Unisys — 3Q26 Earnings Summary

Financial Performance:

• Total revenue was $471.5 million, up 2.5% year-over-year (YoY) and 0.6% in constant currency.
• Technology Solutions & Services (TS&S) revenue was $387.1 million, up 2.6% YoY and 0.9% in constant currency.
• ClearPath revenue was $84.4 million, up 1.7% YoY.
• Gross profit margin was 26.7%, an improvement of 120 basis points (bps) YoY, driven by a higher mix of software licenses in ClearPath renewals, partially offset by higher cost reduction charges.
• TS&S gross profit margin was 16.6%, a decrease of 200 bps YoY, primarily due to higher cost reduction charges.
• Operating profit was $23.7 million, compared to a loss of $33.5 million YoY; operating profit margin improved to 5.0% from (7.3)%.
• Non-GAAP operating profit was $34.0 million, up from $24.8 million YoY; non-GAAP operating profit margin was 7.2%, an improvement of 180 bps YoY.
• Net loss attributable to Unisys Corporation was $201.0 million, compared to $308.9 million YoY.
• Non-GAAP net loss attributable to Unisys Corporation was $8.5 million, compared to $5.9 million YoY.
• Adjusted EBITDA was $59.7 million, up from $48.2 million YoY; Adjusted EBITDA margin was 12.7%, up from 10.5%.
• Cash used for operations was $35.8 million, compared to cash provided of $38.0 million YoY.
• Free cash flow was $(57.7) million, compared to $19.9 million YoY.
• Cash and cash equivalents were $264.2 million as of September 30, 2026, down from $413.9 million as of December 31, 2025.
• Deferred revenue was $174.5 million (current) and $79.1 million (long-term) as of September 30, 2026.
• Long-term debt was $719.1 million as of September 30, 2026.

Guidance and Future Outlook:

• Unisys raised full-year 2026 revenue growth guidance in constant currency to (3.0)% to (1.5)%, previously (5.0)% to (3.5)%.
• The company reaffirmed full-year non-GAAP operating profit margin guidance of 9.0% to 11.0%.
• Revised constant currency guidance translates to reported revenue growth of (0.4)% to 1.1% based on exchange rates as of the end of 3Q26.
• Guidance assumes ClearPath revenue of approximately $425 million and TS&S constant currency revenue growth of (3.0)% to (1.0)%.
• A first-quarter 2026 transaction in the UK business process outsourcing consolidated joint venture is expected to generate a gross profit benefit of approximately $3 million quarterly and $12 million for full-year 2026, with full recognition by year-end.
• The company expects to complete an additional pension settlement in the first half of 2027 to substantially achieve its objective of reducing U.S. qualified defined benefit pension plan liabilities by approximately $600 million.

Business Segments and Product Lines:

• Digital Workplace Solutions (DWS) revenue was $130.2 million, up 3.9% YoY and 1.7% in constant currency, primarily driven by higher hardware revenue. DWS gross profit margin was 9.5%, a decrease of 670 bps YoY due to client attrition and increased implementation/delivery costs.
• Cloud, Applications & Infrastructure Solutions (CA&I) revenue was $180.3 million, down 0.1% YoY and 1.2% in constant currency. CA&I gross profit margin was 20.6%, an increase of 100 bps YoY driven by delivery improvements.
• Enterprise Computing Solutions (ECS) revenue was $140.6 million, up 5.6% YoY and 2.7% in constant currency, primarily driven by higher specialized project work in business processing solutions. ECS gross profit margin was 55.5%, an increase of 930 bps YoY driven by a higher mix of software licenses in ClearPath renewals.
• New Business Total Contract Value (TCV) was $221 million, a 78% increase YoY.
• TS&S Renewals TCV was $275 million, a 20% increase YoY.
• ClearPath Renewals TCV was $98 million, a 61% increase YoY.
• Total company TCV was $594 million, a 43% increase YoY.
• Backlog was $2.92 billion for 3Q26, compared to $2.83 billion for 3Q25.

Market and Competitive Landscape:

• Management noted that client interest continues to deepen across the portfolio and that AI-First execution is transforming delivery, opening new markets in agentic services, AI infrastructure, and the ClearPath ecosystem.
• The company highlighted strong new business signings as a key momentum driver.

Risks and Challenges:

• Gross profit margins were impacted by higher cost reduction charges.
• DWS gross profit margin decline was attributed to known client attrition and increased implementation and delivery costs.
• Cash used for operations was impacted by the timing of cash interest payments associated with the 10.625% Senior Secured Notes due 2031.
• Net loss included a non-cash pension settlement loss of $151 million (net of tax) related to the purchase of a group annuity contract.
• Forward-looking statements involve uncertainties including foreign currency exchange rates, market conditions, and the assumption that contracts will continue for their full term.

Management Commentary and Tone:

• CEO Michael Thomson stated, "The year continues to gain momentum, with the third quarter building on a solid first half," citing strong new business signings and deepening client interest.
• CFO Deb McCann expressed pleasure with the results, noting revenue came in ahead of expectations and non-GAAP operating profit margin of 7.2% exceeded guidance.
• Management indicated that the third quarter results, combined with fourth-quarter visibility, support the increase to full-year revenue guidance and reaffirmed profitability guidance.

Other Key Points:

• Unisys purchased a group annuity contract to transfer approximately $200 million of projected U.S. defined benefit pension liabilities to a third-party insurer, funded with plan assets.
• Including the current transaction, the company has reduced approximately $520 million of U.S. qualified defined benefit pension plan liabilities since July 2025.
• A conference call was scheduled for November 5, 2026, at 8 a.m. Eastern Time to discuss results.
• The company reported a non-cash pension settlement loss of $151 million (net of tax) included in the third quarter net loss.