Tietoevry's Interim Report 1/2025: Performance as anticipated – major step taken in strategic renewal

Tietoevry Corporation INTERIM REPORT  29 April 2025    9:00 a.m. (EEST) 

•         Organic growth of -4% impacted by weak demand environment

•         Adjusted EBITA of 10.6% impacted by IFRS 5-related temporary cost burden of 1.8 pp

•         Strong cash flow and strengthened order backlog – important customer contracts in Banking and Care

•         Tech Services divestment – major step in repositioning Tietoevry as a leading software and digital engineering company​

•         Full-year outlook updated to reflect continuing operations​

On 23 March 2025, Tietoevry announced that it had entered into an agreement to divest its Tietoevry Tech Services business. Starting from the first quarter of 2025, Tietoevry has presented its Tech Services business as a discontinued operation. The financial information presented in this report concerns continuing operations, unless otherwise stated. The comparative information has been restated accordingly. Tietoevry published restated financial information for 2024 on 15 April 2025. 

The full interim report with tables is available at the end of this release.

Full-year outlook for 2025 updated

Tietoevry Tech Services is reported as a discontinued operation as from the first quarter and, consequently, Tietoevry is updating its guidance to reflect continuing operations.

Tietoevry expects its organic1) growth to be in the range of -2% to +1% (revenue in 2024: EUR  1 879.5 million). The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.0–13.0% (12.0% in 2024).

The profitability outlook assumes a negative impact of approx. 1.4 percentage points on the adjusted operating margin (EBITA) related to IFRS 5. The impact includes an estimate of the costs that cannot be allocated to continuing operations and transition services income after the closing of the divestment of Tietoevry Tech Services.

Previous outlook: Tietoevry expects its organic1) growth to be in the range of -3% to +1% (revenue in 2024: EUR 2 802.6 million). The company estimates its full-year adjusted operating margin2) (adjusted EBITA 3)) to be 12.0–13.0% (12.3% in 2024).

1) Adjusted for currency effects, acquisitions and divestments

2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability

3) Profit before interests, taxes, amortization of acquisition-related intangible assets and goodwill impairment.

4) Company estimate

CEO’s comment

Comment regarding the interim report by Kimmo Alkio, President and CEO:

“The announced divestment of Tietoevry Tech Services was a key event during the quarter, accelerating our focus to reposition Tietoevry as a leading software and digital engineering company. While the prevailing economic uncertainty requires us to keep a firm focus on efficiency, our investments are geared to drive growth and expansion of our specialized businesses.

Our first-quarter performance in continuing operations was as anticipated, although revenue development was still impacted by the soft economic environment. While revenue growth was -4%, we were able to significantly improve our order backlog, demonstrating healthy customer confidence. During the quarter, the competitiveness of our continuing businesses was highlighted by new contracts, especially in Tietoevry Banking and Tietoevry Care. 

Adjusted operating margin for the quarter was 10.6%. This includes a negative IFRS 5 impact of around 1.8 percentage points as Group operations costs for supporting Tietoevry Tech Services are allocated to continuing operations until the closing of the transaction. Our full-year guidance has been updated to reflect the Tech Services divestment.

In this soft macroeconomic environment, it continues to be of high importance to drive the efficiency of all the operations of the company. With this in mind, we expect further cost structure optimization activities to continue in all businesses.

We as Tietoevry are now two quarters away from accelerating our new era as a software and digital engineering company. In the future, Tietoevry will become a company focused on delivering world-class industry-specific software and design, data and AI-centric digital engineering services.

For our Tech Services business and our approximately 7 000 colleagues working for it, its future as an independent company represents the beginning of a new era, building on its strong foundation and roots in the transformative managed services arena.

Our four specialized businesses remain focused on innovation and future growth opportunities. We are continuing to pursue our active agenda of promoting new cloud, data and AI technologies in products and services delivered to clients. Lifecare AI Search for Care Measures, the first AI solution deployed in municipal care in Sweden, demonstrates our innovation capability. Thanks to its intelligent search functionality, care professionals can now use natural language search to retrieve the relevant procedural codes quickly and accurately. Furthermore, Tietoevry Banking was recognized in the 2025 WealthTech100 list, which highlights the globe's most innovative wealth technology providers – yet another achievement we can be proud of.

Regarding the ongoing devastating situation in Ukraine, we will continue to support our local colleagues. We are very proud of our people for the commitment and courage they keep on showing, and our hearts and minds remain with them.

In March, we published our first Sustainability Statement aligned with CSRD requirements. It also marked the first yearly results of our Sustainability Pledge introduced in 2024. This agenda is an integral part of our common foundation for the company, focusing on ambitions and activities across three pillars: climate action, ethical conduct and social impact. We remain firmly committed to making progress in diversity, equity and inclusion – to foster a winning equation of technology, innovation and humanity from the perspective of all our stakeholders.

While Tietoevry, like any other enterprise, continues to optimize performance in the midst of economic and geopolitical instability, we are firmly building the future in products, services and technologies that will generate growth and competitiveness for our company, our customers and society in the years ahead." 

Financial performance by segment

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com

Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com

A teleconference for analysts and media will be held on 29 April at 10.00 a.m. EEST (9.00 a.m. CEST, 8.00 a.m. UK time). Kimmo Alkio, President and CEO, and Tomi Hyryläinen, CFO, will present the results online in English. The presentation can be followed on Tietoevry's website.

To take part in the questions and answers session after the presentation you will need to dial in by phone. You can access the teleconference by registering on this link. After the registration you will be provided phone numbers, user ID and a conference ID to access the conference.

The event is recorded and it will be available on demand later during the day. Tietoevry publishes its financial information in English and Finnish.

Tietoevry Corporation

DISTRIBUTION

Nasdaq Helsinki

Nasdaq Stockholm

Oslo Børs

Principal Media

Tietoevry is a leading software and digital engineering services company with global market reach and capabilities. We provide customers across different industries with mission-critical solutions through our specialized software businesses* Tietoevry Care, Tietoevry Banking and Tietoevry Industry, as well as our digital engineering business Tietoevry Create. Our 16 000* talented vertical software, design, cloud and AI experts are dedicated to empowering our customers to succeed and innovate with latest technology.

Tietoevry’s annual revenue for the continuing businesses* is approximately EUR 2 billion. The company’s shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. www.tietoevry.com

* Tietoevry Tech Services is excluded due to the divestment signed in March 2025. The transaction is expected to close during Q3 2025.