UIS - Unisys plunges 40% after guidance cut

Unisys ( NYSE: UIS ) shares plunged 40% on Tuesday after the IT services company reported third quarter results that fell short of Wall Street estimates.

Net loss widened from $18.7M in the prior-year period to $40.1M, primarily driven by the timing of ClearPath Forward renewals, one-time charges related to cost-reduction activities and other non-recurring expenses.

Revenue declined 5.5% Y/Y to $461.2M. The firm achieved double-digit year-over-year growth in annual contract value, total contract value and pipeline, with backlog reaching $2.69B vs. $2.74B as of Q222. The sequential decrease from 2Q22 was driven by the impact of foreign currency exchange rates.

Free cash flow fell from $39.4M in the prior-year period to $23.8M, driven by lower adjusted EBITDA and changes in working capital.

The company revised FY22 guidance, now expecting revenue decline of -5.5% to -3.5% YoY or -1.0% to +1.0% in constant currency, compared to previous outlook of -1.0% to 1.0% YoY or 2.5% to 4.5% in constant currency.

Adj. operating profit margin is expected between 6.0% to 8.0% (prior outlook: 7.5% to 9.0%) and adjusted EBITDA margin between 14.5% to 16.5% (prior outlook: 16% to 17.5%).

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