Q4 2019 Strong fourth-quarter performance – integration of TietoEVRY progressing well Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO Per Hove, former CEO EVRY
2 Outline • CEO opening • TietoEVRY summary • Tieto Q4 and 2019 • EVRY Q4 and 2019 • CFO report • Integration status • Guidance 2020
3 Q4 in brief Strong fourth-quarter performance – integration of TietoEVRY progressing well • Merger to create a leading Nordic digital services company completed in the fourth quarter • Tieto stand-alone: revenue growth 2%, adjusted operating margin over 13% - healthy performance driven by Hybrid Infra • EVRY stand-alone: revenue growth 4%, adjusted operating margin over 13% and strong order backlog in Financial Services • Dividend proposal EUR 1.27 per share
4 Our value proposition & strategy Creating digital advantage for businesses and society We are the backbone of the Nordic society, transforming businesses with expertise, technology and data, to harness the biggest opportunities of our time Services focus Nordic International • Drive competitiveness of Nordic Digital Consulting enterprises and public sector Cloud & Infra • Accelerate digital consulting and cloud services to realize customers digital agenda Industry-specific software • Industry Software and Financial Services Financial Services leading international expansion Solutions • PDS expands its global customer base Product Development across industries Services (PDS) Global capabilities and ecosystems Note: Other businesses in the portfolio include a) local businesses in Austria, Latvia, Lithuania, Estonia, Russia and b) non-Nordic customers served from India and Ukraine, with own go-to-market
5 The Nordic IT market remains dynamic TietoEVRY expects the New services built Business continuity and Nordic IT services around data and design, efficiency continue to be market to grow by 2 – 3% cloud adoption, multi- of high importance in 2020 cloud management and automation is anticipated to grow in double digits
6 A leading community for digital professionals • Building the company culture on Nordic heritage and values of openness, trust and diversity • Combined recruitment in 2019 of over 4 800 new professionals – over 2000 in the Nordics • Continued priority to be an attractive company, aiming to be the best opportunity to grow and learn • Our work for diversity and inclusion received external recognitions • Among the top 3 of global tech companies in Equileap's 2019 Global Gender Equality Ranking • TietoEVRY was also listed on the 2020 Bloomberg Gender-Equality Index (GEI) • EVRY’s listing as Norway’s best technology company for women by the SHE Index
7 Official reported financials* (IFRS) EBIT EBIT Adj.** Revenue € 31.5m € 71.4m € 543m The board proposes Q4 a dividend at 2019 EUR 1.27 Growth EBIT % EBIT Adj.%** 28.7% 5.8% 13.1% Revenue EBIT EBIT Adj.** € 1.734m € 124.2m € 196.4m Representing a FY dividend yield of 2019 4.6% Growth EBIT % EBIT Adj.%** 7.2% 11.3% 8.4% * EVRY consolidated from 5 December 2019 **Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
8 Q4 stand-alone performance Tieto EVRY Solid growth and EBIT margin Healthy growth in Hybrid Infra and Industry Software Revenue EBIT Adj.* Backlog Revenue EBIT Adj.* Backlog € 355 € 48m € 1 998m € 423m € 57m €1 642m Growth*** EBIT Adj.%* Growth** EBIT Adj.%* 13.4% 4% 2% 13.5% MEUR % MEUR 2% % 4% 450 14 400 14 400 11.2% 350 13.5% 12 13.7% 12 13.4% 13.9% 350 13.2% 12.1% 300 10 10 8.4% 300 250 10.0% 10.0% 8 8 250 200 422 423 200 408 403 355 355 6 341 6 380 327 314 150 150 4 4 100 100 2 2 50 50 0 0 0 0 Q418 Q119 Q219 Q319 Q419 Q418 Q119 Q219 Q319 Q419 *Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability ** Local Currency *** Organic growth
9 Tieto stand-alone performance
10 Tieto Q4 - main highlights • Healthy growth in Hybrid Infra and Industry Software with 5% and 4% growth, respectively • Continued adjusted operating margin improvement to over 13% driven by strong performance from Hybrid Infra at 16% • Successful execution of the strategy and efficiency program supported profit expansion
11 Tieto multi-year performance improvement CUSTOMER EXPERIENCE / NPS REVENUE GROWTH DIVIDEND/SHARE, EUR 1700 1,5 1600 0,20 1,3 0,20 0,22 1500 0,25 1,1 1 614 1400 1 600 1 543 1,27 1 493 1,25 1,20 1 460 1,15 1300 0,9 1,10 1200 0,7 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Net Sales, EUR million Base dividend 250 EMPLOYEE ENGAGEMENT SCORE ADJUSTED EBIT NET CASH FLOW FROM OPERATIONS 190 48 * 200 180 170 150 160 188 100 150 182 174 168 151 140 161 133 152 50 151 97 130 120 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Adjusted EBIT, EUR million Net cash flow from operations, EUR million * IFRS 16 2019 impact
12 Tieto Q4 2019 key figures MEUR MEUR % % Revenue up by 0.3% 0.3 › EUR 423.0 (421.9) million › 500 15 Growth in local currencies 2% 13,5 › Organic growth in local currencies 2% 13,2 400 Adjusted EBIT margin 13.5% (12.1%) 10,0 9,3 12,1 › EBIT EUR 31.9 (45.7) million, 7.6% (10.8%) 9,0 10 8,4 11,7 › 300 Includes EUR 25.3 million* in adjusted items Adjusted ** EBIT EUR 57.2 (51.0) million, 13.5% › ( 12.1% ) 200 5 Order backlog EUR 1 642 (1 698) million 100 406 404 367 422 408 403 380 423 0 0 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Revenue Adjusted1) EBIT, % * excludes EUR 3.2 million PPA amortization from TietoEVRY merger. ** adjusted for amortization of acquisition-related intangible assets, restructuring 1) adjusted for amortization of acquisition-related intangible assets, costs, capital gains/losses, goodwill impairment charges and other items affecting restructuring costs, capital gains/losses, goodwill impairment comparability charges and other items affecting comparability
13 Digital Experience Revenue Q4 % MEUR -6% › EUR 123 (130) million 150 20 › Down by 6%, or 4% in local currencies EBIT 14,5 13,7 15 Adjusted 1) EBIT EUR 15.5 (19.0) million, 12.7% › 12,8 12,7 100 (14.6) 10,9 14,6 14,9 8,6 10 Q4 highlights › Application Services continued to be impacted by 50 one large customer insourcing 5 › Contract transfer to a joint venture had a negative impact of over 1%-point on growth › 125 127 106 130 130 123 108 123 Adjusted operating margin was affected by 0 0 decline in sales and a significant project over-run Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 › In Q120 adjusted operating margin is anticipated to be below Q1/2019 level Revenue Adjusted1) EBIT, % 1) adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability 1) adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
14 Hybrid Infra Revenue in Q4 +3% MEUR % › EUR 137 (133) million 150 20 › Up by 3%, or 5% in local currencies 15,8 15,5 EBIT Adjusted 1) EBIT EUR 21.8 (12.9) million, 15.8% (9.7) 15 › 12,5 100 10,8 10,8 9,7 10 Q4 highlights 7,5 6,9 › Growth driven by infrastructure cloud, up by 20% in 50 local currencies 5 › Traditional infrastructure services’ revenue at Q4/2018 level › Security Services’ revenue increased by 17% 132 131 124 133 129 134 131 137 0 0 › Clear improvement in EBIT margin, supported by Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 strong growth, lower quality cost and the company’s efficiency measures › Revenue Adjusted1) EBIT, % In Q1, adjusted EBIT margin anticipated to be above the level of Q1/2019 1) adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability 1) adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
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