Tietoevry's Interim Report 2/2023: Solid underlying performance – growth 3%, profitability 10.5%

Tietoevry Corporation HALF-YEAR REPORT 21 July 2023, 8.00 a.m. (EEST)
 

• Growth driven by Tietoevry Banking, Care and Create
• Performance impacted by continued high inflation and fewer working days
• Ongoing efficiency measures and strong order backlog, organically up by 8% for H2'23, supporting full-year performance
• Tietoevry Banking strategic review conclusions updated to early 2024, Tietoevry Tech Services strategic review progressing as planned
• Tietoevry acquires US-based digital engineering company MentorMate (announced on 21 July)

The full report with tables is available at the end of this release.

Full-year outlook for 2023 unchanged

Tietoevry expects its organic1) growth to be 5% to 7% (revenue in 2022: EUR 2 928.1 million).

The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 13.0–13.5% (13.0% in 2022)

1) Adjusted for currency effects, acquisitions and divestments

2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability

3) Profit before interests, taxes and amortization of acquisition-related intangible assets

CEO’s comment

Comment regarding the interim report by Kimmo Alkio, President and CEO:

“I’m pleased with our first-half performance with good growth of over 5% and a year-on-year improvement in profitability. Following six consecutive quarters of strong growth, we had lower growth at 3% in the second quarter while delivering profitability of 10.5%, at the previous year’s level. Healthy growth continued in our software businesses of Tietoevry Banking and Care, and in our digital engineering business, Tietoevry Create. Group-level growth was impacted by declining revenue in Tietoevry Tech Services. Our second-quarter performance was impacted by continued high inflation and fewer working days. We expect the second-half performance to be seasonally strong, supported by our healthy order backlog and the realization of ongoing efficiency measures.

Our competitive specialization-based strategy supports Tietoevry in the current market conditions. Demand for our advanced industry-specific software has remained healthy, the international markets have strong growth potential for our digital engineering business and we are well positioned to drive enterprise-wide transformation for our Nordic clients. In the current era of demand fluctuations in the industry at large, our business mix of software and services provides healthy resilience.

We have taken major steps in the execution in our strategy, including portfolio decisions to advance Tietoevry as a software and digital engineering company. In addition to the ongoing strategic reviews of Tietoevry Banking and Tech Services, we have today announced the acquisition of MentorMate, a US-based digital engineering company with global capabilities. With a strong customer base in the US and more than 1 000 digital engineering talents in Bulgaria, Paraguay and the US, MentorMate accelerates Tietoevry Create’s ambition to become a leading digital engineering player globally.

Strategic reviews of Tietoevry Banking and Tech Services are progressing with high activity level. Our Banking management is finalizing the strategy and establishing operations as a standalone business. Standalone legal structures for the business are in place and conclusions from the strategic review are expected during early 2024, followed by the implementation. Tietoevry Tech Services started to operate as an integrated business at the beginning of the second quarter, and further operational simplification is ongoing. All preparations aiming for a potential sale or listing as a spin-off of Tech Services, as announced earlier are on track.

Generative AI provides attractive opportunities for our businesses with both new growth paths with AI enhanced products and services and productivity improvement in own operations. We work actively with our enterprise customers and Gen AI partners to gain the experience and benefits of this revolutionary technology. Our recent use cases with customers in healthcare, banking, retail and manufacturing demonstrate the potential for rapid innovation and new enhanced forms of human to machine interaction. We have supported our customers through all major technology cycles and disruptions, and with Gen AI we aim to be one of the leading players in the market to realize the value of this highly innovative technology.

Our hearts and minds remain with our colleagues in Ukraine as the devastating situation in the country continues. We are proud of our Ukrainian colleagues and will keep supporting them and their families with all possible measures.

During the first half of the year, we actively continued to enforce diversity as part of our culture with focused activities – we supported the SHE Conference in Norway to inspire more women to enter technology careers and engaged our teams on the values of Pride and related activities. We also participated in the major societal discussion weeks of SuomiAreena in Finland and Almedalen in Sweden to drive dialogues on issues such as the capabilities of data in detecting financial fraud, digital sovereignty, the green shift of industries as well as the benefits of Generative AI in the healthcare sector. We believe that being an active corporate citizen contributes to the best interests of society and our customers, and enhances our attractiveness as one of the best employers in the industry”.

Financial performance by segment

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com

Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com

A teleconference for analysts and media will be held on Friday 21 July 2023 at 10.00 a.m. EEST (09.00 am CET, 08.00 am. UK time). Kimmo Alkio, President and CEO, and Tomi Hyryläinen, CFO, will present the results online in English. The presentation can be followed on Tietoevry's website.

To take part in the questions and answers session after the presentation you will need to dial in by phone. You can access the teleconference by registering on this link. After the registration you will be provided phone numbers and a conference ID to access the conference.

The event is recorded and it will be available on demand later during the day. Tietoevry publishes its financial information in English and Finnish.

Tietoevry Corporation

DISTRIBUTION

Nasdaq Helsinki

Nasdaq Stockholm

Oslo Børs

Principal Media

Tietoevry creates purposeful technology that reinvents the world for good. We are a leading technology company with a strong Nordic heritage and global capabilities. Based on our core values of openness, trust and diversity, we work with our customers to develop digital futures where businesses, societies, and humanity thrive.

Our 24 000 experts globally specialize in cloud, data, and software, serving thousands of enterprise and public-sector customers in more than 90 countries. Tietoevry’s annual turnover is approximately EUR 3 billion and the company’s shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. www.tietoevry.com

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