Tieto (TIETO) Q3 2024 earnings summary

Executive summary

• Profitability improved in Q3 2024, with adjusted EBITA margin rising to 13.5% despite a 1% revenue decline, supported by active cost management and operational efficiency.

• Strategic review of Tech Services advanced to exclusive negotiations with a non-industrial buyer.

• Order backlog increased by 8% year-over-year to EUR 3,205 million, driven by strong performance in the banking segment.

• Software businesses (Banking, Care, Industry) showed resilience and growth, while Create and Tech Services experienced revenue declines.

• Major agreements included AI-driven healthcare solutions, payment expansion, and strategic partnerships in manufacturing and banking.

Financial highlights

• Q3 2024 revenue was EUR 655 million, down 1% year-over-year; organic growth -1%.

• Adjusted EBITA margin improved to 13.5% (from 13.0%); adjusted EBITA was EUR 88.4 million.

• Operating cash flow was EUR 58 million; free cash flow EUR 26 million for Q3.

• Net debt at quarter-end was EUR 900 million; net debt/EBITDA at 2.1x.

• Book-to-bill ratio was 0.7, up from 0.6 last year.

Outlook and guidance

• Full-year 2024 organic growth guidance revised to around -2% (from 0–3%); adjusted EBITA margin guidance narrowed to 12.3–12.7% (from 12.0–13.0%).

• Market environment expected to remain weak into 2025, with Q4 growth drivers pressured by ransomware settlements and sector-specific headwinds.

• Q4 profitability expected below prior year in most segments except Care, which is expected above prior year.