Unisys (UIS -5.33%), a global provider of IT services, consulting, and digital solutions for enterprises and government organizations, reported second quarter financial results on July 30, 2025. The company delivered higher than expected results, with GAAP revenue reaching $483.3 million, far outpacing the $444.65 million forecast by analysts. Non-GAAP earnings per share came in at $0.19, up from $0.16 in Q2 2024 and above expectations for a loss. However, the company reported negative free cash flow of $336.5 million, a swing largely due to a planned $250 million pension contribution funded by recent debt issuance. Overall, the period showed improvement in top- and bottom-line results, but persistent cash outflows and mixed progress across segments signal continuing operational challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | ($0.28) | ($0.28) | ($0.17) | (64.7 %) |
| EPS (Non-GAAP) | $0.19 | $0.16 | 18.8 % | |
| Revenue | $483.3 million | $444.65 million | $478.2 million | 1.1 % |
| Operating Profit Margin (Non-GAAP) | 7.6 % | 6.1 % | 1.5 pp | |
| Free Cash Flow (Non-GAAP) | ($336.5 million) | ($18.5 million) | (1,718.9 %) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Company Overview and Strategic Focus
Unisys helps clients modernize their IT infrastructure, manage digital transformation, and achieve operational efficiency. It serves enterprises and government agencies with a portfolio ranging from cloud migration and cybersecurity to advanced computing and workplace services. It delivers its offerings through three major segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure (CA&I), and Enterprise Computing Solutions (ECS).
In recent years, Unisys has focused on digital transformation, multi-cloud management, cybersecurity solutions, and artificial intelligence (AI) integration. Success for the company hinges on its ability to offer end-to-end IT modernization, leverage AI for better operations, secure large-scale client environments, and maintain strong strategic alliances to extend its reach and technology depth.
Quarterly Highlights and Segment Results
GAAP revenue rose 1.1% to $483.3 million, topping consensus by $38.65 million. This gain was tied to stronger performance in the DWS and ECS segments. Digital Workplace Solutions revenue grew 4.5% year over year, driven by new client wins and higher hardware sales. Positive impacts from labor cost management and improved service delivery lifted DWS gross margins by 70 basis points to 16.9%.
Enterprise Computing Solutions, which provides specialized computing products and services including software licenses and managed platforms, saw revenue climb 7.3% year over year. The jump in this segment stemmed from the timing of software license renewals and higher demand for specialized managed services. ECS gross margin (GAAP) improved slightly to 53.5%, reflecting consistent profitability despite the lumpy nature of license renewals.
On the other hand, the company’s Cloud, Applications & Infrastructure business -- which integrates cloud computing and cybersecurity solutions for clients -- declined 4.5% year over year. The shortfall was attributed mostly to reduced spending by public sector customers. Despite this, CA&I gross margin increased to 20.8% from 20.7% a year earlier. Unisys continued to make progress integrating advanced cybersecurity and generative AI capabilities into its cloud offerings, rolling out solutions for threat detection and data unification in complex IT environments.
Unisys also made strategic moves to reduce risk associated with its longstanding U.S. pension obligations. It contributed $250 million to its defined benefit pension plans, financed by a mix of cash and new long-term debt. its cash reserves (GAAP) fell to $300.8 million. Free cash flow (GAAP) swung to a negative $336.5 million due to these outflows.
Key Developments and Industry Position
The period featured gains in operating profitability, with company-wide operating profit margin up to 6.3% (GAAP), and non-GAAP operating profit margin improved by 1.5 percentage points to 7.6%. This margin improvement was due to ongoing delivery optimization and lower professional services costs. Adjusted EBITDA, a measure of cash profit used in the technology industry, climbed to $61.4 million, representing a margin of 12.7%.
Unisys continued to invest in artificial intelligence as a key part of its technology roadmap. The company introduced new AI-enabled solutions in its Digital Workplace business, such as the Service Experience Accelerator for automating service desk operations and the Intelligence Accelerator for processing large, unstructured datasets. Management highlighted early adoption by clients and external recognition.
In multi-cloud and security, Unisys reported mixed performance. While demand remained steady for cloud governance and secure access management services, CA&I revenue declined due to a slowdown in public sector contract activity. Segment profitability was maintained through strict cost management. Strategic partnerships with technology providers (such as Dell and EasyVista) were cited as important contributors to the DWS rebound, providing expanded service offerings and faster deployment for IT Service Management solutions. However, clear financial contributions from these alliances have not yet been separately broken out.
Pension-related actions dominated the cash flow story. In addition to the discretionary pension contribution, Unisys issued $700.0 million in new senior secured notes in June 2025 to refinance shorter-term debt and extend its debt maturities to 2031. The company’s liquidity profile is now more stable, but at the cost of higher long-term interest payments.
Contract Trends, Financial Health, and Outlook
The company’s contract value metrics presented a mixed picture. Total Contract Value (TCV) -- a key measure of new business signed -- fell 5% year over year to $437 million, as weakness in new business was only partly offset by a surge in renewals. Excluding License & Support, new business TCV fell sharply (down 43%), but renewals jumped 85 %. The backlog of contracted work grew to $2.92 billion, signaling a modestly improving long-term pipeline.
Unisys ended the period with $300.8 million in cash and equivalents, down $75.7 million from year-end 2024 due to the pension contribution and higher working capital needs. Total debt climbed by $205.2 million over the six months ended June 30, 2025. Despite the cash usage in pension restructuring, the reduction in pension liabilities and extension of debt maturities provide greater visibility and lessen funding risk in the medium term. GAAP earnings per share showed another net loss (at $0.28 per share negative), even as non-GAAP results moved to positive territory.
For the full year 2025, management revised its revenue outlook downward, now expecting reported revenue growth between (0.5)% and 1.5%, compared to a previous forecast of up to 2.5%. Non-GAAP operating margin guidance for full-year 2025 was raised to a range of 8.0% to 9.0%, from 6.5% to 8.5% previously, reflecting expected further cost discipline and improved renewal activity. The company anticipates License & Support revenue of about $430 million for FY2025, and flat revenue growth in its core services business outside of license renewals.
Investors should watch for continued improvement in organic revenue trends in Digital Workplace and cloud security services, as well as the conversion of the growing backlog into future revenue. Further progress in cost controls, AI adoption rates, and stabilization in new contract signings will be important markers for the next several quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
