Tieto (TIETO) Q4 2025 earnings summary

Executive summary

• 2025 was a transformative year with strong Q4 profitability, significant structural and leadership changes, portfolio simplification, and a renewed strategy focused on profitable growth and industry leadership in European software and technology consulting.

• Four main strategic priorities were executed: strengthening client relationships, simplifying the core, selective international expansion, and resetting the cost base.

• AI adoption and sustainability remained key focus areas, with notable achievements in climate action and workplace recognition.

• Major portfolio changes included divestments of Bekk Consulting and Tech Services, and acquisitions in Spain to support European expansion.

• A new brand identity was launched, and the company renewed its management and strategy for 2026–2028.

Financial highlights

• Q4 2025 revenue was EUR 464 million, with organic growth at -2% year-over-year; adjusted EBITA/EBITDA improved to EUR 75 million (16.2% margin), up nearly 4 percentage points from Q4 2024.

• Order backlog increased by 13% year-over-year, supporting improved revenue visibility into 2026.

• Operating cash flow in Q4 was EUR 103 million; net working capital decreased by EUR 30 million.

• Dividend of EUR 0.88 per share proposed (80% of adjusted net profit), yielding ~5%; EUR 150 million share buyback program launched.

• Net debt/EBITDA stood at 2.2x at end of Q4 2025, expected to decrease further after divestment proceeds.

Outlook and guidance

• 2026 organic revenue growth expected between -2% and 0%, with adjusted EBITA/EBITDA margin guidance of 14.8%–15.8%.

• Excluding legacy contract runoffs, underlying growth is guided at +1% to +3%.

• Cost optimization program continues to drive profit improvement; all business units expected to exceed prior year profit levels in Q1 2026.

• Market environment expected to remain soft in 2026, primarily impacting consulting growth and legacy product segments.

• Long-term targets (2026–2028): annual revenue growth over 5% (CAGR), adjusted EBITA margin over 16%, net debt/EBITDA below 2, and dividend payout of 60–80% of net profit.