Atos SE

Good day and thank you for standing by. Welcome to the ATOS third quarter 2022 revenue conference call. At this time all participants are in listen only mode. After the speaker's presentation there will be the question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nordin Biman. Please go ahead.

Thank you. Thank you, operator, and good morning, everyone, and thank you for joining us for the presentation of ATOS Q3 Revenue. I'm Nordin Biman, Group CEO and Co-CEO in charge of Tech Foundation. And for this presentation, I'm joined today with Diane Galb, our Senior Executive Vice President in charge of Strategic Project and Support Functions. and Philippe Oliver, the co-CEO in charge of Avidian, and of course, Nathalie Senechaud, our Group CFO. Now, let's turn to the quarter's highlights. Overall, in the past quarter, Atos continued to improve its business performance as we pursue our in-depth transformation. In terms of revenue, we delivered positive revenue growth at a constant currency, showing a strong sequential improvement compared to previous quarters and reflecting the steady improvement in operational performance. Q3 is a lower quarter in terms of book-to-bill in our sector, but it did come out low at 71% book-to-bill at the group level. We'll get into detail by business later, but the pipeline is still strong and increasing. We should start seeing significant improvement before year-end with more large yields, more new logos, as we are building sales capabilities and providing assurance on the execution of the separation. Book-to-bill is expected to recover strongly in Q4. On the people side, our attractiveness and our ability to retain talent are intact. Group headcount was stable in Q3, reflecting the selective hiring approach we implemented. Gross hiring at 8,400 associates, of which 64% in offshore and nearshore locations. In parallel, we have made significant progress with our separation project, putting us well on track to complete the operation in H2 2023. Diane will comment later on our progress. And lastly, based on our robust revenue performance in Q3, we are precising our revenue growth objective for the full year. With that, I propose now to give you an update on Tech Foundation. So let me say, I'm really pleased with the momentum we have in TechFoundation. As I said last time, this newly formed business line with a refocused strategy combined with our decision to invest in this business has sent a powerful signal to all our employees and customers. Our current strategy is a stark contrast to our previous one where part of the TechFoundation business were going to be disposed and where the group's focus has shifted away from our core infrastructure business. On the revenue side, the momentum is clearly visible. We stabilize our top line in Q3 at plus 0.3 at constant currency, which is a strong improvement coming from minus 11.4% last year and minus 2.6 in H1. The stabilization is happening earlier than anticipated and is the result of that renewed focus and effectiveness of our new team in charge. In particular, the decrease of our core infrastructure business is much more contained than last year, and our professional services business has been showing really growing evidences in the last months. On the commercial side, while we have still a long road ahead, we are making good progress. After a difficult year in 2021, we are gradually rebuilding our commercial pipeline, which takes some time due to the long cycles in our business. typically between 12 to 18 months, as already mentioned. Q3 book-to-bill was 58%, driven by a slippage of a key large deal and increased focus on margin and cash profile of our deals. Despite being more selective, booking in Q3 represents a four points improvement over our prior year booking. As you know, traditionally, Q3 is our lowest quarter in terms of booking, and we anticipate a significant improvement in Q4 as we have experienced historically. However, we see several signs of improvement in our core business. Specifically, our new logo bookings were five times higher compared to last year. An early indication of results from our ongoing investment in large deals and increased focus on new logo acquisition. Our pipeline is also higher by more than 3 billion versus last year at the same period. So we do expect the book to build to improve in Q4 to pave the way for a successful 2023. While these results are encouraging, they do not yet reflect the full potential of our business and the change we have implemented in our commercial model, which will take the 12 to 18 months to fully bear results. So to summarize, a positive momentum on the top line, still some work to do on the commercial front, but things have clearly started to move in the right direction and more rapidly than expected. So on this slide, you could see a few examples of important contracts we signed this quarter. A contract with a major American manufacturer in the automotive industry for mainframe services taking over the entire application support and on top of it, being responsible of the migration of the mainframe application to AWS. Next one, I will mention it, is the six group. It's a five-year contract to provide something, a mainframe managed services to the entire six Swiss infrastructure and exchange to be the IT provider end-to-end. Other one, it's Paragon. It's a large contract to provide an end-to-end IT services solution to that global communication provider in order to develop a digital dynamic infrastructure to support their growth. And the last one, it's an outsourcing operation deal with NRG, a German energy provider based in Nuremberg. And this is their first generation of IT outsourcing and they have choose to trust us to make it happen. So the last three that I mentioned are new logo. And as I said, we significantly increased our order entry with new logo, which indicates encouraging success in rebuilding our commercial pipeline and second, that our client believe in tech foundation ability to deliver top quality services in the long run. So with that, I will now hand over to Philippe to present a vision performance.

Thank you, Nordin.