities, including post-quantum cryptography features. Separately, Unisys moved a quantum fraud-detection solution into production at U.K.-based payments platform Paysafe. Second-quarter gross profit was $117 million, representing a 24.8% gross margin, compared with 26.9% a year earlier. The lower consolidated margin primarily reflected ClearPath license renewal timing. TS&S gross margin increased 170 basis points year over year to 19.3%. Digital Workplace Solutions gross margin declined to 10.8% from 16.9%, reflecting hardware mix, lower volumes and transition costs for a complex client deployment involving Agentic Service Desk across thousands of restaurant locations. Cloud, Applications & Infrastructure gross margin increased 420 basis points to 25%, benefiting from delivery efficiencies and labor-cost savings. Enterprise Computing Solutions gross margin declined to 44.8% from 53.5%, again due largely to ClearPath renewal timing. Unisys recorded a GAAP operating loss of $33 million, including a $47.2 million non-cash goodwill impairment charge related to the remaining goodwill balance assigned to the Digital Workplace Solutions segment. McCann said the impairment reflected a slower pace of profitability improvement amid competitive pressures, pricing dynamics and near-term delivery investments. Net loss was $95 million, or $1.31 per diluted share. On an adjusted basis, the company reported a net loss of $6 million, or $0.08 per share. Adjusted EBITDA was $54 million, or an 11.3% margin. Cash from operations was negative $26 million, while capital expenditures totaled $23 million. Free cash flow was negative $49 million, compared with negative $337 million in the prior-year quarter, which included a $250 million discretionary pension contribution. Unisys ended June with $324 million in cash and an undrawn $125 million asset-based lending facility. The company reaffirmed its full-year revenue outlook, which calls for a constant-currency revenue decline of 5% to 3.5%. At June 30 foreign-exchange rates, that equates to a reported revenue decline of 2.6% to 1.1%. The guidance assumes TS&S revenue declines 6% to 4% in constant currency and ClearPath revenue reaches $425 million. Unisys also reaffirmed its forecast for non-GAAP operating profit margin of 9% to 11% and free cash flow of approximately negative $25 million for 2026. For the third quarter, the company expects about $450 million in reported revenue, including roughly $80 million of ClearPath revenue, and a non-GAAP operating margin of approximately 4%. McCann said the company expects ClearPath revenue to exceed $200 million in the fourth quarter and said management has a “high degree of confidence” that key large deals will close by year-end. The company also expects about $200 million of third-quarter non-operating items affecting GAAP net income, primarily related to a potential pension annuity purchase that could remove about $200 million in liabilities from its U.S. qualified defined-benefit plans. Unisys estimated its global pension deficit improved by about $30 million from year-end to approximately $420 million as of June 30. The company said it remains focused on using pension contributions and operational execution to reduce leverage and target the removal of its U.S. pension obligations by 2030. Unisys Corporation (NYSE: UIS) is a global information technology company that delivers a broad portfolio of digital workplace, cloud and infrastructure, application and security services. Formed in 1986 through the merger of Burroughs Corporation and Sperry Corporation, Unisys combines decades of experience in IT modernization with a focus on secure, data-driven transformations for government and enterprise organizations. The company operates two core business segments: Services and Technology. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Unisys Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Unisys Corporation UIS used its second-quarter 2026 earnings call to emphasize stronger new business activity, AI-driven solutions and improving client engagement while maintaining its full-year outlook. Management highlighted growth opportunities across technology services despite ongoing pricing pressure and uneven demand patterns. The company reported adjusted loss per share of 8 cents, wider than the Zacks Consensus Estimate of a loss of 3 cents per share, while revenues of $473.5 million exceeded the consensus estimate of $446.2 million. Unisys Corporation price-consensus-eps-surprise-chart | Unisys Corporation Quote CEO Michael Thomson said AI investments are becoming a central part of Unisys’ strategy, with the company building AI capabilities across its platforms, workforce and client solutions. Thomson highlighted growth in AI-enabled services, including Agentic solutions, hybrid infrastructure support and modernization offerings designed to help enterprises deploy AI in complex technology environments. Management also pointed to stronger demand from existing customers as a key opportunity, with new business total contract value rising 57% year over year to $192 million during the quarter. Unisys reported improving sales momentum, with year-to-date new business TCV reaching $350 million, up 52% from the prior-year period. Thomson said improved conversion rates on large and midsized opportunities are reflecting stronger competitive positioning and expanding client relationships. The company also noted that pipeline growth accelerated, supported by demand for digital workplace services, cloud modernization and AI-related projects. Management acknowledged continued pricing pressure across portions of the IT services market, particularly as customers adjust spending priorities around AI infrastructure. Thomson said Unisys has worked through much of its renewal cycle pressure and has expanded relationships through additional service opportunities tied to existing contracts. Financially, TS&S revenues increased 2% year over year to $403.8 million, while TS&S gross margin improved 170 basis points to 19.3%, supported by delivery improvements and labor cost savings. CFO Deb McCann reaffirmed the company’s full-year 2026 guidance, including a constant-currency revenue decline of 5% to 3.5% and non-GAAP operating margin of 9% to 11%. The outlook includes expectations for approximately $425 million of ClearPath revenues, with management anticipating a stronger second half due to renewal timing. For the third quarter, Unisys expects revenues of about $450 million and a non-GAAP operating margin of approximately 4%. During Q&A, a DeepDive Equity Research analyst asked about changing client spending priorities as companies increase AI infrastructure investments. Thomson said Unisys is seeing similar market dynamics, with some discretionary projects being delayed while infrastructure spending receives greater focus. He added that the shift benefits offerings such as device subscription services, which help customers manage technology costs. A Needham analyst also questioned pricing trends and contract structures. Thomson said pricing pressure remains present but noted that Unisys has been adding new scopes of work to preserve relationship economics. Unisys closed the call by emphasizing operational execution, AI investments and financial discipline as core priorities. Management highlighted improving pension metrics, liquidity strength and continued investment in workforce capabilities as part of its broader plan to support future growth. The company ended the quarter with $324.3 million of cash and maintained its focus on reducing pension-related obligations while expanding higher-value technology services. Unisys currently carries a Zacks Rank #3 (Hold), indicating that earnings estimate revisions do not place the stock among the strongest-rated Zacks categories. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has a Value Score of C, Growth Score of D, Momentum Score of A and a VGM Score of C. Zacks Style Scores measure characteristics such as value, growth and momentum, with higher scores representing stronger attributes. The Zacks Rank can change as analysts update earnings estimates following quarterly results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unisys Corporation (UIS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. New business total contract value (TCV) grew 57% year-over-year, driven by improved conversion on large and mid-sized opportunities and faster expansion within newer client relationships. The company is pivoting toward high-value AI orchestration, focusing on Agentic assets and AI-infused solutions to accelerate adoption in complex IT environments. Revenue upside in Technology Solutions and Services (TS&S) was supported by increased demand for device subscription services (DSS) as clients seek to offset rising hardware costs. Management is successfully cross-selling modernization services into the ClearPath installed base, leveraging expertise in developing and managing AI-driven applications. Strategic investments in field services are capturing demand for AI data center build-outs, specifically in specialized areas like liquid cooling and high-end server maintenance. Operational efficiency initiatives and a shift toward higher-value solutions expanded TS&S gross margins by 170 basis points year-over-year. The company remains focused on reducing its pension deficit, viewing pension contributions as a primary mechanism for improving leverage and long-term value. Full-year revenue guidance assumes a significant second-half weighting, with ClearPath revenue expected to exceed $200 million in Q4 due to high visibility into large deal closures. Management expects to achieve full-year cost savings of $10 million to $20 million through technology-driven productivity and corporate function streamlining. The company is targeting a 100 to 200 basis point improvement in TS&S gross margin for the full year, supported by workforce investments and delivery efficiencies. Guidance assumes a continued shift in client spending toward infrastructure and AI roadmaps, potentially deferring some discretionary project work in the near term. The long-term strategy aims for the full removal of U.S. pension liabilities by 2030, supported by steady operational cash flow and targeted annuity purchases. A $47.2 million non-cash goodwill impairment charge was recorded for the Digital Workplace Solutions (DWS) segment, reflecting competitive pressures and a slower pace of profitability improvement. DWS margins were temporarily impacted by elevated transition costs and upfront workforce investments for a complex, flagship commercial deployment. The company is contemplating a Q3 annuity purchase to remove approximately $200 million of pension liabilities, which will result in a significant non-cash pension expense. Memory shortages are driving up hardware costs, which management believes will continue to fuel demand for their device subscription services model. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management acknowledged a industry-wide shift where high infrastructure costs, particularly for RAM, are crowding out some discretionary project spending. Unisys views this as a competitive advantage for its DSS offering, as IT executives prioritize flexible lifecycle models to lock in pricing and manage budgets. Management remains platform-agnostic, noting that highly regulated clients favor private, open-weight models for data sovereignty and IP protection. The company is positioning itself as an orchestration partner to help clients determine the optimal mix of cloud, edge, and on-premise AI workloads. While traditional pricing faces pressure, Unisys has been able to maintain relationship economics by adding new scope and AI-driven services into renewals. The company has completed a large portion of its renewal cycle, with approximately 75% of contracts expected to be through the cycle by year-end. Unisys is leveraging its global footprint to partner with system integrators who need a single provider for complex data center execution. The company is shifting its field services mix from legacy PC repair toward high-margin AI infrastructure support, including liquid cooling and Starlink deployments.

Unisys UIS reported a second-quarter 2026 non-GAAP loss of 8 cents per share, missing the Zacks Consensus Estimate by 166.67%. The result compared unfavorably with non-GAAP earnings of 19 cents per share a year ago.Revenues of $473.5 million declined 2.0% year over year and 5.2% at constant currency but surpassed the consensus mark by 6.12%. The decrease reflected the timing of ClearPath license renewals.Total contract value (TCV) declined 3% year over year to $422 million due to lower renewal activity. However, New Business TCV increased 57% year over year and 22% sequentially to $192 million, reflecting improving client engagement. TS&S renewal TCV declined 26% to $196 million, while ClearPath renewal TCV fell 31% to $34 million. Quarter-end backlog was $2.82 billion compared with $2.92 billion a year ago, while trailing 12-month book-to-bill remained 1.2X for both the total company and TS&S. Technology Solutions & Services revenues increased 2.0% year over year to $403.8 million but declined 1.3% in constant currency. The business benefited from incremental volume at existing clients across all three segments. Unisys Corporation price-consensus-eps-surprise-chart | Unisys Corporation Quote ClearPath revenues fell 20.4% to $69.7 million, or 22.9% in constant currency. The timing of software license renewals was the primary drag on consolidated revenue and gross margin. Digital Workplace Solutions revenues rose 2.8% to $141.9 million but slipped 1.1% in constant currency. Gross margin contracted 610 basis points to 10.8% due to known client attrition, a higher proportion of lower-margin hardware sales and transition costs tied to new-business implementations.Cloud, Applications & Infrastructure Solutions revenues decreased 0.4% to $184.4 million and fell 3.2% in constant currency. Its gross margin expanded 420 basis points to 25%, supported by delivery improvements and labor-cost initiatives.Enterprise Computing Solutions revenues declined 10.1% to $126 million, including a 13.2% constant-currency drop. Gross margin fell 870 basis points to 44.8%, reflecting the timing of ClearPath license renewals. Gross profit totaled $117.3 million, down from $130 million in the prior-year quarter. Gross margin contracted 210 basis points to 24.8%, reflecting the lower contribution from ClearPath revenues. TS&S gross profit increased to $77.8 million from $69.7 million in the prior-year quarter. The corresponding margin expanded 170 basis points to 19.3%, aided by delivery improvements and labor cost savings.The company benefited from a first-quarter transaction in its U.K. business process outsourcing joint venture. That transaction added roughly 60 basis points to the TS&S gross margin and is expected to generate about $3 million of quarterly gross profit in 2026.Selling, general and administrative expenses increased 2.2% year over year to $95.7 million, while research and development expenses declined 4.9% to $5.8 million. Non-GAAP operating profit declined to $25.3 million from $36.8 million, while the non-GAAP operating margin contracted 230 basis points to 5.3%.The company posted a GAAP operating loss of $32.9 million compared with operating income of $30.3 million a year ago. Results included a $47.2 million non-cash goodwill impairment charge related to the Digital Workplace Solutions reporting unit. Adjusted EBITDA declined to $53.5 million from $61.4 million, with the adjusted EBITDA margin decreasing 140 basis points to 11.3%. As of June 30, 2026, cash and cash equivalents totaled $324.3 million. Total debt excluding the pension deficit stood at $745 million, while net leverage excluding the pension deficit was $420.7 million, resulting in a net leverage ratio of 1.5X. The company reported an estimated $30 million improvement in its global pension deficit from year-end, reflecting continued progress in strengthening its balance sheet. Cash used for operations was $26.3 million compared with $316.2 million in the year-ago quarter. Free cash outflow narrowed to $49 million from $336.5 million, while adjusted free cash outflow improved to $9.4 million from $49.4 million. Unisys reaffirmed its previously improved full-year 2026 guidance, projecting constant-currency revenues to decline from 5.0% to 3.5% and reported revenues to decline from 2.6% to 1.1%. The company maintained its non-GAAP operating margin guidance of 9.0%-11.0%, with guidance assuming approximately $425 million in ClearPath revenues and a 6.0%-4.0% decline in TS&S constant-currency revenues. Management reiterated its artificial intelligence (AI)-first strategy, which focuses on building enterprise AI foundations, transforming business workflows and securely orchestrating AI deployments at scale to support long-term growth and operational efficiency. Unisys currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Zacks Computer and Technology sector are Kimball Electronics KE, Datadog DDOG and Onto Innovation ONTO, each currently carrying a Zacks Rank of 1 ( Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Kimball Electronics have declined 15.8% in the year-to-date period. KE is set to report fourth-quarter fiscal 2026 results on Aug. 12.Shares of Datadog have surged 94.3% in the year-to-date period. DDOG is slated to report second-quarter 2026 results on Aug. 6.Onto Innovation shares have gained 38.3% in the year-to-date period. ONTO is set to report first-quarter fiscal 2027 results on Aug. 6. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unisys Corporation (UIS) : Free Stock Analysis Report Kimball Electronics, Inc. (KE) : Free Stock Analysis Report Datadog, Inc. (DDOG) : Free Stock Analysis Report Onto Innovation Inc. (ONTO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Unisys Corp (NYSE:UIS) reaffirmed full-year guidance for non-GAAP operating profit margin of 9% to 11%, indicating a slight year-over-year increase. The company reported strong momentum in its ClearPath ecosystem, with upward revisions to ClearPath revenue guidance to $425 million for the full year. Unisys Corp (NYSE:UIS) is seeing strong growth in its DSS pipeline, driven by IT executives prioritizing spend to lock in pricing amid cost increases. The company maintains a strong liquidity position with $324 million in cash, an undrawn $125 million ABL facility, and no meaningful debt maturities before 2031. Unisys Corp (NYSE:UIS) is making strategic investments in AI-driven solutions and hybrid infrastructure management, positioning itself for future growth in higher-value market areas. Free cash flow was negative $49 million in Q2 2026, though improved from negative $337 million in the prior year period. The company expects a 5% to 3.5% decline in full-year revenue on a constant currency basis, indicating ongoing top-line challenges. Unisys Corp (NYSE:UIS) faces a global pension deficit of approximately $450 million, with net leverage including the deficit at about 3.1 times. The company anticipates Q3 2026 non-GAAP operating margin will be only approximately 4%, reflecting near-term profitability pressure. Client spending environment shows a shift toward infrastructure spend, deferring discretionary projects, which could impact near-term revenue growth. Here are the key highlights from the Unisys Corp (NYSE:UIS) Q2 2026 earnings call, presented as summarized Q&A pairs. Warning! GuruFocus has detected 5 Warning Signs with UIS. Is UIS fairly valued? Test your thesis with our free DCF calculator. Q: With the recent shift in client spending towards AI infrastructure, are you seeing a dynamic where large deals are being delayed or crowded out, similar to what IBM reported? A: Mike Thomson, CEO: Yes, we are seeing that dynamic. There is a clear industry focus on infrastructure, specifically RAM and its cost, which is causing some deferral of discretionary spend. We expected this trend to continue through the first half of the year and it may extend a bit further, but this is already baked into our guidance. However, we see this as an advantage for our Digital Workplace Solutions (DSS) offering, as IT executives are prioritizing that spend to lock in pricing, and our DSS offering provides economic value back to clients. Q: What client behavior patterns are you seeing regarding the adoption of private AI with open-weight models versus frontier models? A: Mike Thomson, CEO: We are agnostic to the platform. Clients concerned about sovereignty, data leakage, or IP protection lean towards open-source, private models. Those with complex problems use larger frontier models. Our role is to help clients find the right model and infrastructure for their specific needs. This dynamic helps our go-to-market advisory and consultancy because we have deep industry and hybrid infrastructure knowledge. Q: Is the activity around private AI and open-weight models showing up in your new business wins, or is it mostly in the pipeline? A: Mike Thomson, CEO: Yes, it is showing up in new business wins, particularly in applications modernization and cybersecurity components. The pipeline is also strong in this space. We are seeing a nice balance, and we are using rapid value assessments to start these dialogues with clients, which then leads to larger discussions on managed services. Q: Can you provide more detail on the third-quarter guidance, specifically regarding the expected non-GAAP operating margin and the non-cash pension expense? A: Deb, CFO: We anticipate third-quarter non-GAAP operating margin will be approximately 4%. We expect third-quarter non-operating items impacting GAAP net income to be approximately $200 million, primarily from an incremental non-cash pension expense associated with a likely annuity purchase. This transaction would remove approximately $200 million of pension liabilities from our US qualified defined benefit plans. Q: What is the outlook for full-year free cash flow and the key assumptions behind it? A: Deb, CFO: Our base case expectation for full-year free cash flow is unchanged at approximately -$25 million, which translates to about $75 million of pre-pension and post-retirement free cash flow. This assumes $85 million in capital expenditures, $70 million in cash taxes, $70 million in net interest payments, $30 million in aggregate environmental, legal, and restructuring payments, and $100 million in pension and post-retirement contributions. Q: What are the key drivers for the reaffirmed full-year revenue guidance, and what is the expected trajectory for ClearPath revenue? A: Deb, CFO: We are reaffirming full-year guidance for a constant currency revenue decline of 5% to 3.5%. This assumes TSNS revenue declines between 6% and 4% and full-year ClearPath revenue of $425 million, consistent with the upward revision made in June. We expect ClearPath revenue to exceed $200 million in the fourth quarter to achieve this, and we are confident key large deals will close by year-end. Q: What is the company's strategy regarding its pension liabilities, and what is the current status of the pension deficit? A: Deb, CFO: As of June 30th, our global pension deficit was approximately $450 million, which has improved by about $30 million from year-end. We expect $40 million in global pension contributions in the second half of 2026. We are contemplating an annuity purchase to remove approximately $200 million of pension liabilities. With continued execution, we expect cash contributions to translate into leverage reduction, positioning us to fully remove our US pensions by 2030. Q: What are the key financial objectives and the three main messages from the call? A: Mike Thomson, CEO: First, the business performance, including favorable trends in our ClearPath ecosystem, is advancing us towards higher profit and free cash flow, funding pension contributions and positioning us for pension removal by 2030. Second, we have strong go-to-market momentum with solutions aligned to AI-driven demand, and we are winning work in higher-value market areas. Third, we are making the right investments in people, technology, and innovation to inflect and accelerate future growth. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Unisys Reports Strong New Business Signings and Reaffirms 2026 Full-Year Guidance Revenue of $473.5 million, down 2.0% year over year (YoY), down 5.2% in constant currency(1) Technology Solutions & Services(13) (TS&S) revenue of $403.8 million, up 2.0% YoY, down 1.3% in constant currency Gross profit margin of 24.8%, down 210 bps YoY; TS&S gross profit margin of 19.3%, up 170 bps YoY New Business(5) Total Contract Value (TCV)(3) of $192 million, an increase of 57% YoY Unisys reaffirms previously raised 2026 full-year constant currency revenue growth guidance and maintains non-GAAP operating profit(6) margin guidance; guidance assumes ClearPath revenue of approximately $425 million BLUE BELL, Pa., July 29, 2026 /PRNewswire/ -- Unisys Corporation (NYSE: UIS) reported financial results for the second quarter of 2026 (2Q26). "The year is progressing well, with our strong second quarter performance building on the good start we had in the first quarter," said Michael Thomson, Unisys CEO and President. "New business signings are again a bright spot, and client engagement continues to improve. Our AI-First approach is an important enabler across the business, strengthening our foundation for future growth, sustained market competitiveness, and operational efficiency." Unisys Chief Financial Officer Deb McCann said, "We are pleased with the strong second quarter and are reaffirming our guidance ranges, including our recently improved revenue growth outlook for both TS&S and ClearPath. Our liquidity remains strong and estimated global deficit is improving, advancing us toward our goal of fully removing our U.S. pensions." Financial HighlightsPlease refer to the accompanying financial tables for a reconciliation of the GAAP to non-GAAP measures presented, except for financial guidance since such a reconciliation is not practicable without unreasonable effort. Second Quarter 2026 Results Effective in the second quarter of 2026, the company updated the naming conventions used to describe certain solution groupings to better reflect the nature of its offerings. The company renamed License and Support to ClearPath® and Excluding License and Support to Technology Solutions & Services (TS&S). These changes did not impact the company's reportable segments, the recognition or measurement of revenue and expenses or the consolidated financial statements. As such, previously reported financial information has not been adjusted. Revenue decreased 2.0% YoY, down 5.2% in constant currency. Gross profit margin down 210 bps YoY. The decreases in revenue and gross profit margin were primarily driven by the timing of ClearPath license renewals. TS&S revenue increased 2.0% YoY, or down 1.3% in constant currency. TS&S gross profit margin increased 170 bps YoY, primarily driven by delivery improvement and labor cost savings initiatives, partially offset by lower-margins generated by Digital Workplace Solutions (DWS) during the current period. During the second quarter of 2026, gross profit margin and TS&S gross profit margin benefited by approximately 50 and 60 basis points, respectively, from a first quarter transaction within the company's United Kingdom business process outsourcing consolidated joint venture. This transaction is expected to generate gross profit benefit of approximately $3 million quarterly and $12 million for the full 2026 year. Operating loss for the second quarter of 2026 included a non-cash goodwill impairment charge of $47.2 million related to the DWS reporting unit. The impairment represented the full write-off of the remaining goodwill balance allocated to the DWS reporting unit. Financial Highlights by Segment Second Quarter 2026 Segment Results DWS revenue increased 2.8% YoY, or down 1.1% in constant currency. DWS gross profit margin was 10.8%, a decrease of 610 bps YoY, primarily due to known client attrition, a greater proportion of lower-margin hardware revenue, and increased delivery costs incurred during the transition phase of new business implementation. CA&I revenue declined 0.4% YoY, down 3.2% in constant currency. CA&I gross profit margin was 25.0%, an increase of 420 bps YoY, primarily driven by delivery improvement and labor cost savings initiatives. ECS revenue declined 10.1% YoY, down 13.2% in constant currency. ECS gross profit margin was 44.8%, a decrease of 870 bps YoY. The decreases in revenue and gross profit margin were primarily driven by the timing of ClearPath license renewals. Balance Sheet and Cash Flows In the second quarter of 2025, the company made a discretionary contribution of $250 million to its U.S. defined benefit pension plans. Other Metrics Backlog(2) was $2.82 billion for the second quarter of 2026 compared to $2.92 billion for the second quarter of 2025. 2026 Financial GuidanceThe company reaffirms previously raised full-year 2026 revenue growth guidance and maintains profitability guidance: Constant currency revenue guidance translates to reported revenue growth of (2.6)% to (1.1)%, based on exchange rates as of the end of 2Q26. The guidance assumes ClearPath revenue of approximately $425 million and TS&S constant currency revenue growth of (6.0)% to (4.0)%. Conference CallUnisys will hold a conference call with the financial community on Thursday, July 30, at 8 a.m. Eastern Time to discuss the results of the second quarter of 2026. The live, listen-only webcast, as well as the accompanying presentation materials, can be accessed on the Unisys Investor Website at www.unisys.com/investor. In addition, domestic callers can dial 1-844-695-5518 and international callers can dial 1-412-902-6749 and provide the following conference passcode: Unisys Corporation Call. A webcast replay will be available on the Unisys Investor Website shortly following the conference call. A replay will also be available by dialing 1-855-669-9658 for domestic callers or 1-412-317-0088 for international callers and entering access code 3496075 from two hours after the end of the call until August 13, 2026. (1) Constant currency – A significant amount of the company's revenue is derived from international operations. As a result, the company's revenue has been and will continue to be affected by changes in the U.S. dollar against major international currencies. The company refers to revenue growth rates in constant currency or on a constant currency basis so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the company's business performance from one period to another. Constant currency is calculated by retranslating current and prior-period revenue at a consistent exchange rate rather than the actual exchange rates in effect during the respective periods. (2) Backlog – Represents the estimated amount of future revenue to be recognized under contracted work, which has not yet been delivered or performed. The company believes that actual revenue reflects the most relevant measure necessary to understand the company's results of operations, but backlog can be a useful metric and indicator of the company's estimate of contracted revenue to be realized in the future, subject to certain inherent limitations. The timing of conversion of backlog to revenue may be impacted by, among other factors, the timing of execution, the extension, nullification or early termination of existing contracts with or without penalty, adjustments to estimates in pricing or volumes for previously included contracts, seasonality and foreign currency exchange rates. Investors are cautioned that backlog should not be relied upon as a substitute for, or considered in isolation from, measures in accordance with GAAP. (3) Total Contract Value (TCV) – Represents the initial estimated revenue related to contracts signed in the period without regard for early termination or revenue recognition rules. Changes to contracts and scope are treated as TCV only to the extent of the incremental new value. New Business TCV represents TCV attributable to expansion and new scope for existing clients and new logo contracts. ClearPath TCV is driven by software license renewals, and as such, changes in timing or terms of renewals can lead to fluctuations from period to period. The company believes that actual revenue reflects the most relevant measure necessary to understand the company's results of operations, but TCV can be a useful leading indicator of the company's ability to generate future revenue over time, subject to certain inherent limitations. Measuring TCV involves the use of estimates and judgments and the extent and timing of conversion of TCV to revenue may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of contract signing, and contract modifications, including, without limitation, contract nullification and termination, over the lifetime of a contract. Investors are cautioned that TCV should not be relied upon as a substitute for, or considered in isolation from, measures in accordance with GAAP. (4) Book-to-bill – Represents total contract value booked divided by revenue in a given period. (5) New Business – Represents expansion and new scope for existing clients and new logo contracts. (6) Non-GAAP operating profit – This measure excludes pretax pension and postretirement expense, pretax goodwill and intangible asset impairment charge and pretax charges or gains associated with certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings, and cost-reduction activities and other expenses. (7) EBITDA & adjusted EBITDA – Earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated by starting with net income (loss) attributable to Unisys Corporation common shareholders and adding or subtracting the following items: net income (loss) attributable to noncontrolling interests, interest expense (net of interest income), provision for (benefit from) income taxes, depreciation and amortization. Adjusted EBITDA further excludes pension and postretirement expense; goodwill and intangible asset impairment charge, foreign exchange (gains) losses, debt extinguishment, certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; cost-reduction activities and other expenses; non-cash share-based expense; and other (income) expense adjustments. (8) Non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per share – These measures exclude pension and postretirement expense and charges or (credits) in connection with goodwill and intangible asset impairment; foreign exchange (gains) losses, debt extinguishment, certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; and cost-reduction activities and other expenses. The tax amounts related to these items for the calculation of non-GAAP diluted earnings (loss) per share include the current and deferred tax expense and benefits recognized under GAAP for these items. (9) Free cash flow – Represents cash flow from operations less capital expenditures. (10) Pre-pension and postretirement free cash flow – Represents free cash flow before pension and postretirement contributions. (11) Adjusted free cash flow – Represents free cash flow less cash used for pension and postretirement funding; debt extinguishment, certain legal matters related to settlements, professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; and cost-reduction activities and other payments. (12) ClearPath® – Represents software license and related support services, primarily ClearPath Forward™, within the company's ECS segment. (13) Technology Solutions & Services (TS&S) – These measures include the revenue, gross profit and gross profit margin of the company's DWS segment, CA&I segment and ECS segment, excluding ClearPath software license and support services. The company provides these measures to allow investors to isolate the impact of software license renewals, which tend to be significant and impactful based on timing, and related support services in order to evaluate the company's business outside of these areas. Forward-Looking Statements This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Unisys cautions readers that the assumptions forming the basis for forward-looking statements include many factors that are beyond Unisys' ability to control or estimate precisely, such as estimates of future market conditions, fluctuations in foreign currency exchange rates, the behavior of other market participants and that TCV is based, in part, on the assumption that each of those contracts will continue for their full contracted term. Words such as "anticipates," "estimates," "expects," "projects," "may," "will," "intends," "plans," "believes," "should" and similar expressions may identify forward-looking statements and such forward-looking statements are made based upon management's current expectations, assumptions and beliefs as of this date concerning future developments and their potential effect upon Unisys. There can be no assurance that future developments will be in accordance with management's expectations, assumptions and beliefs or that the effect of future developments on Unisys will be those anticipated by management. Because actual results may differ materially from those expressed or implied by these forward-looking statements, we caution readers not to place undue reliance on these statements. Forward-looking statements in this release and the accompanying presentation include, but are not limited to, statements made in Mr. Thomson's and Ms. McCann's quotations, any projections or expectations of revenue growth, margin expansion, achievement of operational efficiencies and savings, effective use of technology, investments in our solutions and artificial intelligence adoption and innovation, TCV and New Business TCV, the impact of new logo signings, backlog, book-to-bill(4), full-year 2026 revenue growth and profitability guidance, including reported and constant currency revenue, growth and the foreign currency exchange rate assumptions underlying the translation of constant currency guidance to reported guidance, TS&S constant currency revenue growth, ClearPath revenue, non-GAAP operating profit margin, free cash flow generation and the assumptions and other expectations made in connection with our full-year 2026 financial guidance, the reduction of uncertainty and volatility of cash requirements, including pension contributions, our pension liability, debt extinguishment, future economic benefits from net operating losses and statements regarding future economic conditions or performance. Additional information and factors that could cause actual results to differ materially from Unisys' expectations are contained in Unisys' filings with the U.S. Securities and Exchange Commission (SEC), including Unisys' Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings, which are available at the SEC's web site, http://www.sec.gov. Information included in this release is representative as of the date of this release only, and any forward-looking statement speaks only as of the date on which that statement is made. While Unisys periodically reassesses material trends and uncertainties affecting Unisys' results of operations and financial condition in connection with its preparation of management's discussion and analysis of results of operations and financial condition contained in its Quarterly and Annual Reports filed with the SEC, Unisys does not, by including this statement, assume any obligation to review, revise or update any forward-looking statement in light of future events or circumstances, except as required by applicable law. Non-GAAP InformationThis release includes certain non-GAAP financial measures that exclude certain items such as pension and postretirement expense; goodwill and intangible asset impairment charge, foreign exchange (gains) losses, debt extinguishment, certain legal and other matters related to professional services and legal fees, including legal defense costs, associated with certain legal proceedings; environmental matters related to previously disposed businesses; and cost-reduction activities and other expenses that the company believes are not indicative of its ongoing operations, as they may be unusual or non-recurring. The inclusion of such items in financial measures can make the company's profitability and liquidity results difficult to compare to prior periods or anticipated future periods and can distort the visibility of trends associated with the company's ongoing performance. Management also believes that non-GAAP measures are useful to investors because they provide supplemental information about the company's financial performance and liquidity, as well as greater transparency into management's view and assessment of the company's ongoing operating performance. Non-GAAP financial measures are often provided and utilized by the company's management, analysts, and investors to enhance comparability of year-over-year results. These items are uncertain, depend on various factors, and could have a material impact on the company's GAAP results for the applicable period. These measures should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP can be found below except for financial guidance and other forward-looking information since such a reconciliation is not practicable without unreasonable efforts as the company is unable to reasonably forecast certain amounts that are necessary for such reconciliation. This information has been provided pursuant to the requirements of SEC Regulation G. About Unisys Unisys is a global technology solutions company that powers breakthroughs for the world's leading organizations. Our solutions – cloud, AI, digital workplace, applications and enterprise computing – help our clients challenge the status quo and unlock their full potential. To learn how we have been helping clients push what's possible for more than 150 years, visit unisys.com and follow us on LinkedIn. RELEASE NO.: 0729/10062 Unisys and other Unisys products and services mentioned herein, as well as their respective logos, are trademarks or registered trademarks of Unisys Corporation. Any other brand or product referenced herein is acknowledged to be a trademark or registered trademark of its respective holder. UIS-Q Current maturities of long-term debt$ 11.6$ 12.7Accounts payable104.981.2Deferred revenue200.7228.5Other accrued liabilities283.1333.5Total current liabilities600.3655.9Long-term debt721.9729.0Long-term pension and postretirement liabilities485.1517.7Long-term deferred revenue83.0100.7Long-term operating lease liabilities25.330.6Other long-term liabilities77.980.6Commitments and contingenciesTotal Unisys Corporation stockholders' deficit(367.4)(282.6)Noncontrolling interests15.514.3Total deficit(351.9)(268.3)Total liabilities and deficit$ 1,641.6$ 1,846.2 View original content to download multimedia:https://www.prnewswire.com/news-releases/unisys-announces-2q26-results-302838113.html

Unisys UIS is slated to release second-quarter 2026 results on July 29.The Zacks Consensus Estimate for earnings is pegged at a loss of three cents per share, unchanged over the past 30 days. The projection indicates a 115.79% decrease from the figure reported in the year-ago quarter. For the second quarter of 2026, Unisys expects revenues of approximately $450 million. The Zacks Consensus Estimate for second-quarter 2026 revenues is pegged at $446.20 million, indicating a 7.68% year-over-year decline.Unisys’ earnings surpassed the consensus estimate in each of the trailing four quarters, delivering an average surprise of 83.42%. Unisys Corporation price-eps-surprise | Unisys Corporation Quote Let us see how things have shaped up prior to the announcement. UIS' second-quarter 2026 performance is likely to have been driven by stronger business signings and improving revenue conversion in the to-be-reported quarter. In the first quarter, new business total contract value (TCV) increased 45% year over year, while total TCV rose 33%. Stronger book-to-bill ratios, higher backlog and a greater portion of contracted revenues are expected to have supported in-year revenue recognition. Improving client budgets, particularly in the commercial sector and Europe, along with project volumes beginning to materialize following last year’s renewals, are likely to support results in the to-be-reported quarter. Growing demand for Artificial Intelligence (AI)-enabled solutions is likely to have benefited UIS in the to-be-reported quarter. The company continued to secure multiyear contracts for its Agentic Service Desk, including an expanded deployment with a leading U.S. quick-service restaurant chain and a new engagement with Australia’s Department of Health. Rising demand for rapid value assessments and AI-powered application modernization services is expected to have accelerated project wins, while follow-on implementation opportunities are likely to have expanded cross-selling and improved revenue visibility. Continued enhancements to the ClearPath Forward platform, including AI-enabled modernization capabilities, are expected to have supported customer adoption. The company is expected to have benefited from continued momentum in higher-value infrastructure and field services. Demand for enterprise storage, AI infrastructure, IoT device management and hybrid infrastructure services remained healthy, while UIS secured its first engagement supporting AI data center deployment with a major global OEM. The Device Subscription Service business continued to gain traction, supported by AI-enabled endpoint management capabilities, while a growing pipeline of AI infrastructure opportunities and better-than-expected PC refresh activity are expected to have remained supportive in the to-be-reported quarter.Profitability is expected to have improved, driven by continued adoption of intelligent automation, AI-enabled delivery capabilities and workforce optimization initiatives. In the first quarter of 2026, Ex-License & Support gross margin expanded 170 basis points year over year, driven by productivity gains and greater use of AI across service delivery. For the second quarter of 2026, UIS expects revenues of approximately $450 million, including nearly $70 million in License & Support revenues, with a non-GAAP operating margin of approximately 5%. However, Unisys is expected to have been hurt by client attrition, modest price pressures from sharing AI cost savings with clients and anticipated volume declines in certain solutions, particularly due to renewal timing and lower volumes at some U.S. public sector clients. Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.Unisys has an Earnings ESP of 0.00% and a Zacks Rank of 1 at present. You can uncover the best stocks before they are reported with our Earnings ESP Filter. Here are some companies worth considering, as our model shows that these have the right combination of elements to beat earnings in their upcoming releases.Amphenol APH has an Earnings ESP of +1.12% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here. Amphenol shares have gained 13% year to date. Amphenol is scheduled to report its second-quarter 2026 results on July 29.ASE Technology ASX currently has an Earnings ESP of +21.21% and a Zacks Rank of 2.ASE Technology shares have surged 128.8% year to date. ASE Technology is set to report its second-quarter 2026 results on July 30.Fortive FTV has an Earnings ESP of +2.82% and a Zacks Rank of 2 at present. Fortive shares have gained 12.8% in the year-to-date period. Fortive is set to report its second-quarter 2026 results on July 29. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unisys Corporation (UIS) : Free Stock Analysis Report Amphenol Corporation (APH) : Free Stock Analysis Report ASE Technology Holding Co., Ltd. (ASX) : Free Stock Analysis Report Fortive Corporation (FTV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, May 6, 2026 at 8 a.m. ET President and Chief Executive Officer — Michael Thomson Executive Vice President and Chief Financial Officer — Debra McCann Michael Thomson: Thank you, Michaela. Good morning, everyone, and thank you for joining us to discuss the company's first quarter 2026 results. We're off to a good start in 2026. Both growth and profitability were modestly ahead of the expectations we provided, keeping us on track to achieve our full year guidance ranges. Strong new business signings improved our trailing 12-month book-to-bill ratios and will contribute to in-year revenue. While geopolitical events have introduced new uncertainties in the market, client budget seems to be loosening a bit and especially in the commercial sector and in Europe. Project volumes are beginning to materialize on the back of last year's renewal with solid pipeline in place for the remainder of the year. First quarter profit improvement keeps us on track to achieve our full year free cash flow expectations and reflects our focus on adopting AI and continued workforce optimization. As expected, our pension deficit and estimates for future cash contributions remain stable due to the actions we took last year to remove the majority of the pension contribution volatility, allowing us to focus on strategic growth and efficiency initiatives. Looking more closely at the first quarter, revenue was up 1% year-over-year and 3% in our Ex-L&S solutions. Volumes with existing clients were better than anticipated, including a modest pickup in the PC refresh cycle. This helped offset some of the top line effects from client attrition and modest price pressures created through sharing AI cost savings with clients, which we discussed last quarter. While AI efficiency gains reset market pricing last year, they're benefiting gross margins, which improved 80 basis points in the first quarter, including 170 basis points of Ex-L&S gross margin expansion. Turning to client signings, our first quarter wins increased confidence in achieving our 2026 performance goals and we continue to have a higher portion of guided revenue contracted and in backlog compared to a year ago. The first quarter new business TCV was $158 million, up 16% sequentially and 45% year-over-year. This was our strongest quarter of new business signings since the fourth quarter of 2024, with growth from both new logos and the existing base. Several multiyear contract wins illustrate our ability to gain market share when leading with innovation. For example, we had several notable signings for our agentic service desk powered by our service experience accelerator capabilities. During the quarter, we won a large new scope contract to provide our agentic service desk with one of the world's premier quick service restaurants, expanding our existing support to the entirety of their nearly 14,000 restaurants in the United States, with additional growth opportunities around the world. We also signed a new logo in Australia, which will be our first deployment of our agentic service desk in the Asia-Pacific region, where we landed several recent wins. As a part of this engagement, we will provide elevated IT support to approximately 11,000 employees in Australia's Department of Health, Disability and Aging, where we now support numerous regulatory functions. This is a multiyear contract, which has options extending to 10 years and is structured on delivering against automation and service experience outcomes rather than ticket volumes. The value behind our service experience accelerator is proving to be a compelling point of the spear solution for new business, delivering measurable results and quickly orienting us as an experienced AI partner in moving enterprise AI from concept to reality. Our Device Subscription Service, or DSS, continues to resonate with another first quarter win at a large financial client in the United States. Clients are grappling with evaluating OEMs and hardware costs, understanding device AI capabilities and forecasting headcount fluctuations, all of which makes our clients more open to our intelligent refresh offering, which simplifies the process and helps offset cost pressures. We have recently expanded our intelligent offering to encompass certain IoT devices through a deeper partnership with Dell. Several key engagements for application development and management also contributed to strong first quarter new business TCV. For example, we expanded our existing services relationships with ENAIRE, Spain's air traffic controller, a client of 30 years. Renewal included a sizable new scope, which involves managing more than 100 of our clients' existing applications across numerous functions, with additional funds budgeted for future projects to design, test and deploy new applications. Our application capabilities also opened the door at the largest community college system in the United States with Unisys signing a new logo agreement to modernize and manage an important student-facing applications that provides their approximately 2 million students with resources and tailored education pathways for more efficient incoming transfers, graduations and entry into the workforce. This engagement established a solid foundation, which is already leading to additional work expected beginning in the second quarter. We also made progress on our initiatives to cross-sell CA&I application services into our ECS client base. In the first quarter, we signed a renewal with a large Colombian retailer for existing ClearPath Forward and managed services that integrated new scope application development work supporting the client's core commercial and inventory applications. Across our segments, TCV renewal rates were strong and above 95% for the total company. We are also seeing some unexpected extensions from attrited clients stemming from the lack of readiness from the new service provider. At one such client, we were awarded a large new scope in the first quarter for infrastructure and modernization services. We believe this win demonstrates the desire of some of these clients to remain engaged with us, which we attribute to the deep relationships we've established, our delivery track record and the broadening awareness of our capabilities. Looking at our go-to-market and pipeline, we've seen a modest pick-up in client demand over the past few months and a stronger pick-up with new logos where qualified pipeline increased sequentially in Ex-L&S solutions. A number of these opportunities originated from a new initiative within our direct sales organization, which is the development of rapid value assessments for our key AI-enabled solutions. These repeatable assessments help quantify time to value, inclusive of estimated timelines and outcome-based pricing scenarios, easing friction associated with returns on AI investments, especially in the mid-market. We're currently utilizing rapid value assessments for our agentic service desk, intelligent operations and security operations with assessments for agentic application transformation and management and intelligent device refresh in the works. We're also generating more leads by collaborating with alliance partners on development and marketing around a narrower set of solutions, which identified overlapping priorities and strong value propositions. These efforts have led some partners to place Unisys more prominently on their road maps and using us as their primary and preferred implementation and managed service partner for their technology and are directly handing off leads in areas such as enterprise service management, unified endpoint management and field services to implement technology for smart reading rooms, kiosks and digital signage. I want to shift the focus to discuss our investments in the business, much of which is concentrated on leveraging artificial intelligence to move into higher-valued services and penetrate emerging market opportunities stemming from AI. Our approach towards enterprise AI has been to avoid simply rebranding existing solutions as AI-enabled, but instead to use AI to fundamentally transform the outcomes we deliver to our clients and that positions us well for future-proofing our client relationships. In our Ex-L&S IT services, this involves thoughtfully choosing partnerships to strengthen, enhancing the skills of our workforce, expanding our operational accelerators and constructing agentic workflows and governance frameworks to deliver secure, reliable results. We have also been proactive about rolling out delivery innovation in our existing base to create measurable results, increasing our relevance and thought leadership with clients, prospects and industry analysts. We're working to maximize that momentum by investing more deeply in our talent. We're expanding our forward-deployed engineering capabilities to increase capability in areas such as agentic application services. We view Agentic AI as a major opportunity for organizations to close the modernization gap, especially in public sector and higher education. Expanding our forward-deployed engineering capabilities positions us to take a more prominent role in designing and managing agentic workflows, whether they enhance software applications or replace elements of their functionality. In some cases, we're seeing client interest in expanding these services beyond central IT to reshape business as usual and functions such as HR and finance. As we think about upskilling for AI more broadly, the skills and demand are rapidly evolving almost on a daily basis, with the one constant being the pace of change coming from frontier models, hyperscalers, software and OEM providers. We're committed to maintaining a platform and model-agnostic approach that best addresses a given used case within a specific industry for a specific client. At the same time, significant existing technical debt within IT estates will require subject matter expertise to meet clients where they are today and help them transform and transition their technical debt over time. To do that successfully, we're aligning certain technical resources around key models and platforms to provide specialized consulting to both our external and internal delivery teams. Physical AI infrastructure is another emerging growth vector for Unisys, stemming from demand for AI compute and the rapid build-out of data center capability that's occurring. Data center builds are expanding the need for field technicians knowledgeable in the installation and maintenance of complex AI-focused IT infrastructure. Our large globally scaled field services organization with cutting-edge training and delivery experience connects humans, data and AI agents on one trusted platform. In the first quarter, we signed a new business engagement with a leading global OEM to support the build-out of a large U.S.-based data center. While the initial scope is small, it lends credibility to our specialized capabilities for the installation and support of AI infrastructure. AI infrastructure is just one element of our overarching strategy to expand our field service revenue streams. We're continuing to grow hybrid infrastructure volumes and focus on generating opportunities in network equipment and enterprise storage. We're also broadening field service capability in a variety of hardware, most notably within offices, restaurants, retail and manufacturing facilities. In L&S Solutions, we're approaching AI from both ends, infusing AI functionality directly into the ClearPath Forward ecosystem, while also making it easier to extend ClearPath Forward data and applications to fuel AI in other parts of the enterprise. During the quarter, we put out a new release of AB Suite, which is our low-code development environment for building applications on top of ClearPath. The update suite development enhance data encryptions and simplify integration of data with external environments without disruption of mission-critical operations. The release also adds capabilities for generating AI-based synthetic test data, allowing developers to rapidly test new functionality, while reducing the risk of exposing sensitive data, strengthening security and compliance. In addition to AB Suite release, we launched a new AI developer toolkit with practical guidance for building AI data models within the ClearPath Forward ecosystem. This is the first in a series of targeted client AI-enabled initiatives aimed at reinforcing ClearPath's value proposition and role as a long-term AI-ready platform that clients can rely on for decades. Taking a step back across all our segments, we're seeing AI disrupt the status of the industry and push clients to rethink their solutions and IT providers. This has given us an opportunity to show our agility and step into a more prominent role with clients and partners and accelerate the shift in our brand perception. We also hear it in our conversations with and recognition from the industry analysts and advisers that influence client decision-making. In the first quarter, Unisys was again named a leader in reports on end-user computing services and mid-market digital workplace solutions by Avasant and Everest. We are also newly included in the HFS report on next-generation IT infrastructure services, which includes providers able to help enterprise reimagine infrastructure specifically for AI-native operations and distributed digital environments. These acknowledgments follow Gartner's elevating Unisys to a global leader in digital workplace services. With that, I'll turn the call over to Deb to discuss our results in more detail. Debra McCann: Thank you, Mike, and good morning, everyone. As a reminder, my discussion today will reference slides from the supplemental presentation posted on our website. I will discuss total revenue growth, both as reported and in constant currency and segment growth in constant currency only. I will also provide information, excluding license and support or Ex-L&S to allow investors to assess our performance outside the portion of ECS, where revenue and profit recognition can be uneven between periods due to license renewal timing. Looking at our results in more detail, as Mike mentioned, the year is off to a good start. As you can see on Slide 6, first quarter revenue was $438 million, up 1.3% year-over-year, which included an approximate 600 basis point benefit from foreign exchange relative to the prior year period. In constant currency, revenue declined 4.5% with the largest declines in L&S Solutions due to renewal timing and anticipated volume declines in our Ex-L&S solutions. Excluding license and support, first quarter revenue was $372 million, up 3.1% year-over-year and down 2.9% in constant currency. I will now discuss segment revenue performance in constant currency terms shown on Slide 6. First quarter Digital Workplace Solutions revenue of $118 million was down 6.5% year-over-year. This decline was better than we had anticipated and reflected the factors we have discussed in previous quarters, such as client attrition, pricing dynamics in the industry and lower base levels of PC field services volumes that are stabilized, but down year-over-year. At the same time, growth in areas such as higher-value field services and better-than-expected volumes helped mitigate some of those effects. For example, our volumes and revenue from high-end enterprise storage have nearly doubled on a year-over-year basis. And as Mike mentioned, we continue to see significant market opportunities across a more diverse set of higher-margin field services, including AI infrastructure and IoT devices. We are also pleased with our DWS pipeline, which is up sequentially. First quarter Cloud, Applications and Infrastructure Solutions revenue was $182 million, representing a 2.4% year-over-year decline. The decrease primarily reflected lower volumes, especially at certain U.S. public sector clients and client attrition. As you may recall, we began seeing public sector clients pull back in the first quarter of 2025 due to uncertainties related to federal funding levels and those year-over-year headwinds should lessen as we lap declines in subsequent quarters. Within the Enterprise Computing Solutions segment or ECS, our License and Support Solutions revenue was $66 million, down 12.4% year-over-year due to the timing of the renewal schedule. There is no change to our expected weighting of 30% of full year L&S revenue in the first half and approximately 70% in the second half and we continue to expect $400 million of average annual L&S revenue in 2027 and 2028. Artificial intelligence has been and continues to be a driver of L&S consumption and in churn revenue and we are evolving our ecosystem with innovations that facilitate enterprise AI, both on our platforms and external AI-enabled client environments that can utilize valuable data generated by our systems. We continue to detect no change in client commitment to the ClearPath Forward ecosystem resulting from AI and code refactoring. On the contrary, there are some signs that our ecosystem evolution is leading to certain clients with migration plans reevaluating specific workloads to retain and outsource management to Unisys, which we attribute to consistent investments in platform modernization and sustainability of our skilled workforce. In our specialized services and next-generation compute solutions, the Ex-L&S portion of the ECS segment, first quarter revenue was $50 million, down 2.5% year-over-year. This was ahead of our expectations due to improved volumes and additional scope in some of our business process solutions, which partially offset declines from the phasing of project work. Total company TCV was $274 million for the quarter, up 33% year-over-year. New business TCV totaled $158 million, up 16% sequentially and 45% year-over-year. This is the highest level of new business TCV we have had in 4 quarters. Trailing 12-month book-to-bill was 1.2x for both total company and Ex-L&S Solutions. We ended the year with backlog of $2.96 billion, up 2.4% from the prior year-end. Moving to Slide 8, first quarter gross profit was $113 million and gross margin was 25.7%, up 80 basis points from the prior year. Ex-L&S gross profit was $73 million and Ex-L&S gross margin was 19.5% in the first quarter, up 170 basis points year-over-year. Improvement was primarily driven by expanded use of intelligent automation and ongoing workforce optimization. During the first quarter of 2026, a transaction within the company's U.K. business process outsourcing consolidated joint venture generated $3 million of non-segment revenue and gross margin benefit with no net cash impact. Total company and Ex-L&S gross margin benefited by 50 and 70 basis points, respectively. The transaction is expected to generate $12 million of gross margin benefit for 2026 evenly among the 4 quarters. We remain on track to deliver our targeted 150 basis points of annual Ex-L&S gross margin improvement amid a challenging growth backdrop, although our path may not be a straight line. I will now touch briefly on segment gross profit shown on Slide 8. DWS segment gross margin was 13.5% in the first quarter compared to 14.2% in the prior year period. Contraction primarily reflects impact from exited clients and growth in lower-margin device subscription service revenue in the quarter, which can have larger components of hardware, but offer a strong entry point for expansion into higher-value offerings. DWS margins are expected to improve as we move through the year and benefit from the implementation of delivery initiatives. CA&I segment gross margin was 21.8% in the first quarter, up 230 basis points year-over-year. The improvement was driven by continued workforce and labor market optimization, along with higher productivity supported by greater use of intelligent automation, especially within our central application capabilities. The segment also benefited from increased project volumes in higher-margin solutions relative to exited contracts as we see continued traction in high-value application services and multi-cloud management, which leverage more of the latest AI models and tools for delivery. ECS segment gross margin was 46.9% in the first quarter, down 80 basis points year-over-year. This was driven by lower L&S gross margin due to the timing of license renewals, partially offset by nearly 70 basis points of improvement in SS&C Solutions, which was helped by improved utilization in business process solutions. Across our segments, we are providing our associates career pathways and upskilling in emerging technologies, which is supporting our workforce optimization and internal staffing and our low trailing 12-month voluntary attrition of 11.1%. Turning to Slide 9, first quarter non-GAAP operating profit margin was 4.5%, up 170 basis points year-over-year. This was modestly better than the slightly positive margin outlook we provided last quarter, primarily due to execution against our operational efficiency objectives and increased L&S volume. SG&A was $92 million, down $5 million or 5% year-over-year, keeping us on track to reduce SG&A by $10 million to $20 million in 2026. As a reminder, these savings are concentrated in streamlining corporate functions outside of sales and marketing and most of the restructuring costs to achieve have already been recognized. Adjusted EBITDA was $46 million in the quarter, representing a 10.6% margin, up 130 basis points year-over-year. GAAP net loss was $36 million or a diluted loss of $0.50 per share, while non-GAAP net loss was $10 million or a loss of $0.14 per share. Turning to Slide 10, capital expenditures totaled approximately $21 million in the first quarter, relatively flat on a year-over-year basis and consistent with our capital-light strategy. As a reminder, a significant portion of capital expenditure relates to development for our ClearPath Forward ecosystem, comprising our L&S solutions. Free cash flow was negative $26 million compared to positive $13 million in the prior year period. The decline was driven by the timing of interest payments on our 2031 senior secured notes with payments now occurring in the first and third quarters. In addition, the first quarter interest payment included interest related to an 18-day stub period. Pre-pension free cash flow was $2.9 million in the first quarter, net of $28.2 million of pension and $0.2 million of postretirement contributions. The quarter included approximately $12 million of contributions to our U.K. pension scheme that are incremental to our previous full year forecast. Our joint venture partners funded these contributions, resulting in no cash impact to Unisys. For the remainder of 2026, we expect cash contributions to all global pension plans of approximately $69 million. Our cash balance was $380 million as of March 31st compared to $414 million at the end of 2025. Our liquidity position remains strong, supported by significant cash balances and undrawn $125 million ABL facility with an accordion feature up to $155 million and no significant debt maturities until 2031. Our net leverage ratio, inclusive of pension is 2.9x, down from 3.2x a year ago. Turning to our global pension plans, based on market conditions, we estimate that as of March 31st, both GAAP deficit and aggregate expected contributions through 2029 are essentially unchanged from year-end. As a reminder, we provide more detailed projections for estimated cash pension contributions and GAAP deficit at year-end. Quarterly updates reflect estimated impacts of asset returns, market conditions and assumed deficit reduction from contributions. Following our capital structure transformation in mid-2025, which included a $250 million discretionary contribution to our U.S. qualified defined benefit plans, we took actions that removed substantially all volatility from our expected U.S. contributions. This increased stability, along with the existing stability in international contributions set through trustee negotiation has significantly increased certainty for investors as to our future cash needs and trajectory of deficit reduction. Turning to Slide 12, I will now discuss our financial guidance for the full year and the additional color we provide. We are reaffirming our full year guidance range and expect total company revenue to decline between 6.5% and 4.5% in constant currency, which based on April 30th foreign exchange rates equates to a reported revenue decline of negative 3.5% to negative 1.5%. Guidance assumes Ex-L&S revenue constant currency decline of 7% to 4.5% and full year L&S revenue of $415 million. As a reminder, the timing and exact amount of L&S revenue can be difficult to forecast with precision, as it depends on renewal timing, term and client consumption levels among other factors. We are reaffirming guidance for full year non-GAAP operating profit margin of 9% to 11%, which assumes a slight year-over-year increase in L&S gross margin, targeted Ex-L&S gross margin improvement of 100 to 200 basis points and $10 million to $20 million reduction in operating expenses. Looking specifically at the second quarter, we expect approximately $450 million of total company revenue on a reported basis, which assumes approximately $70 million of license and support revenue. Based on these assumptions, we expect second quarter non-GAAP operating margin of approximately 5%. We expect second quarter items impacting GAAP net income of approximately $30 million, primarily related to pension expense. We expect a number of elevated noncash expenses impacting GAAP net income and earnings per share later in 2026 related to pension annuity purchases and streamlining certain legal entities, which we will guide on a quarterly basis. Also, as a reminder, in 2025, we removed hedges on our intercompany balances, which could create noncash FX gains as the U.S. dollar strengthens or losses as the U.S. dollar weakens. These are difficult to guide due to constantly changing rates, but will impact quarterly GAAP net income. There is no change to our expectation for full year free cash flow of approximately negative $25 million, which translates to positive $72 million of pre-pension free cash flow. This assumes approximate payments of $85 million in capital expenditures, $70 million of cash taxes, $70 million of net interest payments, $30 million in aggregate environmental, legal and restructuring payments and $102 million of postretirement contributions with approximately $29 million of which is expected in the second quarter. We are focused on continuing to increase our efficiency and profitability during this period to maximize our underlying cash generation levels for investment and capital return. Before we open the line for questions, Mike has a few additional remarks. Michael Thomson: Thank you, Deb. I want to reinforce 3 key points we hope came through in our commentary today. First, our confidence in the guidance ranges we've reaffirmed today is reinforced by our first quarter financial performance as well as the strength of our client signings, book-to-bill and backlog position. Second, our L&S solutions are durable and we are continuing to make investments to modernize our ClearPath Forward ecosystem and solidify our platforms as a key enabler of enterprise AI. Third, artificial intelligence is not only allowing us to provide more cost-effective solutions for our clients, but creates opportunities for us to help enhance our clients' business processes and end user experience, which creates a variety of new outlets for Unisys. We hope you'll join us on June 2nd to discuss these opportunities and more at our upcoming Investor Day, which you can RSVP for on our investor website. Operator, you may now open up the line for questions. Operator: [Operator Instructions] The first question that we have comes from Rod Bourgeois of DeepDive Equity Research. Rod Bourgeois: So it was helpful to hear some of your AI initiatives across your different segments and the accelerator work and the service experience work and so on. I wondered if you could just take us through quickly each of your segments and how AI is -- what are the headwinds and the tailwinds from AI? And maybe the net effect when you look across how AI is affecting you across your key segments? Michael Thomson: Great. Yes. Look, I think as we've stated in previous calls, we see AI in general as a significant tailwind for -- not only for us, but I think for the industry in general, but specifically embedded in our segments. And I apologize, I'm fighting a little cold here. So when we think about the impact in DWS, so we've already talked a little bit around some of the headwinds, which is really just the renewal cycle and the reestablishment and cost sharing of applying AI to that renewal. But moreover, I think we've been able to mitigate a lot of that headwind. Clearly, we've embedded AI into our solutions. We've seen the industry analyst reports on how that's set. So we think there's some real opportunity there, not only to have that in our solutions, but in our skill sets that we're bringing to market. So we mentioned in our prepared remarks, many opportunities inside of DWS, whether that's infrastructure, AI and the build-out from a field services perspective, all of the work that we're doing with agent force embedded in Salesforce opportunity and application of AI with our team in there and most prominently in DWS would be embedded in our solution experience accelerator and our agentic service desk. So we're seeing that really resonate, seeing some nice uplifts in pipeline, et cetera, in that particular business segment. So really happy there. And clearly, we think it's net-net, a positive long-term statement for the industry and for Unisys. From CA&I, you've heard in the prepared remarks in general across the board, the benefit there is clearly around AI application as it applies to modernization, the adoption of AIOps in our intelligent operations framework and the work we're doing around the agentic build of what we consider to be the action layer or the application or even above the application layer, that's been really growing across the board for us. And we think it's something that will continue to grow and actually probably opens up TAM for us for areas where we can really penetrate with that agentic layer that historically we may not have played in. So really pretty bullish on the application transformation layer embedded in CA&I. And then in ECS, I mean, it's been a powerful story for the last several years. We've talked roughly around $40 million of increase per year over the prior 3 years of consumption. The work that we've done to continue to embed technology enablement from an AI point of view into the ClearPath Forward ecosystem, we mentioned, in particular, the developer toolkit for AI that really allows for testing and utilization, and I'll say, bimodal data transfer has been really important. And we continue to develop the AB Suite to again allow for innovation and flexible deployment. So we see the technology continue to enhance the utilization of various aspects of AI in ClearPath. And again, we've seen that result over the course of the last several years from enhanced consumption and we see that trend continuing. So really happy with how it's shaping up, starting to see a little bit of relief, I think, from the macros, which has again given us confidence in our guidance as we said it. Rod Bourgeois: And just a follow-up on AI in your ClearPath Forward business. You've rolled out these new AI releases. Can you talk a little bit about the impetus to develop those AI releases and what the early client reaction is? And even to the extent that you're partnering with the AI models on that, just a little more color on the development of those releases and the reaction in the ecosystem? Michael Thomson: Sure. Great question. So look, this is not something that we've picked up in the last 3 months in reaction to what's going on in the market. These AB Suite releases have happened over the course of the last couple of years. This is just the latest release that's going out there. Clearly, there is an ask and road map discussions that we're having with clients. And it's really about access to data, portability of data, continued consumption of data and our ability to continue to build out above the, I'll say, the ecosystem layer or what you would consider the hypervisor layer or core layer of data and usage. The -- I'll say the issue du jour there is really about maintaining the support and steady run of the base and utilizing the emerging technology, you talk about frontier models as an example, being able to extract this valuable data that's embedded in ecosystem and marry that to frontier models to really help our clients continue to take advantage of that data set and do that in a manner so that they're not putting at risk anything in the ecosystem. They run the resiliency, the security, et cetera. So we see this as just a continuation of our ClearPath 2050 strategy and it happens to be the emerging technology that's there today. But we do a little bit and continue to work with kind of joint road mapping on some of these providers. And it extends beyond frontier, right? It's also OEM providers as well as some SaaS applications that sit on top of that ecosystem. So this, again, has been multiyears in the making. And I think from a client perspective, aligned to the expectations that we've set with our clients over the course of managing their road maps. Operator: The next question we have comes from Mayank Tandon of Needham & Co. Brandon Thomas Barron: This is Brandon on for Mayank. And I'm just wondering, like given the strong quarter, can you talk a little bit more about the reaffirmed guidance? Is that taking into account some macro uncertainty at buffer? And what are the levers that get you to the high or low end of the guide? Michael Thomson: Yes. Look, I think, obviously, we've reaffirmed guidance. We talked about Q1 being a little stronger than expectations. Kind of early in the year to be thinking about the impact of that. Obviously, our guide to constant currency, Deb mentioned in her prepared remarks some of the movement in FX embedded in that. So we'll have more color in Investor Day around how that relates to whether we're maybe moving towards the higher end of that or where we sit from a guidance perspective. I guess the message that I would want to leave you with is we feel good about Q1. It's a little better than we expected. We assumed in our guidance, as we talked about when we said it, that no real changes in the macroeconomic environment, although it's maybe moving a little more favorably from a macros perspective, I wouldn't consider one quarter to be indicative of the full year. So when we get a little bit more visibility through Q2, clearly at Investor Day and then obviously, if not Investor Day at our Q2 earnings, we'll talk about what -- kind of how we feel about that guidance range. Debra McCann: Yes. And to answer as far as some of the levers, I mean, it will really -- the signing momentum, if that continues and kind of the conversion timing of that revenue and then field services volumes, those are probably drivers we'd be looking for. Michael Thomson: Yes. And just to tie into that, I mean, as we've continued to enhance and improve our gross margin, that we have a lot more control over, obviously, and continue to work our programs and execute against those programs. And then to Deb's point, as these things become revenue recognition in year and we get to run rate on things that we've already sold and have started to implement, we're expecting some pull-through on margin there as well. Brandon Thomas Barron: Great. And then you guys also mentioned some cross-sell momentum in the quarter. I'm just wondering how big of an opportunity that is for you guys and the dynamics of the cross-sells? Especially with current clients upgrading IT and infrastructure for these AI initiatives? Michael Thomson: Yes. Look, I think -- look, in general, and I mentioned in my prepared remarks one specific client where they had 100 applications sitting kind of on top of our ClearPath Forward ecosystem and we're helping modernize those applications. And there's a great example of kind of that agentic action layer to modernize that. So we see that biggest cross-sell opportunity embedded in application modernization, and specifically, agentic -- I'll say, agentic AI applied to that action layer, the more of that we see, the more of that we're able to accomplish. And I think the market's knee-jerk reaction a little bit on SaaS providers, et cetera, we're not a SaaS provider per se, but we certainly play in the area of supporting SaaS application as solution implementers on the SaaS side. And the ability to use that agentic layer, I think, opens up TAM for us to lean in more heavily in that arena. And the ClearPath Forward ecosystem application construct is really a great proof point of that. We've seen a couple of instances of that recently, and we expect that, that will continue. Operator: The next question we have comes from Matt Dezort of William Blair. Matt Dezort: This is Matt on for Maggie Nolan. Congrats on the good results. Can I ask about the strong new business TCV? I think it was up 45% year-over-year, strong backlog too. I guess, Deb, you touched on it a little bit, but how should we think about conversion timing and ramp periods as well as margin profile of these new wins and your ability to continue to win work at these improved margin levels going forward? Michael Thomson: Great. So yes, super happy with the year-on-year uptick there. We mentioned in our prepared remarks about these rapid value assessments. Part of our strategy that we implemented at the tail end of last year and have carried through to Q1 this year is really looking at these point-of-spear opportunities and how emerging technology really avails itself not only in the AI embedded in our solutions, but the skills that we've got around that AI implementation and the conversion of technical debt. So happy with that uplift. We're seeing some real success in the top end of the funnel as well. Clearly, these solutions are resonating with clients. Now these RVAs or rapid value assessments are typically more point-of-the-spear things and are typically a little smaller engagements as a means to open the door. So we expect that the transition time will be faster. We also expect that much of that work is really more kind of time and material or outcome-based pricing. So we don't have the typical 18-month transition on some of those. And then it's really about the expansion post that RVA adoption is kind of what our focus is on top of that. So we think it will be more volume, perhaps a little smaller value, right, of the actual deal, because it's point-of-spear oriented, but gives us a real jump-off point to expand to other aspects of the business. So again, strong year-over-year TCV growth in that, as well as top of the funnel pretty happy and aligned to what our expectations were when we made those changes at the tail end of last year. Debra McCann: Yes, I think on -- yes, you also asked about margin. And I just think it's mix depending on kind of the solutions that we're signing. I think we mentioned there are some DSS have lower margins, right, but still are really good entry way into the client. Michael Thomson: Yes, that's a great point, Deb. Thanks for chiming in there. Mix is exactly right. And if the TCV is coming from the RVAs, then they're probably already at our accelerated margin profile. But as Deb mentioned, a good chunk of that pipeline aligns as we talked about, our DSS solution, which have a hardware mix in the solution itself, which kind of impacts the total margin of the contract, but not the services piece of our margin. Really, it's more the pass-through component of the hardware. But all in all, good line of sight, good progress and feel like the strategy is taking hold. Matt Dezort: Got it. As a follow-up, can I ask about pricing and just consumption pricing? I think IBM discussed the evolution they're seeing in the mainframe platforms to account for MIPS and AI and additional consumption parameters. Are you doing something similar with your pricing in CPF? And how are you maintaining your deserted premium here while adapting to these changing market dynamics? Michael Thomson: Sure. So great question. Look, the pricing discussions that we've had over the last probably 4 quarters were really pricing discussions as it pertains to Ex-L&S. Your question, obviously, is L&S pricing. We have not really had pricing pressure on the L&S side. It is a premium service, our clients view it as a premium service. We continue to get increased consumption out of that business. And most of that consumption increase is really based on the comments that I made earlier around enabling the data sharing and testing and the like embedded in what's going on in L&S. Typically, from an L&S renewal, as you know, Matt, the revenue recognition and that costing or pricing happens at deal signing and it's usually for the entire duration of that deal and it's upfront from a perspective of usage or consumption. So -- and we've been able to, over the course of the last 5 years and don't expect this to change, get price increases on those licenses as well as the support of that environment. So it's not really been pricing pressure at all on the L&S side of the business and we're quite confident that, that's going to continue. Operator: The next question we have comes from Anja Soderstrom of Sidoti. Anja Soderstrom: So AI seems to be a strong driver for you. But what kind of margin impact do you expect that to have? Michael Thomson: Look, I think we've been pretty consistent that the AI that we've embedded into enabling our solutions continues to have margin expansion and improvement. I think we were probably, what, Deb, almost 600 basis points over the last 3 years in Ex-L&S. Debra McCann: Yes. Yes. Michael Thomson: That is a byproduct of embedding that into our solutions. Clearly, when we have a new logo and they're utilizing the new solution, immediately, we get that impact immediately through -- and we've talked about last quarter, as an example, pushing our agentic service desk into the entire legacy base of clients. We should be above 40% of that base using our agentic service desk by the end of the year. So we still have some improvements that we expect on margin beyond this year for the existing base and we expect that we'll continue to offer this solution at an enhanced margin profile. So if I look at kind of where we are in the adoption of AI into our solutions, we're probably about halfway there in the existing base. And so again, we're talking about from our guidance, another 100, 200 basis points of potential improvement on the Ex-L&S side. And there should still be more in '27 as we continue to deploy our agentic offerings into our existing base. Anja Soderstrom: Okay. And then can we just double-click on the opportunities you see with the field services? Michael Thomson: Yes. So that's one we've been continually bullish on, as you know, and it really comes in 3 flavors. The embedding AI in the way we actually deliver our services from a field service point of view, i.e., location of the technicians, sending data to the technicians on the site with next best case cause of issues, looking and using data to understand how to do preventive things while on site, et cetera. So that's kind of a base used case of traditional elements and how AI is enhancing that. The second and third, I think, are actually more exciting, right? So one is around the different types of field service deployments. We talked about the work we've been doing on infrastructure and high-end storage and kind of moving up stack from a field service technician perspective. We talked in the prepared remarks around the data center work for installation and maintenance of things like liquid cooling for GPU chip configuration in a data center in general. And we also talked about the expansion of field services to other areas. In general, if you think about conference rooms, kiosks, office environments, et cetera, and the data telemetry around IoT devices and how that ultimately aligns to having a field service orientation. As you know, we're one of the few companies with the kind of global scale and reach from a field services point of view. And we think that, that's a differentiator from our perspective. And the alignment of that to our agentic service desk, knowledge management, et cetera, and the skills that we've got globally in field service, we've been investing in that area for several years when I think you've seen a lot of the market kind of curtail some of their investment in that space. We're pretty excited about the opportunity it brings to us. Operator: The next question we have comes from Matthew Galinko of Maxim. Matthew Galinko: I was just hoping you could expand a little bit more on the pipeline for field services around data centers and AI data centers? Michael Thomson: I mentioned on my prepared remarks that we had won an engagement there. We've been in the hunt for a couple of others as well. There's billions of dollars being spent in that space. And our goal is to really have our associate base totally prepared to handle significant volume as it pertains to data center construct, installation of racking in there and obviously, the component pieces around immersion cooling, liquid cooling, et cetera. So the pipeline has been, I would say, fairly strong. Our discussions with clients or prospective clients in that pipeline is going, I think, incredibly well. And we're happy about the fact that we are in the hunt for a whole host of opportunities there with some pretty significant players. So clearly, the market awareness of our abilities and skills in that space is out there. And again, these deals take a little bit of time to materialize. But I guess what I would say to you is that we're certainly getting significant invites and that we've got really good opportunities in the pipeline to expand that opportunity for the company. Operator: The next question we have comes from Ana Goshko of Bank of America. Ana Goshko: I have a pension question. So Deb, you mentioned the -- some charges to come later this year related to pension annuity purchases. And I know those purchases helped to reduce the overall liability and then in the medium to long term also help to reduce the amount it's going to take to reduce the pension deficit. But it wasn't clear to me that you had already agreed to do the annuity purchases this year. I know those are cashless. So is that kind of a done deal? Or is it still something that you're considering? Debra McCann: Yes. No, it's not a done deal. It's still in our plans. As we laid out last year, we were going to do some annuity purchases. We did some last year at the end of the year and our plan was to do more this year, but it's not locked in. And that's why we don't know the exact amount of the charge, it will depend on the timing. And so that's why as the year goes on and we get closer to locking that in, we'll give a sense of what that noncash charge would be. Michael Thomson: Yes. Ana, it's Mike. So when we talked about -- even when we did the debt, we talked about roughly $600 million worth of pensions annuities. I think we did, Deb, like $375 million, something like that. And so this would kind of be the other half of that. You're right that is cashless to us. As you know, we've done about 6 of these already. And so when we do them, you make an offer and then you get bids. And there are -- and there has been high interest in those bids. Normally, we get maybe 4 to 7 folks bidding on that. And then it's really a matter of does the bid come through at a rate that we think is worth it from our perspective. So you're right, it is still a little bit market-oriented, but our availability to do another one starts in Q3. And so we fully expect to put that offer out in Q3 and we fully expect that we'll get the same level of demand that we've gotten historically and it really comes down to the economics of the rate. Ana Goshko: Okay. Okay. Great. Understood. And then secondly, I think I asked the same question last quarter. But the debt market has been just very messy for software-related companies and IT-related companies generally. So that's kind of created an opportunity potentially for you to buy back bonds at an attractive rate. I know you've got uses for your liquidity, but you do have a strong liquidity position. So I think you bought back just a tiny bit of bonds in the quarter and about $2 million. And just wondering if that's something that has continued after quarter end or just kind of your view is on basically tapping that opportunity? Debra McCann: Yes. So we have windows where we can purchase. And you're right, we did in Q1, purchase an immaterial amount and at an opportunistic value, we feel. And so we'll continue to look at our liquidity, our cash and assess that as time goes on and as the windows open that allow us to do that. So we'll continue to keep an eye on that and see when the price is opportunistic, look at the overall liquidity picture and make that determination. Operator: The final question we have is a follow-up from Rod Bourgeois. Rod Bourgeois: Yes. I thought I would just ask, in the public services, you had some delays with the government shutdown and some other decision challenges there. The question is, is that starting to turn? And then similarly, on PC refresh, is that also at a point where you should see some upside there as well? Or is it still a little bit of a wait and watch going on? Just those updates would be helpful. Michael Thomson: Sure. Look, I would say, in general, public sector has been more favorable than it has in previous quarters. So -- and I would throw higher end in that same viewpoint. I think some of the noise has started to settle down and some of that project work is starting to return. So again, I wouldn't say 1 quarter or 1.5 quarter is indicative of the future. But I'm encouraged by what we're seeing as far as the loosening of the belt a little bit here and getting back to a little bit more normalcy in that space. I think they also recognize that in many cases, there are significant laggards from a technology perspective and the utilization of the emerging technologies, specifically this influx of these agentic AI models can help leapfrog them and get them not only up to date from a technical debt perspective, but catch them up for perhaps multiyear lag effect. So that's been, I think, pretty positive in the market. And then as far as your comment on PC refresh, yes, we saw a little better than expected in Q1. Again, I'm hesitant to say that, that is a byproduct or that's going to just continue throughout the remainder of the year, but there are certainly some elements that would suggest that it should, specifically as we talk about the Microsoft licensing component, et cetera. So we -- and again, we're coming up against comps of a pretty low year. But I would remind you that, at least for us, the reliance on that refresh cycle is less and we continue to train and educate the workforce on the infrastructure component of the field services arm that is impacted by those PC refreshes. We've extended that IoT devices to go beyond PC refresh. So it's an important factor. But when we set our guidance, we expected it to be pretty flat and maybe even still a little declining. So -- and it's actually performed a little better than our expectations. Operator: The final question we have comes from Sean Perkins of Deutsche Bank. Sean Perkins: I'd like to dig into a little bit more about the data center opportunity that you highlighted to some of the work you have there. Perhaps if you can discuss maybe some of the clients that you're seeing engage with you in those arenas and then how you're -- what the go-to-market strategy for your business is there to as far as given the market -- and to think about the market opportunity size? Michael Thomson: Well, thanks, Sean, for the question. I'm not really at liberty to share actual client names, but I would say to you that, obviously, we're engaged with the OEMs in regards to that and they're an entry way into some of these clients. And I would say, at least for a couple in the pipeline, it's kind of the who's who in that space. So we feel really, again, privileged that those types of clients are engaging with us to talk about the installation and maintenance of such a high-profile investment for them. And again, there are billions of dollars, as you know, being spent in this space. We think there's a really big TAM. And we've been using this, I'll say, period of the last 12 months to really make sure our workforce is trained up on the utilization of this new technology, not only on how to deploy it, but clearly, the implementation of racking and cabling and immersion cooling is a pretty technical aspect. And so the recognition of our capabilities to do that puts us in really good stead. And again, I would just say that we're talking about some major OEMs and major players in data center build. Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines. 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