Creating digital advantage for businesses and society
Outline
• Value proposition, strategy and market
• Merger and integration status
• Q1 in brief
• Performance drivers and guidance 2020
• Why invest in TietoEVRY?
• Appendix
2
Value proposition, strategy and market
IndiaPoland
Czech Republic China
Ukraine
10 000 More than
customersEUR
3 billion
Turnover of approximately
24 000professionals globally
Investments in technology and services more than
EUR 120 million* per year
*incl. capital expenditure
and operational costs
Serving customers in over
90 countries worldwide
Estonia, Latvia, Lithuania
Bringing Global capabilities to the Nordics in Digital
Consulting and Cloud & Infrastructure Services
Scaling the Nordic mindset globally in Industry Software,
Financial Services and Product Development Services
The market leader
in Digital Services
in Norway, Sweden
and Finland
Digital advantage for businesses and societies
4
We are the backbone of the Nordic society, transforming businesses with expertise, technology and data,
to harness the biggest opportunities of our time
Digital Consulting
Cloud & Infra
Industry-specific
software
Financial Services
Solutions
Product Development
Services (PDS)
Global capabilities and ecosystems
NordicServices focus International
• Drive competitiveness of Nordic
enterprises and public sector
• Accelerate digital consulting and cloud
services to realize customers digital
agenda
• Industry Software and Financial Services
leading international expansion
• PDS expands its global customer base
across industries
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
Our value proposition & strategy
Our five service lines (adopted as from Q2 2020)
Bringing global capabilitiesto the Nordics
Scaling the Nordic mindset globally
Product Development
Services
We accelerate ‘time to market’ for high-tech
software products by applying over 25
years of software R&D expertise deployed
globally
Industry Software
We accelerate value creation and
realization with deep understanding of
customers’ industries and requirements with
our rich portfolio of industry-specific
software deployed globally
Financial Services
SolutionsWe deliver all core financial services and
processes full stack with our flexible
modules and innovative global software
platforms built with deep understanding and
experience of the financial services
industry.
Cloud & Infrastructure
We modernize, simplify and secure
customers’ businesses with automated
solutions enhanced by the largest
magnitude of technology alternatives &
delivery capability in the Nordics
Digital Consulting
We help capture new value from technology
and data throughout customers’ digital
journeys, powered by one of the largest
pool of passionate digital specialists
6
IT market outlook
Covid-19 expected to have negative
impact on IT market in 2020
Industry analysts market growth
estimates range from --3% to -7%
7
New digital services, business
continuity and cost optimization
continue to be a driver for
investments
Adapting to Covid-19
8
Initiated
measures to
secure health and
safety of
employees and
ensure continuity
of customer
services
Current market
indicators imply a
2-5% negative
full-year revenue
impact due to
Covid-19 in 2020
Short-term cost
savings to
mitigate potential
financial impact
Resilience
towards Covid-19
supported by
industry mix and
long-term nature
of infrastructure,
application and
software
businesses
Adapting to a new
normal through
digital services
Recilience towards Covid-19 varies by businesses
Digital consulting - Most impacted
Product development services -
Impacted less than digital consulting
Infrastructure services - Impacted
slightly more than industry software
Industry software, incl. Financial
Services Solutions - Least impacted
• Primarily short-term contracts while relationships with customers are long
• Application services with long-term agreements represent approximately
20% of the consulting revenue
• Primarily short-term contracts, while relationships with customers are long.
• Stability due to our role in key customers core development roadmaps
• Primarily long-term commitments of 3-5 years
• Fluctuations in demand in some services in the short term, e.g. increase in
network capacity while some onsite installations postponed
• Primarily long-term contractual periods up to 5-7 years with customer
relationships lasting much longer
30 % of
revenue
5 % of
revenue
30 % of
revenue
35 % of
revenue
9
10
Merger and integration update
Integration well on schedule
• Several important integration milestones
completed
• New organization and operating model
in place
• Leadership appointments across all
businesses and functions
• Active common collaboration
tools/platform
• Actions taken to drive competitiveness
through merger efficiencies
11
12
Integrated structure and
leadership
Common processes and
systems
Integrated go-to-market and
service portfolio
Employee engagement and
cultural integration
Continuous focus on customer engagement, delivery quality and efficiency continues during integration
Synergy planning and realization
Integration focus area Current status
*Progress relative to target-state as an integrated TietoEVRY
• Organization established
• Leadership nominated at all levels
• Interoperating collaboration tools in place
• Active development of reporting and forecasting
• Common customer teams active in the market
• Unified services and delivery teams
• Employee onboarding at all levels
• Active engagement through leadership continues
• Planning ongoing per business and function
• Competitive cost structure actions initiated
Integration progressing as planned
13
• Merger efficiency run rate increased to EUR 45-55
million (up from EUR 30-40 million) by end of
2020
• One-time integration costs for 2020 estimated to be
EUR 50-60 million (up from EUR 40-50 million)
• Union consultations started concerning potential
restructuring of 570 roles
• Leadership appointments finalized
• Roadmap for most important premises
consolidation finalized, expected to deliver
EUR 5-6 million run rate synergies by 2022
EUR 75 million merger efficiencies achieved within three years
Merger efficiency run-rate at end of year (MEUR)
10
0
50
20
30
40
60
70
8015-25
2020 2021
0-5
2022 Total
45-55
EUR 120-140 million of one-time integration cost expected in 2020-2022
75
EUR 75 million of merger efficiencies confirmed – 2020 execution ahead of schedule
14
Services and go-to-
market
Support functions
External costs
including facilities
Infrastructure
partnerships
• Consolidate managerial, sales and administrative roles
• Adopt proven global delivery model and common processes
• Rationalize offering portfolio
• Capture scale in combined investments
• Consolidate managerial and administrative roles
• Harmonize applications and processes
• Optimize use of shared service centers
• Capture scale in combined investments
• Improve commercial terms due to increased volumes
• Consolidate supplier base and phase out duplicate products and services
• Consolidate facilities in common locations
• Consolidation of infrastructure platforms and partnerships
EUR 30-40 million
EUR 20-30 million
EUR 20-30 million
Revenue synergies• Combined growth opportunity especially in Digital Consulting, Cloud & Infra
and Financial Services Solutions
Further potential
in addition to
EUR 75 million
+
Estimated impact by 2022
Efficiency area Examples of main efficiency levers Estimated efficiency
15
Financial performance
2015 2016 2017 2018 2019
1) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital
gains/losses, goodwill impairment charges and other items affecting comparability
Multi-year performance improvement
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
Customer experience / NPS
Employee engagement score
Revenue growth
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
1 4601 543 1 600 1 614
1 493
151 161 168182
152
200
150
100
50
0
300
250
200
150
100
50
0
1,5
1,3
1,1
0,9
0,7
1,101,20 1,25 1,27
1,15
133151
174238
97
Revenue, mEUR
EBIT Adj., mEUR Net cash flow from operations, mEUR
Dividend / share
Base dividend, EUR
0,250,22
0,20
40
0,20
14
1202000
1500
1000
500
0
Adusted1) EBIT Net cash flow from operations
16
EVRY Additional dividend, EUR
EVRY EVRY
17
Q120Q119
75 78
10.0% 10.5%
749 744
TietoEVRY Q1 2020
-1%Revenue
EBIT Adj.**
EBIT Adj. %**
Business highlights
• 3% organic* growth
• Software business, cloud services and strong performance in Norway contributed to growth
• Negative currency impact of 3% points on growth
• Adjusted EBIT 10.5% (10.0%) – improvement primarily driven by cloud and infrastructure business
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Guidance and performance drivers
Guidance 2020 withdrawn
Full-year guidance
withdrawn on 27 March
Given the uncertainties
in the market outlook, it
is not possible to
estimate the potential
impact of Covid-19 on
profitability
Further guidance issued
as soon as visibility to
the market outlook has
improved and significant
uncertainties are cleared
19
Key performance drivers
20
Covid-19
Current market indicators imply a
2-5% negative full-year revenue
impact
Covid-19 impact are actively
being mitigated
FX impact
Depreciation of SEK and NOK
impacting financial results
FX impact* on revenue around
EUR 50 million in Q2 and over
EUR 150 million in the full
year
2020
Long term ambition to grow above market
* Based on March-average exchange rates
Merger-specific
Run-rate of EUR 45-55 million
in cost synergies expected at
year end
One-time integration costs
expected to be in the range of
EUR 50-60 million
Why invest in TietoEVRY?
Key investment highlights
22
Strong cash flow
generation allowing
attractive dividend policy,
deleveraging and
flexibility for investment
opportunities
Continued profit
improvement
– cost synergies of EUR
75 million bring attractive
profit expansion
Attractive business
mix consisting of longer-
term continuous services
and software businesses
– and agile digital
consulting business
Clear market leader in a
growing dynamic Nordic
IT market and
international growth
potential
Appendix
Group structure and leadership
International
Product Development
Services (PDS)
Tom Leskinen
Finland, Satu Kiiskinen
Sweden, Karin Schreil
Norway, Christian Pedersen
Digital
Consulting
Industry
Software
Cloud &
Infra
Financial
Services
Financial Services
Christian SegersvenIndustry Software
Christian Segersven
Cloud & Infra
Johan Torstensson
Digital Consulting
Thomas Nordås
Integration Officer, Malin Fors-Skjæveland
CFO, Tomi Hyryläinen HR, Trond Vinje Operations, Ari Järvelä Strategy, Kishore Ghadiyaram
CEO, Kimmo Alkio
Country teams
Service lines
and PDS
Group functions
and CEO
25
Group structure and leadership
Managing Partner
Finland
Satu Kiiskinen
Managing Partner
Norway
Christian Pedersen
Managing Partner
Sweden
Karin Schreil
Head of Digital
Consulting
Thomas Nordås
Head of
Cloud & Infra
Johan Torstensson
Head of Industry Software
and Financial Services
Christian Segersven
Head of PDS
Tom Leskinen
Integration Officer
Malin Fors-Skjæveland
CEO
Kimmo Alkio
CFO
Tomi Hyryläinen
Head of HR
Trond Vinje
Head of Strategy
Kishore
Ghadiyaram
Head of Operations
Ari Järvelä
26
Q1 in brief
Solid performance –integration on schedule
27
Organic growth of 3%
driven by software
business and cloud
services
Measures in place to
mitigate potential
Covid-19 impact
Integration proceeding
well and end-of-year
synergy run-rate
increased from EUR
30-40 million to EUR
45-55 million
Adjusted operating
margin improvement to
10.5% driven especially
by cloud and
infrastructure business
28
Q120Q119
75 78
10.0% 10.5%
749 744
TietoEVRY
-1%Revenue
EBIT Adj.**
EBIT Adj. %**
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Business highlights
• 3% organic* growth
• Software business, cloud services and strong performance in
Norway contributed to growth
• Negative currency impact of 3% points on growth
• Adjusted EBIT 10.5% (10.0%) – improvement primarily driven
by cloud and infrastructure business
29
19 16
14.9%
12.6%
Digital Experience
130 123
Revenue
EBIT Adj.**
EBIT Adj. %**
Q120Q119
-5%
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Business highlights
• -4% organic* growth
• Revenue impacted by one large-scale customer insourcing in
application services
• Limited impact of Covid-19
• Adjusted EBIT 12.6% (14.9%) – profitability affected by lower
utilization
30
916
6.9%
11.8%
129 135
Hybrid Infra
Revenue
EBIT Adj.**
EBIT Adj. %**
Q120Q119
4%
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Business highlights
• 6% organic* growth driven by infrastructure cloud, up by 19%
• Revenue from traditional infrastructure at Q119 level
• Adjusted EBIT 11.8% (6.9%) – clear improvement supported
by strong growth and the efficiency measures
31
14 12
12.5%
10.3%
Industry Software
113 117
Revenue
EBIT Adj.**
EBIT Adj. %**
Q120Q119
4%*
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Business highlights
• 7% organic* growth
• Strong growth in Payments and Oil & Gas solutions, revenue
up by over 20%
• Good growth in healthcare and welfare solutions continued,
up by 6%
• Adjusted EBIT 10.3% (12.5%) – affected by the continued
technological renewal of SmartUtilities
32
5 5
12.3% 12.1%
Product Development Services
37 38
Revenue
EBIT Adj.**
EBIT Adj. %**
Q120Q119
3%
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Business highlights
• 5% organic* growth
• Strong volume development with the largest key customers
focused on Radio and 5G technologies
• Good development continued in the automotive segment with
new key customers
• Adjusted EBIT 12.1% (12.3%) – continued strong profitability
33
34 35
EVRY
Business highlights
• 3% organic* growth and solid margin 10.5%
• 8% organic* growth in Norway, driven by digital consulting
• Adjusted EBIT 10.5% (9.9%) – improvement both in Norway
and Sweden
Q1 2020 RevenueOrganic
growth*
EBIT
ADJ.**
EBIT
ADJ. %**
Norway 154 8% 18 12%
Sweden 78 -4% 4 5%
Financial Services 87 1% 7 8%
EVRY Subsegment details
9.9% 10.5%
341 331
Revenue
EBIT Adj.**
EBIT Adj. %**
* Adjusted for currency effects, acquisitions and divestments
**Adjusted for amortization of acquisition-related intangible assets, restructuring
costs, capital gains/losses, goodwill impairment charges and other items affecting
comparability
Q120Q119
-3%