Tieto Corporation · OMXHEX:TIETO
Tieto — Tietoevry — Q4 2021 Earnings Presentation
29 slides from Tieto's earnings presentation, February 2022
Slide 1: Q4 2021: Solid organic growth of 3% and strong cash flow
Q4 2021 Solid organic growth of 3% and strong cash flow Kimmo Alkio, President and CEO Tomi Hyrylainen, CFO ~ wis tietoeucy
Slide 2: Q4 in brief
Solid organic growth of 3% and strong cash flow Q4 in brief Growth driven by Strong wins during software businesses the quarter — order and over 20% growth backlog up by 5% in Product YoY and 11% QoQ Development Services and International Operations Healthy adjusted operating margin of 13.9% — stron
Slide 3: Q4 key figures
Revenue EBITA Adj.** Operating cash € 2 823m € 368m / 13.0% flow Organic growth* 0% (12.7%) € 368m (-2%) (€ 355m) Order backlog EBIT Net debt / EBITDA € 3 513m / +5% YoY € 382m / 13.5% 1.1x (€3 350m) (5.3%) (2.5x) * Adjusted for currency effects, acquisitions and divestments ** Adjustment items incl
Slide 4: Key highlights
Key highlights 202 Growth agenda materializing — H2 acceleration in software businesses, Product Development Services and International Operations 4; tietoeuy Integration program completed with main targets achieved — successful operational integration and synergy realization High employee attractiv
Slide 5: Significant wins in the quarter
Significant wins in the quarter Consulting Cloud & Infra Software nacti stogsnoims Vs uu see | Lansférsakringar Next-generation IT services id equinor (¥) SJOFARTSVERKET Accelerate Equinor's business optimization and digitalization through cloud and data services Development of modern and secure ERP
Slide 6: Launching sustainability data services for our customers
Launching sustainability data services for our customers * Enabling automated measuring of sustainability performance for our customers Reducing CO2 emissions in own operations and in supply chain * Carbon neutral in own operations by 2025 * Committed to Science Based Targets — limiting the global w
Slide 7: Q4'21 financials
Q4’21 financials
Slide 8: Adj. EBITA %
800 600 742 722 712 712 400 648 200 14.9 11.5% 12.2% 14.5% 13.9% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA %
Slide 9: Adj. EBITA % Revenue
200 150 100 175 173 173 176 144 50 17.3% 15.1% 13.4% 13.0% 14.1% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA % Revenue
Slide 10: Adj. EBITA % Revenue
300 250 200 150 227 216 218 218 100 201 50 8.5% 4.0% 6.0% 9.2% 9.5% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA % Revenue
Slide 11: Adj. EBITA % Revenue
150 100 134 136 139 131 116 50 26.2% 20.1% 23.1% 27.8% 25.8% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA % Revenue
Slide 12: Adj. EBITA % Revenue
100 129 112 119 111 50 109 14.0% 10.9% 13.7% 16.3% 14.4% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA % Revenue
Slide 13: Adj. EBITA % Revenue
50 40 30 44 20 36 37 36 36 10 13.8% 12.0% 10.4% 11.3% 12.0% 0 Q420 Q121 Q221 Q321 Q421 Adj. EBITA % Revenue
Slide 14: Q4 revenue and organic growth
Q4 revenue Organic growth* in Q4 • EUR 43 million 26% • • • • • • • •
Slide 15: Performance acceleration in Cloud & Infra to drive cloud growth
Performance acceleration in Cloud & Infra to drive cloud growth and achieve over 10% profitability Market drivers Tietoevry way forward Measures initiated Declining traditional infrastructure services — multi-cloud driving growth Align cost structure and accelerate multi-cloud growth Cost saving pro
Slide 16: CFO report
CFO report
Slide 17: Q4 financials highlights
GFOIch lights Q4 financials — solid growth and strong cashflow Organic growth 3% - driven by software businesses, Product Development Services and International Operations Adjusted operating margin 13.9% - impacted by continued higher salary inflation and attrition levels Reported operating profit a
Slide 18: Strong cash flow development — net debt / EBITDA 1.1x
Strong cash flow development — net debt / EBITDA 1.1x 165 MEUR 128 16 EUR 169 (125) million cash flow from operations a 169 Decrease of EUR 68.5 million in net working capital mainly Wo B relating to AP increase and seasonal net working capital changes 56 im 57 Divestment cash impact EUR 38 million
Slide 19: Synergy run-rate of EUR 97 million reached
Synergy run-rate of EUR 97 million reached 120 100 EUR 100 million merger efficiencies achieved within three years 2020 2021 2022 I Merger efficiency run-rate at end of year (EUR million) 100 Total Synergy run-rate of EUR 97 million achieved by end of Q4’21 - Remaining synergies will be rolled into
Slide 20: One-time costs according to plan
One-time costs according to plan — significant reduction from 2020 me items (MEUR) Me Q4 2021 FY2021 Divestment (netgain) Integration cost (prior estimate) IBM transition of services Other one-time items (prior estimate) Total costs (prior estimate) Total one-time items affecting EBITA +40 “11 -(10-
Slide 21: Other finance related topics
Other finance related topics Capex 3.0% 2.9% Capex in % of revenue 84 81 2.5% 3.0% 2.6% 2.4% 3.4% 22 25 18 18 16 Q420) «Q121 = 9221S Q321S 421 FY20 FY21 Higher Capex in Q4 stemmed primarily from business related software licenses and datacenter investments Capex for the full year was EUR 81 million,
Slide 22: Performance drivers — Q1'22
Performance drivers — Q1'22 Revenue drivers Profit drivers Other drivers Continued good momentum in software businesses, Product Development Services and International Operations Cloud & Infra: No impact from pre-merger lost customers, while the decline in traditional infrastructure services is anti
Slide 23: Businesses executing towards long term targets
Businesses executing towards long term targets 2021 2023 Targets a aaa SEA Progress rg. towards growth adj. Ena adj. target 14% 6-8% 18-22% C) 12% 8-10% 12-14% a} 14% 7-9% 15-17% q@) 7% 0-2% 11-13% (’) 13% 5% 15% q@) . Most businesses well on track towards CMD targets Cloud native and software marke
Slide 24: Way forward and 2022 guidance
Way forward and 2022 suidance
Slide 25: Strategy implementation on track and end-to-end businesses live
Strategy implementation on track and end-to-end businesses live Strategic choices Solid implementation , y Tietoevry / Connect 1 Clear business choices to * Live with end-to-end businesses . capture market growth and ; / Tietoevry expansion opportunity * Updated brand & Identity Y / Transform 2 End-
Slide 26: Cloud native and software leading market growth, while traditional services decline
Cloud native and software leading market growth, while traditional services decline High demand continues for enterprise software especially for SaaS Accelerated demand for cloud native applications, data and software engineering services Significant price erosion in managed services renewals and hi
Slide 27: 2022 guidance
Tietoevry expects its The company estimates its full- organic’) growth to be year adjusted 2) operating 2% to 4% margin (adjusted EBITA) to be 13.1-13.6% (Revenue in 2021: EUR 2 823.4 million) (13.0% in 2021) 1) Adjusted for currency effects, acquisi nd divestments 2) Adjustment items include restru
Slide 28: Exciting year ahead
Exciting year ahead Growth agenda materializing — execution through six end to end businesses 4; tietoeuy / Developers of Digital Futures Solid financial position as foundation for strategy execution Go-to place for tech professionals — developers of digital futures 28
Slide 29: Thank you
°o OO 0 O oo hank you wis tietoeucy