Atos in Q1 2023: Organic revenue growth of 2.8%

Aurel Constantin 16/05/2023 | 14:41

Atos, a global leader in digital transformation, high-performance computing and information technology infrastructure, announces its revenue for the first quarter of 2023.

 

Atos’ leadership team, Nourdine Bihmane, Diane Galbe and Philippe Oliva, declared: “Atos recorded a robust +2.8% organic revenue growth in Q1 with both businesses delivering on their 2023 priorities. Under its new commercial brand, Eviden reported another solid quarter with high growth, well balanced between its synergetic Digital, Big Data and Cybersecurity activities. Tech Foundations continued to reshape its portfolio, confirming the earlier-than-anticipated stabilization of its core business while further reducing its exposure to non-strategic activities. The Group’s performance keeps improving. We heartedly thank our 110,000 employees for their exceptional commitment.” 

In € million                              Q1 2023           Q1 2022           Variation             Var.                  Var.

at cst. curr.        organic

 

Eviden scope                           1,334                  1,223                    +9.1%                +8.9%              +9.5%

Tech Foundations scope       1,473                 1,524                    -3.4%                -3.1%                          -2.6%*

Group revenue                        2,806                2,747                   +2.2%                +2.3%              +2.8%

* core business revenue: +0.1%

 

Robust organic revenue growth in Q1: +2.8%

Group revenue was €2,806 million in Q1 2023, up +2.2% year-on-year. Organic growth was robust, at +2.8%, reflecting the continuous improvement in the Group’s operational performance. Scope effects accounted for -0.5% (exit of Russia, divestment of EGSE and Sislog). Foreign exchange contributed -0.1%, mainly reflecting the depreciation of the pound sterling against the Euro over the period, mitigated by the appreciation of the US dollar.

Eviden reported a strong +9.5% organic revenue growth in Q1, well balanced between its synergetic activities in Digital, Big Data and Cybersecurity. Digital further accelerated its growth in Q1, driven by new business in application development and modernization, particularly in European markets. Growth was strong in Advanced Computing as the HPC activity continued to ramp up. Digital Security reported another quarter of double-digit growth, with an increasing emphasis on next-generation cybersecurity services and products focused on identity management, encryption and managed detection and response in hybrid cloud environments.

In Q1, Tech Foundations confirmed the earlier-than-anticipated stabilization of core activities in infrastructure, private cloud & platforms, digital workplace and professional services, at +0.1% organic. Portfolio reshaping actions lead to a further managed reduction in non-strategic activities (BPO, hardware & software resale, UCC), resulting in a -2.6% organic contraction for the whole Tech Foundations perimeter. In March, Atos was positioned as a Leader in the Gartner® Magic Quadrant™ for Outsourced Digital Workplace, based on its completeness of vision and ability to execute, for the seventh year in a row.

Commercial activity

Order entry was € 2.1 billion in Q1 2023, representing a book-to-bill ratio of 73% (72% in Q1 2022).

Eviden’s book-to-bill ratio was 79%, impacted by fluctuations in the HPC deal flow, following a high order intake in Q4 2022 and the slippage of a large HPC contract for an Indian customer into Q2. Digital’s Q1 order entry was reflective of the continued focus on smaller, low-risk contracts and short-term bookings with faster revenue yields (59% of Q1 order entry was made of contracts with durations below 18 months).

Tech Foundations’ book-to-bill was 68%, showing continued quarter-on-quarter progress, as sales capabilities are being gradually enhanced while strict contract selectivity is consistently applied. New logos and new services represented 36% of Q1 2023 order entry compared to 25% in Q1 2022.

At the end of March 2023, the Group’s full backlog was € 19.5 billion, down €-0.9 billion compared to December 2022 excluding the divested Italian operations. It represented 1.8 years of revenue.

The full qualified pipeline amounted to € 6.6 billion at the end of March 2023, up € 0.2 billion compared to December 2022 excluding the divested Italian operations and represented 7.3 months of revenue.

2023 full-year outlook confirmed

Based on its robust Q1 performance, Atos is confirming its 2023 full-year outlook.

In 2023, Group revenue organic growth is expected between -1.0% and +1.0%, as an acceleration of Eviden’s organic growth will be offset by the managed reduction of Tech Foundations’ revenue resulting from portfolio reshaping.

Group operating margin[1] is expected at 4% to 5%. Eviden’s operating margin is expected to increase compared to 2022. Tech Foundations’ operating margin is expected to remain in positive territories, well ahead of plan.

Annual General Meeting to be held on June 28, 2023

Atos’ Annual General Meeting of shareholders will be convened shortly, to be held on June 28, 2023.

Strategic transformation update

Over the past ten months, the intense work undertaken by Atos teams, particularly with regard to the strategic refocusing and related internal reorganization of the Group, has allowed us to get our activity back on track, generate growth, and achieve gradual margin improvement, while preparing for the future of our two businesses, Eviden and Tech Foundations. Transformation is clearly starting to yield results. Atos teams remain committed to ongoing efforts to sustain this positive momentum and continue to drive value creation for all stakeholders.

Progress in divestment program

On March 31st, Atos completed the sale of its Italian operations (“Atos Italia”)[2] to Lutech S.p.A., an Italian provider of IT services and solutions, with a 100% cash consideration. The completion of this transaction is a new milestone in the successful execution of Atos’ divestment plan. Since June 2022, Atos has closed four transactions and signed another one thus securing c.80% of the plan’s €700 million expected proceeds and demonstrating the Group’s ability to execute efficiently.

Eviden brand launch

The progressive introduction of Eviden as a commercial brand within the Atos Group started on April 3rd. The Atos Group will therefore go to market under two brands: the managed infrastructure services, hybrid cloud, digital workplace, and professional services, commonly labelled “Tech Foundations” will retain the Atos brand, while its digital, cloud, cybersecurity and big data business lines will go to market under the Eviden brand.

Roll-out of new client-centric organization to foster innovation and performance

Atos is entering the final phase of the roll-out of its new organization, a key step of its strategic transformation of the Group. Atos is progressively implementing a new client-centric organization across the Group thus allowing Eviden and Tech Foundations to operate according to two distinct business models, tailored to their respective go-to-market specificities, while maintaining close collaboration with one another. All Atos teams are fully mobilized to ensure a smooth and successful transition, while implementing the Group’s new operating model.

Objective to complete the separation project in H2 2023 confirmed

The Group is on track to decide on its separation project for a completion by the end of 2023. In addition to the Annual General Meeting of shareholders to be held on June 28, 2023, Atos intends to convene in H2 2023 a specific General Meeting, dedicated to the finalization of the contemplated spin-off project.

Human resources

Total headcount was 110,270 at the end of March 2023, down -0.5% compared to 110,797 at the end of December 2022.

In line with its objectives for the quarter, Atos hired 4,920 new employees (gross) in Q1 2023, compared to 8,234 in Q1 2022.

As of today, Atos has achieved Great Place to Work® certification in 44 countries out of the 69 countries where the Group operates. This achievement is a testament to the high level of employee engagement that the Group’s strategic project has generated, and a recognition of Atos’ ongoing commitment to fostering a positive and inclusive workplace culture. Last-twelve-months attrition rate at the end of March 2023 was 20%, compared to 22% as of December 2022..

Further changes in the composition of the Atos Board of Directors

Atos is committed to continuously improving its governance practices. This effort was recognized in September 2022 when Atos received the highest rating available (AAA) in the MSCI ESG rating.

In 2022, the company appointed five new directors, including four independent directors and one director representing the employee shareholders. The board also reorganized its committees, which now all have independent chairs. After the work performed by the Nomination and Governance Committee, the Atos Board of Directors intends to continue making changes to its membership in 2023 to strengthen its diversity of skills and experiences and is currently finalizing its selection process which will result in announcements in due time.

Investor & Analyst Day focused on Tech Foundations: June 7, 2023

Atos is pleased to invite analysts and investors to its next investor day, focused on Tech Foundations. The event will be held on June 7, 2023 in Paris and remotely and will be an opportunity for management to share an update on Tech Foundations’ business, progress on turnaround plan, as well as its new vision and opportunities ahead, in light of its recent better-than-anticipated performance.

Another event focused on Eviden will be held at a later stage closer to the completion of the separation project.

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Aurel Constantin | 06/06/2024 | 16:28
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