Tieto (TIETO) Q1 2025 earnings summary

Executive summary

• Q1 performance aligned with expectations, with organic revenue down 4% year-over-year due to weak demand and macroeconomic uncertainty, but order backlog rose 18% year-over-year, reflecting strong contract wins in Banking and Care.

• Major strategic milestone achieved with the announcement of the Tech Services divestment to Agilitas Private Equity for approximately €400 million, expected to close in Q3 2025, repositioning the company as a focused software and digital engineering business.

• CEO Kimmo Alkio to step down after 14 years, with Endre Rangnes appointed as interim CEO effective May 5, 2025.

• Full-year outlook updated to reflect continuing operations, with organic growth expected between -2% and +1% and adjusted EBITA margin of 12.0–13.0%.

• Strong operating cash flow of €97.3 million and free cash flow of €63 million; order backlog reached €2,047 million.

Financial highlights

• Organic revenue growth for continuing operations was -4% year-over-year, impacted by weak demand and fewer working days.

• Adjusted EBITA margin was 10.6%, down from 12.2% last year, negatively affected by IFRS 5-related costs (1.8pp) and fewer working days.

• Net profit for continuing operations was €11.8 million, down from €22.7 million year-over-year.

• Interest-bearing net debt declined to €807 million, with net debt/EBITDA at 2.2x.

• Tech Services (discontinued) posted -5% organic growth and a net loss of €92.3 million, including a €106.7 million impairment.

Outlook and guidance

• Updated guidance for continuing operations: organic growth of -2% to +1% and adjusted EBITA margin of 12.0–13.0% for 2025, including a negative IFRS 5 impact of ~1.4pp.

• Market expected to remain soft with limited visibility into H2 2025; Q2 anticipated to show negative growth but improve from Q1.

• Salary inflation estimated at 4–5% for the year, with efficiency measures and price increases to offset margin pressure.