On February 18, 2025, Unisys Corp (UIS, Financial) released its 8-K filing detailing its financial performance for the fourth quarter and full year of 2024. Unisys Corp, a provider of technology solutions across government, financial services, and commercial markets, operates through three segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I), and Enterprise Computing Solutions (ECS).
Performance Overview and Challenges
Unisys Corp reported a full-year revenue of $2,008.4 million, a slight decrease of 0.3% year-over-year (YoY), aligning with the company's guidance. The company achieved a full-year gross profit margin of 29.2%, an improvement of 180 basis points (bps) YoY. The operating profit margin also improved by 100 bps to 4.8%, with a non-GAAP operating profit margin of 8.8%, up 180 bps YoY.
Despite these achievements, the company faced challenges, including a 2.2% YoY decline in fourth-quarter revenue, primarily due to lower volumes with existing clients. This decline was more pronounced in the Ex-L&S revenue, which fell by 4.7% YoY.
Financial Achievements and Industry Significance
Unisys Corp's financial achievements are noteworthy, particularly in the software industry, where profitability and cash flow are critical. The company reported a significant improvement in operating cash flow, reaching $135.1 million compared to $74.2 million in 2023, and a free cash flow of $55.3 million, a substantial increase from a negative $4.5 million in the previous year. These improvements are crucial for funding future investments and pension contributions.
Income Statement and Key Metrics
The company's net income for the fourth quarter of 2024 was $30.0 million, a significant turnaround from a loss of $165.3 million in the same quarter of the previous year. The full-year net loss attributable to Unisys Corp was reduced to $193.4 million from $430.7 million in 2023. The adjusted EBITDA for the year was $292.1 million, representing 14.5% of revenue, slightly up from 14.2% in 2023.
We have improved the profitability of our Ex-L&S solutions and are seeing positive consumption trends and long-term client commitment to our highly profitable L&S platforms," said Unisys Chair and CEO Peter A. Altabef.
Segment Performance
In the fourth quarter, the DWS segment saw a revenue decline of 7.9% YoY, while CA&I revenue decreased by 4.9% YoY. However, the ECS segment experienced a revenue increase of 2.9% YoY, driven by software license renewals. The ECS segment's gross profit margin was 64.7%, despite a decrease of 270 bps YoY due to a higher proportion of lower-margin hardware revenue.
Balance Sheet and Cash Flow
Unisys Corp ended the year with $376.5 million in cash and cash equivalents. The company's free cash flow improved significantly, driven by lower international pension contributions and favorable legal settlements. The pre-pension and postretirement free cash flow nearly doubled to $82 million for the full year.
Analysis and Outlook
Unisys Corp's performance in 2024 reflects its strategic focus on enhancing profitability and cash flow. The company's ability to meet revenue guidance and exceed profitability expectations positions it well for future growth. The increase in new business total contract value by 29% YoY, driven by new logo signings, indicates strong market recognition of Unisys Corp's solutions.
Looking ahead, Unisys Corp has issued guidance for 2025, projecting revenue growth of 0.5% to 2.5% in constant currency and a non-GAAP operating profit margin of 6.5% to 8.5%. This guidance reflects the company's confidence in its strategic initiatives and market positioning.
Explore the complete 8-K earnings release (here) from Unisys Corp for further details.
