Tietoevry's Interim Report 3/2024: Improved profitability – growth impacted by weakening market

Tietoevry Corporation INTERIM REPORT   24 October 2024, 9:00 a.m. (EEST)

• Revenue decrease of 1% – growth impacted by the weakening market
• Resilient profitability of 13.5%
• Strategic review of Tietoevry Tech Services progressing – the company is in an exclusive process with a non-industrial buyer  

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

Full-year outlook for 2024

The company updated its full-year outlook on 16 October:

Tietoevry expects its organic1) growth to be around -2% (revenue in 2023: EUR 2 851.4 million).

The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.3–12.7% (12.6% in 2023).

Previous outlook for 2024:

Tietoevry expects its organic1) growth to be in the range of 0–3% (revenue in 2023: EUR 2 851.4 million).

The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.0–13.0% (12.6% in 2023).

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

4) Company estimate

CEO’s comment

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

“Our third-quarter performance reflects softer IT market sentiment while we were able to improve profitability through active cost base management. Our software businesses Tietoevry Banking, Care and Industry continued to grow, while experienced softening of the market during the quarter. In Tietoevry Create and Tietoevry Tech Services, growth for the quarter was negative. The drive for resilient profitability continued in the third quarter, resulting in an adjusted operating margin of 13.5%, an improvement from the previous year. At the beginning of October, we delivered the second tranche of the total annual dividends of EUR 1.47 per share, representing an annual dividend yield of around 8%.

We continue to operate in a lower demand market and a number of our specialized businesses are experiencing lower than normal volume development. For Tietoevry Create, our global digital engineering business, this is visible in customers’ cost optimization – while investments into AI are at an early stage. For our software businesses, volumes and overall performance have been more resilient, even as customers’ investment level reductions have recently become visible. As an example, the reduced spending in the public sector across the Nordics is impacting several of our businesses.

We anticipate that the IT market will remain soft for the rest of the year and softness to continue into 2025. In parallel with the ongoing efficiency measures, we continue to strengthen the foundation for growth and expansion across our businesses to be prepared for business acceleration once the macro economy recovers. 

In our multi-year strategic transformation, we are making consistent progress in our ambition of repositioning Tietoevry as a leading software and digital engineering company. Strategic review of Tietoevry Tech Services is progressing and the company is in an exclusive process with a non-industrial buyer.

We continue to pursue our position as one of the leading players in the market to deliver the benefits of AI for our customers. We are pleased to see the accelerated activity level in AI and GenAI-centric products and services. Each of our specialized businesses is actively driving innovations and competitiveness in products and services delivered to clients as well as efficiency gains across our own software development, production and internal operations. Solutions such as GenAI-driven automated speech to text conversion in the Lifecare Hospital Information System and AI-enabled Financial Crime Prevention in Banking are tangible and encouraging signals of the value we can create for our customers in this area.

In addition to the value that the implementation of AI brings to people, businesses and societies, this technology development continues to fuel continuous learning and professional growth opportunities for our people. As a company committed to sustainability, we at Tietoevry take highly seriously the ethical aspects embedded into the development and utilization of technology. By the end of the third quarter, all our employees have gone through annual training, including a dedicated chapter on Responsible AI. We remain committed to keeping ourselves at the forefront also with respect to our responsible approach to technology. 

Our hearts and minds remain with our colleagues and people in Ukraine as the devastating situation in the country continues.”
 

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 24 October 2024 at 10.00 a.m. EEST (9.00 a.m. CEST, 8.00 a.m. 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, user ID 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. https://www.tietoevry.com