On October 29, 2024, Unisys Corp (UIS, Financial) released its 8-K filing for the third quarter of 2024, showcasing a notable revenue growth of 7% year-over-year, reaching $497 million, surpassing the analyst estimate of $486.50 million. However, the company reported a net loss of $61.9 million, translating to a loss per share, which missed the analyst estimate of -$0.21. Unisys Corp is a technology solutions provider operating through three segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I), and Enterprise Computing Solutions (ECS).
Performance and Challenges
Unisys Corp's performance in Q3 2024 was marked by a significant increase in revenue, driven by the timing of software license renewals. The company also reported a gross profit margin improvement of 870 basis points year-over-year, reaching 29.2%. Despite these achievements, the company faced challenges, including a net loss attributable to a $29 million tax accrual for certain foreign subsidiaries and a non-cash goodwill impairment charge of $39.1 million related to the Digital Workplace Solutions segment. These challenges highlight the ongoing financial pressures and strategic adjustments necessary for Unisys Corp to maintain its competitive edge in the technology sector.
Financial Achievements and Industry Importance
Unisys Corp's financial achievements in Q3 2024 include a 50% year-over-year increase in New Business Total Contract Value (TCV), driven by a doubling of new logo signings. The company's ability to secure new contracts is crucial in the technology industry, where innovation and client acquisition are key to sustaining growth. Additionally, Unisys raised its 2024 non-GAAP operating profit margin guidance from 5.5%-7.5% to 6.5%-8.5%, reflecting confidence in its operational efficiency initiatives.
Key Financial Metrics
The income statement reveals a revenue of $497 million, up from $464.6 million in Q3 2023. The operating profit improved to $7.5 million from a loss of $17.1 million in the previous year. Non-GAAP operating profit surged to $49.4 million, a significant increase from $0.4 million in Q3 2023. The balance sheet shows cash and cash equivalents of $373.7 million as of September 30, 2024, slightly down from $387.7 million at the end of 2023. Cash provided by operations was $32 million, a notable improvement from a cash usage of $4.1 million in Q3 2023.
Our strong year-over-year growth in New Business signings continues to demonstrate increased awareness and demand for Unisys’ solutions," said Unisys Chair and CEO Peter A. Altabef.
Segment Performance
The Digital Workplace Solutions (DWS) segment experienced a revenue decline of 7.1% year-over-year, attributed to lower discretionary volume with clients. However, the gross profit margin improved by 150 basis points to 16.3%. The Cloud, Applications & Infrastructure Solutions (CA&I) segment saw a slight revenue decline of 1.5%, with a gross profit margin increase of 100 basis points to 16.3%. The Enterprise Computing Solutions (ECS) segment reported a robust revenue increase of 29.2%, with a gross profit margin of 60%, up 980 basis points year-over-year.
| Segment | Revenue (3Q24) | YoY Growth | Gross Profit Margin |
|---|---|---|---|
| Digital Workplace Solutions (DWS) | $130.9 million | -7.1% | 16.3% |
| Cloud, Applications & Infrastructure Solutions (CA&I) | $131.5 million | -1.5% | 16.3% |
| Enterprise Computing Solutions (ECS) | $157.9 million | 29.2% | 60.0% |
Analysis and Outlook
Unisys Corp's Q3 2024 results reflect a strong revenue performance, driven by strategic contract renewals and new business acquisitions. The company's focus on operational efficiency and cost-saving initiatives has led to improved profitability metrics. However, the challenges posed by tax accruals and impairment charges underscore the need for continued financial discipline. As Unisys Corp raises its profitability guidance, the company appears poised to leverage its strengths in AI solutions and client engagement to drive future growth.
Explore the complete 8-K earnings release (here) from Unisys Corp for further details.
