TietoEVRY (TIETOS) Q1 2025 earnings summary

Executive summary

• Q1 performance met expectations amid a soft market, with a major strategic milestone achieved through the announced divestment of Tech Services, enabling a sharper focus on software and digital engineering businesses.

• Divestment of Tech Services to Agilitas Private Equity for approximately EUR 400 million expected to close in Q3 2025, supporting transformation.

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

• Order backlog increased 18% year-over-year, reflecting strong contract wins in Banking and Care.

• 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%.

Financial highlights

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

• Adjusted EBITA/EBITDA margin was 10.6%, down from 12.2% last year, affected by IFRS 5-related costs (1.8pp impact).

• Operating cash flow reached EUR 98 million, with free cash flow at EUR 63 million, both up year-over-year.

• Order backlog reached EUR 2,047 million, up 18% year-over-year and 4% sequentially.

• Net debt at EUR 807 million, leverage stable at 2.2x net debt/EBITDA.

Outlook and guidance

• Organic growth for 2025 expected between -2% and +1%, with adjusted EBITA margin of 12.0–13.0%, including a negative IFRS 5 impact of ~1.4pp.

• Q2 anticipated to show negative growth but improve sequentially from Q1.

• Market expected to remain soft with limited visibility into H2 2025.

• Salary inflation for 2025 projected at 4–5%, mitigated by price increases, offshoring, and efficiency measures.