Industry Summary Articles

Atos, a global leader in digital transformation, high-performance computing and information technology infrastructure, announces its revenue of the first quarter of 2022.

Rodolphe Belmer, Chief Executive Officer of Atos, declared: “Revenue in Q1 was in line with our expectations, and fully consistent with the quarterly sequence embedded in our 2022 guidance. Albeit negative, revenue growth at constant currency improved sequentially, driven by an improvement in our Tech Foundations business while Digital and Cybersecurity remained well into positive territory.

Atos actively laid the foundations of its transformation, with the swift adaptation of its governanceunder the helm of a strengthened senior executive team, while continuing to capitalize on its core expertise. Gartner recently ranked Atos the new number one company in managed security services worldwide. We also unveiled our new exascale-class BullSequana supercomputer, bolstering our position as the undisputed European leader in supercomputing.

We continued to press ahead with large-scale recruitment in our growth activities and exceeded our Q1 target with 8,200 gross new hires, mainly in offshore and nearshore locations.

These are encouraging signs that the Group is starting to reap the benefits of the energetic turnaround plan engaged since the beginning of the year. I am confident that we are taking the right steps to position Atos on a long-term value creation path.”

Q1 2022 revenue: -0.6% at constant currency, -2.4% organically
Atos’ consolidated revenue was € 2,747 million in Q1 2022, up +2.1% on a reported basis, and down -0.6% at constant currency. On an organic basis, revenue decreased by -2.4%. Q1 2022 showed a significant sequential improvement compared to Q4 2021, where revenue contracted -5.4% at constant currency and -6.9% organically excluding the impact of the UK BPO contract reassessment.

The acquisition of Cloudreach was finalized on January 3^rd, leading to full consolidation and reporting under the Americas as well as Northern Europe & APAC regions since that date. In total, acquisitions contributed +1.7% to the Group’s revenue growth. Foreign exchange contributed +2.7%, mainly reflecting the appreciation of the American Dollar and the Pound Sterling against the Euro over the period.

Q1 2022 revenue by Regional Business Unit
Under Atos’ new simplified governance, regional business units have been modified. The table below presents pro forma figures for Q1 2021 at constant currency. A reconciliation between former regional business units and the new ones is presented in the appendix of this press release.

Americas revenue grew by +1.5% at constant currency, driven by the contribution of recent acquisitions in multi-cloud services (Cloudreach) and in product lifecycle management (Processia). Growth in Digital activities, in particular with the ramp-up of a large contract in Healthcare & Life Sciences, was offset by a decrease in Unified Communication & Collaboration activities.

Northern Europe & APAC revenue decreased by -2.3% at constant currency. Strong business growth in Manufacturing and Healthcare & Life Sciences was offset by a decrease in other industries, especially Telecom, Media & Technology, which suffered from a volume reduction in its “lab as a service” activity, and in Financial Services & Insurance, following the reassessment of the large BPO contract in Q4 2021, which effect was mitigated by the ramp up of other contracts.

Central Europe revenue decreased by -1.8% at constant currency, driven by a significant decrease in Telecom, Media & Technology due to the ramp down of contracts with two large telecom customers. Most of the other industries delivered growth, in particular Resources & Services with the start of new contracts for a global foodservice retailer and a leading logistic company.

Southern Europe revenue decreased by -1.0% at constant currency. The situation was contrasted across industries, with strong growth in Healthcare & Life Sciences’ digital activities, as well as in Manufacturing, driven by the ramp-up of a large automotive contract and the catch up on High-Performance Computing deals that slipped from 2021 to 2022. Conversely, revenue decreased in Public Sector & Defense due to lower High-Performance Computing sales, in Financial Services & Insurance due to the termination of a contract with a major Spanish bank, and in Telecom, Media & Technology, due to lower hardware and software resale.

Rest of the World revenue grew strongly, by +18.3% at constant currency, supported by business related to the Beijing Olympics and a strong growth across most industries.

Q1 2022 revenue by Industry
The situation was contrasted across Industries with Manufacturing, Resources & Services and Healthcare & Lifesciences recording growth, while revenue decreased in Financial Services & Insurance, Public Sector & Defense and Telecom, Media & Technology.

Manufacturing revenue grew by +5.6% at constant currency, rebounding from a low Q1 2021, supported by the acquisition of Processia in June 2021 and by increased volumes in the cloud computing sector.

Financial Services & Insurance revenue decreased by -4.3% at constant currency, following the reassessment of the large BPO contract conducted in Q4 2021, and the termination of a contract with a major Spanish Bank.

Public Sector & Defense revenue decreased by -2.7% at constant currency, due to lower High-Performance Computing sales and the ramp-down of digital workplace projects with a US State.

In Telecom, Media & Technology, revenue contracted by -10.1% at constant currency, driven by a volume reduction in the “lab as a service” activity, as well as contracts ramp-down in telecoms.

Resources & Services revenue grew by +1.6% at constant currency as solid growth in transport & logistics compensated a decrease in the energy sector.

Healthcare & Life Sciences posted a strong +8.4% growth at constant currency, with solid growth in most regions. 

Commercial activity
Order entry was € 2.0 billion in Q1 2022, representing a book to bill ratio of 72%, compared to 96% in Q1 2021. This low level is not representative of revenue trends expected for the balance of the year, as it is primarily the reflect of (i) the timing of contract renewals, as significant renewals took place in prior quarters, including in Q1 2021 and (ii) a decrease in the average duration of new contracts.

Full backlog was € 23.3 billion, decreasing by € 0.7 billion at constant currency compared to the end of 2021 and representing 2.1 years of revenue. The full qualified pipeline reached € 6.9 billion, broadly stable compared to the end of 2021 at constant currency. 

Human resources
Total headcount stood at 111,355 at the end of March 2022, up +2.0% compared to 109,135 at the end of December 2021 (+1.4% organically).

In the first quarter of 2022, Atos hired 8,234 new employees (gross) mainly in Digital and BDS, and predominantly in offshore and nearshore countries, and welcomed Cloudreach’s 742 employees. 

2022 full-year objectives confirmed
Atos confirms its 2022 full-year objectives and reiterates that its performance will be back-end loaded towards the second half of the year.

While the first half of the year will be impacted by the continued decline in classic IT services, combined with personnel cost inflation and supply chain tensions, we target an improvement in the second half, with revenue growth at constant currency turning positive, and an uptick in operating margin. This improvement will be the reflect of performance optimization actions already implemented, an easier comparison basis and a more favorable revenue mix.

Free cash flow should improve compared to 2021, and will largely depend on operating margin delivery and further working capital fluctuations.

For the full-year, Atos expects:

• Revenue growth at constant currency of -0.5% to +1.5%;
• Operating margin of 3% to 5%;
• Free cash flow between €-150 million and € 200 million.

Atos confirmed managed exit of Russia-based operations
Atos condemns the war in Ukraine. On April 5, the Group confirmed the managed exit of its Russia-based operations, that generated c. 0.4% of Group revenue in 2021. Atos delivers critical digital services to some of its global clients out of Russia.

The feasibility of exiting Russia has required significant planning in terms of implications for business operations and for Atos employees based there. Atos is focused on managing the impact on its employees as part of an orderly exit. In support of its global clients, the Group is moving services currently delivered from Russia to other countries, including India and Turkey.

To view the original press release, please click here.

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