Tieto Corporation · OMXHEX:TIETO
Tieto — Tietoevry — Q1 2023 Earnings Presentation
24 slides from Tieto's earnings presentation, 2023
Slide 1: Q1 2023: Good start for the year – strong growth and solid profitability
Q1 2023 Good start for the year – strong growth and solid profitability Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Good start for the year – strong growth and solid profitability
Good start for the year – strong growth and solid profitability Growth of Adj. EBITA margin of Strategic reviews of 8% 12.3% Tietoevry Banking and Tietoevry Tech Services driven by Tietoevry – profitability improved progressing as planned Banking, Care and in all businesses Create 2
Slide 3: Healthy technology market impacted by continued high inflation
Healthy technology market impacted by continued high inflation Continued healthy Customer focus on Cost inflation to Full commitment to demand for cloud, resilience, efficiency remain at high levels support safety and data and security and business requiring continued well-being of our services cont
Slide 4: Consistent value creation building on cloud, data and software mega trends
Consistent value creation building on cloud, data and software mega trends Cloud, data and Specialized businesses taking advantage software of cloud, data and software market growth Shareholder value Strategic reviews to accelerate value acceleration creation - Banking and Tech services Specialized
Slide 5: Our commitments to limit global warming below 1.5 degrees
Our commitments to limit global warming below 1.5 degrees 1. Absolute 2. Renewable 3. Intensity target: 4. Supplier reduction target: electricity target: Tietoevry commits to reduce engagement target: Tietoevry commits to Tietoevry commits to scope 3 business travel GHG Tietoevry commits to that 90%
Slide 6: Recent customer wins across specialized businesses
Recent customer wins across specialized businesses Goodyear partners Market expansion with 12 If Insurance extends its Sparebanken Vest with Tietoevry Create counties in Finland partnership with extends agreement for increased efficiency, adopting Tietoevry Care Tietoevry Tech Services with Tietoevr
Slide 7: Business highlights
Business highlights
Slide 8: Tietoevry Group
Tietoevry Group Good start for the year – strong growth and solid profitability Organic growth1 Adj. EBITA2 8% 12.3% (5%) (11.6%) €92m (85) 731 739 690 768 744 Cash flow from operations Order backlog 11.6% Q1/22 10.7% Q2/22 14.2% Q3/22 15.4% Q4/22 12.3% Q1/23 €104m €3 392m (€62m) (€3 468m) Revenue,
Slide 9: Tietoevry Create
Tietoevry Create Solid growth and profitability Organic growth Highlights 9% • High market activity in digital and software engineering services continued – early (15%) signals of delays in customers’ decision making 216 209 203 219 223 • Strong growth in International business >15% and Norway >10%
Slide 10: Tietoevry Banking
Tietoevry Banking Continued strong revenue growth Organic growth Highlights 15% • Strong growth driven by Cards, Wealth, Credit and Financial Crime Prevention (8%) • Profitability supported by growth and 2022 efficiency measures 123 130 123 144 131 • High technology and personnel cost inflation impa
Slide 11: Tietoevry Care
Tietoevry Care Strong growth and profitability Organic growth Highlights 15% • Strong growth – Healthcare up by >20% • Finland’s social and health reform driving Q1 (5%) growth – potentially lower demand in H2 • Continued strong profitability driven by 57 58 54 63 63 scalable software businesses Adj
Slide 12: Tietoevry Industry
Tietoevry Industry Consistent healthy profitability Organic growth Highlights 4% • Strong growth in Case Management >20% and Pulp & Paper >10% (3%) • Large customer contract ending in Data Platform Services had a negative impact of 71 68 64 70 69 2 pp. on growth • Consistent healthy profitability co
Slide 13: Tietoevry Transform
Tietoevry Transform Healthy growth and improved profitability Organic growth Highlights 6% • Strong growth of >10% in both Industry & Forest and Public, decline in Retail & Financial (0%) Services • Profitability improvement driven by growth 121 118 106 126 123 and continued focus on efficiency incl
Slide 14: Tietoevry Connect
Tietoevry Connect Profitability impacted by seasonality Organic growth Highlights 0% • Strong growth of 16% in Cloud Platforms and Security Services (-1%) • Traditional infrastructure services' revenue declined by 6% 224 230 209 216 209 • Profitability supported by 2022 performance improvement progr
Slide 15: Strategic reviews of Banking and Tech Services to accelerate value creation – progressing on schedule
Strategic reviews of Banking and Tech Services to accelerate value creation – progressing on schedule TIETOEVRY BANKING STRATEGIC REVIEW TIETOEVRY TECH SERVICES STRATEGIC REVIEW Strategic review Go-live with Strategic review Strategic review Finalize strategic announced 22 Jul’22 decisions announced
Slide 16: Tietoevry Tech Services driving integration and strengthening its competitiveness
Tietoevry Tech Services driving integration and strengthening its competitiveness Full-stack capabilities for Focus of integration to Tietoevry Tech Services driving enterprise-wide improve competitiveness initiates employee processes transformation; transforming through customer centric – may lead
Slide 17: CFO report
CFO report
Slide 18: Q1'23 financials – strong performance during high inflation era
Q1’23 financials – strong performance during high inflation era Q1’23 highlights Q1’23 Q1’22 Revenue and growth • Strong organic growth driven by Tietoevry Create, Revenue 744 731 Tietoevry Banking and Tietoevry Care Reported growth 2% 3% • Reported growth impacted by FX headwind of Organic growth 8
Slide 19: Strong Q1 operating cash flow – Net debt / EBITDA 1.3x
Strong Q1 operating cash flow – Net debt / EBITDA 1.3x 127 • €104m (62) cash flow from operations • Operating profit (EBIT) increased by €23m 69 • Net working capital decrease of €14m, mainly 25 due to normal seasonality 8 40 166 104 62 • Free cash flow* of €69m (25) Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 -
Slide 20: Attrition continues to decrease – salary inflation remains high
Attrition continues to decrease – salary inflation remains high • LTM attrition continues to decrease – down 0.9 pp. 16,5 16,3 15,3 14,4 13,5 since Q4’22 Attrition % last twelve months • Performance improvement programmes in (voluntary) Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Tietoevry Connect and Tietoevry T
Slide 21: Performance drivers – Q2'23
Performance drivers – Q2’23 Growth • Continued good momentum in Tietoevry Create, Tietoevry Banking and Tietoevry Care • Decline in traditional infrastructure services anticipated to continue, driven by drivers acceleration of cloud transformation • Continued high inflation – demanding agenda to mai
Slide 22: Q2 profitability outlook
Q2 profitability outlook Q2’22 Business Profitability outlook adj. EBITA % Tietoevry Create 12.2% At or above Q2’22 level Tietoevry Banking 10.6% Above Q2’22 level Tietoevry Care 30.1% At or below Q2’22 level Tietoevry Industry 17.1% Below Q2’22 level Tietoevry Transform* 4.5% Above Q2’22 level Tiet
Slide 23: Our way forward
Our way forward
Slide 24: Way forward – specialization at the core of competitiveness
Way forward – specialization at the core of competitiveness Continued Tietoevry Banking Continued emphasis Go to place for tech profitable growth and Tietoevry Tech on efficiency, price professionals –build in software and Services strategic increases and on strong digital engineering reviews for va