Release Date: July 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TietoEVRY Corp (FRA:TTEB, Financial) has a strong market position in the Nordics with a competitive software product base.
- The company has a solid customer base across various industries and is actively pursuing innovation, particularly with AI integration.
- A new leadership team has been appointed to drive customer orientation and efficiency.
- The company has initiated a cost optimization program aiming for EUR115 million in savings by the end of 2026.
- TietoEVRY Corp (FRA:TTEB) has a strong order backlog, especially in the banking sector, which supports future growth.
Negative Points
- The company has experienced a lack of revenue growth over an extended period, with organic growth close to 0% over the last 12 years.
- There is a high cost and SG&A base due to stagnant revenue growth.
- The second quarter saw a revenue decline of 4% year-on-year, reflecting a challenging market environment.
- The adjusted profitability margin was negatively impacted by temporary costs related to tech services.
- There is ongoing price pressure and weak demand in the consulting market, affecting the Create segment.
Q & A Highlights
Q: Could you provide more clarity on your confidence in delivering FY25 guidance given the first half performance? What are your assumptions regarding underlying market activity?
A: Endre Rangnes, CEO, emphasized that the company does not need a new strategy but rather needs to execute on existing plans. He highlighted the solid foundation in Banking and the potential for international growth in Care. CFO Tomi Hyrylaeinen added that they are comfortable with the guidance due to a strong backlog in Banking, Industry, and Care, despite some headwinds in Create.
Q: How are you balancing cost cuts with the need to maintain innovation capacity, especially in growth areas like AI?
A: Endre Rangnes, CEO, stated that the company has conducted a detailed analysis of KPIs and SG&A, identifying areas for improvement. They plan to reinvest in sales and prioritize growth areas while ensuring cost optimization does not impact delivery quality. Tomi Hyrylaeinen, CFO, added that growth areas are being protected and even receiving more investment.
Q: What is the most exciting growth area for Tietoevry over the next 2 to 3 years?
A: Endre Rangnes, CEO, identified Banking as a key growth area, with a solid foundation and a clear strategy for international expansion. He also mentioned Care as having high expectations for international growth with modernized software. AI is seen as a significant opportunity, with increasing client interest.
Q: Can you elaborate on the recent banking impairments and whether other software units have been reviewed for similar actions?
A: Endre Rangnes, CEO, explained that the impairment was due to the transition from legacy systems to modern platforms, which rendered some older software components non-relevant. Tomi Hyrylaeinen, CFO, added that the impairment was triggered by recent contract renewals confirming future technology needs.
Q: How do you view the current capital allocation policies, especially regarding deleveraging and shareholder remuneration?
A: Endre Rangnes, CEO, stated that the dividend policy remains in place, but there is a need to reinvest in areas like software development. The focus is on growing revenue, bottom line, and cash EBITDA to positively impact the share price. More details will be provided at the Capital Markets Day.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
