What adoption and client behavior patterns are you seeing regarding open-weight models for private AI versus frontier models?

Unisys is platform-agnostic, helping clients choose models based on specific needs like data sovereignty, IP protection (favoring open source/private AI), or complex problems (frontier models). They emphasize managing hybrid infrastructure and understanding client priorities, noting that highly regulated sectors often prefer on-prem solutions for IP protection. “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?”

Is AI activity primarily showing up in new business wins or mostly in the pipeline at this stage?

AI activity is showing up in new business wins, particularly in Cloud Applications and Infrastructure (CA&I) for apps modernization and cybersecurity, which are linked to AI compute. The pipeline is also strong in this area, indicating a loosening of discretionary spend. “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.”

UIS

Unisys (UIS) Q2 FY26 earnings call: guidance and Q&A

Q: What are the overall pricing trends you're seeing across your solution set, and are contracts being structured differently due to AI focus?

Mike Thomson acknowledged 'AI deflation' and price pressure, but noted Unisys has navigated a significant portion of its renewal cycles, completing roughly $1.7 billion last year and expecting to be 3/4 through by year-end. They've successfully augmented traditional pricing pressure with new scope opportunities, maintaining relationship economics. “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.”

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 30, 2026

Source: earnings call transcript

Executive summary

Unisys Q2 FY26 — Strong New Business Signings and AI-Driven Momentum

Unisys delivered a solid Q2 FY26, driven by robust new business signings and strategic investments in AI-infused solutions. While overall revenue saw a slight decline primarily due to ClearPath renewal timing, the company's core Technology Solutions and Services segment demonstrated growth and margin expansion. Management remains focused on leveraging AI to enhance its portfolio, improve delivery efficiency, and strengthen client relationships, positioning for future growth and pension liability reduction.

Highlights

New business TCV increased 57% year-over-year and 22% sequentially to $192 million.
Technology Solutions and Services (TS&S) revenue grew 2% year-over-year.
TS&S gross margin expanded by 170 basis points year-over-year to 19.3%.
Cloud Applications and Infrastructure Solutions (CA&I) gross margin expanded by 420 basis points year-over-year to 25%.
Trailing 12-month book-to-bill is 1.2x for both total company and TS&S.

Concerns

Total revenue declined 2% year-over-year (5.2% in constant currency) due to ClearPath license renewal timing.
GAAP operating loss of $33 million included a noncash goodwill impairment charge of $47.2 million for the DWS segment.
Digital Workplace Solutions (DWS) gross margin declined to 10.8% from 16.9% in the prior year, impacted by hardware mix, reduced volumes, and elevated transition costs.
Net income was negative $95 million, translating to a diluted loss of $1.31 per share.

Guidance & targets

Category	Target	Timeline	Confidence
Full year revenue growth	decline of 5% to 3.5% high materiality	FY26	High
Full year reported revenue growth	negative 2.6% to negative 1.1% high materiality	FY26	High
Full year TS&S revenue constant currency decline	between 6% and 4% medium materiality	FY26	High
Full year ClearPath revenue	$425 million high materiality	FY26	High
Average annual ClearPath revenue	approximately $400 million medium materiality	FY27 and FY28 · FY27, FY28	Medium
Full year non-GAAP operating profit margin	9% to 11% high materiality	FY26	High
Full year ClearPath gross margin	slight year-over-year increase medium materiality	FY26	High
Full year TS&S gross margin improvement	100 to 200 basis points medium materiality	FY26	High
Full year operating expense reduction	$10 million to $20 million medium materiality	FY26	High
Q3 total company revenue	approximately $450 million high materiality	Q3 · FY26	High
Q3 Technology Solutions and Services revenue	approximately $370 million medium materiality	Q3 · FY26	High
Q3 ClearPath revenue	approximately $80 million medium materiality	Q3 · FY26	High
Q3 non-GAAP operating margin	approximately 4% high materiality	Q3 · FY26	High
Full year free cash flow	approximately negative $25 million high materiality	FY26	High
Full year pre-pension and post-retirement free cash flow	approximately $75 million medium materiality	FY26	High
Full year capital expenditures	$85 million medium materiality	FY26	High
Full year cash taxes	$70 million medium materiality	FY26	High
Full year net interest payments	$70 million medium materiality	FY26	High
Full year environmental, legal and restructuring payments	$30 million medium materiality	FY26	High
Full year pension and postretirement contributions	$100 million medium materiality	FY26	High
Q3 pension and postretirement contributions	approximately $25 million medium materiality	Q3 · FY26	High
U.S. pensions removal	by 2030 high materiality	by 2030 · FY30	Medium
Global pension contributions	$40 million medium materiality	H2 2026 · FY26	High
Aggregate expected cash contributions	essentially unchanged from year-end projections medium materiality	2027 through 2029 · FY27, FY28, FY29	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Total Company Revenue exceeded expectations by approximately $20 million, primarily due to Technology Solutions and Services. Revenue constant currency growth: -5.2% YoY	$474 million	-2%	—	—
Technology Solutions and Services (TS&S) Represents the entire company excluding ClearPath. Gross margin expansion reflects investments in technology, workforce, and higher-value solutions. Revenue constant currency decline: 1.3% YoYGross margin change: +170 bps YoY	$404 million	2%	—	19.3% gross margin
Digital Workplace Solutions (DWS) Revenue decline was better than expected. Partially offset by new business signings and high-end storage field services. Gross margin decline due to hardware mix, reduced volumes, and elevated near-term transition costs for a complex client win. Prior year gross margin: 16.9%	$142 million	-1.1%	—	10.8% gross margin
Cloud Applications and Infrastructure Solutions (CA&I) Revenue decline was slightly better than anticipated. Margin expanded due to delivery efficiencies and labor cost savings, but is expected to be lower in the second half due to compensation timing and client transitions. Prior year gross margin: 20.8%Gross margin change: +420 bps YoY	$184 million	-3.2%	—	25% gross margin
Enterprise Computing Solutions (ECS) Gross margin decline primarily due to the timing of ClearPath license renewals. Specialized services and next-generation compute solutions within ECS grew 3%. Prior year gross margin: 53.5%	$126 million	-13.2%	—	44.8% gross margin
ClearPath (within ECS) Revenue was in line with expectations. Decline fully accounted for the overall segment decline due to license renewal timing. Full year gross margin expected to be approximately 70%.	$70 million	-22.9%	—	56.7% gross margin

Orderbook & backlog

Total contract value (TCV) $422 million Q2 FY26

New business TCV $192 million Q2 FY26

up 57% YoY; up 22% sequentially

Year-to-date TCV $696 million H1 FY26

Year-to-date new business TCV $350 million H1 FY26

up 52% compared to H1 2025

Backlog $2.8 billion Q2 FY26 end

Greater portion of in-year revenue assumed in guidance is contracted and in backlog relative to this time last year.

Trailing 12-month book-to-bill 1.2x Q2 FY26

relatively flat sequentially

Applies to both total company and TS&S.

Product announcements

Product	Type	Timeline
ClearPath core operating system	update	Q2 FY26
Quantum fraud detection solution	launch	Q2 FY26
Agentic Service Desk	expansion	Currently in deployment phase
Service experience accelerator	launch	Moving into production

Deals & partnerships

Leading U.K.-based construction company Expanded relationship with 2 wins in Q2 FY26

Will provide Device Subscription Services (DSS), including intelligent refresh and life cycle services for 10,000 devices, and take on Azure service and cloud governance as their Microsoft cloud solution provider. Client relationship is in its second year.

Community college system Signed multiyear infrastructure services new scope multiyear

Became a Unisys client last quarter. New scope based on initial success of Agentic modernization work.

Large OEM Engagement to provide full-time dedicated resident technicians

To support an AI data center build-out and ongoing maintenance. Unisys was also recognized as Dell's 2026 American Data Center Partner of the Year.

Leading global telecommunications company Small expansion in high-value field services

To provide end-to-end deployment and support for Starlink antennas. 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.

Global travel systems integrator 6-year new scope contract 6-year

In Australia, to provide dedicated on-site engineers to maintain check-in kiosks, bag tag printers, and passenger boarding systems in airports across the region.

Key hyperscaler in higher education Collaboration on solution development

Working alongside a large U.S. university system client, Unisys designated a bespoke application built with the partner's AI stack to assist overextended guidance counselors and improve student retention.

Antenna New partnership to enhance AI operations

To improve AI operations governance and observability across AI agents and workflows and help optimize token use for clients.

Risks & headwinds

Revenue decline due to ClearPath license renewal timing Q2 FY26

Total revenue declined 2% YoY (5.2% cc); ClearPath revenue down 22.9% YoY to $70 million.

Mitigation:High visibility into a strong second half for ClearPath revenue, with full year outlook increased to $425 million.

Goodwill impairment charge for DWS segment Q2 FY26

Noncash goodwill impairment charge of $47.2 million.

Mitigation:Reflects slower pace of profitability improvement due to competitive pressures, pricing dynamics, and near-term investments, but does not change view of margin potential in the segment.

DWS gross margin pressure Q2 FY26

DWS gross margin declined to 10.8% from 16.9% YoY.

Mitigation:Due to hardware mix, reduced volumes, and elevated near-term transition costs and upfront workforce investment for a complex client transition. These investments are viewed as foundational for future margin expansion and successful execution of a flagship commercial deployment.

Rising hardware costs for clients Ongoing

Demand accelerated for devices and services as clients contend with rising hardware costs stemming from memory shortages.

Mitigation:Unisys's Device Subscription Services (DSS) offering is geared towards better asset management, reporting, and financial outcomes, helping clients manage these costs and lock in pricing.

AI deflation and pricing pressure Ongoing, but largely addressed through renewals

Price pressure on the top line for some solutions.

Mitigation:Unisys completed roughly $1.7 billion in renewals last year and expects to be 3/4 through all renewal cycles by year-end. They have augmented traditional pricing pressure with new scope opportunities to maintain relationship economics.

Shift in client spending priorities Expected to continue through at least H1 FY26, possibly longer.

Shift into infrastructure spend, potentially deferring some discretionary spend.

Mitigation:Unisys sees this as an advantage for its DSS offering and is well-positioned to manage hybrid infrastructure and AI orchestration. New business signings are strong, indicating a loosening of discretionary spend.

What to watch in Q3 FY26

ClearPath Revenue

Q4 FY26

Current $70 million in Q2 FY26

Target Q4 FY26 revenue of ~$200 million

Why it matters

ClearPath revenue is a significant component of ECS and total company profitability, with high profit flow-through. Achieving the Q4 target is critical for full-year guidance.

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.

Find out whether UIS delivers this. Inve re-checks your case every morning.

Q&A highlights

Are you seeing the dynamic where AI infrastructure costs crowd out other deals, similar to IBM's recent experience? Is it subsiding?

Unisys acknowledges seeing the dynamic of a shift to infrastructure spend and deferral of discretionary spend, which was anticipated. However, they view it as an advantage for their Device Subscription Services (DSS) offering, which helps clients manage rising hardware costs. They believe these deferrals are temporary and new business signings remain strong.

“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?”

asked by Rod Bourgeois · answered by Michael Thomson

2 min read 6 chapters

Detailed narrative

New Business Momentum and Client Expansion

Unisys reported strong new business TCV growth, up 57% year-over-year and 22% sequentially, primarily from existing clients. The company highlighted expanded relationships with a U.K.-based construction company for Device Subscription Services (DSS) and Azure services, and a community college system for infrastructure services following Agentic modernization work.

These wins demonstrate successful cross-selling and expansion within the client base, with win rates on new business with existing clients up meaningfully in the first half of the year.

AI Infrastructure and Data Center Services

The company is expanding its presence in AI infrastructure data center field services, securing an engagement with a large OEM for dedicated technicians to support an AI data center build-out and ongoing maintenance. Unisys was also recognized as Dell's 2026 American Data Center Partner of the Year, underscoring its expertise in this high-growth area, including specialized equipment and liquid cooling.

This positions Unisys as a global partner for data center build-outs and management.

Device Subscription Services (DSS) Demand

Demand for DSS is accelerating as IT executives seek to offset rising hardware costs stemming from memory shortages. Unisys's DSS offering, which focuses on asset management, reporting, and financial outcomes, is purpose-built to transition clients from traditional capital purchases to flexible life cycle models. The solution optimizes planning, procurement, warehousing, deployment, and support through persona mapping, device telemetry, and predictive analytics.

AI-Infused Solutions and Product Development

Unisys continues to invest in AI-infused solutions, including a major operating system release for its ClearPath ecosystem that eases data integration with third-party AI applications and offers an AI developer toolkit. The company also moved a quantum fraud detection solution into production with Paysafe, an online payment platform, developed in partnership with the National Quantum Computing Center (NQCC) and partially funded by the U.K. government, showcasing its advanced capabilities.

Agentic Service Desk and Workforce Transformation

The Agentic Service Desk, designed for orchestrating an elevated and more automated IT support experience, is in deployment with a second group of clients. This solution embeds Agentic Workflows and intelligent automation directly into delivery, with new integrations for NexSync and TeamViewer platforms.

Unisys is also focusing on AI workforce transformation through structured learning pathways, certifications, and a skills-first AI-driven talent architecture to match talent to work and continuously learn from outcomes.

Strategic Partnerships and Industry Recognition

Unisys is collaborating more closely with key partners, including a hyperscaler in higher education, to co-develop and commercialize solutions like a bespoke application for guidance counselors. The company maintained leader rankings in market reports for data center services, cybersecurity, and AI-enabled cloud infrastructure management published by ISG and Nelson Hall, validating its market position and solution portfolio.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.