Industry Summary Articles

Atos, a global leader in digital transformation, high-performance computing and information technology infrastructure, announces its performance for the first quarter of 2024.

Atos’ Chief Executive Officer, Paul Saleh declared: “Tech Foundations and Digital are executing on their transformation plans. Business was nonetheless impacted by softer market conditions in key regions such as the Americas and Central Europe as well as delays in contract award.

During this quarter, our BDS business expanded its leadership in high-performance computing, with a new contract award in Denmark to accelerate research and innovation in various fields such as healthcare, life sciences, and the green transition, as well as with add-on work for existing HPC customers.

On April 9, we outlined the key parameters of a refinancing framework to address our overall debt levels and upcoming debt maturities. We will update in the coming days those parameters to take into account the adjustment of our 2024-2027 business plan. We have therefore extended the deadline for submissions of refinancing proposals by existing stakeholders and third-party investors to May 3. We will review those proposals with our financial creditors and agree on an appropriate path forward. Our goal remains to agree on a refinancing solution by this coming July.

I would like to take this opportunity to recognize our 94,000 employees for their commitment to giving our customers the highest quality of service delivery. I would like to also thank our customers and partners for their continued support.”

Revenue by Businesses

*: at constant scope and average exchange rates

Group revenue was €2,479 million in Q1 2024, down -2.6% organically compared with Q1 2023.

Eviden revenue was €1,164 million, down -3.9% organically.

• Digital activities decreased mid-single digit. While revenue grew in continental Europe with public sector and utility customers, the business was impacted by the general market slowdown in Americas and by contract scope reductions in the United Kingdom.
• Big Data & Security (BDS) revenue decreased low single digit organically. Revenue in Advanced Computing was up slightly, with stronger activity in the public sector in France and in Asia. Revenue in Digital Security declined, impacted by a ramp up delay in a large project in Europe.

Tech Foundations was €1,314 million, down -1.5% organically.

• Core revenue (excluding BPO and value-added resale (“VAR”)) decreased by -3.6%. Stronger contributions related to the Paris Olympic & Paralympic games and the UEFA contract were offset by slowdown in public sector spending in Central Europe as well as by contract scope and volume reductions in Americas.
• Non-core revenue grew high-single digit, reflecting a strong demand for hardware and software products from European customers and a moderate growth in BPO activities in the United Kingdom.

Overall, revenue of the Group was impacted by delays in award of new contracts and add-on work, as clients await the final resolution of the Group’s refinancing plan.

Revenue by Regional Business Unit

*: At constant scope and average exchange rates

Americas revenue decreased by -7.5% on an organic basis, reflecting the current general slowdown in market conditions. Digital services were down reflecting contract completions and volume decline in Healthcare and Insurance. The delivery of a supercomputer project in South America in Q1 2023 also provided a higher prior year comparison basis for BDS. Revenue in Tech Foundations was down due to a contract completion and scope reductions with select customers.

Northern Europe & Asia-Pacific revenue decreased by -3.2% on an organic basis. Eviden revenue declined high-single digit, reflecting a lower demand from Public Sector, Healthcare and Insurance customers. Revenue in Tech Foundations was slightly up with the contribution from Asia and increased BPO activity in the UK offsetting volume decline in the healthcare sector.

Central Europe revenue was down -3.8% on an organic basis. Eviden revenue slightly declined, as growth in Digital activities in Germany and Austria offset lower activities in BDS. Tech Foundations revenue declined high-single digit, reflecting delays in public sector spending.

Southern Europe revenue was up +0.7% organically. Eviden revenue grew mid-single digit, reflecting strong activity in High-Performance Computing. Digital activities grew as well, benefitting from the ramp-up of large contracts in Spain and with a major European utility company in France. Tech Foundations revenue declined low single-digit following contract completions with Banking and Public Sector customers.

Revenue in Others and global structures, which encompass Middle East, Africa, Major Events as well as the Group’s global delivery centers and global structures, strongly grew by 30% organically, reflecting strong performance in Major Events with the ramp up of activities related to the Paris Olympic & Paralympic games and the UEFA contract.

Commercial activity

Order entry for the Group was €1,586 million. Eviden order entry was €966 million and Tech Foundations order entry was €620 million.

Book-to-bill ratio for the Group was 64% in Q1 2024, down from 73% in Q1 2023, reflecting delays in contract awards as clients await the final resolution of the Group’s refinancing plan.

Book-to-bill ratio at Eviden was 83%, improving by +4 points compared with the first quarter of 2023. The increase reflects large orders received by BDS, in particular an AI system that will perform medical and scientific research in Denmark and contracts to extend the computing capacity of existing HPCs: the Santos Dumont in Brazil and the Jean Zay in France. Main order intake also included an SAP implementation and maintenance contract for the European Union and an application maintenance contract with a public sector customer in Central Europe.

At Tech Foundations, Q1 book-to-bill was 47%, down from 68% in Q1 2023. Despite the signature of several large contact renewals, notably in Hybrid Cloud & Infrastructure with a Transportation customer and in Digital Workplace with a client in the financial sector in Americas, signature of new outsourcing contracts was delayed due to the current low demand for new services from public sector customers in Central Europe and the impact of customers delaying decisions on major IT projects, as they await the final resolution on our refinancing plan.

At the end of March 2024, the full backlog was €17.3 billion representing 1.7 years of revenue. The full qualified pipeline amounted to €6.0 billion at the end of March 2024.

Operating margin

Group operating margin in the first quarter of 2024 was €48 million representing 1.9% of revenue, compared with 3.3% in prior year.

Eviden operating margin was €22 million or 1.9%, down -330 basis points organically. Eviden’s profitability decreased, impacted by revenue decrease, lower utilization of billable resources and investment in Advanced Computing.

Tech Foundations operating margin was €26 million or 2.0%, up +50 basis points organically, reflecting the continued execution of its transformation program.

Based on current market conditions and business performance for the first quarter of the year, Atos will adjust its 2024-2027 business plan and communicate any revisions in the coming days.

Q1 2024 cash and net financial debt

As of March 31, 2024, cash & cash equivalents and short-term financial assets was €1.0 billion, down €1.4 billion compared with December 31, 2023 primarily reflecting €1.3 billion lower working capital actions compared with the end of fiscal 2023.

As of March 31, 2024, net debt was €3.9 billion compared with €2.2 billion at the end of last year, reflecting primarily the reduction of the working capital actions.

Conference call

Atos’ Management invites you to an international conference call on the Group revenue for the first quarter of 2024, on Thursday, April 25, 2024 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/ady4y3pm
• 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/BI633fab59d4cc4520b165781369018611

Upon 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.

To view the original press release, please click here.

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