UNISYS CORP Q1 FY2026 earnings call

Good start in 2026 with growth and profitability ahead of expectations. Strong new business signings, TCB up. Geopolitical events introduce uncertainties but client budget loosening. AI initiatives concentrated on higher valued services. XLNS IT services investing in partnerships, workforce skills, etc. Physical AI infrastructure as growth vector. L&S solutions durable with modernization investments. Backlog $2.96 billion, up 2.4% from prior year end.

First quarter revenue was $438 million, up 1.3% year over year. In constant currency, revenue declined 4.5%. Digital workplace solutions revenue of $118 million was down 6.5% year-over-year. Cloud applications and infrastructure solutions revenue was $182 million, down 2.4% year-over-year. ECS license and support solutions revenue was $66 million, down 12.4% year-over-year. ECS XLNS portion revenue was $50 million, down 2.5% year over year. Total company TCV was $274 million for the quarter, up 33% year-over-year. New business TCV totaled $158 million, up 16% sequentially and 45% year-over-year. First quarter growth profit was $113 million, growth margin 25.7%. XLNS growth profit was $73 million, growth margin 19.5%. EWS segment growth margin 13.5%, CA&I segment gross margin 21.8%, ECS segment growth margins 46.9%. Non-GAAP operating profit margin 4.5%, adjusted EBITDA $46 million, gap net loss $36 million, non-gap net loss $10 million. Capital expenditures $21 million, free cash flow negative $26 million.

Reaffirm full-year guidance range. Total company revenue decline 6.5%-4.5% in constant currency, reported decline -3.5% to -1.5%. Ex-LNS revenue constant currency decline 7%-4.5%, LNS revenue $415 million. Non-GAAP operating profit margin 9-11%. Second quarter expected total company revenue ~$450 million, non-GAAP operating margin ~5%. Full year free cash flow ~negative $25 million.

Q: Rod Bourgeois asked about each segment and AI impact, cross sale, pricing.

A: Discussed AI as tailwind in segments, cross sale in application modernization, L&S pricing not pressured.

Q: Mayak Tundin asked on reaffirmed guidance, levers.

A: Q1 stronger than expected, levers include signing momentum, conversion timing.

Q: Matt Desert asked on new business TCV, margin, pricing.

A: TCV up, margin mix, L&S pricing not pressured.

Q: Anya Soderstrom asked on margin impact of AI, field services.

A: AI embedding in services, field services in data centers.

Q: Matthew Galenko asked on field services pipeline.

A: Pipeline strong, engaged with clients.

Q: Anna Goschko asked on pension annuity purchases, bond buyback.

A: Annuity purchases planned, bond buyback opportunistic.

Q: Rod Bourgeois asked on public services, PC refresh.

A: Public sector more favorable, PC refresh better than expected.

Q: Sean Parkins asked on data center opportunity.

A: Engaged with OEMs, workforce trained for data center work.