Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 29, 2026 · Beat 6 of last 7 quarters
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Unisys is capitalizing on the AI infrastructure buildout through field services for AI data centers, including liquid cooling and dedicated resident technicians, and expanding into adjacent areas like Starlink deployments. The company's DSS offering is benefiting from hardware cost pressures, while its platform-agnostic AI orchestration positions it as a key partner for enterprises navigating hybrid AI workloads. These trends support the broader thesis of AI driving demand for specialized infrastructure services and management.
Second-quarter revenue of $474M declined 2% YoY, but beat expectations by ~$20M, driven by 2% growth in TS&S. New business TCV surged 57% YoY to $192M, with notable wins including a U.K. construction company, a community college system, an AI data center OEM engagement, and a Starlink antenna deployment contract. TS&S gross margin expanded 170 bps YoY to 19.3%, while DWS gross margin fell to 10.8% due to transition costs and hardware mix. The company recorded a $47.2M goodwill impairment in DWS, and adjusted EPS of -$0.08 missed consensus. Management highlighted strong demand for DSS and AI infrastructure field services, and continued ClearPath consumption growth.
Management increased full-year revenue guidance at the June Investor Day and reaffirmed it on the call, citing strong new business signings and pipeline momentum. They expect ClearPath revenue of $425M for 2026, with a strong second half driven by large deals closing by year-end. The company is contemplating a transaction to remove approximately $200M of U.S. pension liabilities, funded by planned assets. They continue to target full-year free cash flow and profitability expectations as previously communicated.
“We continue investing to deploy our AI-infused solutions to our existing client base, enhancing AI fluency and proficiency and extending our platforms by building out our portfolio of Agentic assets to accelerate AI adoption in complex IT environments.”
on AI investment strategy
“Our DSS solution is purpose-built for this objective and transitioned clients from traditional capital purchases to flexible life cycle models.”
on Device subscription services demand
“We are contemplating a transaction that would remove approximately $200 million of pension liabilities from our U.S. qualified defined benefit plans, which would be funded by planned assets of a similar amount to the liabilities being removed.”
on Pension annuity purchase
To what extent are you seeing the dynamic of AI infrastructure spending crowding out larger deals, and is it subsiding?
Mike acknowledged the dynamic, noting it's consistent with IBM's commentary and the macro trend of infrastructure spend deferring discretionary projects. He said it's baked into their guidance and sees it as an advantage for DSS, as clients lock in pricing. He expects the deferral to be temporary and noted new business signings show the market is loosening.
Could you talk about pricing trends across your solution set and if contracts are being structured differently given AI focus?
Mike said pricing pressure is real but largely behind them, with ~75% of renewals completed by year-end. They've been able to add new scope to offset price declines, maintaining relationship economics. He noted pricing pressure is baked into their modeling.
Can you give more color on the data center opportunity, including the percentage of field services footprint up to speed and pipeline building?
Mike expressed excitement, highlighting three elements: field services (trained technicians, Dell award, Starlink and airport wins), data center service management (hybrid infrastructure orchestration), and application layer alignment. He noted few global field service providers exist, positioning Unisys well.