TietoEVRY Oyj

Good morning and welcome to Tieto's second quarter earnings webcast. My name is Tommi Järvenpää, the head of investor relations at Tieto. In the second quarter, the market weakened further, which impacted our growth. At the same time, we delivered a significant improvement in our profitability, underlining the resilience of our business and the progress we have made over the past year. This morning, our president and CEO, Enre Rangnäs, and CFO, Tomi Hyröläinen, will walk you through the highlights of the quarter and our financial performance. After the presentation, we will host a Q&A as usual. And with that, I would like to hand over to Enre. Please go ahead.

Thank you, Tomi. And good morning and welcome to Tieto's Q2 presentation. As Tommy alluded on, the second quarter was shaped by two distinct developments. On one hand, market conditions became more challenging than expected, particularly in tech consulting. On the other hand, we delivered a significant improvement in profitability 5.5 percentage points compared to Q2 last year, confirming that the measures implemented over the past year are developing and delivering tangible results. So during this presentation, we will address both these developments. We will outline the market dynamics we experienced during the quarter, discuss the actions we are taking in response, and explain why we remain confident in our long-term strategy and outlook. So with that, let me start by briefly revisiting the strategy that we presented at our Capital Markets Day last fall. As communicated back then in November of last year, 2026 will be a year of transition and execution. Our objective this year has not been to maximize short-term performance, but to build a stronger company for the years ahead. So during the past 12 months, we have fundamentally reshaped our cost base. We have simplified organization and we have strengthened execution across the group. And these actions are now clearly visible in our profitability. While market conditions have become more challenging than anticipated, particularly in technology consulting, our strategic priorities, therefore, are the same and unchanged. We are confident that the actions we have taken today is strengthening the company's competitiveness and supporting the medium term ambitions we presented at our capital markets day. Let me now illustrate how the strategy has translated into concrete progress during second quarter, as we also did for Q1 of this year. Starting then with customers first. So we continue to invest in customer-facing capabilities. AI has become an increasingly important part of customer discussions across the group, and we are seeing clearly growing customer interest in particular in AI applications. At the same time, we have invested heavily in developing our own people with now 1,500 employees already completing Microsoft's rapid AI skilling program. Then the simplification of the group has continued according to plan. So in Q2, we completed the divestment of Edlevo and HR payroll businesses within Intech, and we continue to accelerate the transformation of tech consulting through competence renewal and also organizational changes. Overexpansion priorities also continue to progress well. We are seeing encouraging momentum in our target markets, particularly in Dach and Iberia, with new customer wins and a healthy commercial pipeline supporting future growth. Finally, our cost optimization program continues to deliver ahead of plan. We have already achieved annual run rate savings of 115 million euros and remain firmly on track towards our 130 million euro target. And then more importantly, I would say that cost discipline is now embedded across the organization and has become part of how we operate on a daily basis. Then, of course, it's one theme that cuts across all four strategic priorities, and that is artificial intelligence. AI is no longer a separate initiative within Tieto. It is increasingly integrated into our products, customer solutions, and the way we develop software also internally. AI continues to be one of the most important long-term technology shifts shaping our industry. So during the past year, the discussion have involved rapidly from R&D and experimental projects towards practical deployment at scale. We see increasingly also competitive advantage is built in on trusted software, deep domain expertise, and also business critical customer workflows rather than access to AI models alone. And we believe that this plays directly into Tito's strengths and our client base. While AI investments continue to increase, we are not yet seeing a broad-based recovery in technology consulting. Instead, customers are prioritizing targeted AI use cases, data foundation, and productivity improvement over large-scale transformation programs. So we believe this represents a transition in how technology budgets are allocated rather than a reduction in overall technology demand. And the slide that we have ahead of us illustrates a few examples from across our businesses. AI is now embedded into our software portfolio. Customer solutions from software engineering and tech consulting to anti-money laundering in bank tech, clinical documentation in care tech, and then financial automation in in-tech. The common denominator across all of these examples is that AI is solving real customer problems and creating measurable business values. At the same time, we are applying AI internally across the company. AI tooling increasingly become a part of how we develop software, improving engineering productivity and enabling us to deliver solutions to customers faster and more efficient. And this is, of course, the request that we daily get from our clients as well. So I would say that this is an important capability that supports all our businesses as we speak. Turning now to Q2 itself. The quarter was characterized by two very different developments, with market conditions weakening further, particularly in technology consulting, resulting in revenue development below both our own and market's expectations. On the other hand, we also did see that our profitability remained very strong, an improvement of 5.5 percentage points versus Q2 of last year, demonstrating that the actions we have taken over the past year are clearly delivering results. The market environment became more challenging during the quarter than we anticipated at the beginning of the year as customers continue to postpone larger transformation programs. And we also saw some softer demand in parts of our software portfolio. And as a result of that, we have updated our full year revenue growth outlook to reflect the current weaker market environment and also the shift on customer spending. At the same time, over execution continues to be strong. The cost optimization program is delivering according to plan, profitability improved across all four businesses, and we continue to accelerate the transformation of tech consulting. And as discussed earlier, this includes reshaping our competence base, investing in AI capabilities and strengthening the business for next phase of growth. During the quarter, we also completed the divestment of Edlevo and AGI payroll businesses. And following the completion of the transaction, we have decided to launch a new 90 million euro share buyback program when the current program has been completed. This again is in line with our capital allocation principles and our commitment to return excess capital to shareholders. So overall, while the market environment has become more challenging, the quarter reinforces our confidence that the company is becoming stronger operationally and strategically. Let me then briefly summarize the quarter through the key financial metrics. Revenue for the quarter was, as you can see to the left, 427 million euros, corresponding to an organic growth of minus 5%, again, mainly driven by the minus six in tech consulting. And as discussed, the weaker development was primarily by the deterioration of the consulting market, while our software business continued to be affected by previously communicated legacy headwinds, like we have said with bank tech and care tech, and slightly softer market conditions also in selected areas. The highlight of the quarter was clearly profitability. As you can see to the right, the upper right, adjusted for EBITDA, Adjusted EBITDA improved to 63 million euros, or 14.9%, reflecting the structural benefits of our cost optimization program, together also with improved operational execution across the group. So we are now seeing the tangible financial impact of the actions that we have taken now over the past year. Then also, the balance sheet seems to be, not seems to be, but it remains to be very strong. Net debt to EBITDA was 1x at the end of the quarter. And even if you exclude the temporary impact from the recent divestment proceeds, leverage would remain comfortably below the target range of approximately 1.9x, providing financial flexibility. Order backlog declined by 4% year-over-year, and this is primarily reflecting the exceptionally strong comparison period last year when we signed several large contracts in bank tech, and then together also with the slightly softer market demand during the quarter. And finally, cash flow from operating activities remained healthy at 21 million euros. This is 16% up year-over-year. If you then are factoring in from a comparison point of view, that we also had divested businesses in the 51 that you can see below the 21 number. So with that overview, Let me then move into each of the four business areas. Starting off with tech consulting. As mentioned, market conditions continued to weaken during Q2. And as discussed earlier, increased geopolitical uncertainty The technology shift driven by AI resulted in customers postponing larger transformation programs leading to lower demand than we had anticipated, and this is reflected in the organic growth of minus 6%. At the same time, the quarter also demonstrates that actions we have taken are working. Despite the weaker market, profitability improved significantly to 12.7%, supported by higher utilization and continued cost optimization. We need to keep in mind that if you are excluding now the divested businesses from tech consulting, the headcount reduction is minus 16%, revenues minus 6%, and we have improved profitability to 12.7%. So it's important to underline that our focus is not only on managing today's market. We are also preparing the business for where the market is heading. And AI is changing the consulting market rapidly. Customers increasingly expect higher productivity, smaller delivery teams, and faster execution. This is why competence renewal AI capabilities and software engineering productivity has become a central part of the transformation of Tieto's tech consulting. Overcompetence shift is well underway. As mentioned, around 1,500 consultants have completed Microsoft's rapid AI skilling program. More than 400 employees are participating in advanced AI training for rapid certification, and they continue targeted recruitment in areas where we see future customer demand developing. Oyj.com. customer relationship and demonstrates that customers continue to invest business critical capabilities despite the weaker market environment. Turning then into bank tech, organic growth remained affected then again by the previously communicated legacy contract runoff, which reduced the growth by approximately six percentage points in Q2. Excluding this impact, growth was around zero, which is clearly below our ambitions. So market conditions were also a bit more challenging during the quarter. Customer decision-making took a bit longer time than normal and delaying then partly the timing of new business. However, despite the weaker market environment, profitability improved significantly from 10.5% last year to 15.6% this year, supported by continued cost optimization and disciplined operational execution across the business. So then looking ahead. We remain encouraged about the strength of our order backlog, which provides good visibility into second half and beyond. We continue to see good customer interest in our strategic software offerings, although project timing partly remains affected by the current environment. So despite the softer market environment, we continue to strengthen our customer base through several strategic wins. So during the quarter, Luminor selected our cloud-native payment as a service platform. NOBA adopted our verification of payee solution, helping them strengthening fraud prevention. And then Norgesgruppen extended its partnership with Tito Banktech for another five years with modernized card services and FCP solutions. We also signed a new agreement with the leading Australian bank to modernize its cash management platform. So again, these agreements reinforce our position as a trusted provider of a business-critical banking software and support also our long-term growth ambition. Turning then to CareTech. Underlying business continued to perform well during Q2. Growth of minus 2% affected then by the legacy business decline, which reduced growth by approximately 5 percentage points. In addition, we have two customer contracts currently waiting for regulatory approval that had the modest impact on the growth during the quarter. So excluding these temporary factors, the modern software portfolio continued to develop well. We saw particularly strong performance in our social care business in Sweden, reflecting continued customer demand for the modern software solutions. CareTech continues to deliver excellent profitability. 25.3% margin, as you can see. And that is demonstrating the strength of our life care product portfolio and the operational discipline that we have built into this specific business. We also have a good second half order backlog in care tech and our European expansion also continues to progress according to plan. So during the quarter, we signed two new customers in the DACH region and continue to build a healthy commercial pipeline that supports the long-term international growth ambitions. Finally, the quarter also demonstrated continued customer confidence in our software portfolio. We expanded our customer base across both healthcare and social care, including new wins, such as Sofie's Minde, and additional deployment of Life Care Platform in Finland. So this example supports our ambition to expand our software business beyond the Nordic core markets as well. Then finally turning to in-tech, organic growth was flat during the quarter, which was below our own expectations. And then the weaker development was primarily driven by two factors. First of all, our pulp, paper, fiber business continued to be affected by challenging market conditions. And secondly, softer demand impacted over volume-based business during the quarter due to customer driving their internal efficiency impacting over volumes. Then it's also quite important that these challenges were isolated to specific parts of the portfolio. At the same time, several of the software businesses within Intech continue to perform well. We saw continued solid growth in both iShare and Public 360, demonstrating the resilience of the modern software portfolio that we have built. And then we also saw that we have now, we're going into second half, we have a solid backlog in Intech, providing good visibility for second half and beyond. Profitability was another clear highlight from 10.2 last year to 16.2 this year, supported primarily by the continued cost optimization program and also disciplined execution across the business. So the quarter also marked an important strategic milestone with a successful completion of the divestment of Edlevo and Agile Payroll businesses. So further simplifying the portfolio in line with the strategy that we outlined at our Capital Markets Day. In Q2, we also continue to strengthen customer relationships across our software portfolio. So during that quarter, we signed new agreements with customers, reinforcing our position in energy, financial services, and then document distribution, while continuing to expand on our modern software offerings. Then we are moving to the CFO report. So Tommy, please.

Thank you, Henri, and good morning, everyone. So from CFO point of view, Q2 highlights were improved profitability in all businesses and launch of our new 90 million share buyback program. As discussed, our growth of negative 5% in Q2 was not at the level we expected. This was primarily due to weaker market demand. However, we were able to significantly increase our profitability by over 5%, as mentioned. This confirms the success of our cost-based reset program and the company's resilience, even in weaker market conditions. In addition to adjusted EBITDA improvement, we also improved reported EBIT by 35 million or over 170% after adjusting for M&A gains and non-cash impairments. Our one-time items for Q2 were positive by 50 million, which was impacted by gain on sale from Intech divestments of 57 million. Full-year one-time items expectation is unchanged at 1.5 percentage point of revenues, excluding capital gains. Other Q2 events include issuance of a new five-year 300 million bond, which secures our long-term financing needs. And updating our full-year growth outlook, as Henri mentioned, reflecting the software market conditions. Then to our new 90 million share buyback program. So the program is connected to the sales proceeds from the divestment of EdLevo and HR Payroll software businesses, which were closed 1st of June. The share purchases will begin after completion of the current 150 million share buyback program, which is expected to be completed early September. In accordance with our capital allocation policy, we aim to keep our leverage level close to 2x and distribute excess capital to shareholders. This 90 million share buyback program will ensure continued effective capital structure and deliver solid shareholder returns in a tax-efficient way. The shares will be bought in public trading in Nasdaq Helsinki and canceled on a monthly basis. The execution of the program will take approximately five months depending on the trading volumes of our shares. So in Q2, we delivered healthy operative cash flow of 21 million, which was supported by improved profitability. Our networking capital increased by 29 million due to normal seasonal decrease in liabilities. Note that Q2-25 cash flows include contribution from the divested businesses as cash flows are not restated for prior periods. On a comparable basis, as mentioned, Q2 operative cash flow improved approximately 16%. On reported net debt EBITDA, it improved further from Q1 being 1x at the end of Q2. Main reason for the sharp decline in leverage are the divestments, with divestment proceeds decreasing the net debt and the gain on sale increasing the EBITDA. During the year when we execute the share buyback programs, our leverage will gradually increase. On a fully adjusted basis, our leverage at the end of Q2 is at the targeted level, so slightly below 2x. Then to our cost optimization program, where we have reached 115 million run rate savings at the end of Q2 and are well on track to deliver the full 130 million by the end of 26. As communicated earlier, this program aims for a permanent cost-based reset of approximately 50 million while mitigating the cost burden from tech services divestment and reducing overcapacity primarily in consulting business. Our estimate of the one-time cost from the program is unchanged at 55 to 60 million, of which we have incurred 49 million at the end of Q2. On employee matters, LTM attrition was at very low level, being 7.3% at the end of Q2. These low levels are market-driven. We consider normal healthy attrition to be around 10%. During the quarter, we have continued with planned personal reductions impacting primarily tech consulting. Group personal reduction year on year has been significant with 15% reduction, of which approximately 4% relates to acquisition and divestments. We expect group salary inflation for the year to be lower than last year with 3% to 3.5%. Next outlook remarks for Q3. On growth remarks, tech consulting will continue to be impacted by weak market demand, and we expect Q3 growth to be slightly below Q2 level. Bank tech growth is impacted by the known events in 2025, namely the legacy contract runoff with negative 4 percentage points and SB1 one-time income with negative 14 percentage points. However, Q3 revenues are supported by strong order backlog. CareTech continues to be impacted by legacy contract runoff with negative 5 percentage points, which is at the same level as in Q2. Revenues continue to be supported by growth in the modern software portfolio and the strong order backlog. Intech growth momentum is expected to improve from Q2, which is supported by strong order backlog. On profit remarks, the cost optimization program continues to contribute to profitability in all businesses. And to note is that comparison period Q3-25 included SB1 one-time income, which had positive impact on bank tech level at 11.9 percentage points and at group level 4.1 percentage points. On other remarks, there is only minor impact from working days. Then as usual, Q3 profitability outlook per business. We expect tech consulting and bank tech to be below prior year. Here you can see bank tech's high comparable at 28.1%, which I just commented. Excluding the SB1 one-time income, we expect bank tech to improve profitability from prior year. We expect care tech to be at and in-tech to be at or above prior year profitability level. Overall, we start to reach higher comparables as the cost optimization program benefits become visible in prior year numbers. Then a few words on our updated guidance. So last Friday, we updated our full year growth outlook due to weaker than expected market demand, especially impacting tech consulting. The geopolitical uncertainty has further softened the market, which we expect to continue for the rest of 2026. Accordingly, we lowered our growth outlook to negative five to negative three percent from previous negative two to zero percent. On the other hand, we maintained our profitability outlook of 14.8 to 15.8%, EBITDA adjusted. And as discussed earlier, we have been successful in executing our cost optimization program and have delivered consistent profitability improvement. Our H1 profitability was at 14.8%, with seasonally strongest quarters still ahead of us. As the year 2026 includes some specific headwinds, we created this growth dynamic slide to help everyone to navigate the growth expectations on a quarterly basis. We have updated the information to reflect weaker outlook for tech consulting for the remaining of the year. And in addition, we have adjusted the queue to reflect the actual growth outcome, which included some softness as discussed earlier. Back to you, Endre.

Thank you so much, Tommy. And I would like to summarize now, as we are 22 days into Q3 already, I would like to summarize a bit of where we stand with the company. As we have discussed today, market conditions have become more challenging than we anticipated, particularly then in tech consulting. And this has affected our short-term growth. And we have updated our revenue outlook accordingly. However, our strategic direction has not changed. As we have outlined at our capital markets day, 2026 remains a year of transition and execution for Tieto. So given the pace of the technology change and also what's happening with AI, I believe that 2026 has actually become a year of transformation. We are reshaping the company, strengthening our competitiveness and preparing the business for the next phase of growth. Across the group, we have continued to execute against our strategic priorities. We are simplifying our portfolio, strengthening customer relationships, expanding into selected growth areas, and building a more competitive cost base. And at the same time, we continue to invest heavily in future capabilities through large-scale AI upskilling. Oyj Having said that, I'm really proud of the progress that you have made over the past year. The actions we have taken are strengthening the company and they give me confidence that we are building a stronger T2 going forward. So with that, we are opening up for Q&A.

Pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Mark Hyatt from Morgan Stanley. Please go ahead.

Hi, morning, Andrew and Tommy. Thanks very much for having me on and taking the questions. I've got three to start with, please. Firstly, just on the growth guidance revision, Obviously, H1 organic growth is about minus 4%. And so the new 5% to 3% range, negative 5% to negative 3% range still implies quite a wide range of outcomes into the second half. So could you just explain what the main swing factor is between the top and the bottom end of that range, in particular, what you're assuming for the sequential growth trajectory in tech consulting and the software businesses through Q3 and Q4? Secondly, on tech consulting specifically, you said that the market demands deteriorated further and customers are postponing investment decisions and delaying transformation programs. Could you give us a bit more color on specifically what types of projects are being cut or postponed and what reasons are you hearing from clients? Are customers prioritizing spend elsewhere in the short term, for example, on AI projects or hardware procurement? Just a bit more color on that would be really helpful. And then finally, on the cost savings plan, clearly having a big impact, the margin result very solid. How much of that 115 million euros that you've already achieved was already reflected in the second quarter P&L, and how much have you still got left to flow through? And once the current program's finished, what are the remaining levels to help protect margins, particularly if revenue performance in tech consulting remains challenged? Thanks very much.

So let's take the first one first, related to the Fourier outlook, minus 3 to minus 5. As already mentioned by Tommy, when you look at now the Q3 number and the guidance related to the top line for tech consulting, we are saying that that's going to be weaker than we had in Q3, indicating that this has an impact on the overall picture for the total group. I mean, TecConsulting is approximately 40% of the revenue of the group, and that, of course, has a huge impact on the totality, as you understand. When you put this into perspective, I think that is quite important. Like they say in Spain, todo es relativo, and I think it's quite important that, I mean, There are some millions taken out now of the outlook, but from a 1.7 billion euro company, this is not a big amount. So we need to keep that in mind all the time. From the software businesses point of view, we have a very strong visibility on second half in terms of the backlog. The impact in second quarter where we came in a bit short relative to expectations on bank tech and in tech was mainly related to some of the volume based business, which is part of those software entities. Looking at second half for both of them, we are quite confident that they will deliver underlying solid growth. Tech consulting, when you're talking about postponement of your second question about postponement of investments, I would say that still there is a level of uncertainty how AI is impacting the processes and the different kind of industries and companies. Still a bit wait and see. How is this going to affect us? What should we invest into? What is happening month by month with the new launch of different software impacting the software development through AI tooling? And again, I think it's also still a level of uncertainty, what will be the cost driver related to all the prompts and all the kind of programming that you do with AI tooling, what's the hardware effect of that and what's the total cost effect of that. So it's still a bit wait and see from the clients. I think it's also important to say that when you look at the overall, and this was communicated also in connection with Q2, sorry, Q1 from my side, is that We still are coming into 2026 with a too high level of time and material in tech consulting. And that is where we clearly see the market turning down. And then you see the more kind of agile project through smaller teams jointly developing with clients. That is the market now growing. and not necessarily time and material. So that is also part of why we explained at Capital Markets Day that 2026 will be a year of transition and transformation, especially in tech consulting. When it comes to the cost optimization program, you should take that one.

That's a good question. So we're now 150 million into 130 million. This translates into 10 million quarterly impact from the structural cost reset of in total 50 million. So when we're maxed with the 50 million cost reset program, we deliver 12.2%. Oyj

Yeah, but I think there's also one more element into that is that, I mean, we're coming from a situation starting off in June of last year where we had north of 20% SG&A in the company. That is what we have taken down massively. And my point is that this needs to be monitored closely, unit by unit, based on market demand, based on how are we delivering the top line to ensure that this is a part of the cadence, monthly cadence of the company to monitor revenue and the cost and the bottom line. And if the revenue is not coming, we need to have the discipline in the company to reduce the cost. That is a very simple equation in this business.

Super helpful. Thanks very much, guys.

The next question comes from Felix Henriksen from Nordia. Please go ahead.

Hi, guys. Thanks for taking my questions. I got two, please. One is on in-tech. Basically, just wondering what gives you the confidence to expect growth going into Q3 and the second half of the year. I think you were quite confident previously about Q2 as well, thanks to the backlog. So just wanted to hear about the puts and takes on that how much of that business is actually volume-based, where the weakness was in Q2. And secondly, as you think about your 2027, 2028 revenue growth target of over 5% as a CAGR, do you think that's realistic if the market doesn't improve? And if not, what are you sort of prepared to do to generate earnings growth and incremental shareholder value? Thanks.

Very good, Felix. Thank you. And first of all, on intake, I would say that when we look now at Q3 and Q4, we have, as I said, very good visibility on the backlog, which is a contracted backlog. Part of what happened in Q2 is that The projects that we were kind of expecting to come in Q2 has been postponed to Q3, already started up, but not giving effect in Q2. So that's why we have very high visibility on the backlog. And then on top of the backlog, of course, we have the pipeline, which we are monitoring also quite closely for all the businesses. So that's why we're confident about second half of intake. When it comes to the 5% CAGR, 27, 28, We are still looking now at the backlog that we have for all the software businesses, especially bank tech, going also into 27 and 28. Looking at the comparables for tech consulting, There is no reason to adjust the CAGR target that we communicated at CMD at this stage. Like you said, if something extraordinary should happen, then of course we need to take necessary cost measures to protect the bottom line. But we have still the ambition to deliver more than 16% margin by end of 28 and the CAGR of 5% by 27-28 stands.

Very good. Thank you.

The next question comes from Sami Sarkamis from Dansky Bank Markets. Please go ahead.

Hi, I have three questions. We'll take this one by one. Firstly, on tech consulting, you're expecting a slightly weaker top-line development in the third quarter. Do you have any visibility on improvements thereafter?

Improvements in terms of top line, or? In terms of top line, yes. Yeah, so we give guidance quarter by quarter, and then we have the fuller guidance, and if you factor in the minus three to minus five, and you factor in what you have said about the software businesses, you can understand that we are still expecting a negative Q4 year over year in tech consulting. Having said that, we are also now looking at the bottom line, which we delivered 12.7 in Q2, and we are quite comfortable that we will deliver solid margins also going forward based on the outlook we have for the top line and based on the cost measures that we have already implemented.

Okay, and when it comes to the top line guidance downgrade, was that purely driven by tech consulting outlook for the second half, or have you also changed your sort of assumptions regarding some software segments that saw weakness in Q2?

So it's mainly driven by two elements. First of all, second quarter coming in a bit weaker than anticipated, especially in tech consulting. Then the main effect for second half is driven by tech consulting for sure. We are still maintaining the internal outlook for the software businesses, adjusted for what happened in Q2. Any comments from your side, Arif?

Yeah, that's it. So of course, Intech and Banktech, the slow Q2 from the volume businesses will put that into our full year forecast, obviously. But those are the elements.

Okay. And then regarding cost actions, I guess you didn't announce any new plans today, but are this likely during the second half of the year or do you think you will be sticking with this 130 million euro savings target throughout the year?

Yeah, that should be sufficient. We are sticking to that one, of course. And then I would say that we have pretty good now visibility on the cost levels. Like I said, we have reduced the manning in, if you exclude the sales or back consulting, we have reduced the manning with 16% within tech consulting. And of course, we are now monitoring closely And then finally, I'd like to get some additional color on the software weakness in the second quarter.

I think you mentioned that some of the projects didn't start during Q2 as anticipated, so like some timing factors. You also talked about volume-based contracts not materializing, so can you be a bit more specific on what you mean there?

I would say that if you take bank tech as the first one, I would say that we have, as you know, volume-based business there in ATM, in card issuing, card personalization, et cetera. And part of that came in a bit slower than we anticipated for Q2. No reason to believe that this will continue in second half. So that's the main effect in bank tech during Q2. Related to care tech, we are more or less spot on where we should be. A couple of court cases or escalations to the court, hopefully then coming in with a positive decision and then we will put those into production now in second half. When you look at Intech, we had two main effects. One was related to paper fiber, which has been weak during the whole year, more or less one and a half year now, based on the market conditions. Oyj Part of the project that we signed end of last year was anticipated to go into production in second quarter, early second quarter. They are now in production but giving effect in Q3 and Q4. So that was kind of the main elements. Then, of course, we have solid growth in iShare, Public 360, and the new modern software which will continue also during second half.

Okay, thank you. I don't have any further questions.

Just alluding a bit more...

The next question comes from Matti Rikkonen from DNB Carnegie Investment Bank. Please go ahead.

Hi, it's Matti Rikkonen, DNB Carnegie.

How would you compare your softness related to Accenture and IBM who have reported or communicated of more headwinds as they see for this year so do you think that your challenges are basically the same as IBM has been talking about shifting customers shifting their purchasing from from traditional IT projects to more like AI is this a concern or do you think that your problem as are basically the same as before and related to specific customers and specific cases.

I would say partly we see the same picture, of course, as IBM and Accenture, that there is partly a shift and partly clients holding back on the investments in terms of wait and see what's happening with AI. Having said that, When you look at the software businesses as such, they are very robust in terms of having a lot of legacy, which is very difficult to substitute with new, completely new, modernized solutions. We have very, very deep competence in terms of the industries for bank tech, care tech, and also within in-tech. We have a very high level of integration. which creates complexity. So from that point of view, I would say that for the software businesses, it's quite difficult to disrupt what we have. When you then compare tech consulting to Accenture and IBM, I would say that we came into 2026 with probably a higher content of time and material resources compared to those companies. I would say that partly, yes, we are seeing wait and see, based on AI impact, but partly also something is unique for Tito that we had the too high content of time and material compared to some of the competitors. I think that's fair to say. And that is also why we have now accelerated this AI upskilling through the whole tech consulting organization and of course for the software entities as well. This is a very, very, very detailed program happening as we speak. And still we have an ambition to go through 5,000 people within the company to do full upskilling of AI with the Microsoft upskilling program.

All right. Thank you for the answer. I have no further. My questions have been asked already.

The next question comes from Jako Tijervainen from SEB. Please go ahead.

Jako Tijervainen Good morning, gentlemen. Still a couple of ones for me, starting from the order book, which was down 4% after being several quarters in more favorable development. You already touched it a bit, but could you give a bit more color what caused this, and especially, is this largely reflecting the momentum in consulting?

Ja, it's quite clear that we are coming from a comparable point of view, 2025. Q2, we signed several large deals within bank tech. We had, I don't exactly remember, we had Sparebank 1 prolonging two years, we had Sparebank Norge, we had Frendegruppen, so we had a lot of signings during Q2, so I would say that we had a kind of all-time high situation back to Q2 in 2025, so from a comparable point of view. We are still quite confident that we are on a good traction on the backlog situation going into to second half. And the visibility, as you know, in tech consulting is usually quite low, has historically been, and it is also currently. There are reflecting to, or going back to what I said about also large implementation projects, we don't see that currently happening. So it's more like in the software businesses, we are looking quite optimistic on the second half and into 2028.

Okay, good, thanks. Then on the kind of current new sales in software, how is the sales pipeline and the activity looking if you compare it, for example, a year ago? And especially I'm curious on the momentum in the international arena.

Yeah, that is like you have seen. We have now signed two smaller contracts in Iberia. We have a very strong pipeline now into second half in Iberia. That goes mainly for bank tech and partly tech consulting and partly also care tech. We are also looking at the market opportunities related to digitalization of invoices and tax reporting in Spain as a specific segment tying into our Nexus business. So that's an opportunity maybe into 2027. Also, when we look at the DACH region with CareTech, we signed two deals during Q20. I would say, smaller deals as well, but as a kind of pilot starting point, hopefully to ramp up. And we have several, I would say, numerous deals in Europe related to our new EHR or care tech products. So we are, according to my view now, we are on track towards what we communicated on Capital Markets Day in terms of the international expansion. And just to clarify, we are, of course, monitoring this closely through our business review cadence that we have at monthly basis, looking at the development of the backlog. So both for install-based, but then also new business or hunting. So this is followed up quite thoroughly.

Okay, good, thanks. That's all from me.

Thank you, Jaakko, and thanks, Enri and Tomi. There are no further questions at this stage. I would like to thank everyone for active discussion and watching. See you next time. Have a good day.