Finland · Delayed Price · Currency is EUR Tieto Oyj Earnings Call Transcripts
Fiscal Year 2026
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Q2 saw further market weakening, especially in tech consulting, leading to a -5% organic revenue decline, but profitability improved by 5.5pp year-over-year due to cost optimization. The company revised its full-year growth outlook downward but maintained strong margins and continued strategic investments in AI and international expansion.
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Profitability improved significantly with adjusted EBITDA up 4.1 points to 14.7%, despite a 3% revenue decline due to legacy contract runoffs and weak Tech Consulting demand. Order backlog rose 8% year-over-year, and cash flow and leverage strengthened, supported by divestments and cost optimization.
Fiscal Year 2025
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2025 was a transformative year with improved profitability, strong cash flow, and a simplified portfolio. Despite negative organic growth, cost optimization and strategic execution drove margin gains, a higher dividend, and a EUR 150 million share buyback. Guidance for 2026 remains cautious amid market softness.
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A comprehensive transformation is underway, emphasizing execution, cost discipline, and a customer-first approach. New financial targets include over 5% CAGR growth and 16%+ margin by 2028, with growth driven by Nordic market gains and selective international expansion in software. Portfolio simplification, AI investments, and a stable dividend policy support improved shareholder returns.
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Q3 saw improved profitability and a sharper business focus after the Tech Services divestment, with strong order backlog growth and cost optimization progress. Most new contract revenue will materialize from 2027, while 2026 is expected to be a transition year.
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Q2 saw a 4% revenue decline and a 9.4% adjusted margin amid soft markets and cost pressures. A new CEO and leadership team are driving EUR 115 million in cost savings by 2026, with strong order backlogs in Banking and Industry supporting an improved H2 outlook.
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Q1 saw negative organic growth and margin pressure amid a soft market, but strong cash flow and order backlog. Strategic focus sharpened with the Tech Services divestment and a CEO transition was announced. Guidance reflects ongoing uncertainty and efficiency measures.
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The sale of Tech Services for EUR 300 million, including EUR 70 million in earn-outs, supports a strategic shift to software and digital engineering, reduces capital intensity, and is expected to improve growth and profitability. Transaction closing is targeted for Q3, pending regulatory approvals.
Fiscal Year 2024
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Revenue declined 7% in Q4 amid broad market softness, but profitability and cash flow remained strong, supporting a higher dividend. 2025 guidance anticipates flat to slightly negative growth, with recovery expected in H2 and continued focus on efficiency and AI-driven opportunities.
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Profitability improved in Q3 despite a 1% revenue decline, with strong cash flow and an 8% increase in order backlog. Market conditions remain weak, impacting all segments, and guidance was revised downward, with ransomware settlements and public sector deficits as key headwinds.
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Steady Q2 performance with 1% organic growth and 11% improved profitability, driven by software and Tech Services. Strong order intake, record backlog in Banking, and ongoing strategic transformation amid a soft market and efficiency measures.