Unisys (UIS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 7.0% year-over-year to $497 million (8.2% in constant currency), driven by strong software license renewals in the ECS segment and robust new business TCV, which increased 50% year-over-year.

• Gross profit margin rose to 29.2%, up 870 basis points year-over-year, with adjusted EBITDA margin at 15.5% and non-GAAP operating profit margin at 9.9%.

• Net loss widened to $61.9 million, impacted by a $39.1 million non-cash goodwill impairment in the DWS segment and a $29 million tax accrual for foreign subsidiaries.

• New logo signings and multi-segment contracts expanded the recurring revenue base, with backlog up 18% year-over-year to $2.8 billion.

• Free cash flow improved to $14.2 million in Q3, compared to negative $25.7 million last year, and full-year guidance was raised.

Financial highlights

• Q3 2024 revenue was $497 million, up from $464.6 million in Q3 2023; gross profit was $145 million (29.2% margin), up from $95 million (20.5%) last year.

• Q3 2024 operating profit was $7.5 million (1.5% margin), with non-GAAP operating profit at $49.4 million (9.9% margin).

• Adjusted EBITDA was $77 million (15.5% margin), up from $37 million (8.0%) in Q3 2023.

• Q3 2024 net loss was $61.9 million, including the goodwill impairment and tax accrual.

• Cash and cash equivalents at September 30, 2024, were $373.7 million.

Outlook and guidance

• Full-year 2024 revenue growth guidance reiterated at (1.5)% to 1.5% in constant currency; non-GAAP operating margin guidance raised to 6.5%-8.5%.

• Free cash flow guidance increased to ~$30 million for the year, up from $10 million previously.

• L&S revenue for 2024 expected at ~$415 million, with 2025-2026 annual average raised to $370 million.

• Management expects adequate liquidity for at least the next twelve months and plans to meet all debt covenants.

• Capital expenditures projected at ~$85 million; cash taxes ~$55 million; pension contributions ~$25 million.