Tietoevry's Q4 profit margin exceeded expectations, despite revenue falling short of forecasts

Investing.com -- Tietoevry Oyj reported slightly lower-than-expected Q4 revenue on Thursday, but its profit margin outperformed expectations, thanks to accelerated implementation of cost optimization measures.

The Finnish technology company reported total revenue of €464 million, about 1% below analysts' expectations of €468 million, with organic growth down 2%, compared to an expected decline of around 1%.

The revenue shortfall was mainly due to a weak market for technology consulting services, with organic growth down 6%, as well as known headwinds in the software businesses of the Banktech and Caretech divisions.

Despite the revenue miss, Tietoevry's adjusted EBITA was €75 million, exceeding analysts' expectations of around €70 million. The adjusted EBITA margin reached 16.2%, well above the 15.1% expected by analysts, thanks to faster implementation of cost optimization measures.

The company achieved approximately €22 million in cost savings in Q4, with run-rate savings expected to reach €95 million by the end of 2025. Tietoevry has raised its cost savings target to €130 million by the end of 2026.

For 2026, management expects organic growth between -2% and 0%, citing ongoing headwinds from the exit of traditional contracts. The company projects an adjusted EBITA margin of 14.8-15.8% in 2026, up from 13.8% in 2025.

The proposed dividend is €0.88, lower than last year's €1.50, which may disappoint investors slightly. However, this shortfall could be offset by the announced €150 million share buyback program related to the Bekk divestment.

Tietoevry's order backlog increased 13% year-over-year, providing some positive outlook despite current growth challenges.

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