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1. Company Snapshot

1.a. Company Description

Unisys Corporation, together with its subsidiaries, operates as an information technology services company worldwide.It operates in Digital Workplace Solutions (DWS); Cloud and Infrastructure Solutions (C&I); and Enterprise Computing Solutions (ECS) segments.The DWS segment provides solutions that transform digital workplaces securely and create exceptional end-user experiences.


The C&I segment offers solutions that drive modern IT service platforms, cloud applications development, intelligent services, and cybersecurity services.The ECS segment provides solutions that harness secure, continuous high-intensity computing, and enable digital services through software-defined operating environments.Its solutions include Unisys InteliServe, a service solution that transforms traditional service desk into an intelligent, user-centric experience aligned with the needs of the modern digital workplace; Unisys CloudForte, a comprehensive managed service offering to help accelerate the secure move of data and applications to the cloud; PowerSuite, a packaged software tool used by enterprise IT to monitor, analyze, troubleshoot and secure collaboration, and communications multi-platform environments; Unisys ClearPath Forward, a software operating environment for high-intensity enterprise computing; and Unisys Stealth security software, which enables trusted identities to access micro-segmented critical assets and safely communicate through secure and encrypted channels.


In addition, the company provides industry solutions, which help law enforcement agencies solve crime; social services case workers assist families; travel and transportation companies manage freight and distribution; and financial institutions deliver omnichannel banking.It serves customers in the government, financial services, and commercial markets through direct sales force, distributors, resellers, and alliance partners.Unisys Corporation was founded in 1886 and is based in Blue Bell, Pennsylvania.

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1.b. Last Insights on UIS

Unisys Corporation's recent performance was negatively impacted by a slew of investigations and allegations of securities law violations. The Securities and Exchange Commission (SEC) charged four companies, including Unisys, with making materially misleading disclosures regarding cybersecurity risks and intrusions. This development has led to a flurry of law firms launching investigations and encouraging investors to inquire about potential securities class action claims. The company's Q1 earnings release also reported a loss of $0.05 per share, lagging revenue estimates.

1.c. Company Highlights

2. Underlying Business Trends Drive Mixed Q3 Results

The company's third-quarter revenue was $460 million, a decline of 7.4% year-over-year or 9% in constant currency, primarily due to a shift in timing on a license and support renewal that closed just outside the quarter. Excluding license and support, third quarter revenue declined 4% year-over-year or 5.5% in constant currency. The GAAP operating loss was $34 million, including a $55 million noncash goodwill impairment in the DWS segment, while non-GAAP operating profit was $25 million, with a 5.4% non-GAAP operating margin. Actual EPS came out at '-0.08' relative to estimates at '-0.27', indicating a better-than-expected performance. The company's guidance for the full year now expects constant currency growth of negative 4% to negative 3%, which equates to a reported revenue decline of 3.6% to 2.6%.

Publication Date: Nov -18

📋 Highlights
  • L&S Revenue Growth:: Increased full-year L&S expectations to $430M, up $40M from original forecasts.
  • New Business Signings:: Rose 15% YoY, driven by Ex-L&S renewals and a major industrial client renewal.
  • Gross Margin Improvement:: Ex-L&S gross margin rose 70 bps to 18.6% YoY, aided by workforce optimization.
  • Pension Liability Reduction:: Executed a $250M discretionary pension contribution and an annuity purchase to remove U.S. liabilities.
  • Strong Book-to-Bill Ratio:: 1.1x for the full year, with $2.8B backlog flat YoY, reflecting healthy renewal cycles.

Segment Performance

Digital Workplace Solutions revenue was $125 million, down 5.8% year-over-year, with year-to-date revenue down 2.9%. The decline was driven by the shift of low-margin hardware revenue and lighter-than-expected volumes in traditional PC field services. Cloud Applications and Infrastructure Solutions revenue was $180 million, a 6.8% decline compared to the prior year period, due to public sector uncertainty and the government shutdown. Enterprise computing solutions revenue was $133 million, a 13.9% year-over-year decline, mainly due to the cadence of L&S renewal signings.

Bookings and Backlog

Trailing 12-month signings were approximately $2 billion, translating to a book-to-bill of 1.1x for the total company and ex-L&S solutions. The backlog was $2.8 billion, flat year-over-year. New business signings have increased 15% year-over-year, driven by a strong quarter in Ex-L&S renewals. The company has seen significant client signings, including a renewal with a global industrial manufacturing client that included significant new scope to transform and streamline IT support.

Valuation Metrics

The company's current valuation metrics indicate a 'P/E Ratio' of -0.55, 'P/B Ratio' of 0.43, 'P/S Ratio' of 0.09, and 'EV/EBITDA' of -5.6. The 'ROIC' is 5.51%, while 'ROE' is -78.26%. Analysts estimate next year's revenue growth at 0.2%, indicating a relatively stable outlook. The company's strong liquidity position, with a cash balance of $322 million and an undrawn $125 million ABL, provides a solid foundation for future growth.

Outlook and Guidance

The company expects to come in at or above the midpoint of their upwardly revised non-GAAP operating margin guidance range of 8% to 9%, implying a fourth-quarter non-GAAP operating margin in the mid-teens. They are forecasting approximately $360 million of remaining cash contributions to their global pension plans in aggregate through 2029. The demand for AI technology is evident, but its application in a sensitive ecosystem is challenging, and the company is prioritizing client-centricity and adopting a pragmatic approach to technology implementation.

3. NewsRoom

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Unisys Opens Registration for Its 17th Annual Unisys Innovation Program

Dec -04

Source: prnewswire.com

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Unisys Corporation (UIS) Presents at Bank of America Leveraged Finance Conference Transcript

Dec -02

Source: seekingalpha.com

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Unisys Named a Global Leader in ISG's 2025 Generative AI Services Provider Lens® Report

Dec -02

Source: prnewswire.com

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Financial Times Names Unisys a Best Employer in Asia-Pacific for Second Consecutive Year

Nov -25

Source: prnewswire.com

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Unisys Announces Participation in Upcoming Investor Conferences

Nov -24

Source: prnewswire.com

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Connor Clark & Lunn Investment Management Ltd. Makes New $438,000 Investment in Unisys Corporation $UIS

Nov -21

Source: defenseworld.net

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Unisys Named Leader in ISG's 2025 Public Sector Services and Solutions Provider Lens® Report

Nov -20

Source: prnewswire.com

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Unisys Named a Global Leader in 2025 ISG Provider Lens™ Future of Work Services Report

Nov -18

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.89%)

6. Segments

Enterprise Computing Solutions

Expected Growth: 1.8%

Unisys' Enterprise Computing Solutions growth is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity needs. The company's expertise in mainframe modernization, application services, and industry-specific solutions resonates with clients seeking to optimize IT infrastructure and reduce costs. Strong partnerships and strategic acquisitions also contribute to the segment's 1.8% growth.

Digital Workplace Solutions

Expected Growth: 1.9%

Unisys' Digital Workplace Solutions growth is driven by increasing demand for cloud-based services, digital transformation, and cybersecurity. The shift to remote work has accelerated adoption of digital workplace solutions, while Unisys' expertise in IT consulting and managed services has enabled it to capitalize on this trend, resulting in a growth rate of 1.9%.

Cloud, Applications and Infrastructure Solutions

Expected Growth: 2.1%

Unisys' Cloud, Applications and Infrastructure Solutions segment growth of 2.1% is driven by increasing demand for digital transformation, cloud migration, and cybersecurity services. Additionally, the company's focus on application modernization, IT consulting, and industry-specific solutions also contribute to the growth. Furthermore, the segment benefits from the rising adoption of hybrid and multi-cloud environments, as well as the need for efficient IT infrastructure management.

Other

Expected Growth: 1.7%

Unisys' 1.7% growth driven by increasing demand for digital transformation services, expansion in cloud and infrastructure services, and growth in industry-specific solutions such as healthcare and financial services. Additionally, the company's cost savings initiatives and strategic partnerships have contributed to its growth.

7. Detailed Products

Cloud and Infrastructure Services

Unisys provides cloud and infrastructure services that help clients to design, build, and manage their IT infrastructure

Application Services

Unisys offers application services that help clients to design, develop, and maintain their applications

Industry Services

Unisys provides industry-specific services that cater to the unique needs of various industries

Security Solutions

Unisys offers security solutions that help clients to protect their IT infrastructure from cyber threats

Digital Workplace Services

Unisys provides digital workplace services that help clients to create a modern and secure digital workplace

Industry-specific Solutions

Unisys offers industry-specific solutions that cater to the unique needs of various industries

8. Unisys Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Unisys Corporation faces moderate threat from substitutes due to the presence of alternative IT services and solutions provided by other companies.

Bargaining Power Of Customers

Unisys Corporation has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

Unisys Corporation relies on a few key suppliers for its IT infrastructure and services, giving them moderate bargaining power.

Threat Of New Entrants

The IT services industry has high barriers to entry, including significant capital requirements and the need for specialized expertise, making it difficult for new entrants to compete with Unisys Corporation.

Intensity Of Rivalry

The IT services industry is highly competitive, with many established players competing for market share, leading to a high intensity of rivalry for Unisys Corporation.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 140.86%
Debt Cost 5.42%
Equity Weight -40.86%
Equity Cost 8.65%
WACC 4.09%
Leverage -344.73%

11. Quality Control: Unisys Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
IBEX

A-Score: 5.0/10

Value: 5.0

Growth: 5.7

Quality: 6.1

Yield: 0.0

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

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Usio

A-Score: 4.0/10

Value: 6.2

Growth: 4.7

Quality: 5.8

Yield: 0.0

Momentum: 5.0

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
WidePoint

A-Score: 3.8/10

Value: 5.1

Growth: 4.6

Quality: 4.4

Yield: 0.0

Momentum: 7.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Unisys

A-Score: 3.5/10

Value: 9.8

Growth: 2.2

Quality: 4.8

Yield: 0.0

Momentum: 1.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Grid Dynamics

A-Score: 2.9/10

Value: 4.3

Growth: 4.3

Quality: 5.5

Yield: 0.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
TTEC

A-Score: 2.6/10

Value: 8.1

Growth: 1.3

Quality: 2.2

Yield: 2.0

Momentum: 1.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.78$

Current Price

2.79$

Potential

-0.00%

Expected Cash-Flows