Unisys (UIS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 0.3% year-over-year to $478.2M, with constant currency growth of 0.5%, driven by higher-margin solutions and strong new business signings; new logo TCV more than doubled year-over-year and quarter-over-quarter.

• Gross profit margin expanded by 290 basis points year-over-year to 27.2%, reflecting delivery improvements, software license renewals, and a shift to higher-margin solutions.

• Operating profit margin reached 4.9% (GAAP) and 6.1% (Non-GAAP), up significantly year-over-year, with adjusted EBITDA margin at 12.2%.

• Q2 net loss narrowed to $12M ($0.17/share), a substantial improvement from a $40M loss last year; non-GAAP net income was $11M ($0.16/share).

• The company remains on track for full-year revenue growth and profitability guidance, with continued momentum in AI-enabled solutions and cross-segment integrated offerings.

Financial highlights

• Q2 2024 revenue was $478.2M, up 0.3% year-over-year; ex-L&S revenue was $396.1M, flat year-over-year but slightly above expectations.

• Q2 gross profit was $129.9M (27.2% margin), up from 24.3% last year; ex-L&S gross margin was 18.7%, up 270 bps year-over-year.

• Q2 non-GAAP operating profit was $29.3M (6.1% margin), up from $16.3M (3.4%) last year; adjusted EBITDA was $58.4M (12.2% margin), up from $50.3M (10.5%).

• Q2 net loss was $12M ($0.17/share); adjusted net income was $11M ($0.16/share), a turnaround from a $6M loss last year.

• Q2 free cash flow was -$18.5M, impacted by timing of collections; adjusted free cash flow was -$8M, with improvement expected in the second half.

Outlook and guidance

• Full-year 2024 revenue growth expected between -1.5% and +1.5% in constant currency; ex-L&S growth of 1.5%-5%.

• Non-GAAP operating profit margin guidance of 5.5%-7.5%, with line of sight to exceed the midpoint.

• Free cash flow guidance of ~$10M for the year; capital expenditures expected at $85-$95M.

• Q3 revenue expected at $485-$490M, with mid- to high-single digit growth year-over-year; Q3 non-GAAP operating margin in mid-single digits.

• Environmental and legal payments expected to decline by about half by 2026, improving free cash flow conversion.