Tieto (TIETO) Q1 2026 earnings summary

Executive summary

• Achieved strong profitability and solid performance in software businesses, with adjusted EBITA/EBITDA margin up 4.1 percentage points year-over-year to 14.7%, despite a 3–5% revenue decline due to legacy contract runoffs and weak consulting demand.

• Strategic transformation advanced, focusing on AI integration, cost optimization, sales, selective international expansion, and new leadership in Tech Consulting.

• Order backlog increased 8% year-over-year, providing strong forward visibility and reflecting solid demand in core software businesses.

• Cash flow from operations improved or remained strong, supported by divestments and cost optimization.

• Acquisitions in Iberia and divestments in Norway and Indtech support portfolio simplification and international expansion.

Financial highlights

• Adjusted EBITA/EBITDA margin rose to 14.7%, driven by cost optimization and strong software margins.

• Revenue was EUR 448.3 million in Q1 2026, down 3–5% year-over-year.

• Free cash flow reached EUR 202 million, including EUR 147 million from BEC/BEKK divestment.

• Net debt/EBITDA improved to 1.3x, reflecting divestment proceeds and a strong balance sheet.

• Share buyback program of EUR 150 million is ahead of schedule, with 1.39 million shares cancelled.

Outlook and guidance

• Group revenue growth expected to improve from Q1 but remain impacted by legacy contract runoffs and weak Tech Consulting demand.

• Profitability expected to benefit from ongoing cost optimization; segment margins at or above prior year levels.

• Full-year 2026 organic growth expected between -2% and 0%; adjusted EBITA margin guidance unchanged at 14.8–15.8%.

• 2026 is considered a transition year, with continued focus on strategic execution and profitability improvement.

• Long-term targets: annual revenue growth >5% CAGR (2027–2028), adjusted EBITA >16% by 2028, net debt/EBITDA <2, dividend payout 60–80% of net profit.