Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unisys Corp (UIS, Financial) reported an 8.2% revenue growth in constant currency for Q3 2024, keeping them on track to meet their full-year revenue guidance.
- The company raised its full-year non-GAAP operating margin guidance and improved its outlook for 2024 free cash flow.
- New business total contract value (TCV) grew 50% year-over-year in Q3, with significant contributions from new logo signings.
- Unisys Corp (UIS) achieved year-over-year expansion in both gross margin and non-GAAP operating margin, benefiting from delivery and operational efficiency initiatives.
- The company reported a strong backlog of $2.8 billion, up 18% year-over-year, with a trailing 12-month book-to-bill ratio of 1.2 times.
Negative Points
- Digital Workplace Solutions (DWS) revenue declined by 7.1% year-over-year, primarily due to lower discretionary volume with clients.
- Cloud Applications and Infrastructure Solutions revenue decreased by 1.5% compared to the prior year, driven by nonrecurring revenue and project volume fluctuations.
- Unisys Corp (UIS) reported a GAAP net loss of $62 million for Q3 2024, including a non-cash goodwill impairment of $39 million related to the DWS segment.
- The company experienced a decline in third-party technology revenue, impacting overall revenue growth.
- Despite strong new business signings, the mix of 2024 signings resulted in lower annual revenue, affecting the full-year Ex-L&S revenue growth expectations.
Q & A Highlights
Q: Can you explain the increase in L&S revenue outlook despite an above-expected renewal in Q3?
A: Peter Altabef, CEO, explained that the increase in L&S revenue outlook is due to incremental additions to overall profitability, not pulling from future revenues. Mike Thomson, COO, added that the business has strong pricing power and consumption, leading to the uptick in revenue projections.
Q: Is the discretionary business in DWS stable, or is there further risk?
A: Peter Altabef, CEO, noted that while there has been a decline in short-term discretionary project work, the long-term prospects for DWS are strong. The company expects a strong quarter of DWS signings in Q4, indicating stability and potential growth.
Q: Can you provide more details on the goodwill impairment for DWS?
A: Debra McCann, CFO, explained that the noncash impairment was triggered by economic and industry dynamics affecting the pace of client signings. Despite this, Unisys remains enthusiastic about the DWS space and expects to take market share.
Q: How is the new business pipeline for Ex-L&S improving, and what is driving this growth?
A: Mike Thomson, COO, highlighted that the increase in pipeline and backlog supports the growth trajectory for Ex-L&S. The company is seeing strong renewal rates and new business signings, which are expected to drive future growth.
Q: Where are you seeing success with new customers across capabilities or geographies?
A: Mike Thomson, COO, stated that Unisys is experiencing diverse success across geographies and sectors. The company's solutions are universally applied, allowing for tailored offerings that resonate with clients across different regions and industries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
