10-K: Unisys Posts Wider 2025 Loss Amid Revenue Dip

Unisys Corporation reported a net loss of $339.8 million in 2025, a significant increase from the prior year, alongside a 2.9% decrease in revenue, primarily due to lower client volumes and higher pension settlement losses.

Summary

• Net loss attributable to Unisys Corporation increased to $339.8 million in 2025, compared to $193.4 million in 2024.
• Diluted loss per share was $4.79 in 2025, up from $2.79 in 2024.
• Total revenue decreased by 2.9% to $1,950.1 million in 2025 from $2,008.4 million in 2024, primarily due to lower client volumes in Digital Workplace Solutions (DWS) and Cloud, Applications & Infrastructure Solutions (CA&I).
• Goodwill impairment charges increased to $55.0 million in 2025 from $39.1 million in 2024, both related to the DWS segment.
• Pension plan settlement losses were $228.2 million in 2025, higher than $130.6 million in 2024.
• Cash used for operating activities was $140.0 million in 2025, a significant shift from $135.1 million provided by operations in 2024.
• Total indebtedness increased to $741.7 million at December 31, 2025, from $493.2 million at December 31, 2024.
• Total Contract Value (TCV) increased by 13% to $2,207 million at December 31, 2025, from $1,946 million at December 31, 2024.
• Backlog grew to $3.16 billion at December 31, 2025, compared to $2.84 billion at December 31, 2024, with approximately $1.11 billion (35%) expected to convert to revenue in 2026.
• The company issued $700.0 million aggregate principal amount of 10.625% Senior Secured Notes due 2031 in June 2025, using proceeds to repurchase and redeem 2027 Notes and fund pension obligations.
• A discretionary cash contribution of $250 million was made to U.S. defined benefit pension plans in 2025.
• The voluntary attrition rate for employees was 11.4% in 2025, with a 73% participation rate in employee surveys.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the significant increase in net loss, revenue decline, and shift to cash usage from operations. While TCV and backlog increased, the substantial goodwill impairment and pension settlement losses, coupled with credit rating downgrades, indicate underlying financial pressures and operational challenges.

Positives

• Total Contract Value (TCV) increased by 13% to $2,207 million at December 31, 2025.
• Backlog increased to $3.16 billion at December 31, 2025, with a significant portion expected to convert to revenue in 2026.
• Successfully refinanced debt by issuing $700.0 million in 2031 Notes and repurchasing/redeeming the 2027 Notes, extending debt maturity.
• Made a substantial discretionary cash contribution of $250 million to U.S. defined benefit pension plans, reducing future liabilities.
• Selling, General and Administrative expenses decreased to $391.2 million in 2025 from $424.2 million in 2024, reflecting cost savings.
• Gross profit percentage in the Cloud, Applications & Infrastructure Solutions (CA&I) segment increased to 20.2% in 2025 from 19.6% in 2024, driven by labor cost savings initiatives.
• Maintained an effective system of internal control over financial reporting as of December 31, 2025.
• Settled a litigation matter (Unisys Corp. v. Gilbert, et al.) for $40 million, reinforcing the value of the company's intellectual property.

Negatives

• Net loss attributable to Unisys Corporation significantly widened to $339.8 million in 2025 from $193.4 million in 2024.
• Total revenue decreased by 2.9% to $1,950.1 million in 2025, primarily due to lower client volumes in Digital Workplace Solutions (DWS) and Cloud, Applications & Infrastructure Solutions (CA&I).
• Operating activities shifted from providing $135.1 million in cash in 2024 to using $140.0 million in cash in 2025.
• Goodwill impairment charges increased to $55.0 million in 2025 from $39.1 million in 2024, specifically impacting the DWS segment.
• Pension plan settlement losses were higher at $228.2 million in 2025 compared to $130.6 million in 2024.
• Interest expense increased to $53.4 million in 2025 from $31.9 million in 2024, due to a higher long-term debt balance and increased interest rates.
• Incurred a $7.0 million loss on debt extinguishment in 2025 related to the repurchase of 2027 Notes.
• Credit ratings were downgraded from B+ to B by Standard & Poor's in 2024 and from B1 to B2 by Moody's in 2025.
• New Business TCV decreased by 38% in 2025, attributed to elongated sales cycles with prospective clients.
• Ceased the use of foreign currency forward contracts, which is expected to increase volatility in the consolidated statement of income (loss) related to the remeasurement of foreign currency denominated intercompany balances.

Risks

• Inability to maintain the installed client base and sell new solutions and related services, potentially leading to significant revenue decline.
• Competitors focusing on target markets, which could adversely affect the ability to gain market share.
• Accelerated adoption of Software as a Service (SaaS) for ClearPath Forward could negatively impact shortand medium-term cash position, operations, financial condition, and liquidity.
• Failure to grow revenue, expand profit margins, and generate sufficient cash flows in businesses.
• Inability to effectively anticipate and respond to rapid technological innovation, including artificial intelligence (AI) and quantum computing, potentially leading to reduced demand or competitive disadvantage.
• Cybersecurity incidents, security breaches, and other disruptions in IT systems, which could result in significant costs, liability, litigation, regulatory action, and harm to business and reputation.
• Adverse effects of volatile, negative, or uncertain economic, geopolitical, and political conditions, as well as acts of war, terrorism, natural disasters, or widespread infectious diseases, particularly given global operations.
• Additional risks inherent in working with government and public sector clients, including audits, investigations, and potential project reductions or terminations due to funding changes.
• Aggressive competition, including competitors offering more aggressive pricing or contractual terms, which may reduce demand for solutions and services.
• Inability to attract, retain, and develop skilled employees to align with global client demand and retain strong leaders.
• Commercial contracts not being as profitable as expected or failing to provide the expected level of revenue, including potential termination clauses or performance penalties.
• Dependence on the pricing, performance, and capabilities of third parties with whom the company has commercial relationships.
• Requirement to contribute additional cash to meet significant underfunded defined benefit pension plan obligations, which could materially impact operations, financial condition, and liquidity.
• Inability to maintain credit ratings or access financing markets, potentially increasing the cost of funds or impacting the ability to utilize financial instruments.
• Restrictive covenants in the credit agreement governing the Amended and Restated Asset Based Lending (ABL) Credit Facility and the 10.625% Senior Secured Notes due 2031 indenture, limiting operational flexibility.
• Inability to protect or enforce intellectual property rights, prevent infringement claims, or lose the ability to utilize the intellectual property of others.
• Exposure to risks associated with an evolving international trade and tariff environment, potentially increasing costs or limiting market access.
• Business and financial risks through the completion of acquisitions or dispositions, including integration challenges or unfavorable terms.
• Exposure to numerous and sometimes conflicting global legal and regulatory requirements, including anti-corruption, data privacy (e.g., GDPR, Indian Digital Personal Data Protection Act), cybersecurity directives, and global AI regulations.
• Legal proceedings, investigations, compliance, and environmental matters, which have and may continue to impact results of operations and cash flows.
• Failure to meet global sustainability standards and expectations, achieve sustainability goals, and comply with sustainability laws and regulations, exposing the company to potential liabilities and reputational harm.
• Further or full impairment of goodwill or intangible assets, negatively impacting results of operations.
• Limitations on the ability to use net operating loss (NOL) carryforwards and certain other tax attributes due to ownership changes or future tax law changes.

Future Outlook

Management expects to recognize pension expense of approximately $120 million in 2026. The company estimates future total cash contributions to its global defined benefit pension plans of approximately $87 million in 2026, approximately $105 million in 2027, and approximately $241 million in the aggregate from 2028 through 2030. The company believes it will have adequate sources of liquidity to meet its expected cash requirements through at least the next twelve months and expects to continue to meet all covenants and conditions under its lending agreements.

Management Comments

• Our primary objective is to increase the value we create for our clients to support our financial objectives of improving our revenue growth, profitability and free cash flow.
• We are sharpening our client and industry insights to anticipate needs and trends, defining output-based solutions that deliver measurable results, and advancing the skills of our workforce to ensure we remain at the forefront of innovation.
• In that spirit, we evolve our solutions and services to enable clients to make breakthroughs, optimize processes, and further our mission to grow through their successes.
• We believe our portfolio of solutions is aligned with the secular trends shaping demand in the areas of the market we serve.
• We believe XLAs can be a powerful tool for achieving business outcomes such as reclaiming employee time, reducing support costs, optimizing hardware and software management, and better aligning employee and customer experience.
• Unisys ClearPath Forward 2050 strategy represents a long-term commitment from Unisys to evolving our platforms solutions and expert services to ensure clients can continue to operate their most critical business applications and processes for decades to come.
• We believe that our investment in enhancing and expanding our IT solutions and services, coupled with investment in our go-to-market capabilities, will favor our competitive position.
• The company believes that this settlement [Unisys Corp. v. Gilbert, et al.] was in the best interest of its stockholders and resolved the ongoing litigation in a favorable manner.

Industry Context

StockSavvy.ai notes that Unisys's strategic focus on AI, automation, and hybrid multi-cloud solutions aligns with broader industry trends of digital transformation and increasing IT complexity. The emphasis on agentic AI and high-performance computing reflects the growing demand for advanced computational capabilities driven by AI and large language model workloads. However, the competitive landscape, including clients developing in-house AI capabilities, poses a challenge to market share expansion. The company's global operations expose it to evolving international trade and regulatory environments, a common challenge for multinational IT service providers.

Management Changes

Corporate Governance

Legal Proceedings

• Involved in various litigation matters in Brazil, including numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The estimated amount related to unreserved tax-related matters is approximately $96 million.
• Reached a settlement on December 3, 2024, in the case of Unisys Corp. v. Gilbert, et al., for $40 million, alleging theft of trade secrets and confidential information. The company received $15 million in 2024 and the remaining $25 million in 2025.
• Has an estimated environmental liability of approximately $18 million at December 31, 2025, for a site its predecessor company previously operated, with an expected recovery of approximately $33 million included in other long-term assets.

Related Party Transactions

• As of December 31, 2025, the pension plans assets include approximately $48.4 million of investments in funds managed by BlackRock, Inc., a related party of the company. Investment management fees paid to BlackRock, Inc. were not material for the year ended December 31, 2025.

Stakeholder Impact

• Shareholders: Experienced a significant increase in net loss and a decline in revenue, which are negative. However, increased TCV and backlog provide some positive indicators for future revenue potential. Credit rating downgrades could negatively impact investor confidence.
• Employees: Workforce reductions resulted in $23.0 million in charges in 2025. The company maintains a focus on upskilling and retention, reflected in a 11.4% voluntary attrition rate and 73% employee survey participation.
• Customers: Lower client volumes in DWS and CA&I segments indicate reduced demand or competitive pressures. The company is focusing on AI-driven solutions and digital transformation to deliver value.
• Creditors: Total indebtedness increased, and interest expense rose. Credit rating downgrades could lead to higher borrowing costs. The successful debt refinancing extended maturity, providing some stability.
• Suppliers: Reliance on a single or limited number of suppliers for certain technology products poses a risk if delivery is insufficient or untimely.

Next Steps

• Continue to evaluate opportunities for additional reduction of global defined benefit pension obligations in future periods.
• Plan a cybersecurity program maturity assessment in early 2026.
• Continue to assess the impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements for future reporting periods.
• Expect to make payments of approximately $24.8 million in 2026 related to workforce reduction actions.
• Approximately $1.11 billion (35%) of 2025 backlog is expected to be converted to revenue in 2026.

Key Dates

Recommendation

The significant increase in net loss, coupled with a revenue decline and a shift from positive to negative operating cash flow, indicates deteriorating financial performance. The goodwill impairment charges and higher pension settlement losses further highlight underlying issues. While TCV and backlog show some positive momentum, the credit rating downgrades and decreased New Business TCV suggest ongoing challenges in a competitive market. These factors collectively point to a negative outlook for the stock.

Keywords

IT solutions, digital transformation, cloud computing, artificial intelligence, AI, automation, cybersecurity, managed services, hybrid multi-cloud, enterprise computing, digital workplace, pension liabilities, debt refinancing, SEC filing, 10-K, financial results, corporate governance, risk management