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    UIS
    Earnings call· Jun 2026(Q2 FY26)

    UNISYS Q2 FY26 earnings call UIS

    Jul 30, 2026 Source

    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

    5

    • 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

    4

    • 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

    24
    CategoryTargetConfidence
    Full year revenue growth
    decline of 5% to 3.5%
    high materiality
    High
    Full year reported revenue growth
    negative 2.6% to negative 1.1%
    high materiality
    High
    Full year TS&S revenue constant currency decline
    between 6% and 4%
    medium materiality
    High
    Full year ClearPath revenue
    $425 million
    high materiality
    High
    Average annual ClearPath revenue
    approximately $400 million
    medium materiality
    Medium
    Full year non-GAAP operating profit margin
    9% to 11%
    high materiality
    High
    Full year ClearPath gross margin
    slight year-over-year increase
    medium materiality
    High
    Full year TS&S gross margin improvement
    100 to 200 basis points
    medium materiality
    High
    Full year operating expense reduction
    $10 million to $20 million
    medium materiality
    High
    Q3 total company revenue
    approximately $450 million
    high materiality
    High
    Q3 Technology Solutions and Services revenue
    approximately $370 million
    medium materiality
    High
    Q3 ClearPath revenue
    approximately $80 million
    medium materiality
    High
    Q3 non-GAAP operating margin
    approximately 4%
    high materiality
    High
    Full year free cash flow
    approximately negative $25 million
    high materiality
    High
    Full year pre-pension and post-retirement free cash flow
    approximately $75 million
    medium materiality
    High
    Full year capital expenditures
    $85 million
    medium materiality
    High
    Full year cash taxes
    $70 million
    medium materiality
    High
    Full year net interest payments
    $70 million
    medium materiality
    High
    Full year environmental, legal and restructuring payments
    $30 million
    medium materiality
    High
    Full year pension and postretirement contributions
    $100 million
    medium materiality
    High
    Q3 pension and postretirement contributions
    approximately $25 million
    medium materiality
    High
    U.S. pensions removal
    by 2030
    high materiality
    Medium
    Global pension contributions
    $40 million
    medium materiality
    High
    Aggregate expected cash contributions
    essentially unchanged from year-end projections
    medium materiality
    Medium

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    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 million2%—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

    Operational metrics

    19
    Non-GAAP operating profit margin
    5.3%
    Q2 FY26

    In line with prior outlook.

    Adjusted EBITDA
    $54 million
    Q2 FY26
    Adjusted EBITDA margin
    11.3%
    Q2 FY26
    Capital expenditures
    $23 million
    Q2 FY26

    Year-to-date CapEx totaled $44 million. About half of annual capital expenditures are for ClearPath ecosystem solution development.

    Cash balance
    $324 millionvs $414 million at year-end
    as of June 30

    Maintains a strong liquidity position, with an undrawn $125 million ABL facility and no meaningful debt maturities before 2031.

    Global pension deficit
    approximately $420 millionimproved by approximately $30 million from year-end
    as of June 30

    Year-end global pension deficit was approximately $450 million. Based on market conditions and year-to-date pension contributions.

    Net leverage (including year-end pension deficit)
    approximately 3.1x
    Q2 FY26
    Trailing 12-month attrition rate
    11.2%
    Trailing 12-month

    Reflects continued commitment to fostering a highly engaged and empowered workforce.

    SG&A
    $187 milliondown $3 million from prior year
    Year-to-date

    On track to achieve full year cost savings of $10 million to $20 million.

    Noncash goodwill impairment charge
    $47.2 million
    Q2 FY26

    Remainder of goodwill balance allocated to DWS segment, reflecting slower pace of profitability improvement due to competitive pressures, pricing dynamics, and near-term investments.

    Net income
    -$95 million
    Q2 FY26

    GAAP basis.

    Diluted loss per share
    -$1.31
    Q2 FY26

    GAAP basis.

    Adjusted net income
    -$6 million
    Q2 FY26
    Diluted loss per share (adjusted)
    -$0.08
    Q2 FY26
    Nonsegment revenue
    $3 million
    Q2 FY26

    Benefited total company and TS&S gross margin. Same size benefit expected in Q3 and Q4 from a Q1 transaction within U.K. Business Process Solutions joint venture.

    Nonsegment revenue benefit to total company gross margin
    50
    Q2 FY26
    Nonsegment revenue benefit to TS&S gross margin
    60
    Q2 FY26
    Cash pension and postretirement contributions
    $29.2 million cash pension; $0.5 million postretirement
    Q2 FY26
    ClearPath full year gross margin
    approximately 70%
    FY26

    Expected, as increased license revenue in the second half will have high profit flow-through over a relatively fixed cost base.

    Industry KPIs

    3
    MetricValueDetails
    Headcount dso11.2%%
    Customer logo metrics2 winscount
    Bookings tcv book to bill$192 million new business TCV; $422 million total TCVUSD

    Orderbook & backlog

    6
    Total contract value (TCV)$422 millionQ2 FY26
    New business TCV$192 millionQ2 FY26

    up 57% YoY; up 22% sequentially

    Year-to-date TCV$696 millionH1 FY26
    Year-to-date new business TCV$350 millionH1 FY26

    up 52% compared to H1 2025

    Backlog$2.8 billionQ2 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-bill1.2xQ2 FY26

    relatively flat sequentially

    Applies to both total company and TS&S.

    Product announcements

    4
    ProductTypeDetails
    ClearPath core operating systemupdate
    Quantum fraud detection solutionlaunch
    Agentic Service Deskexpansion
    Service experience acceleratorlaunch

    Deals & partnerships

    7
    Leading U.K.-based construction companyExpanded 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 systemSigned multiyear infrastructure services new scopemultiyear

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

    Large OEMEngagement 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 companySmall 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 integrator6-year new scope contract6-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 educationCollaboration 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.

    AntennaNew 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

    6
    Revenue decline due to ClearPath license renewal timingQ2 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 segmentQ2 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 pressureQ2 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 clientsOngoing

    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 pressureOngoing, 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 prioritiesExpected 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

    5

    ClearPath Revenue

    Q4 FY26
    Current$70 million in Q2 FY26
    TargetQ4 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.