UNISYS CORP
For the period ended Jun 30, 2026. Filed Jul 30, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 30, 2026
UIS$2.72+1.1%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0000746838-26-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0000746838-26-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 101 current paragraphs.
33 unchanged; 29 reworded; 34 added; 4 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
For the six months ended June 30, 2026, the company reported net loss attributable to Unisys Corporation of $131.1 million, or $1.81 per diluted share, compared with a loss of $49.6 million, or $0.70 per diluted share, for the six months ended June 30, 2025.
Current report
For the three and six months ended June 30, 2026, the net loss attributable to Unisys Corporation included a goodwill impairment charge of $47.2 million related to the Digital Workplace Solutions (DWS) reportable segment.
Current report
Revenue for the three months ended June 30, 2026 was $473.5 million compared with $483.3 million for the three months ended June 30, 2025, a decrease of 2.0% from the prior-year period. The decrease was primarily driven by the timing of ClearPath license renewals. Foreign currency fluctuations had a 3 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Current report
Effective in the second quarter of 2026, the company updated the naming conventions used to describe certain solution groupings to better reflect the nature of its offerings. The company renamed License and Support to ClearPath® and Excluding License and Support to Technology Solutions & Services (TS&S). These changes did not impact the company’s reportable segments, the recognition or measurement of revenue and expenses or the consolidated financial statements. As such, previously reported financial information has not been adjusted.
Current report
Gross profit and gross profit margin were $117.3 million and 24.8% in the three months ended June 30, 2026, respectively, compared with $130.0 million and 26.9% for the three months ended June 30, 2025, respectively. The decreases were primarily driven by the timing of ClearPath license renewals.
Current report
TS&S profit and gross profit margin for the three months ended June 30, 2026 were $77.8 million and 19.3%, respectively, compared with $69.7 million and 17.6% for the three months ended June 30, 2025, respectively. The increases were primarily driven by delivery improvement and labor cost savings initiatives, partially offset by lower-margins generated by DWS during the current period.
Current report
For the three months ended June 30, 2026, the company reported an operating loss of $32.9 million compared with an operating profit of $30.3 million in the three months ended June 30, 2025. For the three months ended June 30, 2026, the operating loss included a goodwill impairment of $47.2 million related to the DWS reportable segment (see Note 12 of the Notes to Consolidated Financial Statements for details on the goodwill impairment).
Current report
The loss before income taxes for the three months ended June 30, 2026 was $79.8 million, which included a goodwill impairment charge of $47.2 million related to the DWS reportable segment. The company had no income or loss before income taxes for the three months ended June 30, 2025.
Current report
Six months ended June 30, 2026 compared with the six months ended June 30, 2025
Current report
For the six months ended June 30, 2026, ClearPath revenue was $135.2 million compared to $158.7 million for the six months ended June 30, 2025, a decrease of 14.8%. The decrease was primarily driven by the timing of ClearPath license renewals. Foreign currency fluctuations had a 3 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Current report
TS&S revenue for the six months ended June 30, 2026 was $775.9 million compared with $756.7 million for the six months ended June 30, 2025, an increase of 2.5%. Foreign currency fluctuations had a 5 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Current report
During the six months ended June 30, 2026, the company recognized net cost-reduction charges related to workforce reductions of $4.8 million, compared with net charges of $1.2 million for the six months ended June 30, 2025. Additionally, during the six months ended June 30, 2026, the company recorded lease abandonment charges and other costs relating to cost reduction efforts of $2.8 million. During the six months ended June 30, 2025, the company recorded an asset write-off and other costs related to cost reduction charges of $3.5 million. See Note 3 of the Notes to Consolidated Financial Statements for details of the cost reductions actions.
Current report
During the six months ended June 30, 2026, gross profit margin and TS&S gross profit margin benefited by 50 and 60 basis points, respectively, from a first quarter transaction within the company’s United Kingdom business process outsourcing consolidated joint venture.
Current report
Research and development expense for the six months ended June 30, 2026 and 2025 was $10.6 million and $11.7 million, respectively.
Current report
For the six months ended June 30, 2026, the company reported an operating loss of $16.7 million compared with an operating profit of $35.4 million for the prior-year period. For the six months ended June 30, 2026, the operating loss included a goodwill impairment of $47.2 million related to the DWS reportable segment (see Note 12 of the Notes to Consolidated Financial Statements for details on the goodwill impairment).
Current report
Other (expense), net was expense of $49.4 million for the six months ended June 30, 2026, compared with expense of $39.0 million for the six months ended June 30, 2025. The increase in other (expense), net was primarily driven by higher pension and postretirement expense. See Note 6 of the Notes to Consolidated Financial Statements for details of other (expense), net.
Current report
Net loss attributable to Unisys Corporation for the six months ended June 30, 2026 was $131.1 million, or $1.81 per diluted share, compared with a net loss of $49.6 million, or $0.70 per diluted share, for the six months ended June 30, 2025. For the six months ended June 30, 2026, the net loss attributable to Unisys Corporation included a goodwill impairment charge of $47.2 million.
Current report
DWS revenue was $141.9 million for the three months ended June 30, 2026 and $138.1 million for the three months ended June 30, 2025, an increase of 2.8%. Foreign currency fluctuations had a 4 percentage-point positive impact on DWS revenue in the current period compared with the prior-year period. Gross profit percent was 10.8% in the current period compared with 16.9% in the prior-year period. The decrease in gross profit percent was primarily due to known client attrition, a greater proportion of lower-margin hardware revenue, and increased delivery costs incurred during the transition phase of new business implementation.
Current report
Six months ended June 30, 2026 compared with the six months ended June 30, 2025
Current report
DWS revenue was $260.1 million for the six months ended June 30, 2026 and $256.7 million for the six months ended June 30, 2025, an increase of 1.3%. Foreign currency fluctuations had a 5 percentage-point positive impact on DWS revenue in the current period compared with the prior-year period. Gross profit percent was 12.0% in the current period compared with 15.7% in the prior-year period. The decrease in gross profit percent was primarily driven by known client attrition and a greater proportion of lower-margin hardware revenue.
Current report
CA&I revenue was $366.4 million for the six months ended June 30, 2026 and $361.8 million for the six months ended June 30, 2025, an increase of 1.3%. Foreign currency fluctuations had a 4 percentage-point positive impact on CA&I revenue in the current period compared with the prior-year period. Gross profit percent was 23.4% in the current period compared with 20.2% in the prior-year period. The increase in gross profit percent was primarily driven by delivery improvement and labor cost savings initiatives.
Current report
ECS revenue was $241.2 million for the six months ended June 30, 2026 and $258.9 million for the six months ended June 30, 2025, a decrease of 6.8%. Foreign currency fluctuations had a 4 percentage-point positive impact on ECS revenue in the current period compared with the prior-year period. Gross profit percent was 45.8% in the current period compared with 50.8% in the prior-year period. The decreases in revenue and gross profit percent were primarily driven by the timing of ClearPath license renewals.
Current report
During the six months ended June 30, 2026, cash used for operations was $30.7 million compared to cash used for operations of $282.9 million during the six months ended June 30, 2025. The improvement was primarily attributable to a discretionary cash contribution of $250 million to the company’s U.S. defined benefit pension plans in the prior-year period.
Current report
Goodwill
Current report
The company reviews goodwill for impairment annually in the fourth quarter using data as of September 30 of that year, as well as whenever there are events or changes in circumstances (triggering events), which indicate that the carrying amount may not be recoverable.
Current report
The company initially assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This qualitative assessment considers all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in share price and relevant entity-specific events.
Current report
If, after completing the qualitative assessment, the company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the company proceeds to perform a subsequent quantitative goodwill impairment test. Alternatively, the company may elect to bypass the qualitative assessment and perform the quantitative impairment test. The quantitative goodwill impairment test compares each reporting unit’s fair value to its carrying value. If the reporting unit’s fair value exceeds its carrying value, no further procedures are required. However, if a reporting unit’s fair value is less than its carrying value, then an impairment charge is recorded in the amount of the excess.
Current report
When the company performs the quantitative goodwill impairment test for a reporting unit, it estimates the fair value of the reporting unit using both the income approach and the market approach. The methodology used to determine the fair values using the income and market approaches, as described below, are weighted to determine the fair value for each reporting unit.
Current report
The income approach is a forward-looking approach to estimating fair value and relies primarily on internal forecasts. Within the income approach, the discounted cash flow method is used. The company starts with a forecast of all expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then a reporting unit-specific discount rate is applied to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include the amount and timing of projected net cash flows, long-term growth rate and the discount rate. Cash flow projections are based on management’s estimates of economic and market conditions, which drive key assumptions of revenue growth rates and operating margins. The discount rate, in turn, is based on various market factors and specific risk characteristics of each reporting unit.
Current report
The market approach relies primarily on external information for estimating the fair value. Some of the more significant estimates and assumptions inherent in this approach include the selection of appropriate guideline companies and the selected performance metric used in this approach.
Current report
Estimating the fair value of reporting units requires the use of estimates and significant judgments about key assumptions. There are a number of factors, including potential events and changes in circumstances that could change in future periods, including: projected operating results; valuation multiples exhibited by the company and by companies considered comparable to the reporting units; and other macro-economic factors that could impact the discount rate. It is reasonably possible that the judgments and estimates described above could change in future periods, which could have a significant impact on the fair value of the related reporting units.
Current report
During the second quarter of 2026, the company reviewed its estimated long-term expected future cash flows for its DWS reporting unit. DWS projected gross profit was below the previous estimated forecast primarily due to continued competitive pressure resulting from industry and macro-economic conditions. Based on this, the company concluded that a triggering event existed and conducted a quantitative goodwill assessment for the DWS reporting unit as of June 30, 2026. The fair value of the DWS reporting unit was estimated using a combination of discounted cash flows and market-based valuation methodologies as noted above. Based on the goodwill impairment analysis performed during the second quarter of 2026, the carrying value of the DWS reporting unit exceeded its respective fair value, resulting in the recognition of a goodwill impairment charge of $47.2 million. The impairment charge represented the entire remaining goodwill balance allocated to the DWS reporting unit, resulting in a full write-off of the reporting unit's goodwill.
Current report
Based on the annual impairment analysis performed during the fourth quarter of 2025, the CA&I reporting unit had a 20% excess of fair value over book value, including goodwill.
Current report
The company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact the significant assumptions noted above, including changes to U.S. treasury rates and equity risk premiums, tax rates, recent market valuations from transactions by comparable companies, volatility in the company’s market capitalization, and general industry, market and macro-economic conditions. Although the goodwill associated with the DWS reporting unit was fully impaired as of June 30, 2026, it is possible that future changes in such circumstances or in the inputs and assumptions used in estimating the fair value of the company’s other reporting units could require the company to record an additional non-cash impairment charge.
Removed paragraphs (4)
Previous report
For the three months ended March 31, 2026, the company reported an operating profit of $16.2 million compared with an operating profit of $5.1 million in the three months ended March 31, 2025. The increase was primarily driven by higher gross profit and lower selling, general and administrative expense as discussed above.
Previous report
DWS revenue was $118.2 million for the three months ended March 31, 2026 and $118.6 million for the three months ended March 31, 2025, a decrease of 0.3%. Foreign currency fluctuations had a 6 percentage-point positive impact on DWS revenue in the current period compared with the prior-year period. This positive impact in DWS revenue was offset by lower volume due to client attrition. Gross profit percent was 13.5% in the current period compared with 14.2% in the prior-year period. The decrease in gross profit percent was primarily driven by lower volume due to client attrition.
Previous report
During the three months ended March 31, 2026, cash used for operations was $4.4 million compared with cash provided by operations of $33.3 million during the three months ended March 31, 2025. This decrease was primarily driven by timing of cash interest payment associated with the 2031 Notes.
Previous report
The company will continue to evaluate opportunities for additional reduction of its global defined benefit pension obligations in future periods depending on overall market conditions. As a result of the company’s significant accumulated other comprehensive losses associated with its pension and postretirement plans, any future group annuity contract purchase could result in material non-cash settlement losses, if executed.
Reworded paragraphs (29)
Previous wording
For the three months ended March 31, 2026, the company reported net loss attributable to Unisys Corporation of $35.8 million, or $0.50 per diluted share, compared with a loss of $29.5 million, or $0.42 per diluted share, for the three months ended March 31, 2025.
Current wording
For the three months ended June 30, 2026, the company reported net loss attributable to Unisys Corporation of $95.3 million, or $1.31 per diluted share, compared with a loss of $20.1 million, or $0.28 per diluted share, for the three months ended June 30, 2025.
Previous wording
License and Support (L&S) represents software license and related support services, primarily ClearPath® Forward, within the company's Enterprise Computing Solutions (ECS) segment. Software license renewals tend to be significant and impactful to revenue and gross profit based on timing, which can fluctuate considerably from quarter to quarter. For the three months ended March 31, 2026, L&S revenue was $65.5 million compared to $71.1 million for the three months ended March 31, 2025, a decrease of 7.9%. The decrease was primarily driven by the timing of software license renewals, partially offset by foreign currency fluctuations, which had a 5 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Current wording
ClearPath represents software license and related support services, primarily ClearPath Forward TM, within the company's Enterprise Computing Solutions (ECS) segment. Software license renewals tend to be significant and impactful to revenue and gross profit based on timing, which can fluctuate considerably from quarter to quarter. For the three months ended June 30, 2026, ClearPath revenue was $69.7 million compared to $87.6 million for the three months ended June 30, 2025, a decrease of 20.4%. The decrease was primarily driven by the timing of ClearPath license renewals. Foreign currency fluctuations had a 2 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Previous wording
Excluding License and Support (Ex-L&S) measures exclude revenue, gross profit and gross profit margin in connection with software license and related support services within the ECS segment. Ex-L&S revenue for the three months ended March 31, 2026 was $372.1 million compared with $361.0 million for the three months ended March 31, 2025, an increase of 3.1%. Foreign currency fluctuations had a 6 percentage-point positive impact on revenue in the current period compared with the prior-year period, partially offset by lower volumes in Digital Workplace Solutions (DWS) and Cloud, Applications & Infrastructure Solutions (CA&I) reportable segments.
Current wording
TS&S measures include the revenue, gross profit and gross profit margin of the company’s DWS segment, Cloud, Applications & Infrastructure Solutions (CA&I) segment and ECS segment, excluding ClearPath software license and support services. TS&S revenue for the three months ended June 30, 2026 was $403.8 million compared with $395.7 million for the three months ended June 30, 2025, an increase of 2.0%. Foreign currency fluctuations had a 3 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Previous wording
During the three months ended March 31, 2026, the company recognized net cost-reduction charges related to workforce reductions of $0.7 million, compared with a net credit related to workforce reductions of $0.3 million for the three months ended March 31, 2025. Additionally, for the three months ended March 31, 2026 and 2025, the company recorded charges of $0.8 million and $0.2 million, respectively, of lease abandonment and other costs related to cost-reduction efforts.
Current wording
During the three months ended June 30, 2026, the company recognized net cost-reduction charges related to workforce reductions of $4.1 million, compared with net charges of $1.5 million for the three months ended June 30, 2025. Additionally, during the three months ended June 30, 2026, the company recorded lease abandonment charges and other costs related to cost-reduction efforts of $2.0 million. During the three months ended June 30, 2025, the company recorded an asset write-off and other costs related to cost reduction charges of $3.3 million. See Note 3 of the Notes to Consolidated Financial Statements for details of the cost reductions actions.
Previous wording
During the three months ended March 31, 2026, a transaction within the company's United Kingdom business process outsourcing consolidated joint venture generated approximately $3 million of gross margin benefit, resulting in a positive impact on gross profit margin and Ex-L&S gross profit margin of 50 basis points and 70 basis points, respectively. This transaction is expected to generate approximately $12 million of gross margin benefit for 2026.
Current wording
Additionally, during the three months ended June 30, 2026, gross profit margin and TS&S gross profit margin benefited by 50 and 60 basis points, respectively, from a first quarter transaction within the company’s United Kingdom business process outsourcing consolidated joint venture. This transaction is expected to generate gross margin benefit of approximately $3 million quarterly and $12 million for the full 2026 year.
Previous wording
Research and development expense for the three months ended March 31, 2026 and 2025 was $4.8 million and $5.6 million, respectively.
Current wording
Research and development expense for the three months ended June 30, 2026 and 2025 was $5.8 million and $6.1 million, respectively.
Previous wording
Interest expense for the three months ended March 31, 2026 and 2025 was $18.5 million and $8.2 million, respectively. The increase was primarily due to increased long-term debt balance and higher interest rate following the issuance of $700.0 million aggregate principal amount of 10.625% Senior Secured Notes due 2031 (the 2031 Notes) in June 2025.
Current wording
Interest expense for the three months ended June 30, 2026 and 2025 was $18.3 million and $8.2 million, respectively. The increase was primarily due to increased long-term debt balance and higher interest rate following the issuance of $700.0 million aggregate principal amount of 10.625% Senior Secured Notes due 2031 (the 2031 Notes) in June 2025.
Previous wording
Other (expense), net was expense of $20.8 million for the three months ended March 31, 2026 compared with expense of $16.9 million for the three months ended March 31, 2025. See Note 6 of the Notes to Consolidated Financial Statements for details of other (expense), net.
Current wording
Other (expense), net was expense of $28.6 million for the three months ended June 30, 2026, compared with expense of $22.1 million for the three months ended June 30, 2025. The increase in other (expense), net was primarily driven by higher pension and postretirement expense. See Note 6 of the Notes to Consolidated Financial Statements for details of other (expense), net.
Previous wording
The net loss attributable to Unisys Corporation for the three months ended March 31, 2026 was $35.8 million, or $0.50 per diluted share, compared with a net loss of $29.5 million, or $0.42 per diluted share, for the three months ended March 31, 2025.
Current wording
Net loss attributable to Unisys Corporation for the three months ended June 30, 2026 was $95.3 million, or $1.31 per diluted share, compared with a net loss of $20.1 million, or $0.28 per diluted share, for the three months ended June 30, 2025. The net loss for the three months ended June 30, 2026 included a goodwill impairment charge of $47.2 million related to the DWS reportable segment.
Previous wording
Revenue for the three months ended March 31, 2026 was $437.6 million compared with $432.1 million for the three months ended March 31, 2025, an increase of 1.3% from the prior-year period. Foreign currency fluctuations had a 6 percentage-point positive impact on revenue in the current period compared with the prior-year period, which was partially offset by the timing of software license renewals.
Current wording
Revenue for the six months ended June 30, 2026 was $911.1 million compared with $915.4 million for the six months ended June 30, 2025, a decrease of 0.5% from the prior-year period. Foreign currency fluctuations had a 4 percentage-point positive impact on revenue in the current period compared with the prior-year period.
Previous wording
Gross profit and gross profit margin were $112.5 million and 25.7% in the three months ended March 31, 2026, respectively, compared with $107.5 million and 24.9% for the three months ended March 31, 2025, respectively.
Current wording
Gross profit and gross profit margin were $229.8 million and 25.2% in the six months ended June 30, 2026, respectively, compared with $237.5 million and 25.9% in the six months ended June 30, 2025, respectively.
Previous wording
Ex-L&S gross profit and gross profit margin for the three months ended March 31, 2026 were $72.7 million and 19.5%, respectively, compared with $64.2 million and 17.8% for the three months ended March 31, 2025, respectively. The increases in Ex-L&S gross profit and gross profit margin were primarily driven by delivery improvement and labor cost savings initiatives in the CA&I segment.
Current wording
TS&S gross profit and gross profit margin for the six months ended June 30, 2026 were $150.5 million and 19.4%, respectively, compared with $133.9 million and 17.7% for the six months ended June 30, 2025, respectively. The increases were primarily driven by delivery improvement and labor cost savings initiatives.
Previous wording
Selling, general and administrative expense in the three months ended March 31, 2026 was $91.5 million (20.9% of revenue) compared with $96.8 million (22.4% of revenue) for the three months ended March 31, 2025. The decrease was primarily attributable to a reduction in compensation expense of $6.2 million, partially offset by higher cost reduction charges of $1.7 million.
Current wording
Selling, general and administrative expense in the six months ended June 30, 2026 was $187.2 million (20.5% of revenue) compared with $190.4 million (20.8% of revenue) in the prior-year period. The decrease was primarily driven by a reduction in compensation expense of $8.0 million, partially offset by higher cost reduction charges of $5.3 million.
Previous wording
The loss before income taxes for the three months ended March 31, 2026 was $23.1 million, compared with a loss of $20.0 million for the three months ended March 31, 2025.
Current wording
The loss before income taxes for the six months ended June 30, 2026 was $102.9 million compared with a loss of $20.0 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, the loss before income taxes included a goodwill impairment charge of $47.2 million.
Previous wording
The provision for income taxes was $13.7 million for the three months ended March 31, 2026 compared with a provision of $10.6 million for the three months ended March 31, 2025. The change in the tax provision was primarily driven by the geographic distribution of income. The effective tax rate for the three months ended March 31, 2026 and 2025 was (59.3)% and (53.0)%, respectively, primarily driven by U.S. operating losses with no tax benefit as the deferred tax assets are subject to a full valuation allowance, non-creditable withholding taxes in the U.S., and jurisdictions with no valuation allowance that are subject to tax.
Current wording
The provision for income taxes was $29.5 million for the six months ended June 30, 2026, compared with a provision of $30.6 million for the six months ended June 30, 2025. The change in the tax provision was driven by the geographic distribution of income. The effective tax rate for the six months ended June 30, 2026 and 2025 was (28.7)% and (153.0)%, respectively, primarily driven by U.S. operating losses with no tax benefit as the deferred tax assets are subject to a full valuation allowance, non-creditable withholding taxes in the U.S., and jurisdictions with no valuation allowance that are subject to tax.
Previous wording
The following table represents Ex-L&S and L&S financial measures:
Current wording
The following table represents ClearPath and TS&S financial measures:
Previous wording
CA&I revenue was $182.0 million for the three months ended March 31, 2026 and $176.6 million for the three months ended March 31, 2025, an increase of 3.1%. Foreign currency fluctuations had a 5 percentage-point positive impact on CA&I revenue in the current period compared with the prior-year period. This positive impact in CA&I revenue was partially offset by reduced volume due to client attrition. Gross profit percent was 21.8% in the current period compared with 19.5% in the prior-year period. The increase in gross profit percent was primarily driven by delivery improvement and labor cost savings initiatives.
Current wording
CA&I revenue was $184.4 million for the three months ended June 30, 2026 and $185.2 million for the three months ended June 30, 2025, a decrease of 0.4%. Foreign currency fluctuations had a 3 percentage-point positive impact on CA&I revenue in the current period compared with the prior-year period. Gross profit percent was 25.0% in the current period compared with 20.8% in the prior-year period. The increase in gross profit percent was primarily driven by delivery improvement and labor cost savings initiatives.
Previous wording
ECS revenue was $115.2 million for the three months ended March 31, 2026 and $118.7 million for the three months ended March 31, 2025, a decrease of 2.9%. Foreign currency fluctuations had a 5 percentage-point positive impact on ECS revenue in the current period compared with the prior-year period. Gross profit percent was 46.9% in the current period compared with 47.7% in the prior-year period. The decreases in revenue and gross profit percent were primarily driven by the timing of software license renewals.
Current wording
ECS revenue was $126.0 million for the three months ended June 30, 2026 and $140.2 million for the three months ended June 30, 2025, a decrease of 10.1%. Foreign currency fluctuations had a 3 percentage-point positive impact on ECS revenue in the current period compared with the prior-year period. Gross profit percent was 44.8% in the current period compared with 53.5% in the prior-year period. The decreases in revenue and gross profit percent were primarily driven by the timing of ClearPath license renewals.
Previous wording
Total Contract Value (TCV) represents the initial estimated revenue related to contracts signed in the period without regard for early termination or revenue recognition rules. Changes to contracts and scope are treated as TCV only to the extent of the incremental new value. New Business TCV represents TCV attributable to expansion and new scope for existing clients and new logo contracts. L&S TCV is driven by software license renewals, and as such, changes in timing or terms of renewals can lead to fluctuations from period to period. Measuring TCV involves the use of estimates and judgments and the extent and timing of conversion of TCV to revenue may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of contract signing, and contract modifications, including, without limitation, contract nullification and termination, over the lifetime of a contract.
Current wording
Total Contract Value (TCV) represents the initial estimated revenue related to contracts signed in the period without regard for early termination or revenue recognition rules. Changes to contracts and scope are treated as TCV only to the extent of the incremental new value. New Business TCV represents TCV attributable to expansion and new scope for existing clients and new logo contracts. ClearPath TCV is driven by software license renewals, and as such, changes in timing or terms of renewals can lead to fluctuations from period to period. Measuring TCV involves the use of estimates and judgments and the extent and timing of conversion of TCV to revenue may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of contract signing, and contract modifications, including, without limitation, contract nullification and termination, over the lifetime of a contract.
Previous wording
Backlog was $2.96 billion as of March 31, 2026 compared to $2.89 billion as of March 31, 2025.
Current wording
Backlog was $2.82 billion as of June 30, 2026 compared to $2.92 billion as of June 30, 2025.
Previous wording
Cash and cash equivalents at March 31, 2026 were $380.2 million compared to $413.9 million at December 31, 2025. The decrease in cash and cash equivalents is primarily due to the timing of cash interest payment associated with the 2031 Notes.
Current wording
Cash and cash equivalents at June 30, 2026 were $324.3 million compared to $413.9 million at December 31, 2025. The decrease in cash and cash equivalents is primarily due to the timing of cash interest payments associated with the 2031 Notes and pension and postretirement cash contributions.
Previous wording
As of March 31, 2026, $266.7 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. The company may not be able to readily transfer approximately one-quarter of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations. At March 31, 2026, the deferred tax liability on undistributed earnings was $31.3 million. Transfers of international cash and cash equivalents to the U.S. will require the company to pay withholding or other taxes on a portion of the amount transferred. At March 31, 2026, the company maintained cash balances in various operating accounts in excess of federally insured limits. The company monitors this risk by evaluating the creditworthiness of the financial institutions.
Current wording
As of June 30, 2026, $197.6 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. The company may not be able to readily transfer approximately one-third of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations. At June 30, 2026, the deferred tax liability on undistributed earnings was $31.5 million. Transfers of international cash and cash equivalents to the U.S. will require the company to pay withholding or other taxes on a portion of the amount transferred. At June 30, 2026, the company maintained cash balances in various operating accounts in excess of federally insured limits. The company monitors this risk by evaluating the creditworthiness of the financial institutions.
Previous wording
During the three months ended March 31, 2026, cash used for investing activities was $21.2 million compared with cash used for investing activities of $20.3 million during the three months ended March 31, 2025. In the current period, the investment in marketable software was $10.4 million compared with $11.2 million in the prior-year period and capital additions of properties and other assets were $10.7 million compared with $8.9 million in the prior-year period.
Current wording
During the six months ended June 30, 2026, cash used for investing activities was $44.2 million compared with cash used for investing activities of $10.0 million during the six months ended June 30, 2025. In the current period, the investment in marketable software was $21.1 million compared with $23.6 million in the prior-year period and capital additions of properties and other assets were $22.7 million compared with $16.8 million in the prior-year period. During the six months ended June 30, 2025, net proceeds of foreign exchange forward contracts were $30.5 million. Proceeds from foreign exchange forward contracts and purchases of foreign exchange forward contracts represent derivative financial instruments used to reduce the company’s currency exposure to market risks from changes in foreign currency exchange rates. During the third quarter of 2025, the company ceased its use of foreign currency forward contracts.
Previous wording
During the three months ended March 31, 2026, cash used for financing activities was $6.0 million compared with cash used for financing activities of $4.0 million during the three months ended March 31, 2025.
Current wording
During the six months ended June 30, 2026, cash used for financing activities was $14.6 million compared with cash provided by financing activities of $190.3 million during the six months ended June 30, 2025. During the six months ended June 30, 2025, cash provided by financing activities included the net proceeds received from the issuance of the 2031 Notes, partially offset by the repurchase of the 2027 Notes.
Previous wording
At March 31, 2026, total debt was $737.5 million compared to $741.7 million at December 31, 2025. During the three months ended March 31, 2026, the company repurchased $1.6 million of the 2031 Notes from the open market for $1.4 million.
Current wording
At June 30, 2026, total debt was $733.5 million compared to $741.7 million at December 31, 2025. During the six months ended June 30, 2026, the company repurchased $1.6 million of the 2031 Notes from the open market for $1.4 million.
Previous wording
Availability under the Amended and Restated ABL Credit Facility is subject to a borrowing base calculated by reference to the company’s receivables. At March 31, 2026, the company had no borrowings and $13.5 million of letters of credit outstanding. Availability under the Amended and Restated ABL Credit Facility was $79.1 million, net of letters of credit issued. Any borrowings under the Amended and Restated ABL Credit Facility will be subject to variable interest rates.
Current wording
Availability under the Amended and Restated ABL Credit Facility is subject to a borrowing base calculated by reference to the company’s receivables. At June 30, 2026, the company had no borrowings and $6.1 million of letters of credit outstanding. Availability under the Amended and Restated ABL Credit Facility was $99.7 million, net of letters of credit issued. Any borrowings under the Amended and Restated ABL Credit Facility will be subject to variable interest rates.
Previous wording
Based on current legislation, global regulations, recent interest rates and expected returns, for the remainder of 2026, the company expects to make cash contributions of approximately $69 million primarily to its U.S. defined benefit pension plans. This will result in total expected cash contributions for 2026 of approximately $97 million to the company’s global defined benefit pension plans, including approximately $47 million to the company’s U.S. qualified defined benefit pension plans and approximately $50 million primarily to the company’s international defined benefit pension plans. Additionally, the company estimates future total cash contributions to its global defined benefit pension plans of approximately $105 million in 2027.
Current wording
For the six months ended June 30, 2026, the company made cash contributions totaling $57.4 million to its global defined benefit pension plans. For the remainder of 2026, the company expects to make cash contributions of approximately $40 million, resulting in total expected 2026 cash contributions of approximately $97 million to the company’s global defined benefit pension plans. These contributions are expected to include approximately $47 million to the company’s U.S. qualified defined benefit pension plans and approximately $50 million, primarily to the company’s international defined benefit pension plans. Based on current funding requirements and assumptions, the company estimates future total cash contributions of approximately $104 million in 2027 to its global defined benefit pension plans. Actual future contributions may differ based on changes in regulatory requirements, interest rates, asset performance and other factors.
Previous wording
For the three months ended March 31, 2025, the company made cash contributions of $9.2 million primarily to its international defined benefit pension plans.
Current wording
For the six months ended June 30, 2025, the company made cash contributions of $287.2 million, including a discretionary contribution of $250 million to its U.S. defined benefit pension plans.
Previous wording
There have been no significant changes to the company’s critical accounting policies and estimates as reported in its Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
There have been no significant changes to the company’s critical accounting policies and estimates as reported in its Annual Report on Form 10-K for the year ended December 31, 2025, except as follows.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Selling, general and administrative expense in the three months ended June 30, 2026 was $95.7 million (20.2% of revenue) compared with $93.6 million (19.4% of revenue) for the three months ended June 30, 2025. The increase was primarily attributable to higher cost reduction charges.
Current report — wording carried from elsewhere
The provision for income taxes was $15.8 million for the three months ended June 30, 2026, compared with a provision of $20.0 million for the three months ended June 30, 2025. The change in the tax provision was primarily driven by the geographic distribution of income. The effective tax rate for the three months ended June 30, 2026 was (19.8)% primarily driven by U.S. operating losses with no tax benefit as the deferred tax assets are subject to a full valuation allowance, non-creditable withholding taxes in the U.S., and jurisdictions with no valuation allowance that are subject to tax. The effective tax rate for the three months ended June 30, 2025 is not a meaningful measure due to the lack of pre-tax income or loss.
Current report — wording carried from elsewhere
The charges (credits) were recorded in the following statement of income (loss) classifications:
Current report — wording carried from elsewhere
Interest expense for the six months ended June 30, 2026 was $36.8 million compared with $16.4 million for the six months ended June 30, 2025. The increase was primarily due to increased long-term debt balance and higher interest rate following the issuance of $700.0 million aggregate principal amount of the 2031 Notes in June 2025.
Current report — wording carried from elsewhere
A summary of the company’s operations by segment is presented below:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
For the three months ended March 31, 2026, the company made cash contributions totaling $28.2 million, primarily to its international defined benefit pension plans.