Standing by. Welcome to the Atos Q3 2024 Revenue Conference Call. At this time, all participants are on the listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Philippe Salle, Chairman of the company. Please go ahead.
Thanks, everyone. Good morning, everyone. My name is, Philippe Salle. As you know, I've been appointed as the chairman of the board of directors of the Atos group last week, and I will also be taking over officially the role of CEO in early 2025 . I'm very glad, in fact, to join this call this morning, and I'm also very excited, I would say, to join the Atos group at this critical time, of course. And as we are completing the financial restructuring and turning the page, I would say, to a new chapter with a focus for sure on profitable growth of our clients and our key asset, our people. Thank you for joining us in this Atos Q3 2024 revenue conference call this morning.
I will now hand it over to Jean-Pierre Mustier, our Group CEO, to go through the key highlights and messages for the Q3. Jean-Pierre, the floor is yours.
Thank you, Philippe, and thank you to all of you for joining us this morning to discuss our third quarter revenues. On the call with me, in addition to Philippe, is Clay Van Doren, our Chief Growth Officer, and Jacques-François de Prest, our Group CFO. So before we get started, I want to draw your attention to the small print on slide three. Let's move to the agenda. I will share some key messages related to Q3. Clay will then go into our performance by business line and region before Jacques-François covers the third quarter financial elements in more detail. And I will come back with closing remarks, and then we will take your questions. Let me start with some highlights. First, thanks to the significant progress we have made on our financial restructuring, we can now focus on our industry turnaround and growth.
The decision from the court on our restructuring plan has just been published a few minutes ago, and you will have a dedicated press release, which was just out. The plan will be completed in the next two months. We have also a new governance in place with Philippe Salle, who was appointed chairman earlier this month and will become CEO on February first, as he just mentioned. Let me say something important. He's the right person to lead our transformation journey and restore confidence in Atos. These developments are all very positive for Atos, and we have already seen a change in perception with our clients. They have taken note of our restructuring and are looking to resume normalized interactions with us. This should lead to a stronger commercial activity in the coming months.
Second, our revenue evolution for the third quarter is in line with the business plan we shared with you on September second, and finally, the discussion with Alten regarding the sale of Worldgrid are on track, and we expect this transaction to close by the end of the year. Discussion with the French state related to the potential acquisition of the advanced computing, m ission-c ritical system and cybersecurity products, businesses of BDS are continuing. Let me now give you an overview of the key figures for Q3. Group revenue was EUR 2.3 billion, down 4.4% organically, compared with Q3 last year. Eviden revenue was affected by the continued market softness in the Americas and Central Europe, and by the impact of previously established contract scope reduction. We expect Eviden Q4 revenue to be slightly down on the same period last year.
Tech Foundations revenue decreased in Q3 due to a lower scope of work and contract completion and termination with customers in the Americas and the U.K. In Q4, Tech Foundations revenue is expected to decrease double digit due to previously established contract termination and completion. Order entry in the third quarter was EUR 1.5 billion , representing 66% of revenue and in line with the third quarter 2023. BDS order entry benefited from several high-performance computer contracts signed during the quarter. Tech Foundations book-to-bill was 60%, which is consistent with seasonality trends over the past three years. Now that confidence in the financial sustainability of the group has been restored, we expect stronger commercial activity in the coming months at both Eviden and Tech Foundations, leading to a significant improvement of the group book-to-bill ratio in the fourth quarter.
Group cash position was EUR 1.1 billion, including a EUR 1.6 billion reduction in working capital optimization compared to December 2023. Cash consumption was EUR -3 million during the quarter, excluding change in working capital optimization of EUR 232 million. Thank you for your attention, and I now hand over to Clay for comment on our Q3 business highlight. Clay?
Thank you, Jean-Pierre, and good morning, everyone. I'd like now to share with you our key business highlights, building on the comments from Jean-Pierre. Focusing initially on order entry. Order entry reached EUR 1.5 billion during the quarter, reflecting some of the seasonality that we see, and also softer market conditions and delays in contract awards. Many customers were waiting for the conclusion we had this morning, of our group refinancing plan before proceeding with strategic awards. Our book-to-bill ratio was at 66% in Q3 2024, down from 84% in the prior year, excluding large exceptional deals, of which there were two in 2023. Our performance in Q3 was actually in line with what we did in 2023.
If we look at our Eviden book-to-bill, it was at 73% in Q3, down slightly from where we were in Q3 of prior year, and our Tech Foundations third quarter book-to-bill was at 60%, which was consistent with our previous three years average. I'd like to highlight four Q3 deals, covering both contract renewals and new wins. First of all, we had a new win in control room services with a major European energy utility provider, and also for the supply of an HPC to a leading European aerospace provider. We also had contract renewals to provide mission control systems, mainframe data modernization, as well as hybrid cloud and security services for a public sector entity in the U.K. Further, we had a large application maintenance contract renewal with a leading player in the automotive industry.
As Jean-Pierre has already noted, we expect stronger commercial activity in Q4 and a significant improvement in our book-to-bill as companies renew their faith with us on the back of the announcement of our group refinancing plan. If we look at revenue, you can see that we have a relatively good distribution with Northern Europe and APAC representing 31%, the Americas representing 22%, and the rest of Europe representing 45%. Now, going into each region in a bit of detail, starting with the Americas. So the Americas, we saw a general slowdown, which was reflected in the broader market inside the U.S. and digital, but as well as the completion and termination of some of our contracts. And Americas' revenue was down 10.5% on an organic basis.
Eviden was down double-digit on the back of the contract completions and terminations and some volume decline in our health care, finance, and transport and logistics sectors. BDS in the Americas experienced high single-digit decline on the back of some volume reductions. Tech Foundations in the Americas declined at mid-single digits on the back of the contract completions and terminations that have previously been as announced, as well as some scope reduction on select customers. Moving on to Central Europe. Central Europe was down slightly on an organic basis. Eviden, the revenue declined low single-digit which was slowing from where we've seen in prior quarters on the back of volume reductions in digital on the back of general market softness in manufacturing and public sector.
Tech Foundations showed some stabilization and even mild growth, so single-digit growth on the back of stabilizing our broader revenue stream and then having an upturn in hardware product sales. Looking at Southern Europe. Southern Europe was down 0.7% organically. Eviden revenue was roughly flat. We saw a growth in digital, which benefited from a contract win with a major utility in France, but this was offset by softer business in BDS compared to 2023, where we delivered a significant supercomputer in Spain. Tech Foundations' revenue in Southern Europe declined low single-digit on the back of some volume reductions. Turning to Northern Europe and Asia Pacific, our revenue decreased by 6.6% on an organic basis. The Eviden revenue declined mid-single digit.
The revenue, there was a revenue increase inside of this for BDS on the back of the rollout of an advanced computing system with an innovation center inside of Denmark, but this was more than offset by the decline of digital revenues, reflecting softness in the market and public sector on the back of some delayed decisions with the change in government. If we look specifically now at the revenue and Tech Foundations in Northern Europe and APAC, it was down low single digits, basically on the back of some contract completions, but most significantly on the value volume decline with the closeout of a public sector BPO contract in September.
Shifting now to our headcount evolution, you can see the full details in the slide, but just drawing attention to a couple things. First and foremost, you'll note that we had a number of contract completions in the Americas and the U.K., that resulted in 4,900 employees following this work, so exiting the company. Excluding these transfers, the headcount decreased by 5%. If we look at our attrition, our unplanned reduction, our attrition, over nine months, it's at normal historical levels. Thank you very much, and with that, I'll hand over to Jacques-François .
Thank you very much, Clay, and good morning to you all. I will now share with you some key financial elements for the third quarter of 2024 . Let me start with our revenue bridge. Our Q3 2024 revenue evolution is explained by two main drivers. Firstly, the scope changes over the past year with the divestitures of UCC, EcoAct, State Street joint venture, and Elexo. Secondly, the organic revenue decrease of -4.4%, as Clay just commented upon, driven by softer market conditions and previously established contract scope reductions and terminations. This is consistent with the updated business plan we communicated on 2nd of September. This leads to a third quarter revenue of EUR 2.3 billion. Turning now to cash. On the left, we start with the working capital optimization at the end of December 2023 .
As already communicated, we keep reducing our working capital actions, which is the main takeaway from this page. You can see on this graph the various components of the working capital optimization reduction. Working capital optimization was still EUR 265 million at the end of September 2024, down by EUR 1.6 billion since year-end 2023. Cash consumption was EUR -3 million in the third quarter, excluding change in working capital optimization of EUR 232 million. Turning to the next page. I would like now to comment on the financial restructuring plan of the group. Firstly, we significantly reduce our gross debt by EUR 3.1 billion through the conversion of EUR 2.9 billion of debt into equity and a EUR 233 million capital increase.
This capital increase will be open to existing shareholders and is backstopped already up to EUR 175 million. Secondly, EUR 1.7 billion of new financings are provided to the group, meaning sufficient liquidity to execute our business plan. Finally, we push out our debt maturity to the end of 2029 and beyond. Again, this will provide the necessary time and flexibility to implement our business plan. Financial covenants on leverage will not be tested before June 2027. Moving now to the timeline of the financial restructuring plan. The shareholders and financial creditors of Atos have strongly supported the proposed accelerated safeguard plan at the vote of the 27th of September. Following this, Atos presented a request for the adoption of the plan to the Nanterre Commercial Court on the 15th of October.
As Jean-Pierre said, we just received the press release this morning, publishing the judgment from the court today. The key next steps are as follows: a EUR 233 million rights issue with preferred subscription rights for existing shareholders. As mentioned earlier, this is backstopped up to EUR 175 million and is expected to take place in November. In December, this will be followed by the execution of the four concomitant reserve capital increases for the various affected parties. Finally, the receipt of the new money debt of between EUR 1.5 billion and EUR 1.7 billion is expected by the end of this year or January next year. This step will mark the closing of our financial restructuring process. I will finish my presentation by sharing with you our outlook for the full year 2024.
We expect for the fiscal year 2024, a mid-single-digit organic revenue decrease, corresponding to revenue of approximately EUR 9.7 billion. An operating margin of approximately EUR 238 million, excluding provisions to be booked for some underperforming contracts. Negotiations are in progress with customers, which could lead to a low double-digit percentage reduction of the operating margin. A change in cash before debt repayments of approximately -EUR 783 million, excluding the full unwind of working capital optimization. This was EUR 1.8 billion as of December 31st, 2023, and EUR 265 million at the end of September of 2024. Thank you very much for your attention. I will now hand over to Jean-Pierre for the conclusion.
Thank you, Jacques-François, and I will now close with some key takeaway. First of all, the judgment from the court on our accelerated safeguard proceeding is out. Our ambition is to close this financial restructuring process by the end of the year or early January next year. On the commercial front, I'm pleased to report a change of perception with our clients. They have taken notes of our restructuring and are looking to resume a normalized interaction with us. We expect a stronger commercial activity in the coming months, with the anticipated return of multi-year strategy contracts with existing customers. As part of our governance, Philippe Salle is already chairman of the board and will become CEO from February next year. Atos can focus on its industrial turnaround and growth, and I am very confident in the future of the business.
Thank you very much for your attention, and, we are now ready to take your questions. Operator?
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, that's star one and one if you wish to ask a question.
Don't be shy.
There are no questions on the phone at this time. Once again-
Let's-
Oh.
Let's wait for a few minutes. Yep.
Yeah, absolutely. No problem. We will now take the first question. One moment, please. And the first question comes from the line of Aditya Buddhavarapu from Bank of America. Please go ahead.
Hi, good morning. Thanks for taking my question. Could you maybe just comment on the market conditions you're seeing? So you mentioned, for example, you're seeing some contract delays in the public sector in the U.K., weakness in manufacturing and public sector across Europe. So could you maybe just talk about how you see the market conditions across different regions evolving in Q4, and when you might see any signs of recovery heading into 2025 ?
Sure. Clay, do you want to answer this question?
Sure. So if we look, let's take them region by region quickly. If we look at the U.K., clearly there's been some contraction on the back of the change of government and the inability of the public sector to execute contracts and spend. So that feels very much like a short-term phenomenon that we would expect to be released, when the new budget is executed, mid-November. So that feels very much a short-term activity. If we look in Central Europe, there is continued slowness, although we are seeing an upturn, in German public sector spend.
But there's a contra activity around German manufacturing, where we're seeing some softness in German manufacturing as they're concerned about their Asia exposure and building and expanding too much with the softness in Asia and anticipated continued softness. So we see public sector there turning better, but we see continued softness in manufacturing, and those are two of our key industry exposures inside of Central Europe. In the Americas, we have seen an upturn in demand in digital on a very soft period. PAC, an industry analyst company, have identified that the growth in digital was only 0.8% for the first nine months in 2024. We don't think that will continue.
We also think that there'll be more transformational projects that come on the back of the rate changes that we've seen recently from the Fed in the U.S. So that gives you a bit of a sense for, you know, where we see things. We don't see long-term market softness, probably outside of Germany and the manufacturing sector.
Thank you.
Thank you. That's very helpful. Maybe just a quick follow-up. On the Worldgrid business that you are selling, could you just give some color on the growth and margin dynamics there?
Sure. I'll take that. So the M&A process is on track. We just obtained the green light from the European Commission on the antitrust authorities, and so we expect the transaction to close soon. So, you know, everything is with green light on Worldgrid.
Thank you. I just. Could you also maybe offer some color on the growth and margin dynamics of that business?
Sorry, you were a bit cut. So what?
Can you talk about the growth and margin dynamics of Worldgrid?
I mean, you know, Worldgrid is, you know, we have communicated, you know, our business plan in September 2, which included Worldgrid, and Worldgrid is growing in line with our plan, basically with, you know, very strong activity. Worldgrid is a, you know, leader in its field, and its activities are performing as planned.
Okay, understood. Thank you.
Any other question?
Thank you. Once again, as a reminder, if you wish to ask a question, please press star one and one on your telephone. That's star one and one if you wish to ask a question. There are no further questions at this time. I would like to hand back over to management for closing remarks.
Well, thank you very much for your participation to this call. As we have said, you know, we are very confident about the future of the group. Our restructuring is now behind us and with the tribunal decision. Of course, execution has to be done in the coming months, but there's no more uncertainty about it, and we can focus about the future of the group and its development. And we have a new governance with Philippe Salle, who is Chairman and will be CEO very soon, who will lead the group for a new phase of redevelopment and growth. These are all very good news for our group, and we look forward with confidence to our future. Thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect.