Breaking Down Unisys Corporation (UIS) Financial Health: Key Insights for Investors

You're looking at Unisys Corporation (UIS) and seeing a classic turnaround story-a high-risk, high-reward situation where the near-term revenue headwinds are battling a significant profitability and cash-flow pivot. Honestly, the market is split, but the opportunity is clear: if management executes on its strategy, the consensus analyst price target of $5.88, which forecasts a potential 136.14% upside from the November 2025 price, is defintely achievable. Here's the quick math: while the company is navigating a revised full-year constant currency revenue decline of about -4% to -3%, they are simultaneously targeting approximately $110 million in pre-pension free cash flow for 2025, largely fueled by the high-margin License & Support (L&S) business, which has a raised full-year expectation of $430 million. That focus on cash, plus the strategic removal of about $320 million in U.S. pension liabilities, is the real story, shifting the focus from top-line stress to a projected non-GAAP Earnings Per Share (EPS) of around $0.62 for the year, a powerful swing toward stability that you need to understand before making your next move.

Revenue Analysis

You need to know where Unisys Corporation (UIS) is making its money, and the simple truth is that while the core services business is holding ground, the high-margin software business is facing timing volatility. Total revenue for the third quarter of 2025 (3Q25) came in at $460.2 million, a decline of 7.4% year-over-year (YoY). This drop is a clear signal that investors must look past the headline number and focus on the segment details to understand the true financial health, which is what we'll do here.

The company revised its full-year 2025 constant-currency revenue growth guidance to a decline of 4% to 3%, which translates to a reported revenue decline of 3.6% to 2.6%. This downward revision is a reality check, but the forward-looking Total Contract Value (TCV) grew 15% YoY in Q3, suggesting new business momentum is defintely there, just not yet fully realized in the top line.

Here's the quick math on the primary revenue streams for Unisys Corporation (UIS), which are categorized into three main segments: Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I), and the crucial Enterprise Computing Solutions (ECS). ECS, which includes the high-margin License and Support (L&S) revenue from its ClearPath Forward platform, contributes the majority of the company's revenue.

• ECS (License & Support): This is the cash generation engine, with full-year 2025 L&S revenue expected to be approximately $430 million.
• Ex-L&S Revenue: This is the core services business, which was $377.2 million in 3Q25, down 3.9% YoY.
• Digital Workplace Solutions (DWS): Revenue declined 4.3% YoY in 3Q25, impacted by elongated public-sector decision cycles.
• Cloud, Applications & Infrastructure (CA&I): This segment saw a 4.8% YoY revenue decline in 3Q25.

The primary revenue challenge in 2025 has been the timing of L&S renewals, which are inherently lumpy. For example, a shift in renewal timing caused a roughly $12 million impact to 3Q25 revenue, pushing that revenue into the fourth quarter. This volatility is why the company also reports Ex-L&S revenue, which helps investors separate the more stable, recurring services business from the cyclical, high-margin software license renewals.

To put a finer point on the recent performance, here is the segment-level revenue breakdown for the third quarter of 2025:

What this estimate hides is the underlying strength in new business TCV, which hit $415 million in 3Q25, driven by renewals. The TTM revenue for Unisys Corporation (UIS) is currently around $1.92 billion as of November 2025. This suggests that while the revenue growth rate is negative, the company is still securing large, long-term contracts that will feed future revenue. For a deeper dive into the company's valuation, you can check out Breaking Down Unisys Corporation (UIS) Financial Health: Key Insights for Investors.

Next step: Dig into the gross margins for each segment to see if the cost-cutting measures are improving profitability despite the revenue headwind.

Profitability Metrics

You are looking at Unisys Corporation (UIS) because you see a turnaround story, but the numbers tell a nuanced tale of strategic margin discipline against a tough revenue backdrop. The short takeaway is that while the company is successfully executing a pivot to higher-margin services, its GAAP net income is still deep in the red due to legacy costs, and its margins lag behind most of the pure-play IT services sector.

In the third quarter of 2025, Unisys Corporation reported a gross margin of 25.5%. This is an improvement from the 24.9% seen in Q1 2025, which shows sequential progress, but it was still down 370 basis points year-over-year largely due to the timing of high-margin License and Support (L&S) renewals. The key metric to watch is the gross margin excluding L&S (Ex-L&S), which rose 70 basis points year-over-year to 18.6% in Q3 2025, validating the strategy to improve the core services business.

The operational picture is clearer, thanks to cost management. Management has raised its full-year 2025 Non-GAAP Operating Profit Margin guidance to a range of 8.0% to 9.0%. This is a strong signal of confidence in their cost-cutting and efficiency programs, despite lowering the full-year constant-currency revenue growth outlook to a decline of (4)% to (3)%. The GAAP Operating Profit Margin, however, remains volatile, hitting 6.3% in Q2 2025 but being lower in other quarters.

• Gross Margin: 25.5% (Q3 2025)
• Non-GAAP Operating Margin (FY25 Guidance): 8.0% to 9.0%
• GAAP Net Profit Margin: Still negative, with a Q3 2025 Net Loss of $39 million.

Here's the quick math on the industry comparison: Unisys Corporation's profitability is a clear outlier in the broader Information Technology sector. The average Net Profit Margin for the S&P 500 Information Technology sector was 27.7% in Q3 2025. For the consulting services industry specifically, the average Gross Profit Margin is typically much higher, ranging from 55% to 65%, and the Net Profit Margin averages around 7.3%.

The gap is stark, and it highlights Unisys Corporation's position as a company in transition, still carrying the cost structure of its legacy business. The full-year Non-GAAP Operating Margin guidance of 8.0% to 9.0% is respectable for a firm in a deep turnaround, but it's still less than half the estimated ~22% Operating Profit Margin expected for major global IT services companies in FY2025.

Operational efficiency is the real story here. The company's pivot is centered on operational discipline, moving away from low-margin volume chasing to higher-value, technology-driven solutions. This includes leveraging Artificial Intelligence (AI) to deflect 40% of support tickets to automated solutions, which is a massive efficiency gain. This kind of efficiency boosts the bottom line but, to be fair, it also compresses top-line revenue as savings are passed to clients. The improvement in the Ex-L&S gross margin to 18.6% shows that cost management and delivery modernization, including labor cost savings initiatives, are defintely working across segments like Digital Workplace Solutions (DWS).

The biggest risk to the net profit line is the legacy pension overhang. The Q3 2025 GAAP Net Loss of $39 million was driven by a single, non-cash pension annuity settlement loss of $227.7 million. This is a necessary clean-up of the balance sheet to reduce future volatility, but it makes the headline GAAP Net Profit Margin look terrible. The focus on pre-pension free cash flow, which is expected to be around $110 million for the full year 2025, is the right way to measure the underlying health of the business. You can dive deeper into the market's reaction to this by Exploring Unisys Corporation (UIS) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

The capital structure of Unisys Corporation (UIS) tells a clear story of high financial leverage and a recent, costly strategic shift to manage long-term liabilities. The direct takeaway is that Unisys is heavily debt-financed, operating with a negative shareholders' equity, which is a significant red flag for investors.

As of the second quarter of 2025, Unisys reported long-term debt of approximately $693 million. This figure is primarily driven by a major debt refinancing completed in June 2025. The company's total debt, including short-term obligations, was around $769.30 million in the most recent 12-month period, against a cash position of $321.90 million.

The Negative Debt-to-Equity Ratio

The Debt-to-Equity (D/E) ratio is the cleanest measure of how a company finances its assets-debt versus shareholder money (equity). For Unisys, this ratio is stark: -3.312 as of June 30, 2025. A negative D/E ratio means the company has negative shareholders' equity, where total liabilities exceed total assets. This isn't just high leverage; it signals a structural financial weakness.

• Unisys D/E Ratio (Q2 2025): -3.312
• Technology Industry D/E Benchmark: Typically below 1.0

For context, most stable technology and information services companies aim for a D/E ratio well below 1.0, often closer to the median for the broader tech sector. Unisys's negative equity position is a massive outlier, indicating that losses have accumulated to the point of wiping out shareholder capital. This is defintely a high-risk profile.

Recent Refinancing and Costly Debt

In June 2025, Unisys executed a critical, albeit expensive, refinancing move. The company issued $700 million in new Senior Secured Notes due 2031. This new debt was used to retire the existing $485 million of Senior Secured Notes due 2027 and to fund a substantial portion of the U.S. pension deficit. Here's the quick math on the cost:

The jump in the interest rate from 6.875% to 10.625% is a 375-basis-point increase, which translates to a significant additional annual interest expense. This rate increase signals that the market perceives a materially higher credit risk in Unisys Corporation. While the move successfully extended the company's only major debt maturity to 2031 and helped de-risk the pension liability, it came at a steep price, prioritizing liquidity and liability management over immediate cost savings.

The company is balancing its funding by using debt for both operational flexibility and to address legacy liabilities like the pension deficit, rather than relying on equity funding, which is constrained by the negative equity position. This refinancing is a strategic maneuver to buy time for the business turnaround. To dive deeper into who is betting on this turnaround, you should read Exploring Unisys Corporation (UIS) Investor Profile: Who's Buying and Why?

Actionable Insight: Monitor the cash flow from operations (CFO) in the coming quarters. The higher interest expense from the new 10.625% notes will pressure margins, so CFO must show a strong, sustained improvement to cover this increased debt service and fund growth initiatives.

Liquidity and Solvency

You need to know if Unisys Corporation (UIS) can cover its short-term bills, and the 2025 data shows a mixed but improving picture: the company maintains adequate operating liquidity, but its recent debt restructuring highlights the long-term solvency challenge posed by its pension obligations.

The core liquidity position, which measures the ability to pay short-term debts, is solid. As of the most recent quarter (MRQ) ending September 30, 2025, the company had total current assets of $979.3 million against total current liabilities of $628.0 million. This gives us a Current Ratio of approximately 1.56, which is comfortably above the 1.0 benchmark. A ratio over 1.5 is defintely a good sign.

The Quick Ratio, which strips out less liquid assets like inventory, is also healthy at an MRQ value of 1.31. This tells us that even without selling inventory, Unisys Corporation has enough highly liquid assets-like cash and accounts receivable-to cover its immediate obligations. Here's the quick math on the key liquidity metrics:

Cash Flow Trends: Operating Strength vs. Investing Decisions

When you look at the cash flow statement, you see a positive trend in core business operations, but a significant use of cash in financing activities. Cash provided by operations in the first quarter of 2025 increased to $33.3 million. More importantly, the company is guiding for full-year 2025 pre-pension free cash flow-cash generated before major pension contributions-of approximately $110 million. That's real cash generation.

However, the investing and financing sections tell a story of strategic capital allocation. Capital expenditures (CapEx) for investing were modest, totaling about $59 million year-to-date through Q3 2025, mostly for solution development. The big move was in financing: in June 2025, Unisys Corporation issued $700 million in new Senior Secured Notes due 2031, primarily to refinance existing debt and make a large $250 million discretionary contribution to its U.S. pension plans. This action reduced the cash balance to $321.9 million by September 30, 2025, down from $377 million at year-end.

Working Capital and Near-Term Risks

Working capital trends have been a bit volatile. While Q1 2025 saw an improvement in free cash flow due to favorable working capital timing, the second quarter saw negative free cash flow driven by fluctuations in working capital that were expected to reverse later in the year. This is common in service businesses, but you need to watch accounts receivable closely. The company's liquidity strengths are clear:

• No major debt maturity until 2031.
• An undrawn $125 million asset-backed revolving credit facility.
• Expected $110 million in pre-pension free cash flow for FY2025.

The primary solvency risk remains the high leverage, especially when factoring in the pension deficit. The new debt carries a high interest rate of 10.625%. While the net leverage ratio is 1.8 times, it jumps to 3.7 times when you include the pension deficit. The pension contribution was a strategic step to reduce future volatility, but it came at a high cost of debt. For a deeper dive into who is buying the stock amid these moves, you can check out Exploring Unisys Corporation (UIS) Investor Profile: Who's Buying and Why?

Valuation Analysis

You need to know if you're buying a bargain or a falling knife, and the valuation ratios for Unisys Corporation (UIS) in late 2025 paint a complex picture. The short answer is that the market is pricing Unisys as a high-risk turnaround play, making it look undervalued based on future earnings, but its current profitability is still a major headwind.

As of November 2025, the stock price sits at approximately $2.49. This reflects a brutal year, as the stock has plummeted about -67.57% over the last 52 weeks, trading near its 52-week low of $2.37. That kind of drop is a clear signal of market skepticism, fueled by challenging financial outlooks for the fiscal year 2025.

• Current Price (Nov 2025): $2.49
• 52-Week Performance: -67.57% decrease
• 52-Week Range: $2.37 to $8.93

The standard Price-to-Earnings (P/E) ratio is a non-starter right now. The Trailing Twelve Months (TTM) P/E is -0.5467. A negative P/E means the company is currently losing money, so the ratio isn't useful for comparison. However, the Forward P/E, which is based on expected 2025 earnings, is much more compelling at just 3.38x. Here's the quick math: A Forward P/E this low suggests that if Unisys can hit its expected earnings per share, the stock is defintely cheap relative to the broader IT Services industry median, which typically trades much higher.

A better metric for a company in a turnaround is Enterprise Value-to-EBITDA (EV/EBITDA), as it accounts for debt, which is a major factor for Unisys. The TTM EV/EBITDA is a very low 2.1x. What this low estimate hides is the company's significant net leverage ratio of 3.5x, which is much higher than the peer median of 0.8x. The Forward EV/EBITDA is higher at 6.5x, but this is still significantly below the industry peer median of 12.6x. This gap is where the value argument lies: the market is discounting the stock heavily due to debt and execution risk, but if the company can execute on its strategy-which you can read more about here: Mission Statement, Vision, & Core Values of Unisys Corporation (UIS)-the multiple should expand.

A final point on shareholder return: Unisys Corporation is not a dividend stock. The TTM dividend payout and dividend yield are both 0.00%, so you should not expect passive income here. This is a pure capital appreciation play.

Wall Street analysts have a mixed but overall optimistic view, giving Unisys Corporation a consensus rating of Buy. The average analyst price target is $5.88, which suggests an upside of over 136% from the current price. That's a huge potential return, but remember, this target depends entirely on management delivering on its expected non-GAAP operating margins, projected to be between 8% and 9% for FY25.

Risk Factors

You need to be a trend-aware realist when looking at Unisys Corporation (UIS), and honestly, the company's financial health in 2025 is a story of disciplined margin defense against a challenging top-line environment. The biggest risks aren't existential; they are execution-related and tied to market volatility.

The core financial risk is the variability of License and Support (L&S) revenue timing. This high-margin segment is crucial, but its lumpiness creates earnings volatility. For instance, L&S revenue dropped 20.6% year-over-year to $83.0 million in Q3 2025, which significantly dragged down the overall gross profit margin to 25.5%. The other major headwind is the general IT services market, where competitors are aggressively undercutting on price, forcing Unisys to be hyper-focused on efficiency.

Here's the quick math on the near-term operational risks:

• Execution Risk: Success hinges on converting the strong backlog, which stood at $2.89 billion in Q1 2025. If project ramps are delayed-a common issue with federal budget dependencies-the expected sequential revenue improvement from Q2 through Q4 won't materialize.
• AI Paradox: The company's push into AI is a strategic win, deflecting a staggering 40% of support tickets to automated solutions. But to be fair, this efficiency also compresses topline revenue as the cost savings are passed to clients, creating a growth challenge.
• Discretionary Spending: Macroeconomic headwinds like stalled PC refresh cycles and general client caution have caused a decline in the Digital Workplace Solutions (DWS) segment, where revenue was down 7.1% in Q3 2024 (the latest segment-specific decline cited).

What this estimate hides is the massive, albeit one-time, financial cleanup. In Q3 2025, the GAAP net loss ballooned to $308.9 million, almost entirely due to a single, non-cash pension settlement loss of $227.7 million. That looks terrible on the headline, but it's the cost of cleaning up the balance sheet.

The good news is that management is defintely taking clear actions to mitigate these risks. They've made huge strides in de-risking the balance sheet by successfully transferring over $300 million of U.S. pension liabilities to a third-party insurer in Q3 2025. This move stabilizes future cash contributions, which are now forecast not to fluctuate by more than 3% annually through 2029. Plus, they've strengthened liquidity, holding $322 million in cash as of Q3 2025. This is a disciplined operator. For a deeper dive into the institutional view of this transformation, you should read Exploring Unisys Corporation (UIS) Investor Profile: Who's Buying and Why?

The overall risk profile is shifting from structural liability concerns to pure execution and market competition. The company is targeting a full-year 2025 non-GAAP operating margin between 6.5% and 8.5%, which shows confidence in their cost controls, even with revenue softness.

Growth Opportunities

You're looking at Unisys Corporation (UIS) and trying to figure out where the real money is going to be made over the next few years. The short answer is: their growth isn't coming from massive top-line expansion right now, but from a strategic shift toward higher-margin, specialized services, and a defintely cleaner balance sheet.

The company's full-year 2025 revenue guidance is tight, projecting only a negative 1% to positive 1% growth in constant currency, or a range of $1.9 billion to $2.0 billion in total revenue. But here's the quick math: the focus has shifted to profitability and cash flow. Management raised the full-year non-GAAP operating profit margin guidance to 8% to 9%, up from a prior range of 6.5% to 8.5%. That's a clear signal: they are prioritizing margin over volume.

The biggest near-term opportunity is the new business pipeline, which is feeding the backlog. In the first quarter of 2025, their New Business Total Contract Value (TCV) excluding License and Support (Ex-L&S) solutions surged by over 80% year-over-year. This momentum pushed the total backlog to approximately $2.9 billion in the second quarter of 2025, which provides strong revenue visibility for the coming quarters.

Key Growth Drivers and Product Innovation

Unisys Corporation's future growth is anchored in a few core areas, moving away from legacy IT and into next-generation services. This is not about one big acquisition; it's about product innovation and market penetration in key segments. They are betting on three main pillars:

• AI-Driven Services: The new Service Experience Accelerator (SEA) and autonomous digital agents are driving AI-powered service desk transformation, particularly in the U.S. Public Sector, where Unisys was named a Leader in 2025 for AI-Augmented Workforce Services.
• Digital Workplace Solutions (DWS): This segment is seeing a stabilization of declines and increases in higher-value infrastructure field services, such as enterprise storage and network services. Their Device Subscription Service (DSS) is a major traction point, offering multi-year revenue visibility with new large contracts.
• Security and Platform Modernization: The high-margin License & Support (L&S) segment, centered on the ClearPath Forward platform, is being modernized with enhancements like post-quantum cryptography (PQC) security algorithms, keeping long-term clients locked in with entrenched platform stickiness and longer contract terms.

Strategic Positioning and Financial Clean-Up

The company's competitive advantage is being validated by external recognition, which helps them win new business. They were named a Leader in multiple 2025 Information Services Group (ISG) Provider Lens reports, including for Public Sector Services in Australia and the U.K., highlighting their expertise in digital transformation and secure sovereign private cloud solutions. This is how you build credibility in a competitive market.

Also, a major strategic initiative that improves the investment narrative is the aggressive reduction of pension volatility. By executing a September 2025 annuity purchase, Unisys removed approximately $320 million of U.S. pension liabilities, which reduces contribution volatility and improves funding predictability. This financial clean-up is critical for attracting new investors who were wary of the pension overhang. For the full year, the company targets generating approximately $110 million in pre-pension free cash flow.

While the company is forecast to remain unprofitable on a net basis for at least the next three years, the expected earnings per share (EPS) growth is significant. Analysts project EPS to grow from $0.61 per share to $1.28 per share next year, a massive 109.84% increase, showing the operational leverage from their cost-cutting and margin focus. You can read more about their core philosophy here: Mission Statement, Vision, & Core Values of Unisys Corporation (UIS).