Unisys at 17th Annual Southwest IDEAS Conference: Strategic Focus on Growth

On Wednesday, 19 November 2025, Unisys Corporation (NYSE:UIS) presented at the 17th Annual Southwest IDEAS Conference. The company outlined its strategic priorities, emphasizing growth in cloud and digital workplace solutions. While highlighting its strong market position, Unisys also addressed challenges such as debt management and pension obligations.

Key Takeaways

• Unisys reported 2024 adjusted EBITDA of $290 million and free cash flow of $55 million.
• The ClearPath Forward segment remains a high-margin business with a 70% gross margin.
• Unisys aims to improve gross margins in Cloud and Digital Workplace Solutions by 150 basis points annually.
• The company plans to eliminate pension liabilities in the next three to five years.
• Unisys was recently recognized by Gartner as a global leader in digital workplace services.

Financial Results

Unisys operates in the $1.6 trillion global IT services market, with approximately $2 billion in revenue. In 2024, the company achieved an adjusted EBITDA of $290 million and a free cash flow of $55 million. The ClearPath Forward segment contributed significantly, generating $430 million in revenue with a 70% gross margin.

The company's capital structure includes around $700 million in debt and cash reserves of over $300 million, projected to reach $380-$390 million by year-end.

Operational Updates

The Cloud segment, serving primarily public sector clients, is a key area of focus. Digital Workplace Solutions (DWS) has been recognized by Gartner as a leader, leveraging AI to enhance service efficiency. The ClearPath Forward segment supports high-volume, secure transaction processing.

Unisys is investing in AI strategies across strategy and consulting, data solutions, and managed services. The company has also taken steps in pension management, refinancing bonds and transferring $320 million of liabilities to a third-party insurer.

Future Outlook

Unisys aims to enhance profitability in the Cloud and DWS segments while maintaining the high-margin ClearPath Forward business. The company plans to improve gross margins by 150 basis points per year through higher-value solutions. Capital allocation priorities include pension funding, with a long-term goal of initiating a capital return program for shareholders.

Q&A Highlights

During the Q&A session, Unisys discussed its ClearPath Forward strategy, focusing on providing a modern ecosystem for clients to leverage mainframe benefits. The company aims to use data from these systems to power applications and analysis.

Unisys also emphasized its commitment to removing pension liabilities from its books within three to five years, redirecting future cash flows to shareholders.

For more details, please refer to the full transcript below.

Full transcript - 17th Annual Southwest IDEAS Conference:

Operator: Thank you for joining us, everyone. Our next presentation after lunch is Unisys Corporation, traded under the symbol UIS on the New York Stock Exchange. Presenting for the company today is Michaela Pewarski, VP of Investor Relations. Michaela?

Michaela Pewarski, VP of Investor Relations, Unisys Corporation: Thank you. I'm going to start off with a quick overview of the company. We are a global provider of IT solutions. We focus on mission-critical IT solutions. A lot of the things that we do are going to be less tied to discretionary spending and more kind of the bones of what keeps an organization running. We operate within the very large $1.6 trillion global IT services market, which has a mid to high single-digit kind of CAGR. This slide just shows some of the many priorities that are facing Chief Information Officer today as they consider where to invest their budgets and all of the things that they're aiming to achieve through their IT solutions.

As you can see, it's a very complex set of priorities that often involves a significant number of systems and platforms and applications and software and solutions that are interacting together across your IT landscape. That is one of the reasons why many companies work with IT providers like Unisys, who can be an expert in the areas of these different solutions and stay up to date on all of the advancements in technology and manage parts of that ecosystem for them. We have about 16,000 employees, about 8,000 engineers, 100 partners, 700 clients, and supporting 50-plus countries. We are about $2 billion in revenue. Our 2024 adjusted EBITDA was about $290 million. We had about $55 million of free cash flow.

This is just kind of an overview so you get a sense of kind of our size and scale and where we're operating. One thing that sets us apart, we're a 150-year-old company, and our top 50 clients have been with us for more than 20 years on average. That customer support that we provide, the quality of that, and the client satisfaction, and the deep expertise in these specific sectors like the public sector, financial services, and commercial, but public and financial services, we're really deep in working with banks, state and local U.S. governments, international, federal governments. That, I think, really sets us apart is that customer relationship that we've built with our core customers. Let me talk a little bit more about the specific solutions that we're providing.

I'll start with our two segments on the left-hand side of this slide, really our services segments. There's a cloud segment where we manage cloud environments, hybrid infrastructure. We optimize that, automate it. We also do work with applications so we can build applications, modernize applications. We have a central application factory that sits within the cloud division. That data modernization, a lot of that data engineering, managing data, and really helping clients structure their data to be able to draw the most powerful insights they can from that. In some cases, that may be cleaning and structuring data that's going to be used for AI, for example. Of course, a very important area of the market, cybersecurity. I think that's only getting more complex, and threats are getting more frequent and more sophisticated.

We provide security-managed services for clients where they may outsource that cybersecurity to us or different elements of it. That segment, each of these segments is about a third. The cloud segment is a little more for us. That is the first segment. Digital workplace solutions. One thing just to kind of put a bow on the cloud segment, we have significant public sector expertise there. About half of that segment is public sector clients. A portion of those are U.S., state, and local. Like I said, international. I would say a differentiation there is public sector. On the commercial side, we are really leaning into kind of mid-sized enterprises with that $1 billion-$5 billion of revenue. In digital workplace solutions, we are really a global leader.

Just this week, for the first time, Gartner named Unisys a global leader in digital workplace services. It's a big deal for us. Before this report was a global report, it was a regional report, and we were only a leader in North America, really. Gartner is kind of the leading advisor, that industry analyst, that kind of clients will look to industry analysts and advisors to consider who should I think about working with for these solutions. For us now, I think that makes us a leader across a global leader, if not all, most of these advisors.

I think this is an area where having a footprint in field services where you have thousands of kind of field technicians who can go out and install networks or service technology in a data center is only going to become more valuable in the future as more and more data center capacity gets built and more and more technology is permeating kind of every aspect of life. Having those field engineers is, I think, a differentiator. It is still, I would say, a lower margin segment for us, but that is becoming all of those capabilities we provide through field services. I would say the margin profile of that business has been improving. There is more and more need for specialized technicians out in the field. We are very bullish on the field services aspect of digital workplace solutions.

is also the element in this segment, the other kind of core area of solutions is in IT support, really, where you are managing devices, the tech stack on those devices, and you are managing kind of all of the outsourced support for the employees of your clients, like a service desk, for example. We have really invested significantly over the past few years in differentiating and automating and really leveraging generative AI and agentic AI to increase the deflections of our service desk and bring down the costs for our clients. We think what we have done on both the service desk and the field services sides of this business, historically viewed, I would say, as more traditional solutions, has really differentiated us in the market.

We think that we have an offering in service desk where we can bring down the cost significantly for clients and that we're going to take share in that market over time and help us scale there. The third segment is probably the most important segment because it's the company's profit and cash engine. While it is about a quarter of the revenue, there is a piece or a third of the revenue, maybe. There's a piece within this called ClearPath Forward, which if you go through our materials, you will see referred to as License and Support. That is about $430 million of revenue. It's highly profitable revenue, typically about a 70% gross margin. That is related to our proprietary software operating systems that initially were, in the past, were mainframe operating systems. Now they're running on servers.

It's software that we can also deploy in a cloud environment. It’s platform agnostic. This is used by companies. There's no new clients, right? It's used by people who were using it when they were running on a mainframe and they had built applications on top of it and integrated it into different systems. It’s incredibly sticky at the kind of core of their IT environments. It is really helping them complete high-volume, highly secure transaction processing. It is very resilient. It’s for things like an airline's reservation system where you cannot have even 1% downtime because it would cause your whole company to kind of fall apart. It’s used for processing tax returns, processing mortgages, financial transaction processing. It’s very, very sticky. It also houses incredibly valuable data.

These contracts that we sign with clients, there is an element of price that you'll get each time you renew. It is also based on consumption. The number of MIPS that you're going to purchase when you renew. The more that we have invested in enabling clients to extract data from those systems and use that data to power front-end applications or move it to a data lake to run AI analysis, the more that you make that data usable, the more consumption that drives. If you think about an airline as you're now able to change your seat online these days and that generates a new reservation, a new ticket, that type of thing is driving consumption. The more digital that these businesses become, the more consumption that drives as well.

The ClearPath Forward operating system kind of ecosystem and the services around that, which are the rest of the ECS segment, those services are really to support clients in modernizing their own kind of applications that they've built that run on ClearPath and managing the infrastructure that ClearPath is running on. Really, so that they don't have to keep a team in-house that can keep their critical systems running. If we required them to kind of do that on their own, it would be a push factor to leave our platform. The dynamic you have here is we invest significant amounts of money each year to continue to modernize, secure, like investing in post-quantum encryption, to invest in the resilience and the security and the speed of these platforms year after year to keep these clients embedded in our ecosystem to drive more value to them.

That has really created a stable business, long-term business with about $400 million of annual revenue and a 70% gross profit. Just one more thing to note about this business. When we sign a multi-year renewal for a term license, we do recognize all of the revenue upfront in that quarter. There are typically 30-day payment terms, so we get the cash upfront as well. There are quarters like this past quarter, and this can really go in either direction. It is not always a deal slipping out of the quarter. It could be a deal slipping into the quarter just based on the timing of collecting all the signatures and closing that deal. We did have one large contract slip out of the third quarter into the fourth quarter. It was signed a few days into the fourth quarter.

That did create some volatility in the revenue relative to the guidance that we provided. We have reaffirmed the guidance for the full year for that business. I have covered the two kind of services segments. You have heard about the profit and free cash flow engine of the company as well, which is highly sticky, highly visible, etc. This is just showing you the I just covered this here with ClearPath, the use cases and what it is used for and why it is so sticky and some of the financials here on the right-hand side. Just to give you a sense, shifting back to the overall company, these are the sectors that we play in and the types of clients that we work with. Generally, high-quality blue chip clients.

Outside of ClearPath Forward, where we also do have some partnerships, but in the two services segments, digital workplace and cloud applications and infrastructure, partnering with the best companies and building that partner ecosystem and continuing to evolve it is really important. As you can see, we have partnerships with some of the most recognizable technology companies in the world, like Amazon and Dell and Lenovo, Microsoft, ServiceNow. This is just to give you kind of a sense of the technologies that we bring to our clients. This last slide is just to kind of show you the improvement that we've made over the past couple of years in getting recognition for our solutions. I'd say we're definitely on a positive trajectory in terms of the recognition of the third-party analysts and advisors who help clients decide who to consider working with. Okay.

That's kind of the who we are today. Now I'll talk about kind of where we're going. It's really these things on the page really are about our two priorities in supporting those, and those are really profit dollars and free cash flow. How we're going to do that is we're going to improve the profitability and the growth in the two services segments while maintaining that high-margin ClearPath Forward business. That will bring those two services segments to that kind of break-even point and will really unleash and reveal, I think, the cash generation power of the business. We're also focused on SG&A and streamlining kind of the corporate functions. We talked about this at an investor day in June 2023, and we've really kind of executed that plan, removed a significant amount of kind of corporate costs.

In 2026, we should get really that first full year of benefit from that, a full year of all the benefits of the past couple of years of cost reductions. I'd say this fourth item here, improve free cash flow conversion, we've largely executed on that opportunity, as I will kind of get to in a few slides. We had a few things that were really dragging on cash conversion, namely legal and environmental expenses. We've done a lot to clean that up, which is something that we had visibility to for the past several years. I think we've really proven to investors, and the proof is in the pudding, and those costs have come down a lot. The last item is a flexible capital structure. I'll touch on a few things we did there recently.

In our XL&S solutions, the growth strategy is really landing and expanding. We have a really strong track record of expanding with clients once we land with them. We have had an inflection in 2024 in attracting new logos to the company. In those first few years with the new logos, really when the expansion opportunities are the largest. We are seeing that pipeline from those clients of follow-on opportunities. That is really the strategy. I would say we are executing on that. I touched on the partnerships. That is a big part of the strategy, continuing to deepen those partnerships and go deeper with certain partners as well as add new partners and offer clients a variety. If you think about using ServiceNow, there are other ITSM kind of technology platforms that maybe make sense for kind of a mid-size client.

If you can only provide them ServiceNow and that's too expensive, they're not going to want to work with you. You need to have those partnerships. Elevating awareness and relevance. I talked about those analysts and advisors. We've invested a lot behind kind of educating them on our solutions, on marketing. I think our marketing team's done an incredible job of rebranding Unisys as a company and really getting visibility out there and with specific clients aligned to kind of who you can look at who is looking to buy certain solutions that align with our portfolio and then kind of market more aggressively to them. We've gotten a really dynamic kind of marketing strategy in place now that's working well and I'd say generating a lot of leads that are high quality.

Expanding addressable markets, enabling emerging technology like AI, and modernizing on the edge. Those are all kind of areas of where you're investing your dollars. A lot of that is in just in AI or in filling in the small areas of the portfolio that are higher value and pushing up that technology stack and bringing down costs for clients. I'd say all of those things are important in the solutions that you're trying to expand into and grow within the portfolio. I think we really covered this, the ClearPath Forward 2050 strategy. It is about how do we get this profit and cash driver.

All of the profit and cash are coming from this part of the business and ensuring that you're investing behind that, investing to unlock the data on those systems so that it becomes not just a place where data is stored, but a source of data that is powering applications and analysis throughout the company and is being used by your employees to unlock insights. How do we continue to support our clients with specialized capabilities to manage their infrastructure and things like that? I'd say we're seeing great success with this strategy, but I think the purpose here is for you to take away from this slide that we think this business is stable to 2050. I think everyone's talking about AI.

I just want to frame up here maybe the strategy around AI and really just break it into kind of these are the areas where AI is relevant for us, whether it's providing strategy and consulting around their infrastructure and an AI solution or an AI strategy within a certain element of the ecosystem, helping with the data that's going to power that AI or actually building the AI solution. I'd say managed services is also a big one. As I talked about with the field services organization, you're going to need more field technicians. If you have double the amount of data centers or servers, you're going to need more managed services to support that physical infrastructure. It could be liquid cooling capabilities. It could be just going out and installing equipment. All of that is kind of managed services.

You're going to need more protection of those assets. In general, AI is, I would just say, adding a layer of complexity into the IT ecosystem. Anytime there's this complexity, you're layering in complexity. I would say that's good for IT services providers. That was kind of the growth. I want to leave time for questions. I'll just go through this quickly here. The two services segments, digital workplace and cloud, were aiming to improve their gross margin by about 150 basis points in aggregate per year. That's coming from really two things: shifting into higher value solutions or just getting better margins. Like in DWS, you might not view service desk or field services as higher value, but we want to be in the higher value areas of that.

We want to be providing in service desk our Service Experience Accelerator Platform, which is a next-generation, highly automated, using that AI that I talked about, rather than just having a bunch of people sitting in a center who are virtually helping people or talking to them on the phone. That is the two different flavors there. For field services, there is the virtually helping somebody fix a PC or going out to a restaurant and installing and upgrading the network. Those are two levels of expertise that are really one's higher value, even though you may consider those traditional. We are seeing better margins in those higher value areas of digital workplace and shifting more into that. That is a big driver in both segments is mix. Then improving your delivery.

I talked about some of the ways we help clients with AI, but we're using AI ourselves in the actual delivery. Whether that's delivering the service desk using more automation and AI, or whether that's modernizing an application using AI assistance in the generation of code, all of those things are helping us deliver cheaper. Of course, our client is going to want to share in some of that, right? We are going to get a piece of that over time, and that's going to help margins the more that you're infusing AI and automation into your delivery. Then there's kind of the typical things in our industry, which are trying to optimize your labor markets to use more low-cost labor where you can, or working at specific kind of accounts to make sure that you've right-sized the labor pyramid.

That kind of workforce optimization is always ongoing and is a big focus for us, where I'd say we probably, because we're in this transition from being a products company in the past to a services business, there's probably a little more low-hanging fruit for us there relative to some of our peers who are kind of more mature in that area. That has been an area of investment you'll hear us talk about. I think we kind of covered this, but this is just showing you how the environmental, legal, cost reduction has come down. We actually, in the third quarter, received a $25 million payment as part of a legal settlement with one of our competitors. That is why that number was actually in flow in the third quarter. We had been seeing a significant drag in the past from environmental, legal, and cost reduction and other.

Now that's largely been reduced to kind of more normalized levels. Quickly, I'll let you reference this in the slide deck, but I just wanted to provide an overview of the kind of capital structure: $700 million of debt. We have about a little over $300 million of cash. We have told the street that we expect that to be kind of closer to $380-$390 million by the end of the year based on the guidance that we gave for free cash flow. We have a big quarter of license renewals and ClearPath coming up in the fourth quarter. That's going to be a driver of a lot of that. That's part of why it's an unusually large fourth quarter.

That is part of why the LTM adjusted EBITDA is a little bit lower because the fourth quarter last year was not as significant as it will be this year. Capital structure objectives. Our first one is the pension. That is where a lot of the free cash flow is going. We do see a path to removing that pension from our books completely in the next three to five years, after which all the cash that will be going to the US pension over the next few years will be going to shareholders. Right now, the primary objective is funding the pension. It is really reducing leverage, which funding the pension does do. It brings down the gap deficit, which is going to reduce leverage over the next few years, all else equal. We feel we are investing healthy levels in the business today.

There could be inorganic opportunities over the coming years, but really at the end of the day, it's our ultimate goal to institute a capital return program to our patient shareholders. One thing that we did to strengthen our capital structure recently was we refinanced our bonds that were due in November 2027. We issued $700 million. We refied $485 million. The incremental $200 million was taken with about $50 million of cash from the balance sheet, funded our U.S. pension to that, reduced the deficit dollar for dollar. The U.S. pension deficit in the U.S. came down from $500 million to about $250 million. That then allowed us to shift the allocation of assets into fixed income, matching the duration of the liabilities and essentially crystallizing the aggregate contributions that we owe so that there's no more volatility in the cash contributions as a whole.

There could be some shifting in our forecasts between years, but the amount that we expect to pay between now and 2029, that aggregate total should not move more than a few percent, 3% at most each year, up or down. We really hope that shareholders will begin to appreciate the increased level of certainty that provides them. You can look at our materials and see what we have provided about future pension contributions and know that those are relatively locked in. Recently, in September, another thing this funding did was it allowed us to execute an annuity purchase, and we transferred $320 million of liabilities to a third-party insurer for basically the same amount in assets from the pension trust. That is bringing down the size of the pension and making it more manageable over time to eventually fully remove it from our books.

We did an event on this on the pension. We also did an event a couple of weeks ago on the ClearPath Forward software business. Both of those are on our investor website, and I encourage you to take a look. I am going to end it there, and we have a couple of minutes if anyone has questions. Is ClearPath Forward its good sticky business? Is the other side of your business looking at creating business cases for getting off their legacy? I mean, framing which to do, and some of them are so ingrained in the business view. Are you just trying to make that look like a cloud to the end user, or actually?

Yeah, I think you're trying to make it look like a cloud to the end user because I think at the end of the day, the reasons to move to the cloud are getting less and less. There's fewer and fewer of them, and more and more reason, like security, for example, is unmatched, according to NIST, the only enterprise operating system that has not had client data forcibly extracted. If that's a priority for you, which for many of our clients it is, if not the most, it's like one of the highest priorities. It's going to be really expensive to move to the cloud, and maybe the cost savings are not really there.

Maybe you feel like you're losing control of some of that data, or a lot of times you'll have to lose historical data to make that move if you don't want to spend insane amounts of money to restructure all of that. All of those things just make it like, "If I could stay, I want to stay." I think that's the attitude of many clients. We want to make sure we're delivering that modern ecosystem where there's nothing you can really do in the cloud that you can't do here. Maybe there's benefits to staying on your kind of modern mainframe. That's the goal.

I would say in the past, there was this push, like all the Gartners, everyone was saying, "You got to move to the cloud." The boards were saying, "You got to move to the cloud." I do think there was some of that push to the cloud. I think in some cases, CIOs are even thinking of repatriating certain workloads from the cloud. I would say in the past, there was some not going holding back that CA and I segment from going near those clients. I think now it's more the CA and I segment has these modernization services and capabilities to kind of manage hybrid infrastructure where there's maybe opportunities for our CA and I teams to come in and help modernize your application layer that ClearPath may be sitting beneath.

I think there's more synergies there that we're seeing more and more now that I would say the value proposition of the modern mainframe has become clearer and stronger. It is more resilient to those, I guess, pitches or efforts of people to kind of entice them away. Maybe I have time for one more, but if there's no questions, we can wrap. Great. Our investor relations website, you can email investor@unisys.com or reach out to me, Michaela Pewarski. The conference folks have my contact information. Thank you.

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