In our rapidly changing world, technology is everything. It's in the fabrics of society, in every part of every business, at the very heart of human evolution. It's a great power that comes with great responsibility, because as technology evolves, new dilemmas emerge. Effortless online shopping fueling consumerism and climate change. Mobile first increasing the digital divide. Personalized experiences blurring the boundaries of personal privacy. Fast spread of fake news challenging the truth. At Tietoevry, we believe technology is moving from having one single purpose to running multiple digital futures that either collide or become united. It is our responsibility to manage the balance between what's good for business and good for humanity. Where there's friction, contrast, and challenges, we see opportunities for transformation, innovation, and a change for the better. This is how we create futures where humanity, societies, and technology can thrive side by side.
When empowering our global team with this perspective, our joint skills, creativity, and empathy can create solutions with far greater value for everyone involved. We are Tietoevry. Together, we create purposeful technology that reinvents the world for good.
Good afternoon, welcome to Tietoevry's 2022 Capital Markets Day. My name is Tommi Järvenpää. I'm the head of Tietoevry's Investor Relations. I am extremely excited to see so many of you attending our event live here in Stockholm. A warm welcome to everyone following our day over the web. Today is all about accelerating value creation. We will provide insights into our strategy execution, our business portfolio, and uplifted financial ambitions. Our businesses will provide details about their market opportunities and outlook going forward as well. This morning, we announced big news, a strategic review of Tietoevry Transform and Tietoevry Connect as a combined business will reposition our company. How? This you will find out in the next few hours.
Regarding the practicalities, we will be having a Q&A session after each presentation, and then at the end of the day we'll have a joint Q&A hosted by our CEO and CFO. We will be naturally taking questions from the audience here in Stockholm and then also over the web. We will start the day with the theme of the day, Accelerating Value Creation. I'm pleased to invite our President and CEO to the stage. Kimmo Alkio, please welcome.
A very warm welcome to a very exciting Capital Markets Day here at our new Arenastaden office in Stockholm. What an exciting afternoon I believe we will all have. Our focus today is to share our perspectives to accelerate value creation for the company. In this opening session, I'll be providing an overarching view on the opportunities on hand and the concrete steps to drive shareholder value. Naturally, a great deal of business-specific insights will be provided by the respective executives during the afternoon. I'd like to, in the beginning, actually emphasize all of my main messages and to a large extent the themes of the day. First of all, the market dynamics continue to be attractive and call for specialization. We are making fine progress in becoming a highly specialized and a highly competitive company per business area.
Second of all, we are actively reshaping our portfolio and seek for optionality to maximize the potential of each business. The core of today is around reconfiguring the longer term portfolio and identity towards higher growth software and digital engineering. In addition to the strategic review of Banking, as announced in July, we have today announced the strategic review for the combined Transform and Connect businesses, recognizing the specific needs and opportunities for the managed services business. Furthermore, the third core part of today, naturally around our updated financial ambition for 2025. Revenue growth based on the sum of the specialized businesses, 8%-10%. Profitability, EBITDA adjusted , 15%-16%. Capital allocation focusing on reinvesting in businesses to accelerate profitable growth and continued attractive increase of dividends annually. I'll be diving into the respective areas during my opening presentation.
I'd like to first start with a bit of a high-level perspective of our role in the market and society. We play a very significant role and part in helping the society to advance, to be more competitive, to be more sustainable. Our role tends to vary depending on the customer engagement in question, all the way from supporting welfare societies through our software solutions, managing the data assets across the Nordic society. For providing the technology backbone for many industries and financial institutions. Our 24,000 professionals globally take enormous pride in developing the digital futures with our clients and enjoying the type of a learning as a lifestyle concept in advancing in all of our professional careers and ambitions. Extremely meaningful role in supporting our clients and the society at large.
A part of our role enabling sustainable and digital societies is to ensure adequate shareholder returns. We have delivered solid, consistent financial results over the last years. This would be visible in terms of our consistent development in profitability, cash flow development, dividend attractiveness. Fair also to highlight the rapid deleveraging within 18 months of the merger. We have believed and continue to believe in the importance of continuous and sustainable financial performance improvement. Naturally, we expect to continue this and look for even accelerating further. Next, I'd like to confirm some of the main customer and market drivers, as this is kind of the core of our profession on a daily basis. The customer dialogues tend to be very consistently around the types of themes around building enterprise efficiency, building agility, building competitiveness for our clients.
Competitiveness through embedding data insights into our customers' own products and services, increasing agility through cloud adoption, driving efficiency through automation, utilizing the likes of machine learning, artificial intelligence to make our clients more nimble. Extremely meaningful insights provided by Tietoevry to our clients to achieve their own ambitions and strategies. Second factor I'd like to pinpoint to, which is not necessarily new news, but important to confirm. The market dynamics are attractive. The shift towards cloud-native technologies, towards investments into data-related insights, is gaining continuously very favorable speed, and this naturally opens up new opportunities for ourselves. In parallel, fair to recognize the more traditional side continues to see type of price erosion that we have seen historically. Market momentum, I would clear, and the main drivers are very consistent and clear in the industry.
With these factors in mind, we usually believe in the importance of specialization, creating trust and insight in every client engagement, and the specialization has started to work already in our favor. This is visible in the customer relevance, winning more type of business in the identity itself, talent attraction, and naturally, value creation as well. We continue to capture market share and competitiveness through our specialization-based strategy, as announced in October of last year. We address the market through our specialized businesses in the categories of digital engineering through our Tietoevry Create business. We address the market in the category of software and software platforms through our three software businesses and the managed services type of business structure, business model through Tietoevry Transform and Tietoevry Connect.
Businesses went live in January of this year. First three quarters absolutely fine progress as such. As a company at the group level, we naturally seek for ways of gaining further speed in looking at the growth scale and optionality of each business. Wanted to confirm the strategic intent as announced 1 year ago. Based on the discoveries and insights of the respective businesses, we naturally identify highly unique type of growth and expansion opportunities by business area, whether we think about the growth profile of the market worldwide, whether we think about the geographical expansion opportunities which the businesses will be sharing during the afternoon. These are some of the factors, but by nature, within a specialized strategy, these are the discoveries.
Important to highlight that each one of our businesses have a highly distinctive peer group that naturally we seek to actually be profiled, against and looking for actually, competing extremely well, within the peer group. By nature, the respective peer groups have also their own value profiles. Historically, Tietoevry, we would have been identified a bit more in the category of IT services towards the lower part of the page shown. With the ambition we have is naturally to be recognized within the categories where we aim to be one of the best in the world. I wanted to also highlight that the foundation that we've built over the years opens up new opportunities to accelerate our growth, scale, and financial returns.
The background being that the merger in 2019, as announced in 2019, created new type of scale. Our assertion main message in 2019 was that this would be by far the best intermediate step for both companies. What followed, in practically last year, end of 2021, we announced our new specialization-based strategy focusing on increasing competitiveness of all of the businesses. With this in mind and the market development worldwide, we see a tremendous opportunity to reconfigure our portfolio for higher scale and value. Set of businesses having a quite distinct profiles from a growth and scale standpoint.
Practically, the businesses that make up the software businesses and digital engineering actually enabling the type of pure-play software and digital engineering to be participating in the rapidly growing and expanding global marketplace, separating the managed services and transformation businesses as a combined entity. I'd like to open up furthermore a bit more the distinct dynamics between the business types. When we consider the software business digital engineering, these are businesses with significant international expansion opportunities, software, IPR, and global talent pools in the centerpiece of scaling, expanding, and the likes. For managed services and transformation, having a strong Nordic-level position with long-term customer relations, continuously seeking for drive for scale and efficiency, highly differentiated type of business logic. As of today, 60% of the business mix is software digital engineering with strong growth and profitability. Naturally, 40% in the managed service and transformation.
Today, as mentioned already a few times, we've announced a strategic review for the managed services and transformation type of businesses in order to be able to successfully build both the higher growth, higher scale, and the managed services and transformation-centric business. Furthermore, each one of our businesses aim to be amongst the best in the market. More will follow in the afternoon. I'd like to do a short synthesis of each one. Basically, the foundation and the competitiveness today is already at a competitive level. In the case of banking, seeking for becoming a leading European banking and payments fintech company, significantly software platform-driven. For Tietoevry Create within digital engineering, a leading digital engineering player globally with a very distinctive peer group and global market opportunity. For Care, specializing healthcare welfare, a leading health tech software provider, initially in the Nordics, over time within Europe.
Finally, the Industry Software, a portfolio of fine-performing, well-positioned, a bit smaller software businesses. Furthermore, for the combined Transform and Connect, a leading Nordic, potentially European, focusing on enterprises, public sector, multi-cloud, and total mode-modernization agendas for the enterprises. Really distinctive opportunities unique in nature. I'd like to furthermore carefully go through the two strategic reviews that we have announced. In July, related to Tietoevry Banking with the objective of realizing the value of the banking software business as a potentially independent listed company. I'll go into the status update on the next page. To confirm, I'll also talk about the foundation in a bit more detail of the announcement of this morning. I'd like to confirm the progress and schedule planned next steps for the banking strategic review.
As announced, the aim is to potentially operate as an independent listed company. This is progressing fully on schedule and towards second half 2023 conclusion. Main actions currently are related to carve-out and public company readiness, including legal structures, strategy as an independent company, and long-term business plans. Listing preparations and potential transaction structures to be evaluated and concluded during the second and the third quarter , summer timeframe. Implementation shall follow the potential deal structure conclusions and naturally subject to existing market conditions at that point in time. I'd like to go through carefully also the announcement from this morning, the strategic review for Transform and Connect combined that could result in a potential sale or listing as a spin-off.
Combination today is highly competitive in this domain, covering services across business processes, platforms, and infrastructure with the largest Nordic customer base and multi-cloud platform available for each one of our core markets. As a starting point, 90% of Transform's key customers are also Connect customers. Ample amount of existing collaboration and even dependencies between the businesses. We have very significant capabilities with approximately 8,700 professionals across Nordics, Baltics, Czechia, and India, and also attractive combination of onshore close with customer proximity, offshore for price competitiveness. Process and way forward expected to take 12-18 months, and combining the operations will be the first step very much in the first thing as we enter 2023.
Very important, as we've done dialogues with our customers, in the recent hours, that the customer engagement and overall market operations continue fully as normal with the very strong agenda delivering high-quality services, driving expansion in the marketplace. No expected disruption to the market activity on either business. I'd like to move now to the next stage of my presentation, the financial plans and ambition. Based on the combination of our belief on continuous performance improvement, market potential, and our specialized businesses, we are further elevating our ambition levels. As mentioned in my early summary, revenue 8%-10%, profitability 14%-16%, leverage target to be between one and two, and the dividend attractiveness to continue with the aim of increasing dividends annually.
Very important objectives, and Tomi, as the CFO, will actually elaborate in further detail regarding, also the capital allocation. To the business views, which will be really interesting throughout the afternoon. Our ambition will reflect the distinct dynamics of the different businesses and the market opportunities. Well visible are the factors that the software businesses, digital engineering, very healthy growth profile, and continued improvement in profitability. We are actually seeing performance improvement in all of our businesses. Naturally, software and digital engineering expected to be leading the performance acceleration and value creation. Overall, we aim at a step change in our growth profile while consistently improving profitability. With this in mind, and in consideration of reshaping the portfolio and longer-term identity of the company, it's fair to highlight also the performance profiles, the ambition levels for the two types of businesses.
Software and digital engineering with the global reach, growth between 12%-14%, adjusted EBITDA up 17%-19%. I would claim very much in alignment with the market opportunity on a global landscape within the respective businesses. When we look at the managed services and transformation relative to market development, growth of 1%-3% and continued improvement in profitability between 9%-11%. This is very interesting from a standpoint of very firm performance improvement and the identity development towards higher growth, scalable businesses over time, especially in software and digital engineering. Implementation, we believe will follow also very naturally. We embarked on the specialization based strategies, end-to-end businesses in January. We are fairly well on track with all expectations for 2022.
In the next cycle, 2023, 2024, we naturally expect to be concluding the strategic reviews and accelerating M&A in the businesses where we expect the greatest combination of growth and scale. From there onwards, looking into next wave of market development, by that time leading edge businesses and looking at the next stage of opportunities. The digital agenda in the world market will continue to be attractive. I think we leave fantastic doors open of further innovation in the next cycles to come. I would also like to highlight the importance and the foundation of our agenda coming through our people and values. Values serving very well our employee base worldwide and tangibly benefiting client engagement. Values of openness, trust, and diversity, as well as transparency.
Our focus on employee wellbeing and engagement has continued at a really high level throughout also the highly turbulent times of the pandemic and followed by the war in Ukraine. I want to take a special note that we have done our utmost for employee safety and are proud of our Ukrainian colleagues for tremendous resilience. Continuous learning is actually the name of the game in our business, in our professional lives in tech sector. It is extremely positive to see that our colleagues in the company are discovering further opportunities at an elevated level for continuous professional advancement and continuous learning of new technologies, new type of business models.
I also want to highlight that we have progressed really well in attracting talent in a highly active market. I'd like to conclude some of my consideration with the topic of high importance, ESG, which are an integral part of our business agenda. Whether through enabling digital solutions to our customers or reducing our carbon footprint or driving ethical practices across entire across our own entire business operations, even to our subcontractors, it's very important priorities for the company. We have ambitious targets, as an example, gender neutrality by 2030, and we strive to reach these on a daily basis. Furthermore, the ESG targets are also part of our long-term incentive plans. Now I'd like to recap my and our main views of this opening session and, to a large degree, of the day.
Our employee and sustainability agendas are very integral parts of our future aspirations. We are making good progress with our specialization-based strategy, opening up avenues for further innovation and business expansion. We are taking very precise and active decisions with our portfolio and related identity. It's time to renew the company even faster. As recognized, we have updated our financial ambition for higher shareholder value. What a very exciting agenda we have. Exciting, highly transformative, highly energizing. Thank you.
Thank you very much, Kimmo, for an interesting presentation. As a reminder, we will take questions both from the live audience here and also from the webcast. Let's start here from the room, and when you have a question, please raise your hand, then wait for the microphone, and then state your name and the company.
Yes. Good afternoon. My name is Daniel Djurberg, from Handelsbanken. First I would like to congratulate on this decision. I think it's really interesting. Looking at, if you see any negatives, so to say, in this potential new structure, with regards to, you know, overhead functions that might be common for all the group, would it be fair to use some kind of shared service company for this or to minimize the potential overhead that will be, you know, tripled going forward? Thanks.
We are already highly mindful of making sure we continue to optimize the centralized functions of the company. Work has already started.
Interesting. Thanks. Also a little bit on timing. Why? I have several questions today from customers that was asking, "Okay, but why right now, you know, ahead of this recession perhaps around the corner and so forth?"
Overall, if look at the combination of how our industry is developing worldwide, what is the potential we have given the six different type of businesses we have, I think it's a fantastic time to move ahead. There's no reason to wait. The market is there, and we can do better and take the specialization, a few inches forward.
Okay. Thank you so much.
Thank you, Daniel.
Okay, thanks. Sami Sarkamies, Danske Bank. I have a question on the target setting. What gives you the confidence? If we look at track record on growth before this year, you've been typically around 3% organic growth. Why do you think you can keep up the current good level and even improve on that going forward? Secondly, on margins, during the past few years, you haven't made as much progress towards targets as you would have liked to. You are targeting a quite material step up in the coming few years. Where does the confidence come from this time?
I think of common nature regarding the growth and margins are two factors. One is that naturally the perspectives of the six businesses that the foundation, that we'll be hearing more about. That's super important. If I may, I wouldn't now give a company average because the real is in very different per business. I'll of course address both in a bit more detail. From a growth standpoint, traditionally we have had such a significant kind of a dependency on the legacy side, on the much more on the proportionately. Now we are seeing software, digital engineering accelerating, kind of that is moving tangibly forward. From a margin standpoint, naturally in the current era, we are all impacted by the inflation.
Nevertheless, we continue to make consistent progress and question if the trajectory of the curve. Again, going back to the potential of each one of the businesses and the business mix towards more scalable businesses.
Okay. Secondly, if I may, also the timing is quite aggressive. If we think about 2025, it comes fairly quickly as management will be quite busy with these structural changes until 2024. Next year will probably be quite tough regarding business conditions.
There's not that much kinda like room for the actual improvement to take place.
Naturally we are all mindful of the macro environment. Currently, we are not seeing slowdown. That's one factor, and the comfort and confidence of the businesses to be progressing. Now of course we now talk only about 2025. We'll talk later at the later stage on 2023. Gives us good comfort that now we have four quarters of accelerated growth behind us. I think we are starting to turn the corner in a quite a favorable manner.
Okay. Thanks.
Hi. Felix Henriksson from Nordea. I have a question regarding the revenue growth target. Just wanted to confirm that what role does M&A sort of play in achieving that target? I know you mentioned something about Create and Care specifically, obviously your target commands acceleration in your revenue growth. I'm just wondering how sort of linear do you expect this acceleration to be, especially when we consider that next year more likely there is a recession and there potentially has been some sort of pull forward in IT spend as well over the pandemic. Thanks.
Just to be clear, in our revenue ambitions, it is to a very, very large extent organic, may include smaller M&A, our typical definition. On the potential linearity, if I may, that's a bit, I wouldn't like to guess that answer currently. There will be a slight difference per business. Some of our businesses have good growth velocity, and it's a bit dependent on how fast the business mix evolves. No, I don't believe in any of our plans ever on like a ad hoc hockey sticks at the end. We'll come back of course maybe a bit later on, but I think we have fairly fine track record of, and belief on the importance of sustainable performance improvement than the curve of course. No details yet.
Right. Then a quick follow-up, if I may, on Create and Banking, where you see the addressable market also being more global in a sense. You might address this later in the segment presentations, I just wonder if you wanted to highlight a bit on the go-to-market strategies globally for each of these businesses as well as the sort of traction that you've had so far.
If I may, my sparring and guidance to our businesses is to be very mindful on the timing and readiness of global market expansion to make sure that the investments and revenue streams always come roughly at the same time. I don't think we'll be investing too fast before we verify that the scalability of the products and services are there.
Right. Thank you.
Thanks, Felix. Next one. Over there. Yeah.
Hi. I'm George Webb from Morgan Stanley. Two questions, maybe one which is always a bit dangerous first. When we think about 2023 potential downturn, to what extent do you think this time could be different from a demand perspective because cloud, digital, et cetera, are so central to companies' visions and their strategies that actually it supports demand through next year even if there is a mild recession? Do you see that in your work pipelines? I'll start with that one, and one follow-up.
My current belief, in my mind and my data points and many other people in the industry that the kind of a cloud movement, investing into data assets, will likely not be that much impacted. Time will prove, but the probability of investment levels being high, I think it's fairly high. One factor. The second point I want to highlight that, in the case of a downturn, we are likely one of the more resilient companies given the business mix. What's in the backdrop of the business mix is for a lot of our business is long-term contracts, long-term commitments. We are of course always mindful of the, you know, reading the signals ASAP, what might be coming.
Very clear. Secondly on M&A competency, to what extent does each of the individual business units have that competency already in place, or does that still have to be built out?
On purpose, this is very centralized. We have a very good small team that is active on M&A, of course, supporting the business leaders in this.
Will that change moving forwards or will that structure remain in place in the same way?
We'll rethink of course when however to fast the scale each of the businesses. Optimizing has to do with the other question earlier, ensuring that we don't bring duplicate, triplicate structures too fast. Total efficiency, we, I expect we can be very mindful of.
Okay. Thank you.
Thank you. In the back row, there's one question. Okay. Right there.
Hi. Jaakko Tyrväinen from SEB. Regarding the growth ambition in Create segment, how you are prepared and how you are going to solve kind of the challenge regarding the talent need to deliver such growth? We know that market is very tight on that side as well.
I'd love to give you a long answer, but I leave it for Christian. I know he'll want to talk about it. Very briefly on the Create side, the likelihood of very attractive global demand, very high. We have already a good footprint of capabilities around the world actually to build and expand the talent pool. That is already actually working in our favor, having a light kind of front end in the respective market like North America, very strong back end. We expect that we can turn that machine even to a higher clock speed. He'll talk more about it.
Okay, great. another one on the planned strategic review on the Connect and Transform businesses. If we assume that, those will be ended up in some kind of a consolidation game, what are the key synergy sources, if you end up in, in marriage with a same kind of a peer company? What kind of a level of synergies should we assume for such a deal?
Understandably, I will not speculate on the potential outcomes. What I can confirm from the customer dialogues in the recent hours and recent days that people tend to understand scale is important, scalability, the right investment needed for that type of business model, totally different from software. The understanding that scale is important, the required investments, exactly which outcomes, you know, I don't go and speculate into. We'll discover them throughout the era and customer commitment on an importance of that continued client engagement at a very high level, and we look as we make progress with the strategic review.
Okay. Thank you.
Okay, let's take one question from the online audience as well. There's a lot of services sold internally within Tietoevry. How big of a challenge do you see it in a situation where the units are separate companies? How does that change the dynamic of the company?
This question was a fair one already in January of this year as we shifted to the specialized end-to-end businesses, and we've been very clear that all the businesses partner with any other business or company which creates value for the business in question, and that will continue. Subcontracting internally or subcontracting with external parties, standard procedure within all the businesses.
Hi. Thanks for taking my question. This is Aditya Buddhavarapu from Bank of America. Just a couple from my side. In terms of the structure of the potential disposals or a spin-off, would you be looking at keeping maybe a stake in some of those assets to participate in future value creation? Second, when you think about the structure of the group after you dispose of Transform and Connect, how do the Software and Create businesses fit together, and why is Banking maybe separate from that? You've also doing a review of Banking, or why not keep Banking as well within the structure given it's growing faster than, let's say, industry as well?
Thank you. First of all, regarding the strategic review for Transform and Connect, the outcome of the alternatives we will see during the process. I wouldn't to go and speculate exactly which one. We'll discover all and consider within the program itself. Regarding our software and digital engineering, we've talked about for the past year on the optionality for each business to become one of the best in the world, so we'll be looking at that very dynamically for the quarters and years to come, and meaning that the best possible path for all the business is to scale. With that in mind, I wouldn't paint a picture of any type of endpoint model at this point in time.
All right. Thank you.
Thanks, Aditya. Any more questions? I guess we are then done with the first Q&A. Obviously there will be more opportunities to ask questions from Kim at the end of the day. We will now move to the first business section of the day. We will start with the theme, the Nordic leader in managed services and transformation. Our first speaker will come from the Transform business. She will explain how focused market approach is enabling performance improvement. Satu Kiiskinen, please welcome.
Thank you for the introduction and warm welcome on my behalf as well. I'm excited now to share with you what we do in Transform, what our team of Transformers do, where we focus, and how we drive performance. I will walk through three main elements in my presentation. Kimmo talked about the specialization, I will explain what our specialization in Transform means and where we focus on. Secondly, I will open up the dynamics for growth and how we grow. Thirdly, I will talk about our strengths, how we win in the market, and why I believe that we have actually carved out a very unique position for ourselves in the Nordic market. I will summarize our financial ambition towards the end of the presentation. At Tietoevry Transform, we are driving enterprise-wide transformation for our customers.
What does that actually mean? Our customers are, sort of driving two agendas at the same time. First, they need extreme efficiency, and secondly, they want business agility to be successful and competitive in their markets. We support them in complex, large, multi-year projects that aim at, first of all, modernizing their application and infrastructure, and secondly. We are helping them to improve their total cost of ownership in their operations. Thirdly, it's all about data and technology. We help them improve customer experience and improve their decision-making with the help of data and analytics. We're in Stockholm today, and I cannot start with any other example but City of Stockholm. I'll share two examples, and City of Stockholm is the first one. City of Stockholm is driving an ambitious initiative on smart city and, becoming climate positive by 2040.
We are building a next generation IT solution for the city's administration as well as municipal-owned companies that enables them to free up capital in their operations and then reinvest it to build a smart and sustainable city. My second example is all about data and technology. Kesko is one of the largest retailers in Finland. Among other things, we are helping Kesko in their grocery retail division in real-time retail. When you or I, any one of us, orders groceries online, one of the most critical things for us is that we want to know when exactly is that delivery on our front door. In real-time retail, we are building a comprehensive data solution that empowers Kesko to improve their logistics as well as the customer experience in terms of predictable deliveries.
In order to be successful in what we do, we have a very clear focus, and I'll talk about in terms of customer services and capabilities, and I'll talk about that next. Our customer focus is on the Nordic headquartered enterprises as well as public sector organizations that have a relevant IT spend between EUR 30 million-EUR 300 million. We estimate this market to be approximately EUR 10 billion. To these customers, we want to provide a complete set of services. We advise, we develop, we run, and we transform their entire IT portfolio. To do this, we have unified the model covering infrastructure services, application services, business process transformation using data. We use our capabilities covering IT managed services, core ERP renewals, and data-driven digital services.
This is like Kimmo mentioned, 90% of our customers, we have a unified model with Connect in terms of application and infra services. This frame of these capabilities, I will come back to when I talk about our growth and the dynamics for growth. It's important to keep in mind. Our selected customers really are the cornerstone of Nordic society, and they play a really crucial role in all of our daily lives. Let me share some examples. What impact our team from Transform has on a daily basis. First of all, 62% of all round wood in the Nordics go through our systems and find its way to the mills.
Secondly, 31% of the pensioners in Norway get their pensions on time with the support of our team. We ensure that five million invoices are processed annually to keep City of Stockholm running. 83% of daily grocery trade in Finland runs smoothly when our team supports our retail customers in Finland. How impressive is that? Quite remarkable. Let me now elaborate on the dynamics for growth. As you see, our portfolio is really like a sample set of the Nordic IT market. It includes both the fast-growing data and digital services as well as the traditional services where growth is more moderate. We grow through increasing our wallet share with our existing customers.
Secondly, the nature of our business requires that we close new large deals and acquire new customers. We select customers, where we can deliver a full set of services, and typically the contract period is from three to five years. Large customers and large account management is one of our key capabilities, and we invest in it. We are also experts in renewals. We have been with our customers over several technology waves and business model changes, and this deep custom knowledge actually becomes a key asset for us in the marketplace. This gives me a great bridge to talk about our strengths and how we win in the market. I mentioned that I believe that we have a unique position in the Nordic market. We help run cities.
We keep the wheels for manufacturers rolling. We're in the middle of the retail supply chain. We maintain the legal system that supports our democracy. Our customers really truly are the cornerstone of our Nordic economy. In order to bring value to our partnerships, our teams have really deep knowledge of our customers' businesses and processes. We are committed to long-term cooperation beyond the contract period. Almost half of our customers have been with us for more than 20 years. That's definitely one of our key strengths in the market. Secondly, we do what is right for our customers, and we are open to use partnerships, including best-of-breed technology partners. We have a very balanced delivery mix.
One-third of our experts, of our resources are in the Nordics, one-third in nearshore, and one-third in offshore country, in India. We are flexible to adjust our delivery mix to have the right delivery mix for the customer in question. We also have a repository of best practices and a comprehensive set of services to drive real business efficiency. Finally, sort of, we have been awarded two times in row for our automation solution, which by the way, I have mentioned our recent large wins, was one of the key criteria for Aker BP when couple of weeks ago, we announced that they selected us as their IT services and transformation partner.
Our peer group is in this market, as you can see, are some of the largest names in IT. I come to scale. In order to be successful, we are driving scale through unified global delivery, automation, and selected partnerships. I talked about our delivery mix. Over 50% of our professionals and experts are outside Nordics. I mentioned about our automation solution. AI-driven automation is really starting to play a bigger part in driving scale in our managed services deliveries. As we automate in fixed price deliveries, our labor needs reduce, and we are able to redeploy those professionals then to billable work with in other projects.
This year we have increased our automation with 150% during last year in terms of automation. We're also driving scale through reusable assets. This is extremely important, by the way, for example, in cloudified ERP implementations, and in delivery. Our delivery model enables us to work in an open ecosystem and without a lock-in. We also may work jointly with our peers to create value for our customers. I'll come to the financials and our financial ambition. By 2025, we aim to grow around the range of 2%-4%, and we are committed to deliver adjusted EBITDA around 10%-12%.
Our growth is really driven by increased wallet share with existing customers as well as these new customer wins that I talked about earlier. Growth is also driven by, through, business mix change, so we are really, really keen to get the growth in cloud-driven next-generation services, and we are betting on that. In terms of profitability, I will address our short-term profitability on the next page. Overall, in profitability terms also increased share in cloud enables us to drive automation and therefore an important driver. We are driving on continuous way of working where we are able to redeploy people and be agile in talent deployment and therefore increase efficiency. Customer pricing increases are also one element for our profitability as a driver.
We have been facing some challenges in terms of profitability during the first part of the year, and we have taken clear actions to mitigate that. We have an ongoing performance improvement program, and we have been driving the price increases with our customers, and we are continuously optimizing our delivery mix in terms of redeploying our professionals to billable work and optimizing the pyramid. I believe that with these actions, we are able to sustain the margins and drive our ambition towards the 2025 profitability range of 10%-12%. All right. I have come to the end of my session, and I am summing up with these three messages. To go back to the specialization that we are so excited about.
We specialize in driving the enterprise-wide transformation using technology, and I want you to remember that we focus on large customers with multi-year contracts. That, I think brings us stability even though there might be some turbulent times as the questions already indicated during Kimmo's session. We do have a really unique position. Our margins are really driven by continuous efficiency, and we are committed to drive that. Our financial ambition to finish 2% - 4% revenue and 10%-12% in terms of adjusted EBITDA. Thank you for your interest in Transform. I will now be open for questions.
Thank you, Satu, for a very inspiring presentation. Let's take questions. Daniel here in the front row.
Thank you. Sorry. Daniel here again from Handelsbanken. A question little bit on pricing, on the cost level so that you see in the market. Obviously, we see higher cost levels across the board, and energy, I guess, is one of your cost items that has been impacted. Can you comment a bit on this? Also, if your contracts contain some kind of CPI adjustments in the terms that you have so far, so you can give an overview of the pricing versus the cost implication here. Thanks.
Our contracts are of course unique and, but depending on the customer, we have different terms in terms of, for example, cost of living. When we talk about the sort of application management that is very sort of labor-driven, and then I will leave it to you to comment on from Connect side on the energy.
Yeah. That's fair enough. Another question if I may is, the automation you mentioned, was up 150%, I think year-over-year. How do you measure this? It looks like you're up to some 60% while targeting 80%, so what is the automation measurement?
Sure. We are driving automation in terms of automating all sort of transactional work and ticketing and so on. That is the sort of basis for for the labor reduction intensity as well as the KPI.
Okay. Sami Sarkamies, Danske Bank. Can you please talk about some of your main challenges in the recent years? Why, why have you lost customers, not won too many new customers, and there's been also quite severe margin erosion?
I mentioned that actually we have actually very good customer attraction. 40% of our customers have remained with us for over 20 years, so I think we are actually really good at renewals. We have a very strong order intake during the last 12 months, and I think we have a sort of good position to be competitive in the market. The market is actually very competitive.
Yeah. Are there any improvement measures you have taken, and when do you think these will bear fruit?
Sure. In terms of margins, like I mentioned, the first half of the year has been challenging for us in terms of profitability. We have initiated the performance program where we are addressing 250 roles and driving the performance. The first impact of this program was seen towards, only towards the end of Q3, so that those initiatives continue.
Thanks.
Felix Henriksson, Nordea. As one of your profitability drivers, do you also describe the delivery mix and the competence pyramid? So I just wanted to dig into that a little bit more. So I'm just wondering if this means sort of, you know, deploying more sort of junior talent and so on, how sort of long of a lag should we expect from these actions to the improved profitability and how do you sort of see yourself as an employer for example, for junior talent and your competitiveness on that front?
Yeah. We have a graduate program and we are sort of recruiting graduates on an annual basis. I think, in that, we are sort of gaining a lot of attraction as an employer. When it comes to the pyramid change, for us, the nature of our business is that we are in a continuous cost optimization. This also gives great career paths for our personnel. They are sort of able to move from sort of application management type of deliveries into project work and vice versa. I see the pyramid, and the kind of like redeployment, or we call it smart redeployment, a positive in terms of our personnel.
It is of course important for us in terms of efficiency as well.
Okay. Continuous work. Thanks.
Thank you, Felix. Last question then over here.
Hello. Marcus Rylander , Robur. If you're going to grow in 2025 by 2%-4% and achieve 10%-12% EBITDA margin, do you, I mean, you need to decline some business in order to get profitability. Do you expect the growth to be like accelerating, first coming down and then accelerating, or how do you expect the growth pattern to look like?
The business mix and our portfolio includes the traditional services part that is by default in the market declining business. We do have high growth businesses where demand is high. For example, data, currently cloudified ERP is in great demand. I think the business mix change over the years is one key driver for the growth.
Growth 2%-4%, is that in 2025 then, or will it be sort of 2%-4% every year? I mean, do you see what I mean? You will trim some of the business to get the higher margin, that means you will take out some business.
That, I will leave, then. I think now we have given the long-term growth so, I wouldn't speculate on the fluctuation.
Okay.
Thank you. Thank you for the questions, and thank you, Satu Kiiskinen. The second business presentation will continue the theme Nordic Leader in Managed Service and Transformation. Our next presenter will tell us how our unique Nordic multi-cloud services are driving scale and value. Johan Torstensson, please welcome.
It's my pleasure today to talk about how we in Connect over the last two years have built a unique Nordic multi-cloud services which will drive both scale and value, not only for our customers, but for our shareholders. What is happening now in the market is that we're seeing the increased demand of what we something we call digital sovereignty. We in Tietoevry Connect is capturing that part of the change right now. Let me just explain what we mean with digital sovereignty before we go on. Digital sovereignty is all about that we all now are demanding digital solutions to live our life, to drive our companies for society, and that is moving very fast. There's two things our customers are now questioning and asking about. First, data. Who is managing my data? Where is it stored? Who can access it?
Am I sure it's the right people who do this? Number one. Number two, how do I make sure we have resilient solutions? If I have something bad happening, a cyberattack, or even worse, that somebody cut the network connection to the Nordic society, can I still run my city, my company, my life? These things are now driving changes of how cloud transformations are going. We have put ourselves in the position, Nordic leading position for multi-cloud services to gain the growth in cloud. We are uniquely positioned to actually capitalize on this multi-cloud journey and the sovereignty needs of our customers. By us driving this trend and driving this actively, you will see a large transformation of the service portfolio of Tietoevry Connect to more multi-cloud services, which will drive a sustainable profit improvement over the years. We in Connect do mainly three things.
We have unified and secured infrastructure and cloud platforms to take care of our customers' data. Number two, we have the people to help our customers transform from traditional infrastructure to the new modern cloud services on their journey in digitalization. Finally, in the multi-cloud era, we have the modern, highly automated managed services to manage our customers' complexity across these different platforms. One great example to talk about this, which I want to mention, is actually our customer, Aibel. It was the customer who asked Tietoevry, "I need to go on a much faster digital journey. I need a digital platform, a cloud platform for help with that." My team in Connect, together with my colleague, Satu's team in Transform, joined forces in actually building the cloud platform, the hybrid cloud for them for the future.
We helping them transform, and we now are managing their solution, so Aibel can keep on being competitive in the market. The market is shifting, and there is a healthy demand both for private cloud and public cloud because of the reasons of the sovereignty requests. It is the public cloud which is driving the fast growth and making this market in Nordic a EUR 6.1 billion market. There is a large part of the growth coming also from private cloud. It's the combination of these two which drives it while the traditional infrastructure continues to shrink as people are moving their workloads to cloud.
It's important to see the end user part of this market, which is a part of what we are doing in Connect, which is growing slowly, but it's a stable market as people need demands of how to access the data for the people and making the people more efficient. What happens then when the workloads go to cloud? How will that impact us in Connect? Well, what we are seeing is with our customers right now and in the market, not everything is going to the public cloud. It's a large part, 50%-60% of the volumes, the workloads are going to cloud, public cloud. When it goes there, yes, the actual platform is the hyperscalers who gonna have that revenue.
All the projects and all the managed services on top of this is actually up to 40%-60% of the same type of revenue as we had in traditional infrastructure. In addition, 25%-30% of the volumes go to private cloud, where a company like Tietoevry Connect will still have the full project services, the managed services, and the platform services. Then we have a part which we nowadays call special purpose platforms. You can call it part of the traditional infrastructure. It's certain part of the workloads which you will never move to cloud. It will not perform. You need dedicated hardware for this part, and that's why as long as the customer keeps those applications, it will run on this, and we will continue to do this.
This kind of change in the market will then drive this change of the portfolio of Tietoevry Connect. We will then go from, in the past, having over, you know, 50% in traditional infrastructure, come to a situation by 2025 where it is just over 25% of our portfolio is traditional infrastructure. The rest of the so-called capacity is in different clouds or in specialized services. This is driven by that we actively will move our customer now to the cloud. We will not sit and wait. We'll actually move them actively. It's a very important part of the story. What we also see is the demand, of course, of the cloud helping us to move this change. We also seeing that the whole cloud-first strategy will drive this and help us on the journey.
When it comes to the end user part, that one we will follow the market, and we're seeing we have a very attractive portfolio, but that will be the same part of our service portfolio as before. Why should the customer choose us in Connect? Why not somebody else? Well, the point is that we have a full offering, end-to-end offering for our customers through the whole cloud journey. That means that we can help them with their traditional infrastructure. We have the people who can actually help them to decide which platform to go to, so they don't make mistakes. We transform them with our 1,000 people we have in our professional services. Finally, we manage their multi-cloud across the whole part.
We are unique in the Nordic to actually being able to do this as we have a full-scale service integrator. Our presence in the Nordic means that we also can help our customers who demand to have Norwegian people in Norway, Swedish people in Sweden, Finnish people in Finland, I should say. I might be a little bit of a wish from a Swedish person here. To have them and actually even being security cleared. We can do that, or if the customer says it's enough with EU, we drive it, and we deliver it from our big large center in Ostrava, which has 1,800 people. Strong partnership is important. We have, again, a long partnership with VMware. We have won their prizes of the most innovative cloud, the first Nordic sovereign cloud in place.
We have announced our new relationship with Google last week, where we will drive the whole Google partnership across the Nordic countries. Microsoft has been there for the last couple of years as a really strong growth partner. Finally, we have the flexibility which the customers demand, both when it comes to the data, where to have it. They can have our platforms in their data center if they need and if they're part of that part. They can have it in our data center, or they can have it in the public cloud, where we manage it for them. The great part is that this is nothing which starts right now. We have 600 of our customer now using our cloud services. One of my favorite is actually 14 municipalities up in the northern parts of Sweden, which is called Norrbotten.
They came together because they were too small to go and buy cloud services themselves, but they understood the need of sovereignty and how to protect their inhabitants of those municipalities. They came together, looked for a partner who could actually build a modern private cloud in their facilities up north and then help them to move all their workloads and manage this. These are one of our best friends right now of how to do this. That's 14 municipalities out of 290 in Sweden, which is a great potential. Another great customer is Ilmarinen in Finland. I think they probably have one of the fastest move into public cloud. We helped them move 80% of their workload into public cloud in the growth part. We ran the project with them, and we're now managing it.
As you can see, we are both in the private, in the what we call the Tietoevry Sovereign Cloud, and we're doing this with public cloud. In order to stay both price competitive and also to drive sustainable profit, this is, as you heard before, a game of scale. The game of scale starts with actually having workloads, having customers, having their applications, and running them. We have the largest number of customers in the Nordic. We have the largest number of workload which are ready to be transformed with our customers. When you have that, you need to move them to scalable platform.
We are the only company who has the same private cloud architecture in Finland, Sweden, and Norway, which means that we can do failover between these countries, especially with NATO coming, that is a very interesting part for a lot of our customers to have that possibility. That means that you have the same architecture. Nobody has that for the private cloud in those three places. We have the strong partnerships, which both drives that we have the latest innovative solutions when it comes to cloud, but it also drives a price point that we make sure that we have the right price point to us, which we can share with our customers. You need to have a highly automated operation. This is about standardization. This is about building an IT factory based on AIOps, so you can reuse it over and over again.
We have that now based out of especially Ostrava, but the same type of tooling can be used in all the countries and out of India. Finally, it's about competencies, people who can redo the transformation for the customers using structural capital in order for doing it faster and more efficient than anybody else in the Nordic. This kind of movement has already started and has been needed for us to change our financial situation. We have driven this over the last two years and again this year to actually increase automation, centralizing operations, and driving, for example, down our SG&A cost. This part had led to that we now have a headcount reduction of 7%. Now productivity on the highest level, now revenue per FTE has gone up by 5%.
This of course then lead to that the profitability moves in the right directions over the quarters. We are on this journey right now where we have set the foundation. I want to say that again, the last two years, we have set the foundations, both when it comes to technology, getting the platforms in place, but it actually had to do about gaining back the trust with our customers. The trust comes from two things: deliver to your commitments and having a future roadmap which they think are attractive. That is now in place, so now we can accelerate the move of our customers' workload to the highly automated, more profitable cloud solutions. When we do that, we will consolidate data centers.
We will also consolidate our legacy platforms, our old cloud platforms to fewer, to actually the mainly two to three of the standardized ones. What we will then do to drive growth right now and over 2025 is following the data. The data does not only come from enterprises, but we have new segments which we are right now exploring and winning deals in, the software companies. The software companies who want to sell SaaS to the health sector in the Nordics, to the public sector, they need somebody to run it in Sweden, in Finland, in Norway. They come to us, we run it for them, and their software is powered by Tietoevry Connect, just to quote one of our customers.
We're seeing the possibility to use channel partners to actually going after the SMB market where they want to have the standard cloud platforms and they want to have a private cloud alternative to the public clouds. What we now are seeing is that with this change, we will move away from actually being an organic shrinking kind of business to go back to growth again. The growth will come from the multi-cloud trends. It will also come from the technology partnerships and go-to-market partnership with the companies you saw on the previous slide. We will also expand into these new market or segments which will bring more data coming to our cloud platforms. Last but not least, it's all about a solid customer retention because we built back the trust with our customers.
The profitability is, as we said, coming from the shift into the cloud services that will go into the much more highly automated managed services part and the consolidation of data centers and platform to fewer. When we do this, we actually will also drive down the investment per revenue from 5% to 4%, coming to from that our data centers will be more colo data centers where we don't own them anymore. When we move our services to public cloud services, it's less investment in the actual platform that's done by the hyperscalers. I just want to finish off with saying that we, and actually together with Transform, are running the Nordic society. We have a very important place to play. Right now, my people are down in the European Commission, where they have asked us to come and talk about Nordic sovereignty.
They see us as the partner to talk about in EU how this should be run. This is done in a market which is growing 9% year-over-year. We have established our platforms ready to take on the growth and the transformation. We will proactively move our customers to these platforms, which will drive the scales on platform, data center, partnership, and automation. This will lead to that we will have a profitability by 2025 of 8%-10% EBITDA adjusted, and we will have 1%-3% growth. With that, I'm ready for some interesting questions.
Thank you, Johan. We have now time for a couple of questions. Who would like to go first? Daniel again.
Yes, Daniel again from Handelsbanken. I guess it's better to rephrase my first question before to you, Johan, instead on the cost side versus what you have in your, yeah, on the CPI and the terms you have with the customers today. If I may, a little bit on security while doing the hybrid clouds, you know, the private or the and also with the hyperscalers, how do you secure the cybersecurity between those APIs, so to say? Thanks.
Yeah. First was the, I think the question about again, our cost versus our price and the contracts, if I understand right.
The energy side.
Energy side. Yeah, actually our managed services contract are long contract with usually fixed prices. The energy part can be addressed in new contract. It actually is not possible in the same way for that. We have certain indices for certain customers. We have that as some standard. There are also customers where, you know, we have promised our prices for a number of years. That's what we add the value to them on that part. We cannot fully gain that into it. When it comes to security part, this is where, you know, how do you make sure that you have the right security between private and public cloud? First, I want to say one thing. Nobody can ever beat, you know, the investments the hyperscalers do in public cloud.
That's why we will never argue about where, you know, you can get security. You can get that in the public cloud. The interesting part is how you do it across. Here's where our partnerships are important. We are working now closely, we announced with Microsoft, that we will be their partner using their technology so they can use that in the Microsoft cloud together with our private cloud. We will build those solutions with a hyperscaler which goes across. VMware is another who helps us to build the foundation across this. It's very important for us to have the right partnership to build those, which we now have.
Okay. Sami Sarkamies, Danske Bank. In the recent years, you've lost important customers and have not been able to reach market growth with your multi-cloud offering. You have also suffered from weak profitability.
Mm.
Can you please explain what you have done to turn the course around and what measures still need to be done in order to reach the targets?
If you look historically, we have been suffering from losing customers, as you said. That comes from dysfunctional relationships, especially which came from one of the companies, from the EVRY side in the past, which drove down the trust with the customers, and that's why we got the churn happening. In order now, we have built back that trust with customers to show that we are delivering to our promises when we insourced this back and have built it up. Now we have gained the trust back. We're seeing that in our, we call it our survey with our customers. It's going up. They believe in our quality again, so that is our sign to do that. The other one is why should we now growing?
The specialization of the businesses which we have done in the last nine months has been very beneficial for Connect. In order to sell cloud, you need to understand cloud. By now we have the specialized salespeople who can actually sell our portfolio, where there was in the matrix, they need to sell a larger portfolio. This is then the way to gain. We're seeing that in both our pipeline, our winning ratio, that this is going in the right directions.
Okay, thanks.
Thank you, Johan. I think it's now time to finalize this Q&A. Thank you very much.
Thank you.
for the answers. Thank you for the questions. Now it is time for our first break. Let's be back in 10 minutes. Welcome back to Tietoevry's Capital Markets Day. We are now moving to the second part of business presentations. We will be hearing how we are accelerating value through software, and we will start with the banking business. Christian Segersven, go ahead.
Thanks a lot. Welcome everyone also on my behalf, and I hope you enjoyed the break. I can see that some of you are still enjoying some of the delicious servings that we have here. I have the pleasure to tell you a story about an expanding financial services software business with a substantial value potential. Due to our competitive software portfolio and expanding global partner network, our addressable market is significantly increasing, and we can clearly now uplift our ambition for further global expansion. Let me now introduce you to Tietoevry Banking. As a foundation of our business and our success, we have a competent global teams who are actually uniquely trained in both the industry, the financial services industry, as well as software and modern technology.
The other leg that we obviously stand on is our competitive software solutions and very broad portfolio of softwares. We are actually covering all aspects of modern banking, making our customers more agile, innovative, and actually highly competitive. Our competent staff, in a combination with the software assets, is actually opening up a substantial global and continuously expanding addressable market for us. We have a solid financial platform to stand on as we now embark on a journey to further expand even more aggressively with a clear global ambition. Today our business is roughly half a billion euro, growing double-digit with a solid and ever improving profitability. We have delivered now double-digit growth for, or close to double-digit growth for seven consecutive quarters. We will make sure that trend continues.
Due to our size and solid financials, we can invest adequately into our portfolio, both improving functionality as well as technology. Our recurring revenue base is year-to-date 69% and constantly growing. We have a very low churn and very loyal customer base, and due to our global capabilities of scalable software solutions and directly addressable market is rapidly increasing and at, as we speak today at EUR 8.5 billion. Our share of global revenue is 30% today, and we have a clear ambition to further expand internationally and globally to change that mix even further towards the international side. I want to highlight the global nature of also our almost 4,000 people.
They are located in 13 countries all around the world, and our global presence actually gives us a unique sourcing base in the era of a talent war that also my colleagues has talked about. Our employee satisfaction also being very high is naturally helping us to keep our attrition low. That's extremely important. What obviously gives me and the whole Banking team great pride is our very loyal and satisfied customer base. We have over 400 customers spanning from the global tier one banks like the Bank of America, the Morgan Stanley, the ING, the HSBC to the Nordic tier ones from the Nordea, Handelsbanken, the DNB, and the likes, all the way to the Fintechs and international payment provider, which is a segment actually growing very, very fast, also expanding our addressable market.
NPS at 47, the net promoter score at 47 in a combination with a very high customer loyalty, it must be seen as the best proof one can get in terms of doing things right. To support our market expansion, providing us with speed and scale, we are working more and more with global partners. Such as Microsoft and AWS on mostly on technology and public cloud obviously. CGI helping us in implementing, integrating in North America, their home turf. IBM, a global partner that have capabilities that actually can strategically help our customers in their transformation utilizing our software assets. They have capabilities to implement, to integrate, and they can even deploy on their global, actually financial public cloud technologies.
Naturally, also, in the cards business, Visa, Mastercard as the global giants are partners that we work with. Let me now introduce you to what can be a little bit complex, which is our very broad software portfolio. It is actually divided into six distinct domains, as you can see here, and they also reflect the main areas of banking and financial institutions. I would just like to make things a little bit more easy. When you think of that you as a consumer apply for a loan, you apply for a credit card, you withdraw cash from an ATM machine, you make a bank transfer, you pay for your groceries with nowadays maybe your watch, your phone, your credit card, you trade or share a fund if you are an investor, you transfer money to a friend.
Here in Sweden, you use Swish, right? In Norway, there is Vipps. In Finland, we use mainly MobilePay or Siirto, or you shop online. These are all tasks when you actually interact with our technology and our software. One could say that we make the financial system spinning, and we're keeping it running on a day-to-day basis. A couple of examples of our value propositions here. Our banking as a service platform is a fit for purpose, scalable, compliant, and API-based modular banking platform, actually running over 100 customers already today with over 12 million bank accounts. Last week, we actually onboarded six new, the newest members of our platforms, six banks in the Eika Gruppen in Norway.
This is a growing community of banks running on our platforms. Cards as a service is a full value chain of modern card services and ATMs, processing six billion card transactions on an annual basis. We produce, personalize, and deliver over 20 million credit cards yearly. Our full suite of payment software enables the real-time economy with already globally over 200 customers in 60 countries, one of our most global business domains, actually. Financial crime prevention, as everyone understands in the era of instability in the world, is of course a domain that grows all the time. Here we have best-of-breed identity proving, know your customer, anti-money laundering, and anti-fraud prevention and detection softwares, real-time monitoring over four billion transactions on an annual basis.
Just to give you a few examples of the areas we work in and a little bit also sort of giving the understanding of the size and volumes that we operate and process on a daily basis. To give you a bit of perspective and potential benchmarks, I want to briefly show a sample set of our global peers here and how we actually differentiate. In the Nordics, we have a dominant position, and we have been part of building the industry already for 50 years. The Nordic banking market, as we coming from the Nordic knows, is seen as the most sophisticated in the world, and being the leader here actually gives us a great position to further expand internationally.
Our solutions that we have been creating for over 50 years are seen as the most innovative, we make great pride in being the front runner in the industry. Already in the 1990s, latter part of 1990s, we launched the first internet bank in the world, some years later, the first mobile bank in the world. That actually ran on the WAP technology, for those of you who remember. We have a proven track record in outperforming the competition in efficiency, like for example, in cost-income ratios for the customers running on our platform. This is of course, extremely important for us to be able to show that the customers running on our software platforms have an ability to be more cost-efficient than their peers. Our customer satisfaction is very high, they appreciate our unique industry expertise.
As said, we do have a large, directly addressable market for our software, and we have set clear ambition and priorities for our product segments to expand and conquer new ground internationally. With our payment cards and financial crime prevention software suites, we have a clear ambition to expand further into Europe and even North America with some of them. Wealth and banking as a service having a more Nordic tier one focus. Most of our investment, as we are a software business, goes into the software portfolio and into our product. What we also invest in to go to market, into our partner network, and naturally also to educate our people.
To take a little bit of a break in just me talking now, I will show a short video highlighting the importance actually of our partners and the collaboration and cooperation with the global partners, they are very key for us in our now and the world to rapidly expand our global market footprint. Let's take a view.
The payments market is changing rapidly. Being cloud-ready has become a must-do step for banks to effectively handle risk while supporting faster time to market for innovative new customer services that encourage growth. As a front-runner in the financial industry, Tietoevry Banking delivers real-time payment solutions on AWS and Microsoft Azure public clouds. Through our market-leading software and global experience, we are enabling customer payments to drive innovation and quickly launch new scalable services. We are now accelerating our global expansion. In North America, we have entered a partnership with CGI. We are taking a new step forward in global collaboration with IBM.
IBM is a cloud and cognitive company, so we can take the capabilities that Tietoevry Banking provide through their offerings and put them onto IBM Cloud for Financial Services, which is the industry's leading public cloud for regulated industries.
A competitive software and substantial addressable market leaves Tietoevry Banking with a great opportunity to accelerate growth and deliver solid financial performance.
As we could hear, of course, for us, it's extremely important to be able to work with global giants in the industry such as, for example, eBay, IBM, that have been sort of a major player and are a major player in the industry helping us to digitalize and transform. This gives us a huge reach and also, of course, sort of scale and speed in expanding our markets internationally. To conclude, I'm proud to share with you our financial ambition for 2025 in terms of both revenue and growth. In terms of revenue, we are uplifting our ambition to 10%-12%. That is driven, of course, by the market momentum and our large customer base where we are able to cross-sell and up-sell.
Also, of course, the market expansion and fast-growing global pipeline, especially in the area of cards, payment, credit and financial crime prevention and of course as we saw also here in the video, the strong global partner network that gives us speed and scale internationally. In terms of profitability, we are uplifting our ambition to 16%-18%. Here we are continuously driving standard software practices which gives us a scale and efficiency, modernizing our technology to more efficiently be to run our softwares. Expanding as-a-service business models to further move the revenues to becoming more and more recurring.
The talent base, I refer to our global talent base here we always, of course, trying to optimize where we source our talents and how we and where we create our softwares. To finalize, a couple of key takeaways also from my side. First of all, as I said, we have a constantly improving and evolving, very competent talent base and software portfolio that enables us to actually digitalize the full financial services industry. We have a global customer base and an ever-increasing addressable market. Our pipelines globally especially improves all the time. We have a solid financial performance track record and a clear ambition to grow and improve even further. This concludes my presentation. Now I'm happy to take on questions.
Thank you, Christian. I think we have time for two questions if you keep answers pretty short. Let's start.
Depending on the question.
Back. Yeah. Aditya in the back.
Thanks for taking my question. Aditya Buddhavarapu from Bank of America. Just very quickly, if I look at the current targets, 10%-12% top line growth, 16%-18% margins 2025, if I compare that to the previous targets for 2023, which were around 6%-8% top line at 18%-20% margin. Now you have higher top line growth, but the margin guidance is low for 2025. I mean, what's driving that? Very quickly, are you seeing any decision-making delays from customers? I think one of your European peers flagged that recently. Are you seeing anything on that based on some macro concerns in customers?
I capture. Yeah. Two questions actually. First of all, yeah, due to our now more aggressive market expansion, we are able to uplift our growth ambition, which is great, also comes through the network of partners we work with and standardizing our software that it scales. That is one. That's a positive thing. It is true that we take down the profit ambition from 2020, the last CMD, a bit. Actually two main drivers here. One of them is the inflation that hits us both on technology and on labor cost.
Another aspect is actually the carve-out and related reclassification of tax grouping, which is a little bit of a complex thing that actually gives us a little bit of headwind as well. Those are the primary reasons. Obviously, also aggressively investing now in growth and expansion that usually tends to have a little bit of an impact on profitability. Those would be the main reason.
Anything you're seeing on customers right now?
Yeah, sorry. Not actually at the moment. Of course we are trying to have our sight in the binoculars at all the time. Our demand for our services keeps on being high, both in terms of upselling, cross-selling where we are already and growing global pipeline. We don't see that yet, but we are of course cautious on the situation in the world.
Thank you.
Let's take one more. There was, I think Jakob was the first one.
Jaakko Tyrväinen from SEB. Looking at your Nordic customer base, how comprehensively they are using your solutions, i.e., is there significant upsell potential still with the Nordic clients? Does the Nordic growth have to come from outside the existing clients?
Yeah, that's a great question. For all our business domains, for all our software, there is significant potential to still grow in the Nordics. Definitely we are not finished here. We have significant potential. However, naturally, the potential in Europe and internationally, globally is even bigger because our market share are much smaller. Definitely all our services are growing and we have potential to grow in the Nordics. However, the focused investments in taking some of them now more aggressively into the international arena, where there is even bigger potential. Our addressable market that we now talked about of EUR 8.5 means a combination of the Nordics as well as European.
This is not yet a global market that we are talking about, but a European, international, European plus, I would say.
Thank you, Christian.
Thanks.
All right. Our next speaker is running not only one, but actually two of our software businesses. We will start with Care, and Ari Järvelä will come to the stage to explain how we are expanding high-performing Care software, and accelerating value creation. Ari Järvelä, go ahead.
Good afternoon. Pleased to go through how already high-performing Tietoevry Care business will accelerate the value creation further. Tietoevry Care is the leading Nordic social care and healthcare software provider. We develop open and modular software for full care value chain. We have a consistent track record of delivering excellent financials in the Nordic markets. We have four distinctive software families: healthcare, social care analytics, and laboratory. We are the market leader in Finland under healthcare in hospital information systems and care analytics. Our social care and laboratory softwares are Nordic leaders. We create value by innovative software developed in close collaboration with our 1,500 customers. We are EUR 230 million in revenue, of which close to 70% is recurring. Our software cares for millions of citizens annually in the Nordics.
In helping 50,000 care workers to serve four million patients in Finland, by facilitating 10 million Nordic citizens with our social care software, exploring 500 terabytes of data for better treatment, and processing 300 million laboratory results annually to help doctors to find symptoms for faster recovery. I have here two customer cases. One is from Helsinki University Hospital, when our data platform combined with AI solution has revolutionized the diagnostics of rare diseases. We compile the data, integrate the data from 70 back-end systems, utilize our AI and machine learning solution to understand the data quickly. We have a intuitive user interface for researchers and doctors. With this we have brought significant cost savings for the hospital when the diagnostics and the recovery has started quickly. Not to mention the benefits for the patients itself.
Actually, based on some of the results, we have examples where our AI has detected the rare disease several years before it was actually diagnosed. Cool story. The second thing is from Skellefteå Kommun, Skellefteå Municipality here in Sweden, where we have implemented the full-scale social care system. The municipalities can apply financial assistance as an example anytime, anywhere. For social care workers and the municipality, we have automated the backend workflows, including the decision support for better case management. When looking at the care market overall, we can see aging population with increasing amount of chronic diseases, putting a huge pressure to the whole care system. I would even claim that without a giant leap in digitalization, the whole system in the form that we know it today, is in danger to collapse.
On the left-hand side, you can see the multi-layered service model provided by several private and public sector service providers not actually being connected to each other. This has brought the challenges like disparate systems bringing inefficiencies to the whole value chain. Limitations or even lack of holistic user-patient experience. Too much cost is carried in the high cost settings like secondary care at the hospitals. Compared to any other industry, I claim that the healthcare sector has fallen behind in the pace of digitalization, partly because of the lack of usage of open standards. These challenges have brought the demand of the convergence of social and healthcare to drive the lower cost of care settings like home care and virtual care. In order to be able to do that, the care system needs to be personalized.
There needs to be a digital interface for citizens. In order to be able to do that, there needs to be the data fluidity between the systems to detect the persons early enough, symptoms early enough, and to start preventive actions. These two requires open modular architectures. We at Tietoevry Care, we are uniquely positioned to capture this demand because number 1, we are the market leader in both social care and healthcare. Hence, we are in the pole position in this social care, healthcare convergence. Number two, with our Medical Device Directive certified data platform, together with our AI capabilities, together with our proven references, we are the partner of choice in data-driven care for better clinical and operational decisions. Since we are the pioneers in this open and modular software architecture, we can bring this digitalization efficiency widely in use in the Nordics.
We have an attractive market here in the Nordics. Total addressable market for our software is approximately EUR 700 million, growing 6%-8% annually. There are certain pockets like this care analytics, where I expect even 30%+ annual growth. We are the market leaders in Finland and in Sweden. In Norway, we are in top three. I expect huge step up in the market share in Norway, but also in Sweden. In order to be able to capture this opportunity, we are elevating our software R&D investments from the current 11% up to 13%-14% level. The capitalization will be from current two percentage point up to three-four percentage point. The main investment areas is to further personalize also our software from citizen point of view, but also from the care worker's point of view.
Build the next generation operational excellence software suite to integrate social care and especially primary care in the healthcare sector. Further package our data platform and care AI solutions for rapid scale up. Continue the transformation to open architectures, including software as a service in certain software products. With this market opportunity and the investments, I firmly believe that we can reach the growth rates of 12%-14% with extremely healthy profitability levels. The growth drivers overall is to increase the share of wallet, especially, like I mentioned, in Norway and Sweden with the full social care and healthcare suite. Increase the addressable market with our care analytics software and operational excellence. Some part of the growth is coming also software-as-a-service transformation. Profitability drivers are twofold. First of all, we are elevating our investment levels to capture this growth opportunity.
On the other hand, we have a relentless focus on our internal efficiency, especially in software R&D through automation, as an example in testing and deployments. We are already on a extremely healthy level what comes to both software and recurring revenue. I see the main shift happening now to gradually increase the portion of software as a service. I still claim that during the next few years, that the software as a service model will remain in relatively modest level at Care because of the customer requirements, especially data privacy and business continuity or operational continuity. The recurring revenue will go up from current below 70% level somewhere to 70%-73% accordingly driven by the software as a service transition. In the next two years, the main focus is to win the Nordic social and health reform.
We know that Finland is embarking the social and healthcare convergence, establishing well-being areas. We want to be the key driver of that transformation. Sweden actually has the legislation initiative in the same area, how to ensure the data connectivity between social care and primary care. After FKJ in Norway has the similar ambition to integrate social care, elderly care to primary care for faster recovery and move to lower cost of care settings. We want to be in the pole position and the vanguard of that change happening. 25 onwards, we are pursuing the selected European market with proven products. I want to confirm that the financials presented are only covering the Nordic part, and we will come back to you with this European strategy when the time is right later on. We are the high-performing business.
We are the Nordic leaders in health and social care sector. We are the pioneers in open and modular software for the full care value chain. We have extremely high growth and profitability ambition and proven track record to deliver that. Thank you. It's time for questions.
Excellent, Ari. Thank you very much. Time for the questions. George.
Thanks. It's George Webb from Morgan Stanley. A couple of questions. Firstly, in Kimmo's section at the start, there was a mention that Create and Care will have a focus on scaling in 2023 and 2024 inclusive of M&A. Are there any specific areas that you're interested in as the division head? Are they tech-focused, footprint-focused? Then just secondly, on the SaaS strategy, looks like there's still gonna be a big chunk of license and maintenance in 2025. Is this a, is this a pool-based approach? You're gonna offer customers both choices? Is that the idea?
Okay. Thank you for the question. The first one, all the financials, like Kimmo mentioned, includes only certain small portions. Otherwise, it's organic. We do have certain ambitions, of course, what comes with that direction. I would say that especially 25 onwards, possibly if we are looking at the other markets, but I wouldn't start to speculate now until we have a firm plan. Software as a service, we can offer certain amount of, or certain products in our portfolio are SaaSified, and we can offer them both from software as a service or on-prem. The wide portion, like I take example, this hospital information system, at least so far, customers are relatively reluctant in going, especially the public cloud. The main reason, two main reason already mentioned is this data privacy, and secondly, the operational continuity.
They want to ensure that they will not be disturbed by any network challenges and the likes. I would say that latest conflicts in Europe has even strengthened those opinions based on my discussions with several customers.
Thank you.
Sami.
Sami Sarkamies, Danske Bank. It would be interesting to hear your comments regarding the Finnish health and social care reform, as this would seem to create plenty of demand for you. How do you think it will materialize? Will it be more about replacing existing systems with new ones, or is there just going to be a lot of system integration and professional services type of integration work?
This is a bit speculative because I have to say that those well-being areas, they are only now about to be established. I have had several discussions with the leaders who's, who has been nominated. They will be a step-by-step approach. The first six months I would guess is focused on administrative system softwares like payroll and the likes. What comes after, it's still actually pretty much open. I would claim that in, at least based on some customer dialogues, that they keep the transactional softwares, for example, hospital or patient records and the likes pretty much as is in the first stage.
They introduce, like we have now, the new software suite for operational efficiency to integrate that on the data level and same with this data analytics and AI, and that would be the first step. Over the time, I guess that there will be harmonization of core systems also. Most likely something like that, step-by-step approach. For sure there will be a plenty of opportunities in professional services for... also for us because our customers need a lot of guidance and help in how to do this architecture actually, and help them also implementing that.
Thanks.
Markus, Robur. You almost achieve Rule of 40. You're aiming for Rule of 40 at least. How do you work with prices? I mean, how long contracts? Do you have inflation clauses, or how do you sort of work with pricing power?
Yeah. We have the clauses in most of our contract. They are typically tied in certain indexes like labor cost increases and the likes. That is happening. We have relatively well mitigated the inflation from that point of view. Was there another question or?
Yeah. I mean, with costs moving around-
Yeah
... just to make sure that you're sort of resilient.
Yeah. The on the cost side, of course, like I already mentioned, we still have an opportunity to improve in, especially in R&D efficiency. It happens through automation in deployments and testing as an example. Some 25% of our workforce is currently in lower cost countries. I can see somewhat increase in that going forward also.
Thank you. Last question from Felix.
Thanks. Felix Henriksson, Nordea. I'm still trying to wrap my head around the sort of software as a service penetration of your business. Could you just then clarify what exact parts of your business can be SaaSified? As you mentioned, that some can and some cannot.
Okay. What we can and what is already now fully SaaSified is, for example, of our care analytics. That is part. That represent currently less than 10% of our revenues, amount is increasing. Like I mentioned, I expect some 30% growth in that one, That can be SaaSified. We have this operational efficiency, especially the social care part of the software. We have a Software as a Service, a transformation ongoing. I see slower pace in hospital information systems with the reasons I already mentioned.
Thanks. Appreciate it.
Thank you, and thank you for the questions. Ari, ready for the second round?
Absolutely.
Great. Industry next.
Thank you. Okay. I continue smoothly to Tietoevry Industry. Tietoevry Industry is a portfolio of specialized software and platform with the potential of accelerated growth. We are EUR 270 million in revenue, serving 5,000 plus customers in more than 50 countries at the moment. 69% of the revenue is recurring. We develop software to niche market segments. We want to support the critical functions and processes of our customers. We add more value through data and advanced analytics integrated to our software. We are the market leaders. We focus on market leading softwares and platforms. Public 360° is our case management with 20% market share in the Nordics. We have 45% market share in learning and school administration software in Sweden. Our production system for paper mills is globally the leader.
Purchase-to-pay process automation has 50% market share in Norway. 20% of consumer related billing and invoice volumes is driven by our platform. We have a growth bet in energy utility sector related to asset and data management. 700 million transactions in our industry messaging to keep supply chain of food and medicine up and running in Norway. 300 out of 500 paper mills which use the standardized software has selected our TIPS. 300,000 civil servants in public administration use our Public 360. I have two customer examples here. One is from Public 360, where which is trusted by the government offices and ministries in Finland, Sweden, Norway, and Denmark.
Policy making, including the legislation preparation, requires secure, traceable, correct follow-up of any and all reviews, changes, and approvals of the document. We have brought this capability to the core of national decision-making with automated workflows. Our distributed energy solution is one of our growth bets. Cloud-native platform to help energy and utility companies to balance their supply and chain. St1 has connected multiple distributed geothermal heat pumps to our platform, and we have established one virtual power plant. With this, they can manage the heat production in comparison to electricity consumption. We have brought significant cost savings when St1 can avoid the peak prices of electricity. Like I mentioned, we focus on specialized software for niche market segments. When we are then developing and having this focus, we have a clear criteria of how to do that.
Number one, when they have specialized the niche products, typically, there's less competition from global giants. Typically, this segment is too expensive for bespoke software development. With this, we have created the competitive position. We support the critical functions and processes, and with this we have achieved the stickiness and sustainable pricing. We want to be the leaders in each of the segment that we are investing in. With this, we achieve the scale and good profitability. All of our softwares, they are self-funding when it comes to investments, and they are all cash generating. With this, we have 5,000 and increasing amount of customers with extremely low churn, high level of recurring revenues, and excellent profitability. The market. In this segment or data center industry, to be honest, defining exact the market is a bit difficult. We estimate that to be EUR 2 billion.
In paper segment, it's global market. Other segments presented here are Nordics. We have ample room to grow in paper, where we increase our addressable market by moving from traditional paper industry towards tissue and packaging. In energy and utility, the current energy crisis actually has boomed this demand of our distributed energy solution, and we have many discussions ongoing at the moment. This whole product suite is just launched. For data services, billing and invoicing, and public sector, we see stable development, and we have ample room to increase our market share in the Nordic countries. We have diligent investment to our software, representing some 8% of the revenue. The key investment areas is case management, moving to SaaS, expansion the production, paper production system to tissue and packaging.
For all of our software, naturally, we are all the time adding functionalities to drive more value and create more addressable market. We have continuous technology renewals, especially in our platform businesses, to keep the profitability high, then we bring in automated workflows to our customers and add value through that. With the market potential, with the smart investments, we can accelerate the growth to 8%-10% with sustainable 20%+ profitability. The growth drivers are software-as-a-service transition and market share increase in Public 360°, expansion of our paper production system, and market share increase in billing and invoice and data services in the Nordics. The profitability improvement drivers are twofold. First of all, we have hard pruning of our end-of-life products.
We improve our R&D efficiency by increasing our offshoring ratio from current 30+% to 40+%, and we increase the automation, especially in testing and deployments. This automation happens naturally when we are doing this SaaS transformation. We are on a healthy level, both in software revenues as well as in recurring revenues. What I see currently is still room for improvement in software as a service and subscription-based business model that is also driving the financial visibility to our software businesses. Similar to health, also here, the professional services will remain in an important role since we are doing our own pro- software consulting, integration and implementation work. Near future focus is twofolded: grow and expand our existing growth beds, case management, data services, paper production system, and drive the portfolio pruning, including the end of life of certain products.
2025 onwards, we scale this further up with possible market expansion, but in a similar manner than in health, I'm not starting to speculate it now. We need to be ready for that. Tietoevry Industry is a portfolio of profitable specialized scalable software. We want to be leading in the selected segments. We are well-positioned to deliver the value and attractive financials going forward. Thank you, and time for questions.
Thanks, Ari. Excellent.
Thank you.
presentation again. Questions, let's take Daniel here in the front row.
Thank you very much, and two questions from me. First, on the revenue mix. You aim for 57% Software as a Service coming from 48% roughly last year. My question is this mainly from the new deals you take that is more Software as a Service tilted, or is it also including a large chunk of migration of the existing clients?
Yeah. Thank you for the question. It comes mainly with the new deals, and the biggest growth is in Public 360° case management. In our current portfolio, the biggest part of the software as a service is in data services as well as in billing and invoice, and we have a growing part in Public 360°. It comes from big part from the new customer acquisitions we are utilizing our software mainly as a software as a service.
Also, if I may, on the expansion, towards tissue and packaging segment, for your paper production system. Can you comment a little bit on that market when it comes to competition, for example, will you need to compete with, like, SAP, et cetera, for this? Also, where are you in the investment phase, towards this expansion? Thanks.
Okay. Well, I take the first one. We have, we started the investment already in 2021. We have existing software package, and we have a good traction in the market, and we have plenty of references and customers also up and running. From that point of view, it's good. The position where we are, we are actually... You referred to SAP, which is the ERP layer. Our system is a so-called manufacturing execution system, which is on the factory level. It's between this ERP and the base automation. The main competition is not coming from traditional software companies. More companies like ABB, Honeywell, and the likes.
Yes, there will be certain amount of competition, but we have got, and I said, good traction, in that expansion, and that business is growing rapidly.
Thank you.
Then, Felix.
Thanks. Felix Henriksson, Nordea. On the sort of roadmap slide, you showed that, you know, portfolio pruning is an active exercise and you're, you know, saying what you're doing with the sort of non-performing businesses. Can you disclose any sort of metrics on, you know, how large of a share do you actually consider your business to be sort of non-performing? To follow up on the structural theme, you sort of compare yourself to Vitec and consolidation software. Are you actively scouting for M&A targets to grow by that?
Whats to M&A, M&A targets, in the numbers we have, that small bolt-on M&As included. Otherwise, it's, it's organic. Going forward, there might be temptates or possibilities 25 onwards, for now, we are focusing on organic growth with certain bolt-ons. The first question was related to-
The portfolio pruning.
... portfolio pruning
which businesses-
Like in all portfolio businesses, we have certain amount of legacy systems. In our portfolio, it's relatively minor. We don't have huge amount of so-called challenged portfolio. It's about 10%, less than 10% actually of our revenues. We require and we want to speed up the portfolio pruning to have on a good ground and start this growth trajectory.
Thank you.
Thank you. Eric.
Øystein Elton Lodgaard, ABG. To my understanding at least, the case management market is relatively consolidated. In which markets do you expect to see the largest potentials in taking market shares going forward?
We are the challenge, in Finland as well as partially in Sweden. Those are our target market. We have a good and I would say even dominant market position in Norway. There I can see, relatively modest market growth.
Thank you.
Thank you. Now we have time for one more question if there's anything. If not, thank you, Ari.
Thank you.
It is now time for our second break of the day. Let's continue in about 12 minutes, so at 3:45 P.M. local time. Welcome back. We are now moving to the third part of our business presentations, and we will be hearing how we are accelerating value creation through digital engineering. I'm pleased to welcome Christian Pedersen to the stage.
Thank you, Tommy. On behalf of the full Tietoevry Create team, it is fantastic to be here today and get this opportunity to introduce you to our exciting business in the field of engineering, data, and design. The world is going through a green and digital shift. Both private companies and public organizations are turning to digital to create new services and new products, to improve their current service experience, reduce the environmental impact of their operations, and to uplift their efficiency and productivity. This green and digital shift is creating a massive demand for our services, and we are well-positioned to capitalize on this and aim to capture and create value for all stakeholders, our shareholders, our employees, and our customers. When you think about our business, I would like you to think and remember three things. That we're advanced, that we're impactful, and that we're global.
I'm going to talk you through all three characteristics of our business. I'm going to support and illustrate with customer examples, and we will start with advanced. We are a highly advanced engineering, data, and design business. For and with our customers, we build large-scale, data-intense systems that makes an impact. These large-scale systems are being built utilizing the latest technologies, supported by modern tool sets and modern ways of working. Our engagements normally start small. We start out building a feature. Several features becomes a function. A group of functions becomes an application or a digital product. That application or digital product might evolve into a platform, and some of these platform even becomes their own companies or own business. Whatever we're asked to build, we are often asked to enhance further, develop, and improve.
The typical engagement cycle starts small, it grows, and it's long-lasting. As an example of advanced, I'll take our engagement with Goodyear. It started out originally with a small team developing a small piece of software. Today, this is a very large team. The small piece of software has evolved into an advanced application. It's location-aware, it's data intense, it's a predictive tire maintenance systems that improves road safety, introduces better cost efficiencies, and it reduces CO2 emissions for anyone equipped with a car or a truck that has Goodyear tires. I would like you to think of and remember us as impactful. We aim to work on things that matters. Matters to our customers, matters to our employees, and matters to society. As an example of that, I'll take the work that we've done together with Offshore Norge.
Together with Offshore Norge, we've developed something called virtual inventory. Virtual inventory enables the 12 operators on the Norwegian continental shelf to share spare parts and tools. You should think of it as any of the shared economy platforms we as consumers get to use and benefit from. The industry themself says that they've saved NOK 1 billion in avoided downtime due to better handling and sharing of spare parts and tools. I would like you to think of us as global. We normally, and in most engagements, work in a global engagement model. The global engagement model means that we will deploy and start engagement with vertical competent, slim stateside team. From there, we will scale the engagement utilizing our global competency centers to the benefit for ourself and also for the customers. All four examples that are present behind me are global in nature.
I'll take the two latest one. Quite recently, we announced a partnership with HCL Technologies. Together with HCL Technologies, we're developing the next generation infotainment systems that will be found in current and future Polestar and Volvo car models. The engagement started off with automotive experts, and we're scaling the delivery by using our global competency center. Six weeks back, we also announced a partnership with Bose. Same model. Our consumer electronics experts working together with our automotive experts won the initial engagement, start the engagement, and they scale out the delivery by building a new engineering center of excellence for Bose in Warsaw, Poland. To give a little bit more insight to the global nature of our business, I'll introduce you to this map. We do business in three core markets, Nordics, Western Europe, and North America.
Almost 50% of our business and revenues originates from outside of Nordics. As for talent, two-thirds of our talent is located outside of Nordics, Asia-Pacific and Central and Eastern Europe. I think also I would like to underline that, you know, some of the big markets for business is not necessarily the same markets for talent. I'd introduce you to how we view our business. For us to be truly successful, for us to play in the league of the best, for us to compete and win against our new peers, we look at our business in four dimensions. Four dimensions that we need to grow, manage, and develop in. First and foremost, we compete for business. A large and fast-growing market.
We do not only compete for business, we also need to address, compete, and win the talent. Thirdly, we need to manage our expertise, skills, capabilities, and competence agenda. Finally, we need to lead our performance and drive our scalability. In our business, the key performance factor are on the revenue side, how well we do talent attraction and retention, how well we do utilization, how well we do pricing, and we need to clearly manage our costs. The key scale factors in our type of business is how well we manage and develop the pyramid, and even more important, how well we manage and utilize our global competency centers. I would like to remind you that these four dimensions should not be seen in isolation. If we are successful in winning business, winning interesting engagements, it's easier to win in the talent market.
If we are successful in driving our scale, it's more likely that we will win business. These four feed on each other. I'll now take you through all four and our plans on how we are going to develop, grow, and improve in all four dimensions. We'll start with the market. We're addressing a large market. We're addressing a market of EUR 500 billion, and it's growing rapidly. We are expanding our business in Western Europe and North America, and we're doing that by leading with our three global segments: automotive, telecom, and consumer electronics. All three segments are growing rapidly today with growth rates of 20%-50%. We are leading with the global segments, and then we are coupling it with the global engagement model.
Whatever business we win, we will have a small stateside team, and then we will scale the engagement using our global competency centers. We do see business growing through the three global segments, we're looking into establishing ourselves in several new global segments where we see strong software and data engineering demand. Moving to the talent side of the equation where the situation is very different. Today, it's 40 million open tech positions worldwide. We believe that that number is going to quadruple over the next five years, meaning that there will be 160 million open deep tech jobs available worldwide. We're doing well in the talent market today. I'll give you a few data points on how we're doing in talent retention and attraction. We've grown our talent base in Tietoevry Create with close to 6% so far this year. We've sorry.
We have a high and rising employee engagement of 85, we have a very high employee NPS. That being said, and with the backdrop, what we do today will not be good enough to win in the talent market of 2025 and 2027. We aim to uplift our talent agenda even more, and we are doing that by first expanding our addressable talent market by establishing ourself in new sites in Europe. We are driving our continuous learning and development agenda for all our employees, and we have a huge opportunity in coupling all the engagement we have worldwide and exposing that to all our employees. The combination of the two will allow our people to grow and create career opportunities for themself that we're not able to provide today and that will set us apart from the rest of the competition. Sorry.
We need to drive our competencies, skills, and capabilities agenda. We will continue building out our horizontal capabilities. The four key practices: design, cloud, engineering, and data. We will continue to add vertical expertise that I've talked about, and we will combine the two. We will combine the leading horizontal experts and the leading vertical experts into an advisory function that will be able to lead our customers on and through their digital journeys. The fourth dimension on performance and scalability. There's two performance factors where we have room to improve. We can go faster than we are doing today. We can go faster in talent acquisition, and we can go faster in the time from people join us to we deploy them in meaningful engagement. The other performance factor that we can improve on is pricing. The world around us is changing.
Digital is becoming a business priority. Our buyers shift from the traditional IT side to business. The other dimension is that as the world shifts towards business, digital shifts towards business, this demand supply situation changes, meaning that demand massively outstrips supply. Combining the two, we will drive our pricing logic towards value-driven pricing. On the scale factors, leading with the global engagement model will help us and our customers to grow faster and get their services and products delivered faster. Leading with global engagement model will be key for our uplift. We have one thing we can improve on, and that's our large customers. They would like us to do more for them, so we will concentrate our resources on our key customers.
That's important for many things, including growth and profitability, but also because we would like to work on things that matter, as I said in the beginning. In combination with larger engagements, working on things that are important drives our employee engagement and also our employee retention. Combining the four dimensions, competing and winning business, competing and winning talent, driving our expertise and capabilities agenda, and driving performance and scalability, we aim to deliver 14%-16% revenue growth, where the revenue growth will come from the global segments driven in North America and Western Europe and staffed in our global competence centers. For profitability, we aim to uplift that to 14%-16%, where the key contributors are the operational efficiencies.
I talked about the pricing transformation towards value driven on the basis that business are now buying our services and the fact that the world is resource-constrained. The global engagement model will also help us towards the profitability ambitions we're putting forward today. To sum it all up, we work on things that matters to employees, to customers, and to society as whole, the large demand for our services. We are expanding our addressable market, both on the business side and the talent side, and combining that with our scale and performance factors. Our 2025 ambition is to deliver 14%-16% revenue growth and 14%-16% profitability. With that, I'm actually going to end here and open up for questions. Thanks for listening.
Thank you, Christian. Very impressive indeed. Questions? Sammy, I think, was the first one here.
Thanks. Sami Sarkamies from Danske Bank. I think there have been some current concerns earlier today regarding the business outlook for next year. Can you tell us what you're seeing at the moment when you look at your customer base? There is decision-making. What, what are you kinda like assuming will happen next year at Create thinking about the growth momentum?
I mean, there's certain signals that the economy is moving into a slower growth pace or even a declining, right? Currently we're still resource constraint. We have still larger demand from our customers than we can supply at the moment. That's still the situation as I'm standing here today. We do see some softer signals, but we follow it closely, but nothing major at the moment. On the other hand, I think, if you look at the development the last two years, the market has been growing extremely rapidly, right? We've struggled to keep up with the resource side. Maybe it's beneficial if it slows down a little bit without actually asking for a major downturn.
Maybe follow up, how comfortable are you with a 15% organic growth target? It's a bold number and, I mean, obviously you need to be finding good demand, and you also need to be finding resources. Is that a doable number?
Yes. It's doable given that we manage to drive our business on the four dimensions that I took you through. It's absolutely doable. It doesn't come easy, but it's possible.
Thanks.
Daniel.
Yes. Just a question on your Nanjing delivery center. According to the map here, you're aiming to supply a lot into Europe from China. I was just thinking if you can share with us the, your, the current status and the, also when it comes to order backlog, et cetera, if it's business as usual given the, you know, trade war, et cetera, we see in the world right, ramping up and the strategy with China? Thanks.
No, good question. We're around 1,000 employees in China today. We're deliberately, all the new sites we're setting up is in Eastern Europe and Central Europe. Out of 9,200 people today, we're very resilient in the form that we have people spread around most of the world, and we're deliberately now investing and building sites in Central and Eastern Europe. The business is still going fine from China.
Perfect. You see no hurdles, you know, from the NATO like things that? Because you supply mostly towards Europe, I guess, from China, or it's a former Ericsson-
Yeah
... R&D site.
Okay. I'll underline the following. All our customers that take service from China today, they're also present with big operations in China themselves.
Okay.
Mm-hmm.
Perfect. Thanks.
Thank you. Jaakko.
Could you elaborate a bit, how has your employer brand or employee satisfaction developed since the announcement of this new segment or division structure last year? How does your employee brand differ between the Nordics and then looking at globally?
Yeah. Starting with the talent attraction. Since we announced the new strategy last year, we've done three surveys this year on employee engagement, and it's been rising throughout the year in Tietoevry Create. When the last survey was collected three weeks back, I do recall, and we were at a high 85, and it's been rising through the year. We've added 6% to our talent base this year in Tietoevry Create. As for the talent attraction and the talent brand, it's somewhat different in the different market. We have a very strong brand in the Nordics.
I think the good news when we look at this, you know, congested talent market is that we're big in some of the small talent markets of this world, like the Nordics, and then we have ample room to grow in Eastern Europe, Central Europe, and Asia. That said, a lot of the people that do join us, they say that out of many options, there's very few with a Nordic heritage and Nordic value set. In that sense, we're a little bit different from our competitors in those talent markets.
Thanks. A bit of a technical one on the, on the sales and growth. How large share of the international revenue is coming from the Nordic customers that you have?
Sorry, can you repeat the question?
Meaning the global revenue outside Nordics, how large share of that is coming from the Nordic clients that you might have?
Yeah, I don't have that number in my head, and I need to go back and actually figure that out. Fundamentally, almost 50% of our revenue origins from outside of the Nordics.
All right. Thanks.
Thank you.
Thank you. Thank you, Christian.
Thank you.
All right. Time to move to the last presentation of the day. We are well positioned to deliver attractive shareholder returns, and the day will be summarized by our CFO, Tomi Hyryläinen
As the last presenter of the day, I have the pleasure to summarize to you why Tietoevry is an attractive investment opportunity. Let's start with our value creation proposition. The foundation of our value creation proposition is the uplifted financial performance of our six specialized businesses. We have today heard the market opportunities of the respective businesses and how our managing directors will capture the growth opportunities while delivering improved profitability. Second, we intend to accelerate value creation from the strategic reviews of banking, transform and connect, as explained by Kimmo earlier. Thirdly, we have an optimized capital allocation policy, which is supporting the profitable growth of the businesses while continuing with attractive dividend levels. Before looking at our new uplifted financial ambitions, let's look at how we have progressed towards our old ambitions which were set for 2023.
On growth, we had an ambition to grow 5%, With our guidance for the year of 5%-6%, we are tracking well to reach that ambition. On profitability, our ambition was 15%, With our guidance for the year of 12.8%-13.1%, we are tracking below that ambition with one year to go. Needless to say that this high-inflationary era is impacting the pace of profit improvement for the company. I will talk more about this later in my presentation. On one-time items, we aim to be at around 1%. This year we are tracking towards 2%. That is impacted by the exit from Russia, the continued war in Ukraine, and somewhat higher one-time cost from the performance improvement programs in our businesses due to high inflation.
On dividends, we have been increasing dividends annually with one exception of the COVID-19 year, and we have reached our leverage target below two well in advance, as commented before. It's fair to say that we have made solid progress towards our 2023 financial ambitions. Let's look at our new uplifted financial ambitions. Our growth and profitability ambitions are business-specific. As aggregated at group level, our growth ambition is 8%-10% and profit ambition 15%-16% as adjusted EBITA. It was commented before as well, but still important to summarize the growth ambition includes only minor bolt-on M&A, and anything larger will be adjusted for. On leverage, we have defined an optimized healthy leverage range of one to two , and I will discuss more about that later in my presentation. On dividend, we will continue with increasing dividends annually.
On this slide, I have a summary of the financial ambitions of our businesses. As you can see, we have two very different performance profile businesses. With software and digital engineering, including Create, Banking, Care, and Industry, the combined growth is from 12%-14% with adjusted EBITDA of 17%-19%. On managed services and transformation, consisting of Tietoevry Transform and Connect, the combined growth is 1%-3% with adjusted EBITDA of 9%-11%. Having these very different two performance and valuation profile businesses in a group is not optimal from the capital markets point of view. It creates a valuation discount for the group compared to the sum of the parts valuation.
We believe that the announcement made today on strategic review will release this valuation discount for the benefit of our shareholders while ensuring better growth and scale opportunities for the respective businesses in the future. In this slide, I will explain to you how Tietoevry is positioned in this era of high inflation and the potential macroeconomic slowdown. The key point to understand is the length of our customer contracts. On the right-hand side of the page you can see that approximately 60% of our revenues come from the long-term contracts with our customers with committed revenues. The smallest share of the long-term contracts, it's with Create, followed by our three software businesses of Banking, Care, and Industry, and the largest share of long-term contracts in our Transform and Connect businesses. These long-term contracts provide us good resilience towards any potential macroeconomic slowdown.
This resilience does not, however, come without some negatives. This resilience impacts our or has a lead time how we increase our customer prices. We estimate that the lead time for us is 6-12 months, which means that as of today, we are not fully able to mitigate against this sudden high inflationary cost increase. That's visible on the left-hand side of the page. Moving into our investments, we aim to invest into profitable growth. For us, this means that we have defined a group-level investment frame which takes into account the business-specific needs. To ensure effective capital allocation, we have defined investment return criteria, which aims to deliver business-specific accretive returns. All investment decisions are made in the specialized businesses. We invest primarily in two categories, in offering development and in fixed assets.
Our offering development investments are focused on software and solutions and are in the range of 4%-5% of revenues, of which 1%-2% of revenues is CapEx. On fixed assets, our investments are approximately 1.5%, those are focused on data center technology refresh and facility upgrades like this fabulous location where we are today, Stockholm Arenastaden. Tietoevry has a strong financial position. We have robust capital structure with secured liquidity. Our liquidity is secured through our healthy cash balance, well-functioning commercial paper market, and unused revolving credit facility of EUR 250 million. We aim to continue with strong cash flow generation, which is supported by the uplifted performance of our six end-to-end businesses, as discussed before. We have defined an optimized leverage target range of between 1-2 of Net Debt/EBITDA.
This means that at the high end of the range, it tells you that we do not intend to be a highly leveraged company. At the lower end of the range, it tells you that we do not intend to run an inefficient capital structure in the company. We have set a potential activities which are mentioned on the slide as well. When we are above the range, 2x, we focus on deleveraging with only limited strategic M&A potential. When we are below 1x, we consider extraordinary shareholder distribution in a way of dividend or share buybacks. Into our capital allocation policy. Firstly, we invest back into our businesses to support the profitable organic growth of our businesses. This relates to the 4%-5% of offering development which I talked about before.
Second priority is to increase dividends annually and to invest into strategic M&A, primarily in the businesses of Create, Care, and Banking. The third priority, extraordinary distribution to shareholders, is relevant, as discussed, when we are below one in our Net Debt/EBITDA metric. Here is my key slide. Why is Tietoevry an attractive investment opportunity? We continue with our attractive dividend policy of increasing dividends annually. Our share price development is supported by many favorable elements, such as improved growth profile to 8%-10%, improved profitability to 15%-16%, realization the value from the strategic reviews of Banking and Transform and Connect, and good to remind the, of the resilience of our businesses. This is how we intend to maximize shareholder return at Tietoevry. Thank you. Now time for the Q&A.
Thank you, Tomi, and welcome Kimmo back to the stage as well. Now we are ready for the final Q&A of the day. Who would like to go first? Is it so that there's no more questions from anyone anymore? Good. I think everything is clear. Thank you everyone for participation, and then I'll hand over back to Kimmo now for final remarks.
Thank you very much, Tomi, and for everybody. By the way, there is time for a dialogue still, although there were no immediate questions it seems like. First of all, we all sincerely hope that you have enjoyed, everybody here in Arenastaden and online, the insights through our and to our specialized businesses and to the leadership of Tietoevry. I also hope you are getting a very tangible feel for the market opportunity, value creation opportunity we have as a company, the firm moves we are making in terms of evolving our portfolio, our business mix, and our identity. We believe there is very tangible and further upside for our shareholders, and we are extremely driven to deliver on what we have put on the table today. On our behalf, thank you very much for joining.