Unisys CEO: Security Sales Set To Soar As Cybsecurity Software Is Taken Global

Unisys plans to double down on security-oriented consulting, infrastructure and managed services, and to extend its Stealth cybersecurity offering to vertical practices around the planet.

"What you'll find, which you didn't see in previous quarters, is a geographic breadth and depth," said Unisys President and CEO Peter Altabef during Thursday’s quarterly earnings call. "What started as a North American base is going global."

The Blue Bell, Pa.-based company, No. 19 on the CRN 2015 Solution Provider 500, turned the corner on profitability, delivering $5.4 million of non-GAAP net income, or 11 cents per share, for the quarter ended March 31, compared with a $15.8 million non-GAAP net loss at this time last year. That beat Seeking Alpha profitability expectations of 6 cents per share.

[Related: Unisys CEO: Challenges Have Been Somewhat 'Self-Inflicted']

Unisys saw sales for the quarter ended March 31 decline 3 percent, to $667 million, after factoring out changes in foreign currency exchange rates, beating Seeking Alpha projections of $655.4 million.

"I don't believe the last few quarters have been particularly strong for us, and we need to do better," said Altabef, adding that he expects Unisys' sales pipeline to improve during the remainder of 2016.

Wall Street responded very favorably to the numbers, as Unisys' stock climbed 7.1 percent in after-hours trading Thursday, to $8.20 per share. Earnings were released after the market closed.

Stealth -- which cloaks data communication end points to make them undetectable to hackers -- was developed around 2007 and now includes mobile, cloud, identity and analytics offerings. Altabef said the company’s direct sales force has recently found success selling Stealth to banking, energy, government and retail customers not only in North America, but also in Asia-Pacific and Latin America.

"We're seeing improved market penetration with Stealth," Altabef said.

Unisys also makes Stealth available to vendors and other resellers, and Altabef expects recent partnerships with Microsoft and Mitel to drive Stealth consumption globally. A new Stealth Cloud integration with Microsoft will automate the shifting of secure workloads from the data center to Microsoft Azure, while Mitel intends to use Stealth to protect cloud access and mobile communications.

Beyond Stealth, Altabef said, Unisys is looking to highlight and bolster its security capabilities around its consulting and managed services offerings in both cloud and application spaces, as well as its identity management work in the business process outsourcing (BPO) space.

For instance, Altabef said, Unisys provided security consulting services for Super Bowl 50 in February around firewall, hosted cloud and infrastructure. Moreover, Altabef said, there is not a single known instance of data being forcibly extracted from Unisys' ClearPath Forward enterprise computing platform, making it unique among operating systems.

"Our goal is to distinguish Unisys through a focused effort to build leading security protocols into all of our solutions companywide," Altabef said. "In reality, this company has been in the security business for decades."

Services revenue fell 2 percent on a constant currency basis, to $595.1 million, as declines in BPO and cloud and infrastructure services more than offset gains in application services, CFO Janet Haugen said during the earnings call.

Unisys' cloud and infrastructure services declined 7 percent on a constant currency basis because of lower contract volumes in the public sector verticals, Haugen said, while revenue from the company’s BPO business -- which is all based outside North America -- fell because of lower sales from a joint venture.

But application services sales climbed 10 percent on a constant currency basis, thanks to additional justice, law enforcement and border security work, Haugen said.

Unisys' technology segment recorded a double-digit sales drop for the second consecutive quarter, Haugen said, with revenue declining 10 percent on a constant currency basis to $71.7 million because of reduced software licensing renewals.

From a geographic standpoint, Unisys' U.S. and Canadian sales fell 3 percent on a constant currency basis because of technology segment struggles, Haugen said, while revenue from Europe, the Middle East and Africa (EMEA) sunk 8 percent on a constant currency basis because of soft BPO sales.

On a more positive note, Asia-Pacific sales grew 9 percent on a constant currency basis, thanks to contract wins and a strong BPO performance, Haugen said. And Latin America delivered 8 percent constant currency sales growth off broad-based strength in the services and technology segments.