Tietoevry's Interim Report 3/2023: Mixed performance in a softer market

Tietoevry Corporation INTERIM REPORT  26 October 2023, 8.00 a.m. EEST 

•         Growth 2% – solid performance in software businesses, weaker demand in Tietoevry Create and Tech Services 

•         Profitability of 13% despite softer market and continued high inflation – improved profitability in Tietoevry Industry and Tech Services

•         MentorMate acquisition closed in the third quarter – business performance and integration progressing as planned

•         Strategic reviews of Tietoevry Banking and Tech Services on track with earlier announced schedules

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

Full-year outlook for 2023

The company updated its full-year outlook on 19 September:

Tietoevry expects its organic1) growth to be approximately 4% (revenue in 2022: EUR 2 928.1 million).

The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.6–13.0% (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:

“In the third quarter, we had mixed performance reflecting weaker market demand. Organic growth of 2% was driven by our software businesses, especially Tietoevry Banking with revenue up by 11%. On the other hand, Tietoevry Create and Tech Services were impacted by macroeconomic uncertainty, which has resulted in weaker demand. Furthermore, Tietoevry Create is impacted by the prolonged war, materializing as a decline in our Ukrainian business.

Our profitability was healthy at 13.0% despite the changes in the market environment and continued high inflation. I am pleased to see the improvement in Tietoevry Tech Services’ profitability, resulting from the solid execution of the efficiency measures initiated before the summer. Also, Tietoevry Industry improved its performance as planned and Tietoevry Care continued to post strong profitability in the third quarter. Our third-quarter order intake reflects seasonality and the changed market sentiment.

We continue to make progress with our strategy execution with a focus on improving the competitiveness and performance of our specialized businesses and to reposition Tietoevry as a leading software and digital engineering player globally. The strategic reviews of Tietoevry Banking and Tech Services and the acquisition of MentorMate play an important role in the strategy execution. In Tietoevry Banking, we continue to make good progress in building the management team, finalizing strategy and establishing operations as a fully independent company.  Conclusions from the Tietoevry Banking strategic review are expected during early 2024, as announced in July. In Tietoevry Tech Services, operational simplification and performance uplift is ongoing, and the overall timeline is in line with the original plan.

The acquisition of MentorMate, a US-based digital engineering company, advances Tietoevry Create’s strategic ambition to become a leading digital engineering player globally. The acquisition significantly strengthens Tietoevry Create’s North American customer base and digital engineering capabilities across design, data, cloud and AI. With business based on the latest technologies, large customers and long engagements, MentorMate is performing as planned, despite softer market conditions.

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.

We continue to believe in the foundation new technologies such as cloud, data and artificial intelligence will bring to our customers – also enabling productivity improvements in our operations. With this evolution, we actively drive our strategic agenda and renewal towards scalable software and digital engineering businesses. In light of the uncertainties in the current macroeconomic and geopolitical environment, we continue to focus on operational and financial resilience across the company.”

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 Thursday 26 October 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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