Unisys Q1 2025: Contradictions in Revenue Growth, AI Opportunities, and L&S Guidance

Ex-L&S revenue growth expectations, L&S revenue improvement drivers, Ex-L&S revenue growth trajectory, AI revenue attribution and opportunities, and L&S revenue guidance stability are the key contradictions discussed in Unisys' latest 2025Q1 earnings call.



Revenue and New Business Growth:
- Unisys Corporation reported first quarter 2025 revenue of $432 million, down 11.4% year-over-year as reported and 8.5% in constant currency.
- New business TCV grew by more than 50% sequentially and over 80% year-over-year, driven by sustained momentum in new logos and increased field service volumes.
- This growth is attributed to client interest in solutions like Device Subscription Services and expansion into high margin storage services.

Profitability and Operational Efficiencies:
- The first quarter non-GAAP operating margin was 2.8%, aligning with low-single-digit expectations.
- The company expects enhanced delivery operational efficiencies and upside in license and support solutions to support profitability guidance above the midpoint.
- Improvement in operational efficiencies and strategic backlog visibility contribute to these expectations.

Pension and Cash Flow Management:
- The company maintains a strong liquidity position with cash balances of $393 million and expects approximately $100 million in pre-pension free cash flow for 2025.
- Pension contributions are estimated at approximately $27 million per quarter for the remainder of the year, unchanged from year-end 2024 estimates.
- This financial stability is due to consistent execution of strategy and active management of pension exposure.

Geographic and Market Resilience:
- Unisys has less than 1% of its revenue generated from China, providing resilience against tariffs and trade restrictions.
- The company's diverse solution portfolio and wide geographic and industry mix limit exposure to macroeconomic fluctuations.
- This resilience is attributed to long-term contracts and recurring revenue streams, with minimal exposure to high-risk sectors like automotive and retail.