Tieto Corporation · OMXHEX:TIETO
Tieto — TietoEVRY — Q3 2021 Earnings Presentation
28 slides from Tieto's earnings presentation, 2021
Slide 1: Q3 2021 Solid profitability – strong performance in software businesses
Q3 2021 Solid profitability – strong performance in software businesses Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Q3 in brief
2 Q3 in brief Solid profitability – strong performance in software businesses Adjusted Strong growth and Over 1 600 new New strategy operating margin profitability in recruitments announced – 14.5% – organic software demonstrating specialized growth 1% businesses – strong employer businesses driving
Slide 3: Market dynamics
3 Market dynamics Customers’ Talent market Hybrid working New strategy well investments active, while model in effect – received with clarity shifting into stabilizing – continued care in direction – strong cloud, data and accelerated new and attention on value propositions modernization hirings glo
Slide 4: Customer wins
4 Customer wins Telia and TietoEVRY continues as a strategic Digital transformation and development of cloud- IT partner first strategy OP Financial Group and TietoEVRY sign Renewal and modernization of application multi-year agreement development, and maintenance collaboration Aibel chooses TietoEV
Slide 5: TietoEVRY Q3'21
5 TietoEVRY Q3’21 Business highlights Organic growth* 1% Revenue EUR 648 million, organic growth* 1% • Reported growth 1%, currency impact EUR 11 million Adj. EBITA** 800 14.5% (up 0.5%) Adjusted EBITA** EUR 94.0 (90.2) million, 14.5% (14.0) 600 Strong organic growth in Industry Software, Financial
Slide 6: Digital Consulting
6 Digital Consulting Business highlights Organic growth* -1% Revenue EUR 144 million, organic growth* -1% Adj. EBITA** Adjusted EBITA** EUR 18.7 (21.1) million, 13.0% (14.7) 200 13.0% (down 1.7%) Growth continues to accelerate in Cloud, Data & Analytics 150 Traditional application services continue
Slide 7: Cloud & Infra
7 Cloud & Infra Business highlights Organic growth* -10% Revenue EUR 201 million, organic growth* -10% 300 Adj. EBITA** Adjusted EBITA** EUR 18.5 (24.0) million, 9.2% (10.9) 9.2% (down 1.7%) 250 Revenue decline impacted by: 200 • Pre-merger lost customer appr. 6% • Reduced hardware sales due to glob
Slide 8: Industry Software
8 Industry Software Business highlights Organic growth* Revenue EUR 116 million, organic growth* 10% 10% Adjusted EBITA** EUR 32.2 (25.0) million, 27.8% (21.7) Adj. EBITA** 150 27.8% (up 6.1%) Strong growth across the businesses, including Health & Care 100 Profit development driven by growth and co
Slide 9: Financial Services Solutions
9 Financial Services Solutions Business highlights Organic growth* 7% Revenue EUR 111 million, organic growth* 7% Adj. EBITA** Adjusted EBITA** EUR 18.1 (15.4) million, 16.3% (15.2) 16.3% (up 1.1%) Continued growth driven by strong performance in core banking, credit and cards businesses 100 Profit
Slide 10: Product Development Services
10 Product Development Services Business highlights Organic growth* 7% Revenue EUR 36 million, organic growth* 7% 50 Adj. EBITA** Adjusted EBITA** EUR 4.1 (4.1) million, 11.3% (12.3) 11.3% (down 1%) 40 Growth driven by Mobile Networks and Automotive industries New customers in Electronics and strong
Slide 11: International Operations – strong capabilities in cloud and data
11 International Operations – strong capabilities in cloud and data Capturing demand for transformation and future digital services Q3 revenue Organic growth in Q3 EUR 39 million 22% • Enhancement of digital customer and citizen experiences • Digitalisation of business processes e.g., supply chain a
Slide 12: Growth dynamics 2021
12 Growth dynamics 2021 H1 2021 H2 2021 Industry Software Growth agenda materializing in majority of Financial Services Solutions businesses Product Development Services Group growth of 1% in Q3’21 Digital Consulting Digital Consulting outlook supported by higher recruitments in Q3 Cloud & Infra In
Slide 13: CFO report
tieto fiey —— | CFO report
Slide 14: CFO highlights
14 CFO highlights Q3 financials – healthy profitability Other Q3 items development • Organic growth 1% – adjusted operating margin • Synergy impact EUR 11 million (net) in Q321 14.5% • One-time items according to plan • Reported operating profit at EUR 72.2 (28.6) million, • FX revenue tailwind EUR
Slide 15: Healthy cash flow development and leverage level
15 Healthy cash flow development and leverage level MEUR 125 108 116 86 95 92 76 EUR 92 (108) million cash flow from 56 57 operations 31 Increase of EUR 11.6 million in net working capital due to seasonality 11 Free cash flow of EUR 57 million Q320 Q420 Q121 Q221 Q321 Free cash flow* Operating cash
Slide 16: Synergy realization on track
16 Synergy realization on track Q3’21 operating profit includes EUR 11 million EUR 100 million merger efficiencies achieved within (net) of synergies three years Run-rate of EUR 90 million executed by end of 120 Q3’21 5 100 100 15 Run-rate of EUR 95 million expected by end of 80 80 2021 60 Accumulat
Slide 17: One-time items according to plan
17 One-time items according to plan Q4 2021 FY2021 One-time items (MEUR) H1 2021 Q3 2021 estimate estimate Divestment (net gain) 71 - 26 97 • Divestment of three software Integration cost -24-26 businesses estimated to impact -9 -5 -10-12 one-time items by positive EUR (prior estimate) -(26-30) ~26
Slide 18: Other finance related topics
18 Other finance related topics Industry software divestment Capex On 13 October, TietoEVRY signed an agreement to Capex in % of revenue divest three small software businesses in construction, 2.7% 2.5% 3.1% 2.5% 2. 4% retail, and transport markets 18 18 22 18 • Alystra, Jydacom and TRYGG/2000 16 To
Slide 19: Performance drivers – Q4'21
19 Performance drivers – Q4’21 • Cloud & Infra pre-merger lost customer impact on the Group’s growth ~1% Revenue drivers • Supply chain challenges for hardware sales expected to continue in Q4, estimated negative ~1% impact on Group’s growth • Synergy impact appr. EUR 5 million (net) Profit drivers
Slide 20: New strategy announced – driving customer value through specialization
New strategy announced – driving customer value through specialization
Slide 21: Time to step ahead and reshape the future!
Solid foundation to rethink our future Attractive market with high opportunities Solid integration progress Time to step ahead and reshape the Competitive services, software and capabilities future! Strong customer base and market position
Slide 22: Technology industry reshaping with cloud as the foundation
Technology industry reshaping with cloud as the foundation T R A D I T I O N AL M O D ER N I Z E CLOUD NATIVE Data & PROFI T ABI LI T Y Analytics SaaS 20 Enterprise % software Cloud 15 Cloud capacity % Integrated Consulting & (apps + Infra) Development & automated 10 managed Managed % services Cloud
Slide 23: TietoEVRY reshaping businesses to drive customer value and growth through specialization
TietoEVRY reshaping businesses to drive customer value and growth through specialization S T RAT E G I C CHOI CE S TO DRIVE … Clear business choices to capture market 1 growth and expansion opportunity Specialist customer engagement End-to-end businesses with full accountability 2 and broader option
Slide 24: Investment priorities geared towards sustainable high growth businesses
Investment priorities geared towards sustainable high growth businesses Invest to expand Partner to scale Focus for value • Invest to accelerate products, services • Invest in capabilities to drive scale and • Optimize investments for selected and capabilities automated managed services businesses •
Slide 25: Financial targets maintained – new strategy support potential for enhanced performance
Financial targets maintained – new strategy support potential for enhanced performance Financial targets as announced at CMD ACHI E V E D One-time items Accelerating growth EBITA adjusted Increased dividends Net debt / EBITDA ~1% of revenues by to 5% by 2023 15% by 2023 annually <2 by end of 2022
Slide 26: Summary: Renewed strategy to drive focus, specialization and expansion
Summary: Renewed strategy to drive focus, specialization and expansion 1 Hyperconnected data enabled by cloud is redefining customer priorities and reshaping technology industry 2 Growth and expansion opportunity for TietoEVRY by specializing in cloud, data, engineering and software 3 Reshaping Tiet
Slide 27: Summary of Q3 2021
27 Summary of Q3 2021 Continued solid performance led by Strong global New strategy announced software businesses – Market opportunity, recruitment business focus – objectives – driving growth and cloud, data andand drivers of competitiveness software record high number of expansion through driving
Slide 28: tieto fizy
tieto fizy