Third quarter of 2022: transformation in motion
Revenue up +5.7% in Q3 with growth at constant
currency turning positive
Full-year revenue growth now expected in the
upper half of the range
Significant progress achieved in separation
project
Paris, October 26,
2022 - Atos, a global leader in digital transformation,
high-performance computing and information technology
infrastructure, today announces its revenue for the third quarter
of 2022.
Atos’ leadership team, Nourdine Bihmane, Diane
Galbe and Philippe Oliva, declared: “In Q3, we remained fully
focused on continuously improving the business performance: revenue
growth at constant currency turned positive, with an
earlier-than-anticipated stabilization at Tech Foundations, while
Evidian continued to grow despite fluctuations in the HPC business,
and is set to accelerate in Q4. Based on this robust performance,
we confirm our full-year objectives, with revenue growth now
expected in the upper half of the previously indicated range. In
the meantime, we achieved important milestones in Q3 towards the
envisioned separation. We finalized a €2.7 billion financing
providing the means to execute our transformation until separation
while ensuring the Group’s liquidity. We launched the works
councils consultation process and made tangible progress in
carve-out preparation workstreams. The separation project is well
on track to be completed in H2 2023 as initially planned. Atos is
resolutely pursuing its in-depth transformation: the whole
organization is mobilized and committed to the successful execution
of our strategic plan, which we are convinced will create
significant value for all Atos’ stakeholders.”
In € million |
Q3 2022 |
Q3 2021 |
Change |
Change at constant currency |
Evidian Perimeter revenue |
1,278 |
1,191 |
+7.3% |
+2.1% |
Tech Foundations perimeter revenue |
1,540 |
1,475 |
+4.4% |
+0.3% |
Group revenue |
2,818 |
2,666 |
+5.7% |
+1.1% |
|
|
|
|
|
Revenue
growth at constant currency
turning positive in
Q3
Group revenue was €2,818
million in Q3 2022, up +5.7% year-on-year. Growth at constant
currency turned positive in Q3, at +1.1%, while organic growth
stabilized, at -0.1%, showing a strong sequential improvement
compared to previous quarters (-1.9% in Q2 and -2.4% in Q1). This
positive momentum reflects the continued improvement in operational
performance brought by the Group’s new organization and management
team. Acquisitions contributed +1.2% to the Group’s revenue growth.
Foreign exchange contributed +4.6%, mainly reflecting the
appreciation of the US Dollar against the Euro over the period.
Evidian’s revenue was up +2.1%
at constant currency in Q3. Digital recorded a solid growth, driven
by buoyant trends on digital transformation markets, as well as by
the contribution from recent acquisitions. Q3 activity was
supported by a good level of fertilization of existing customers.
Cybersecurity continued to benefit from market leadership and
strong customer demand. Revenue growth was affected by Advanced
Computing, with a low level of HPC revenue, expected to ramp up
from Q4 onwards based on the very high order entry recorded in
Q2.
Tech Foundations’ revenue
stabilized in Q3, at +0.3% at constant currency (+0.5% excluding
UCC). This positive top line momentum is a clear sign of an
earlier-than-anticipated improvement of the business line’s
performance, resulting from renewed management focus under the
Group’s new organization and strategic project. The core
infrastructure business reported a much more contained decline than
in 2021, while professional services grew strongly. Digital
workplace services and UCC recorded a slight contraction due to
persisting supply chain tensions.
Significant progress
achieved in separation
project
The Group is making significant progress in its
separation project and confirms that it is well on track to
complete it within the previously announced 12 to 18 months
timeline1.
The Group successfully signed a new €2.7
billion bank debt financing on July 29, 2022, ensuring the
interim period leading to the envisioned separation is fully
financed. The syndication of this new debt package was finalized in
a short timeframe and received very strong support from the Group's
historical lenders. This unsecured debt package includes a €1.5
billion term loan with very satisfactory tenure and pricing
conditions, a €0.9bn revolving credit facility supporting the
Group’s liquidity, and a €0.3 billion bridge loan to be repaid out
of the expected proceeds from the Group’s non-core businesses
disposal program. Financial covenant was reset to 3.75x net debt to
OMDA2, tested at year-end.
On September 7, 2022, the information
and consultation process of Atos European works council
(SEC), regarding the Group’s envisioned separation into two listed
entities, was launched in line with the project timetable. In
parallel, social dialogue has also started at country level.
All separation workstreams are mobilized
and progressing according to plan, across four pillars:
(i) go-to-market and commercial continuity, (ii) carve-out
operations covering tax and legal structuring, strategic agreements
and preparation of carve-out financial statements, as well as Day-1
operational readiness, (iii) operating model and support functions
set-up and (iv) program coordination. Atos is convinced
that this project is the most value-creating for all its
stakeholders. Evidian will emerge as a global digital pure player
fully focused on growing markets and combining a unique set of
highly synergistic areas of expertise. Tech Foundations’ turnaround
is already underway and showing encouraging signs of
earlier-than-anticipated recovery. Once turned-around, Tech
Foundations will take a fresh start as an end-to-end orchestrator
of digital infrastructure, leveraging its core operations to
deliver solid margins and cash generation.
Moving ahead with
disposal
program
On June 14, 2022, Atos announced a disposal
program of non-core businesses representing €700 million of
expected proceeds, as part of the financing of its transformation
plan. On the same day, the Group completed the sale of its
remaining 2.5% stake in Worldline, for net proceeds of c. €220
million. The remaining €480 million expected proceeds pertain to
the disposal of non-core businesses mostly within the Evidian
perimeter.
This disposal program is progressing as planned,
with several disposal processes currently ongoing, including 2
small-sized transactions already signed, indicating market interest
for the businesses selected by Atos as part of its disposal
program, as well as the Group’s ability to execute swiftly, only
four months after the disposal program was set up.
CSR: outstanding
external recognition
In September 2022, for the third year in a row,
Atos was awarded the EcoVadis Platinum
Award for its Corporate Social Responsibility performance,
with the highest score ever received by the Group, at 84 points out
of 100. Atos therefore confirms its position in the top 1%
companies assessed by EcoVadis within its sector.
In October 2022, Atos was upgraded to the
highest rating available (the AAA rating) in the
Morgan Stanley Capital International (MSCI) ESG
rating 2022, ranking it among the top 7% of companies in the
“Software and Service” industry with a good performance in
Sustainability measured through the Environmental, Social and
Governance dimensions. MSCI highlighted Atos’ leadership in clean
technology initiatives, as well as the Group’s strengthened
governance. Since the beginning of the year, Atos’ Board of
directors has welcomed five new members: René Proglio, Astrid
Stange, Elizabeth Tinkham, Caroline Ruellan and Katrina Hopkins,
who collectively bring a wealth of experience in digital, finance,
human resources and corporate governance.
Commercial activity
Order entry was € 2.0 billion in Q3 2022,
representing a book-to-bill ratio of 71%.
For the Evidian perimeter, the
book-to-bill ratio was 85%, impacted by fluctuations in the HPC
deal flow, following a very high order intake in Q2, as well as a
lower number of large application management services
contracts.
On the Tech Foundations
perimeter, the book-to-bill ratio was 58%, while Tech Foundations
is in the process of gradually re-building a strong commercial
pipeline and enhancing its sales capabilities. However, positive
evolutions were noted in Q3, with a significant increase in order
entry from new logos, and the benefits from a higher contract
selectivity.
Book-to-bill ratio is expected to recover
significantly across both perimeters in Q4.
At the end of September 2022, the Group’s
full backlog reached € 21.8 billion, down €0.8
billion compared to the end of June 2022. It represented 1.9 year
of revenue.
The full
qualified
pipeline amounted to € 7.1 billion at the end of September
2022, stable compared to the end of June 2022, representing 7.5
months of revenue.
Human resources
Total headcount was 112,344 at the end of
September 2022, broadly stable compared to the end of June 2022
(112,180).
In Q3 2022, Atos hired
8,367 new
employees (gross), of which 64% are located in
offshore and nearshore countries.
In September 2022, Atos was listed for the first
time by Great Place to Work® as one of ‘Europe’s Best Workplaces’
in the 2022 annual list. It is ranked 21st position in the
multinational company category.
2022 full-year objectives confirmed and
refined
Based on its robust Q3 performance, Atos refines
its revenue growth objective for the full year, while operating
margin and free cash flow objectives are unchanged. For the full
year, the Group expects:
- Revenue growth
at constant currency in the upper half of the -0.5% to +1.5%
range;
- Operating
margin at the lower end of the 3% to 5% range;
- Free cash flow at the lower end of
the €-150 million to €200 million range excluding additional
impacts of the envisioned transformation plan. Such additional
impacts are estimated around €-250 million, including the cost of
financing, in line with information communicated at Atos Capital
Markets Day in June.
Marks of interest received
As indicated on September 29, 2022, Atos
received, on September 27, an unsolicited letter of intent from
Onepoint, in association with private equity firm ICG, related to
the potential acquisition of the Evidian perimeter, for an
indicative enterprise value of €4.2 billion. Following the thorough
examination of this preliminary and non-binding mark of interest,
and upon the recommendation of its ad hoc committee, the Board of
Directors convened and unanimously concluded that it was not in the
interest of the Company and its stakeholders, and therefore decided
not to proceed.
In addition, as indicated on October 24, 2022,
since the presentation of its separation project at the CMD on June
14, Atos has been approached by several players interested in the
Tech Foundations business. The Board of Directors reiterates that
it is its duty to examine all marks of interest, and it will do so
for the Tech Foundations business with regard to the Company’s
corporate interest and value creation for its stakeholders.
Atos is fully mobilized on the progress of the
separation project within the planned timetable, which remains the
Group's priority.
Analyst and investor
conference call
Atos Management invites analysts and investors
to a conference call on the Group 2022 third quarter revenue, on
Wednesday,
October
26,
2022, at 08:00 am
(CET – Paris).
You can join the webcast of the conference:
- via the
following link: https://edge.media-server.com/mmc/p/nh2xut9f
- by telephone with the dial-in, 10
minutes prior the starting time. Please note that if you want to
join the webcast by telephone, you must register in advance
of the conference using the following link:
https://register.vevent.com/register/BIcddb3828aa844c69ac846f1b0d03d6f9Upon
registration, you will be provided with Participant Dial-In
Numbers, a Direct Event Passcode and a unique Registrant ID. During
the 10 minutes prior to the beginning of the call, you will need to
use the conference access information provided in the email
received upon registration.
After the conference, a replay of the webcast will be available
on atos.net, in the Investors section.
Forthcoming events
February 28, 2023
(After Market
Closing)
Full
year 2022 resultsApril 27, 2023
(Before
Market Opening)
First
quarter 2023 revenueJuly 26, 2023
(Before
Market Opening)
First
half 2023 results
Contacts
Investor Relations: Thomas
Guillois - +33 6 21 34 36 62
- thomas.guillois@atos.netMedia: Anette
Rey - +33 6 69 79 84 88 - anette.rey@atos.net
Appendix
Q3 2022 revenue by Regional Business
Unit
In € million |
Q3 2022 |
Q3 2021* |
Change at constant currency |
Americas |
776 |
752 |
+3.1% |
Northern Europe & APAC |
801 |
781 |
+2.6% |
Central Europe |
638 |
646 |
-1.2% |
Southern Europe |
544 |
556 |
-2.2% |
Others & Global structures |
60 |
53 |
+12.4% |
Total |
2,818 |
2,788 |
+1.1% |
* At constant currency |
|
|
|
Americas revenue grew by +3.1%
at constant currency, driven by the contribution of recent
acquisitions in multi-cloud services and in product lifecycle
management, as well as a positive organic growth. A robust growth
in Digital, in particular with a new logo in decarbonization, as
well as in BDS, was mitigated by a decrease in Tech Foundations
activities.
Northern Europe & APAC
revenue grew by +2.6% at constant currency. In addition to the
contribution of Cloudreach, Digital activities were driven by
strong demand in application services, in particular from the
public sector. Tech Foundations activities continued to improve,
while BDS was impacted by fluctuations in the Advanced Computing
business.
Central Europe revenue
decreased by -1.2% at constant currency, as growth in digital
applications, particularly in public sector, TMT and energy, and
cybersecurity was offset by a decline in Tech Foundations’
activities, partly driven by the UCC business, and by lower
hardware and software resale.
Southern Europe revenue
decreased by -2.2% at constant currency primarily due to lower HPC
sales, coming from a very high level in FY21, and to the continued
deliberate decline of hardware and software resale. Digital
activities benefitted from a good momentum in applications and
public cloud services, while Tech Foundations activities were
slightly up, driven by professional services.
Others and global
structures encompass Middle East, Africa, Major Events as
well as two cost centers: the Group’s global delivery centers and
global structures. Revenue grew strongly, by +12.4% at constant
currency, supported by the acquisition of Ipsotek in 2021, as well
as a good performance in Africa and in Turkey.
Revenue at constant scope and exchange
rates reconciliation
In € million |
Q3 2022 |
Q3 2021 |
% change |
Statutory revenue |
2,818 |
2,666 |
+5.7% |
Exchange rates effect |
|
122 |
|
|
|
|
|
Revenue at constant exchange rates |
2,818 |
2,788 |
+1.1% |
|
|
|
|
Scope effect |
|
31 |
|
Exchange rates effect on acquired/disposed perimeters |
|
3 |
|
Revenue at constant scope and exchange rates |
2,818 |
2,821 |
-0.1% |
Currency exchange rates effects positively
contributed to revenue growth for €+122 million. They mostly came
from the appreciation of the American Dollar against the Euro over
the period.
Scope effects (including exchange rates effect on acquired/
disposed perimeters) amounted to € +33 million. They are related to
the acquisition of Cloudreach, as well as other acquisitions closed
in Q3 2021 (Nimbix, Ideal GRP, Visual BI, Cryptovision,
AppCentrica, DataSentics).
About Atos
Atos is a global leader in digital
transformation with 112,000 employees and annual revenue of c. € 11
billion. European number one in cybersecurity, cloud and
high-performance computing, the Group provides tailored end-to-end
solutions for all industries in 71 countries. A pioneer in
decarbonization services and products, Atos is committed to a
secure and decarbonized digital for its clients. Atos is a SE
(Societas Europaea) and listed on Euronext Paris.
The purpose of Atos is to help design the future
of the information space. Its expertise and services support the
development of knowledge, education and research in a multicultural
approach and contribute to the development of scientific and
technological excellence. Across the world, the Group enables its
customers and employees, and members of societies at large to live,
work and develop sustainably, in a safe and secure information
space.
Disclaimers
This document contains forward-looking
statements that involve risks and uncertainties, including
references, concerning the Group's expected growth and
profitability in the future which may significantly impact the
expected performance indicated in the forward-looking statements.
These risks and uncertainties are linked to factors out of the
control of the Company and not precisely estimated, such as market
conditions or competitor's behaviors. Any forward-looking
statements made in this document are statements about Atos’s
beliefs and expectations and should be evaluated as such.
Forward-looking statements include statements that may relate to
Atos’s plans, objectives, strategies, goals, future events, future
revenues or synergies, or performance, and other information that
is not historical information. Actual events or results may differ
from those described in this document due to a number of risks and
uncertainties that are described within the 2021 Universal
Registration Document filed with the Autorité des Marchés
Financiers (AMF) on April 6, 2022 under the registration number
D.22-0247 and the Amendment to the 2021 Universal Registration
Documents filed with the AMF on August 5, 2022 under number
D.22-0247-A01. Atos does not undertake, and specifically disclaims,
any obligation or responsibility to update or amend any of the
information above except as otherwise required by law. This
document does not contain or constitute an offer of Atos’s shares
for sale or an invitation or inducement to invest in Atos’s shares
in France, the United States of America or any other
jurisdiction.
This document includes information on specific
transactions that shall be considered as projects only. In
particular, any decision relating to the information or projects
mentioned in this document and their terms and conditions will only
be made after the ongoing in-depth analysis considering tax, legal,
operational, finance, HR and all other relevant aspects have been
completed and will be subject to general market conditions and
other customary conditions, including governance bodies and
shareholders’ approval as well as appropriate processes with the
relevant employee representative bodies in accordance with
applicable laws.
Revenue organic growth is presented at constant
scope and exchange rates.
Regional Business Units include
Americas including North America (USA, Canada,
Guatemala and Mexico) and South America (Argentina, Brazil, Chile,
Colombia, Uruguay, and Peru), Northern Europe and
APAC including Northern Europe (United Kingdom &
Ireland, Belgium, Denmark, Estonia, Belarus, Finland, Lithuania,
Luxembourg, The Netherlands and Sweden) and Asia-Pacific
(Australia, China, Hong Kong, India, Japan, Malaysia, New Zealand,
Philippines, Singapore, Taiwan, and Thailand), Central
Europe (Germany, Austria, Bulgaria, Bosnia, Croatia, Czech
Republic, Greece, Hungary, Israel, Poland, Romania, Russia, Serbia,
Slovenia, Slovakia, and Switzerland), Southern
Europe (France, Andorra, Spain, Portugal, and Italy) and
Rest of the World including Middle East &
Africa (Algeria, Benin, Burkina Faso, Egypt, Gabon, Ivory Coast,
Kenya, Kingdom of Saudi Arabia, Madagascar, Mali, Mauritius,
Morocco, Qatar, Senegal, South Africa, Tunisia, Turkey and UAE),
Major Events and Global Delivery Centers.
1 Pending completion of the employee
representative bodies consultation process 2 Excluding IFRS 16
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