Finland · Delayed Price · Currency is EUR Tieto Oyj Earnings Call Transcripts
Fiscal Year 2026
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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 13% increase in order backlog. Despite negative organic growth, cost optimization and portfolio simplification drove a 4-point margin improvement, with 2026 guidance focused on profit growth and continued market challenges.
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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 a -4% organic revenue decline and 10.6% adjusted EBITDA margin, with strong cash flow and an 18% order backlog increase. Tech Services divestment and a CEO transition mark a strategic shift, while market conditions remain soft and salary inflation pressures margins.
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The company is divesting its Tech Services business for EUR 300 million, including EUR 70 million in earn-outs, to focus on software and digital engineering. The deal is expected to close in Q3, improving financial profile and reducing capital intensity.
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% order backlog increase. Market weakness persists across all segments, prompting revised guidance and ongoing cost management, while strategic initiatives in AI and divestments progress.
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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.