Unisys Corporation

In FY2019, Unisys generated $2.95 billion in total revenue across two reporting segments: Services ($2.55B, 16.6% gross margin) and Technology ($396M, 61.8% gross margin). The Services segment encompassed a broad portfolio of IT outsourcing including a ~$689 million U.S. Federal contracting business. The high-margin Technology segment — anchored by the proprietary ClearPath Forward mainframe operating environment — represented just 13.4% of total revenue ($396M / $2,949M). The company's blended gross margin was 22.6%, weighed down by the dominant low-margin Services business. Non-GAAP operating margin was 9.0%. Services backlog stood at $4.3 billion, but the legacy IT outsourcing base was in secular decline as enterprise clients migrated to cloud infrastructure.

Under CEO Peter Altabef, Unisys executed a multi-year portfolio transformation to concentrate on its proprietary software assets and shift revenue toward recurring models:

• U.S. Federal divestiture (March 2020): Sold the ~$689M-revenue U.S. Federal IT services business to SAIC for $1.2 billion in cash, representing 13x LTM Adjusted EBITDA. Net proceeds were used to redeem $440 million in 10.75% Senior Secured Notes due 2022, reducing pro forma net leverage from 4.3x to 2.4x based on 2019 Adjusted EBITDA.
• Segment restructuring (2020): Reorganized the remaining business into three focused segments — Digital Workplace Solutions (DWS), Cloud, Applications & Infrastructure Solutions (CA&I), and Enterprise Computing Solutions (ECS). ECS housed ClearPath Forward and the Stealth zero-trust microsegmentation security platform.
• ClearPath Forward subscription conversion: Migrated ClearPath Forward clients from perpetual licenses to annual recurring subscription licenses. ClearPath Forward clients run mission-critical transaction processing on the proprietary OS, creating high switching costs that gave Unisys leverage to convert without attrition.
• Stealth security platform positioning: Invested in Stealth, a zero-trust microsegmentation platform that can identify, isolate, and contain breaches within 10 seconds. In May 2020, Stealth became the first microsegmentation cybersecurity solution validated by the National Information Assurance Partnership (NIAP), meeting requirements across 31 member nations.
• Legacy managed decline: Allowed low-margin IT outsourcing contracts in DWS and CA&I to run off without renewal, deliberately accepting revenue decline in exchange for margin improvement.