Tieto Corporation · OMXHEX:TIETO
Tieto — Tietoevry — Q2 2023 Earnings Presentation
23 slides from Tieto's earnings presentation, 2023
Slide 1: Q2 2023 Solid underlying performance – growth 3%, profitability 10.5%
Q2 2023 Solid underlying performance – growth 3%, profitability 10.5% Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Solid underlying performance – growth 3%, profitability 10.5%
Solid underlying performance – growth 3%, profitability 10.5% Growth driven by Performance Ongoing efficiency Tietoevry Banking Tietoevry acquires Tietoevry Banking, impacted by measures and strategic review US-based digital Care and Create continued high strong order conclusions engineering inflati
Slide 3: Improved H1 performance in a mixed market environment
Improved H1 performance in a mixed market environment Continued healthy Temporarily softer Improved growth of Continued attention on demand for cloud, data international digital >5% and profitability of efficiency and price and security services – engineering market 11.4% in H1 - strong increases in
Slide 4: Software and technology services industry extending its value chain with AI and GenAI
Software and technology services industry extending its value chain with AI and GenAI Generative AI @Tietoevry GenAI enhanced growth through new products & services, delivery efficiency and SG&A optimization Customer priorities Company-level program bringing together Efficiency Agility Competitivene
Slide 5: Recent customer wins across specialized businesses
Recent customer wins across specialized businesses Tietoevry Create delivers Ostrobothnia wellbeing Tietoevry Tech Services Tietoevry Industry delivers Offshore Norge material services county in Finland delivers Oslo municipality in Göteborg Energi modern management software chose Tietoevry Care’s N
Slide 6: Enhancing diversity and purposeful technology
Enhancing diversity and purposeful technology SHE Conference, Oslo Helsinki Pride SuomiAreena, Finland Tietoevry rated by Women in Tech, Oslo Pride Almedalen, Sweden EcoVadis in the top 1% Stockholm Stockholm Pride globally in business sustainability performance 6
Slide 7: Tietoevry accelerates specialization strategy: Acquires MentorMate
Tietoevry accelerates specialization strategy: Acquires MentorMate, a US based digital engineering company with global capabilities MentorMate profile Headquartered in Minneapolis, USA and part of • Advances Tietoevry Create ambition to Taylor Corporation become a leading digital engineering player
Slide 8: Tietoevry Banking and Tech Services strategic reviews
Tietoevry Banking strategic review conclusions updated to early 2024, Tietoevry Tech Services strategic review progressing as planned TIETOEVRY BANKING STRATEGIC REVIEW TIETOEVRY TECH SERVICES STRATEGIC REVIEW Strategic review Strategic review Go-live with announced 22 Jul’22 announced 30 Nov’22 int
Slide 9: Business highlights
Business highlights ee
Slide 10: Tietoevry Group
Tietoevry Group Order backlog up by 6%1 Organic growth1 Adj. EBITA2 3% 10.5% (5%) (10.7%) €73m (79) 739 690 768 744 695 Cash flow from operations Order backlog 10.7% Q2/22 14.2% Q3/22 15.4% Q4/22 12.3% Q1/23 10.5% Q2/23 €11m +6%1 (€8m) €3 350m (3 400) Revenue, €m Backlog invoiced in H2 +8%1 Adj. EBI
Slide 11: Tietoevry Create
Tietoevry Create Solid growth in a more challenging market Organic growth Highlights 5% • Growth driven by Austria and Norway, temporarily soft international market (12%) • Healthy demand in data and AI further fuelled by customer interest in the potential of 210 204 220 223 205 Generative AI. • Few
Slide 12: Tietoevry Banking
Tietoevry Banking Continued strong growth Organic growth Highlights 11% • Solid growth driven by Wealth, Financial Crime Prevention, Credit and Banking as a Service • Profitability impacted by increased 143 136 156 142 140 technology costs and increased costs resulting from legal separation Adj. EBI
Slide 13: Tietoevry Care
Tietoevry Care Continued strong growth and profitability Organic growth Highlights 7% • Strong growth driven by Healthcare and Welfare (-4%) • Strategic win of the wellbeing services county Ostrobothnia in Finland 58 54 63 63 59 • Continued strong profitability • Tietoevry Care and Silo AI developin
Slide 14: Tietoevry Industry
Tietoevry Industry Healthy underlying performance Organic growth Highlights 4% • Solid growth in Pulp & Paper and Data Platforms (3%) • Growth and profitability impacted by timing of customer contracts shifting between quarters 68 64 70 69 64 • Healthy order backlog for H2’23 Adj. EBITA 14.7% 17.1%
Slide 15: Tietoevry Tech Services
Tietoevry Tech Services Integration in focus – efficiency measures incl. operational simplification contributing to H2 Organic growth Highlights -5% • Business mix evolving towards scalable data, application and cloud services while volume reduction in traditional infrastructure services and low-mar
Slide 16: CFO report
CFO report oe ee
Slide 17: Q2'23 financials – solid underlying performance
Q2’23 financials – solid underlying performance Q2’23 highlights Q2’23 Q2’22 • Growth driven by Tietoevry Create, Banking and Care – overall Revenue and growth growth negatively impacted by fewer working days (-1.4%) Revenue 695 739 and accelerated decline in traditional infrastructure services Repo
Slide 18: Seasonally low Q2 operating cash flow – Net debt / EBITDA 1.6x
Seasonally low Q2 operating cash flow – Net debt / EBITDA 1.6x 127 • €11m (8) cash flow from operations • Seasonal net working capital increase of €41m – 69 mainly driven by liabilities • Free cash flow* of €-23m (-34) 8 40 166 104 11 -23 • Cash generation foundation remains healthy Q2 22 Q3 22 Q4 2
Slide 19: Attrition continues to decrease – salary inflation estimate 5%
Attrition continues to decrease – salary inflation estimate 5% • LTM attrition continues to decrease – down 1 pp. since Q1’23 Attrition 16,3 15,3 14,4 13,5 12,5 % last twelve months • Slight net personnel decrease from Q1’23 to Q2’23 (voluntary) Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 • Impacted by performanc
Slide 20: Performance drivers – Q3'23
Performance drivers – Q3’23 • Continued good momentum Tietoevry Banking - Tietoevry Industry back to healthy growth level • Continued good momentum in Tietoevry Create, however impacted by strong comparable and less working days Growth • Healthcare reform in Finland impacting demand for Tietoevry Ca
Slide 21: Q3 profitability outlook
Q3 profitability outlook Q3’22 Business Profitability outlook adj. EBITA % Tietoevry Create 13.3% Below Q3’22 level Tietoevry Banking 15.6% Below Q3’22 level Tietoevry Care 33.9% Below Q3’22 level Tietoevry Industry 16.8% Above Q3’22 level Tietoevry Tech Services 9.3% At or above Q3’22 level 21
Slide 22: Our way forward
Our way forward oe ee
Slide 23: Way forward – accelerating specialization
Way forward – accelerating specialization Solid H1 performance, Advance Banking and Go to place for tech Generative AI provides ongoing efficiency Tech Services strategic professionals –build on attractive business measures, strong order reviews to drive strong engagement opportunities - we aim back