Unisys Corporation New

Good morning and welcome to the Unisys Corporation second quarter 2026 financial results conference call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Michaela Pewarski, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. Thank you for joining us. Yesterday afternoon, Unisys released its second quarter 2026 financial results. Joining me to discuss these results are Mike Thomson, our CEO and President, and Deb McCann, our Chief Financial Officer. As a reminder, today's call contains estimates and other forward-looking statements within the meaning of the securities laws. We caution listeners that these statements are subject to risks and uncertainties that could cause actual results to differ materially. These items can be found in our forward-looking statements section of yesterday's earnings release furnished on Form 8K and in our most recent Form 10K and 10Q filed with the SEC. We do not assume any obligation to review or revise any forward-looking statements in light of future events. We will also refer to certain non-GAAP financial measures such as non-GAAP operating profit and adjusted EBITDA. These measures exclude certain unusual or non-recurring items such as post-retirement expense, cost reduction activities, and other expenses the company believes are not indicative of ongoing operations. We believe these measures provide a more complete understanding of our financial performance, but they are not intended to be a substitute for GAAP. Reconciliations for non-GAAP measures are provided in the slides for today's call, available on our investor website. With that, I'd like to turn the call over to Mike.

Thank you, Michaela. Good morning, everyone, and thank you for joining us to discuss the company's second quarter 2026 results. The year is progressing well with the second quarter building on a good start to the year. As announced at our June investor day, we have increased our full year revenue guidance and second quarter came in ahead of the expectations we shared on our last earnings call. New business signings are again a bright spot up more than 50% year over year in the second quarter and improved sequentially over the first quarter, which had been our strongest since 2024. 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. That includes within our ClearPath ecosystem, where we are evolving both our core platforms to support AI capabilities and increasing the flexibility in using ClearPath data for connecting and powering enterprise AI workloads. Our investments are focused on converting today's demand into durable, high value relationships that strengthen our conviction and our long term value. We believe that value will become increasingly evident over time. especially as pension contributions translate to lower pension deficit which will continue to improve our leveraged position. Looking more closely at the second quarter performance, our revenue year-over-year decline of 2% was better than we anticipated last quarter due to a 2% growth in technology solutions and services or TSNS. As a reminder, TSNS represents the entire company excluding ClearPath and it reflects the renaming of XLNS to more accurately represent the businesses included within that grouping. Upside in our digital workplace solutions and cloud applications and infrastructure segments span field services volumes, shorter cycle project work and increased hardware. We again saw some sequential improvement in clients undertaking project work and moving forward on their enterprise AI roadmap. Revenue was up across key solutions and applications, cybersecurity and data center field services both sequentially and year over year. Demand accelerated for devices and services as clients contend with rising hardware costs stemming from memory shortages. We believe this supports the continued growth of our device subscription services or DSS offering as it is geared towards better asset management and reporting as well as better financial outcomes for our clients over time. We expanded technology solutions and services gross margin by 170 basis points year over year, reflecting the results of ongoing investments in our technology workforce and higher value solutions. Looking at client signings during the quarter, new business TCV increased 57% year over year and 22% sequential. Our sustained new business strength primarily reflects the generation of project work with our existing clients. Our win rates on new business with existing clients are up meaningfully for the first half of the year on both a TCV and a deal count basis. We have improved conversion on large and mid sized opportunities, which we believe reflects our strengthening competitive position and acknowledgement of our portfolio and delivery capabilities. Follow on opportunities are coming in Shorter succession than in the past and many of our notable wins were with newer clients where our relationships are expanding more quickly. For example, we recently expanded our relationship with the leading UK based construction company with two wins in the second quarter. The client relationship is currently in its second year and will now provide our DSS offering including intelligent refresh and lifecycle services for their 10,000 devices and take on an Azure service and cloud governance as their Microsoft cloud solution provider. As another example, a community college system that became a Unisys client just last quarter signed a multi-year infrastructure services new scope based on the initial success of our agentic modernization work. These cloud and infrastructure services solidify a recurring relationship with a top higher education institution offering us significant white space opportunities. We continue to expand our presence in the rapidly growing need for AI infrastructure data center field services, which requires unique expertise in servers, liquid cooling and other equipment. In the quarter, a large OEM engaged us to provide full time dedicated resident technicians to support an AI data center build out and ongoing maintenance. Importantly, the client is funding advanced on-site trainings for the dedicated team as well as Unisys technicians rotating ahead of future anticipated volumes. This engagement is meaningful for our profile in the space where we were also recently recognized by Dell as their 2026 American Data Center Partner of the Year. We also signed a small expansion in high-value field services with a leading global telecommunications company to provide end-to-end deployment and support for StarLeak antennas. Our field engineers will conduct site surveys, installation planning, cable routing assessments, testing, and lifecycle management beginning in Germany with plans to expand within Europe and beyond. Building on recent momentum in Australia, we signed a six-year new scope contract with a global travel systems integrator to provide dedicated on-site engineers to maintain check-in kiosks, bag tag printers, and passenger boarding systems in airports across the region. While 2026 has fewer large contract renewals scheduled, our AI-first approach is resonating, and many clients are considering new scope opportunities into their renewals, which helps us maintain the relationship economics for us and allows our clients to share in a more efficient delivery profile. Looking at pipeline and demand trends, we saw double-digit sequential growth in new business pipeline with both existing and prospective clients. In digital workplace, we saw a broad-based influx in demand for our device subscription services as IT executives focused more urgently on offsetting the cost pressures that device price increases are putting on their budgets. Our DSS solution is purpose-built for this objective, and transition clients from traditional capital purchases to flexible lifecycle models. Using persona mapping, device telemetry and predictive analytics, we optimize across planning, procurement, warehousing, deployment and support. In cloud applications and infrastructure, we saw a pickup in application services requiring our central engineering capabilities and expertise in developing, modernizing and managing applications. The majority of this work now involves the creation and orchestration of AI agents where we have allocated highly skilled specialists. Several of our new application opportunities, including some large scale transformations, come from our ongoing initiative to cross sell modernization services into our ECS base of ClearPath clients. In ECS, we went live with our first endurance advisory engagement at a large financial institution and added several opportunities to the pipeline at other ClearPath clients. Endurance consulting projects involved developing initiatives for AI knowledge management, upskilling, and skill sustainability that we use to enrich our own internal experience and where we see several key benefits. These engagements support retention and longevity by reinforcing skills at clients that manage ClearPath systems in-house. while giving us a better understanding of their needs to inform our own product roadmap. We believe these initiatives will generate ancillary services revenues by identifying modernization opportunities within the ClearPath estate. The momentum in our pipeline is a function not only of demand trends and losing budgets, but also a balance of consistency and agility in our go to market. Last quarter, I discussed how we adapted to the disruption AI was having on client decisions by rolling out rapid value assessments to create repeatable frameworks for understanding time to value and return on investment for key solutions. These frameworks are engaging more new logos and reaching out to them earlier in their AI journey, and we continue expanding our catalog. A consistent focus on existing initiatives like our alliance partnerships is also yielding results. And our partner linked opportunities are generating a larger portion of the pipeline than they did a year ago. We're collaborating more closely with key partners on solution development, where we can deliver outcomes for specific industry use cases relevant to both Unisys and our partners clients. A vivid example is our deepening relationship with a key hyperscale in higher education. Working alongside our client, one of the largest university systems in the United States, we designated a bespoke application built with our partner's AI stack to assist overextended guidance counselors and improve student retention. Our partner is now training its own pre-sales architects on the solution and making new introductions that open doors to apply a repeatable framework for co-developing and commercializing solutions and use cases with one of the largest global technology companies. In addition to client wins, our solutions are continuing to garner industry recognition. This quarter, we maintained our leader rankings in the market reports for data center services, cybersecurity, and AI-enabled cloud infrastructure management published by analysts from ISG and Nelson Hall. I want to shift to discuss how we're investing in the foundations of future growth and as a diversified play on enterprises and mid-market AI orchestration. This encompasses developing solutions, delivery frameworks, partnerships and workforce skills to offer a standardized point of view while remaining platform agnostic Optimizing for use cases or leveraging clients' existing technology investments. In the enterprise computing segment, we're continuing to deliver incremental modernization without disruption for clients that depend on ClearPath for mission-critical workloads. During the second quarter, we had a major release of a core operating system, which eases integration of data with third-party AI applications and new capabilities such as our AI developer toolkits. As with all major platform upgrades, we strengthen security, including the latest advancement in post-quantum cryptography. Quantum computing more broadly is an area where we've established expertise and a growing track record. In the second quarter, we moved into production a quantum fraud detection solution at Baysafe, an online payment platform based in the UK. This solution pushes the bounds with its use of AI and machine learning and was developed through an ongoing partnership with the National Quantum Computing Center, or NQCC, and was partially funded by the UK government. We're seeking third-party validation from NQCC, which would establish Unisys as having one of a very few validated quantum production instances and lends its credibility in a highly regulated market. In digital workplace, our agentic service desk is our solution for orchestrating an elevated and more automated IT support experience. We're currently in the deployment phase with a second group of clients, and these capabilities remain a key differentiator in client conversations. The agentic service desk embeds agentic workflows and intelligent automation directly into delivery, and it's deployed directly to the client's environment to maintain data sovereignty. This solution is a powerful example of our ability to operationalize AI at enterprise scale, providing more value at a lower cost. Our teams are working on new integrations for NextThink and TeamViewer platforms, so our AI agents can directly access telemetry and analytic data to lead to better outcomes by leveraging our clients' existing technology. We're also working on new voice capabilities using conversational AI, further enhancing the end user experience. Longer term service experience accelerator is designed to address a broader market beyond IT, orchestrating unified knowledge management for global capability centers, delivering centralized HR, finance and facility services. While early, we're now moving into production with a client on our first non IT use case, for Human Resources following a successful pilot during the quarter. On the field services side, as we invest in training and talent for high valued hybrid infrastructure and IoT devices, we're exploring partnerships with certain system integrators to scale faster. The system integrators were working with design and manage data center build outs for clients directly, but also use an array of subcontractors for execution. Our global footprint offers them the ability to consolidate field service capabilities with a single provider, making us a particularly attractive partner. In CA&I, we continue to enhance delivery of our intelligent operations platform and have established a new partnership with Antenna to improve AI operations governance and observability across AI agents and workflows and help optimize token use for clients. We are experiencing a broader architectural shift as clients weigh the question, where should I run my AI workloads? Determining which AI workload belongs in the cloud at the edge or on prem, and whether you're solving for cost, latency, security or data solventry reasons are all part of the equation that we help clients solve. Our combined expertise across devices, applications and hybrid infrastructure makes us a natural orchestration partner for adopting AI and increasingly complex IT estates, especially as intelligent edge compute proliferates. Converting portfolio investments into client outcomes ultimately relies on the quality of our people and making the deliberate investments required for true AI workforce transformation. We continue to enrich our company-wide AI fluency and proficiency training programs with structured learning pathways, certification cohorts and role based standards for major AI tools. This is being complemented by skills first AI driven talent architecture, a closed loop system to capture skills and credentials, curated learning journeys, and matching the right talent to the right work using AI at every step and continually learning from the outcomes. Our commitment to development is fundamental to our culture. and we are proud to share that Unisys has again been named one of Time Magazine's American's Best Companies for 2026 and moved up 42 rankings to number 32 on the Economist 2026 Top 100 Most Loved Workplaces. This recognition coupled with our low trailing 12-month attrition rate of 11.2% reflects our continued commitment to fostering a highly engaged and empowered workforce. With that, I'll turn the call over to Deb to discuss our financial performance in more detail.