How an emboldened Unisys is capitalizing on its momentum

May 2nd, 2019executiveconversations


It is one thing to achieve a major milestone over the course of a year. It is an entirely different thing to repeat the same achievement the following year. After achieving full-year, year-over-year revenue growth for the first time in 15 years in 2018, Unisys believes it is on course to do just that again in 2019.

Our confidence is reflected in what we announced in our first-quarter earnings press release today: that we are raising our full-year financial guidance for non-GAAP adjusted revenue (while also reaffirming full-year financial guidance for non-GAAP operating profit margin and adjusted EBITDA margin) from +1%-+4% year-over-year growth to +2-+5% year-over-year growth. This marks the first time Unisys has raised its full-year financial guidance mid-year since reinstating the practice of issuing it three years ago.

Simply put, Unisys is winning in the market. At approximately $990 million, Total Contract Value[1] (TCV) in the first quarter of this year was at the highest level we have seen since the first quarter of last year, which had included our largest contract in more than a decade. Much of the momentum we are seeing is accruing from our success in signing new business – new business TCV and Annual Contract Value[2] (ACV) grew 3% and 20% year over year in the first quarter, respectively. Then there is the strength of our pipeline, which is another indicator of potential future success. Both our total company pipeline, at 3%, and our new business pipeline, at 5%, were up year over year in the quarter as well.

What is even more exciting than what we are doing is how we are doing it. Our strategy is two-fold: to leverage our IP and related solutions, and to use security to differentiate our offerings.

With respect to the first of these approaches, we continue to focus on the theme of finding scalable and repeatable solutions across our business to enhance our go-to-market approach. This is a strategy we have deployed over recent years with a number of our Technology solutions such as Unisys Stealth®, and we have also recently launched a number of these productized offerings within our Services business. These include Unisys InteliServe™, which transforms the traditional helpdesk into an intelligent, automated, user-centric service available on an organization’s channel of choice. (Innovation like InteliServe is what prompted Gartner to recognize Unisys as a “Leader” in its 2019 Magic Quadrant for Managed Workplace Services, North America.) They also include Unisys CloudForte™, which automates and accelerates the secure transformation to the Amazon Web Services (AWS) and Microsoft Azure public clouds as well as to hybrid cloud environments. (We just launched CloudForte for Hybrid this week.)

With respect to the second element of the strategy I mentioned, we saw traction with our Unisys Security Solutions offerings in the first quarter. Our largest renewal win in the quarter included Stealth™ and Managed Security Services. And security was a key component in a first-quarter win with Nutreco that included Stealth, blockchain, IoT and advanced analytics. While mentioning Nutreco, this quarter our work with the company resulted in Unisys winning the “Most Innovative Project in a Company” award at the Technology and Innovation Management event in the Netherlands.

There is nothing like a good proof point, and I cannot think of a better one than our new contract with the U.S. Air Force that we announced this week.

The contract calls for us to help the Air Force consolidate multiple service desks with varied tool sets into a single environment with a cloud-based ITSM (or IT Service Management) and end-user device management solutions that will automate security to ensure end-user devices comply with security rules before they can connect to Air Force networks. The solution as a whole reflects our company strategy, and its combination with our deep U.S. Federal domain expertise and world-class delivery track record sealed the win.

The Air Force contract is one of the two largest that we signed in the first quarter, with the other of the two a selection to support a contract with a U.S. federal cabinet-level agency. Both wins came through our U.S. Federal business, which we believe is on target to see strong revenue growth for the year. Even after doubling year over year in 2018, TCV for U.S. Federal was up 23% year over year in the first quarter, taking total TCV for the sector to $1.75 billion over the last 15 months (as of March 31, 2019). Total funded backlog for this sector was also up 43% year over year in the quarter. Based on this and our overall view of the business, we expect U.S. Federal to see revenue growth in the mid to high teens in 2019. It is a shining star in our galaxy.

We are pleased to see revenue growth rates continue to reach levels we have not seen for years. We are growing the top-line because we are bringing to bear solutions that feature the advanced automation and leading-edge security capabilities the market now demands. The U.S. Air Force win is a good example of our momentum – and we look forward to more to come.

 

1 Total Contract Value – TCV is the estimated total contractual revenue related to contracts signed in the period including option years (U.S. Federal contracts only) and without regard for cancellation terms. New business TCV represents TCV attributable to new scope for existing clients and new logo contracts.
2 Annual Contract Value – ACV represents the revenue expected to be recognized during the first twelve months following the signing of a contract in the period.


ABOUT THE AUTHOR

Peter Altabef

Peter A. Altabef has served as chairman of the board of Unisys Corporation since April 2018, and as president and CEO of Unisys since January 2015. Prior to joining Unisys, Peter served as president and CEO of MICROS Systems, Inc, as president and CEO of Perot Systems Corporation, and as president of Dell Services, the information technology services and business process solutions unit of Dell.