EVRY ASA Q2 2019 PRESENTATION CEO PER HOVE CFO HENRIK SCHIBLER
Group highlights Business update Agenda Financial highlights Concluding remarks Q&A
Group highlights Q2 2019 EBITA 2 (NOKm) REVENUE (NOKm) BACKLOG (NOKbn) 3 178 354 18.1 FINANCIALS ORGANIC GROWTH 1 EBITA MARGIN 2 -3.4% 11.2% Tieto and EVRY to create one of the most competitive digital services and software companies in the Nordics Revenue down y-on-y due to seasonality and Fulfilment services Growth in Consulting and Application Services drives favourable revenue mix and supports the strategic direction BUSINESS Financial Services experiences high activity driven by demand across geographies, solutions and services areas UPDATE Data-driven services across the Nordic Continuing our journey towards becoming a Nordic Consulting Powerhouse Reduced margin due to seasonality (2 working days less in Q2) and performance in Sweden 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 3 2) BEFORE OTHER INCOME AND EXPENSES
Great positions in the recent Universum rankings EVRY awarded as one of the most attractive IT consultancy firms to work for amongst Norwegian students! EVRY fastest growing employer in the Universum ranking in Sweden climbed to no. 87, up 67 positions UNIVERSUM RANKING FOR EVRY IN NORWAY
Business update Focus on key growth areas 1. Continuing our journey towards a Nordic Consulting Powerhouse 2. Data-driven services across the Nordic 3. Financial Services
Continuing our journey towards a Nordic Consulting Powerhouse A strong mix of deliveries and sales motions also in the second quarter Clarity of Enabling value Realizing Understanding Sustaining direction creation potential of possibilities performance Digital Experience (~ 300 FTEs) Business Consulting (~ 300 FTEs) AI, Analytics & Insight (~ 100 FTEs) Application Innovation (~ 700 FTEs) Business Applications (~ 450 FTEs) Security & Risk (~ 140 FTEs) Cloud & Infrastructure (~ 160 FTEs) A NORDIC CONSULTING ORGANISATION WITH APPROXIMATELY 2 150 CONSULTANTS IN OUR 7 6 PRACTICES5 (EXCLUDING GLOBAL DELIVERY)
EVRY Data-driven services across the Nordic New Nordic Constellation Q1 | INITIATION • Data-Driven Sevices with over 200 experts across the Nordics. Q2-Q3 | EXECUTION • EnterCard TCV 65mSEK. Q1 Q2 Q3 Q4 • Launch of Gjeldsregisteret AS. Q4 | INNOVATION • Open API & Analytics Data-Driven Services Organisation community, creating a data eco- announced operationalised system for customers and Data Eco-System partners. EXAMPLE OF DATA SOURCES 7
Financial Services experiences high activity and demand across geographies, solutions and services area Good traction in ATM, payments and cards Selected contracts and highlights Extension of contract in Finland Important agreement in Sweden Start of a uniform, independent The Savings Banks Group in ATM network Contract extension with a large Finland selects EVRY for five more bank in Sweden on Front-end card years From June 2019, the ATMs of payment processing Geldmaat will gradually start to The agreement includes production appear on streets of Dutch cities A three year agreement with a TCV of debit and credit card as well as of approx. NOK 190 million associated services The renewed ATMs will be evenly distributed throughout the country 8
Financial highlights
Group financial highlights FINANCIAL EVRY GROUP NORWAY SWEDEN SERVICES Organic growth Q2 2019 Q2 2019 H1 2019 Q2 2019 H1 2019 Q2 2019 H1 2019 Q2 2019 H1 2019 REVENUE Consulting 3 178 6 507 1 419 2 921 767 1 584 862 1 749 NOKm Services 1.9 % ORGANIC -3.4 % 0.1 % -5.2 % -1.4 % -7.1 % -4.7 % 1.9 % 5.2 % GROWTH 1 Application Services EBITA 2 6.0% 354 686 129 286 37 68 119 213 NOKm Digital EBITA Platform 11.2 % 10.5 % 9.1 % 9.8 % 4.9 % 4.3 % 13.8 % 12.2 % MARGIN 2 Services -2.0% CASH CONVERSION FREE CASH FLOW (FCF) EPS 2 BACKLOG Fulfilment Services 85.7% LTM Jun’19 NOK 48 m Q2’19 NOK 0.56 Q2’19 NOK 18.1bn 30 Jun’19 -41.9% 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 2) BEFORE OTHER INCOME AND EXPENSES 10 * ALL FIGURES INCLUDING CASH CONVERSION, FCF, EPS AND BACKLOG ARE COMPARED YEAR-ON-YEAR
Soft results in the quarter, but the first six months are driven by favourable product mix in line with strategy 7.5% 4.0% 3.9% 3.6% 3.0% 0.4% Organic 0.1% 0.1% -3.4% growth 1 Revenue 12 925 12 912 NOKm 6 507 6 494 3 413 3 330 3 286 3 178 3 005 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 H1’19 H1’18 LTM’19 FY’18 Period 11 1) ORGANIC GROWTH: ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS
Financial Services experiences high activity driven by demand across all solutions and services areas Organic Organic growth 1 0.1% growth 1 3 286 6 494 6 507 3 178 +1.9% -5.2% -1.4% +5.2% -7.1% -4.7% 836 767 1 675 1 584 Revenue Revenue split split 1 497 NOKm 1 419 2 921 NOKm 2 962 862 847 1 749 1 666 Quarter Q2’18 Financial Norway Sweden Q2’19 First six H1’18 Financial Norway Sweden H1’19 Services months Services Sweden Norway Financial Other Services 12 1) ORGANIC GROWTH: ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS
Growth in Consulting Services and Application Services underlines a positive shift in revenue mix as higher margin services are delivered 5% Consulting Services 33% 32% 35% 39% 1.9% Application 62% Services 6.0% 27% 30% 32% 24% Digital Platform Services -2.0% 28% 28% 30% 28% 33% Fulfilment Services 12% 10% -41.9% 6% 7% Q2 2018 Q2 2019 Norway Sweden Financial Services Organic growth Q2 2019 Q2 2019 Q2 2019 Q2’19 Consulting Services Application Services Digital Platform Services Fulfilment Services 13
Reduced revenue from infrastructure services and fulfilment is in line with corporate strategy – to sell services higher up in the value stack 5% Consulting Services 33% 33% 35% 4.8% 40% Application 63% Services 7.3% 27% 31% 32% 23% Digital Platform Services -0.1% 28% 28% 30% 27% Fulfilment 32% Services 12% 9% -32.6% 6% 7% H1 2018 H1 2019 Norway Sweden Financial Services Organic growth H1 2019 H1 2019 H1 2019 H1’19 Consulting Services Application Services Digital Platform Services Fulfilment Services 14
Sweden continues to impact the margin performance in Q2 13.9% 13.7% 12.2% 12.3% 11.4% 11.2% 10.5% 10.7% EBITA 10.0% margin 1 -0.2p.p. -0.2p.p. EBITA 1 1 574 1 582 NOKm 694 686 475 413 374 354 332 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 H1 ’19 H1 ’18 LTM’19 FY ’18 Quarter/ YTD 15 1) EBITA: BEFORE OTHER INCOME AND EXPENSES
Margin softened by less working days in Q2 and Sweden 13.9% 13.7% 11.4% 11.2% 10.5% 10.7% EBITA 10.0% EBITA margin development (%) - quarter margin 1 -0.2p.p. 13.8% Financial Services 12.5% 11.4% 11.2% 11.1% Group -0.2p.p. 10.4% 11.3% 10.0% EBITA 1 9.1% NOKm Norway 8.5% 694 686 7.4% 475 413 374 354 332 4.9% Sweden Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 H1 ’19 H1 ’18 Quarter/ Q2’17 Q2’18 Q2’19 YTD 16 1) EBITA: BEFORE OTHER INCOME AND EXPENSES
Margin softened by less working days in Q2 and Sweden 13.9% 13.7% 11.4% 11.2% 10.5% 10.7% EBITA 10.0% EBITA margin development (%) – first six months margin 1 -0.2p.p. 11.9% Financial Services 12.2% 11.0% 10.7% Group 10.6% 10.5% -0.2p.p. Norway 10.0% 9.7% 9.8% EBITA 1 9.1% NOKm 7.6% 694 686 475 413 374 354 332 4.3% Sweden Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 H1 ’19 H1 ’18 Quarter/ H1’17 H1’18 H1’19 YTD 17 1) EBITA: BEFORE OTHER INCOME AND EXPENSES
Other income and expenses according to plan significantly lower in relation to IBM OIE with cash flow effect (NOKm) OIE with P&L effect (NOKm) 1 215 Sharebased options (STIP) 1 767 Payments related to 33 Other restructuring processes 195 Restructuring Transaction costs, IPO 241 and refinancing Transaction costs, 343 IPO and refinancing Payment related to former CEO Provisions to former CEO Payments related to IBM partner agreement 1 014 IBM partner agreement 560 15 368 661 941 375 51 1 229 82 22 26 78 545 21 186 595 7 557 19 136 250 24 160 15 97 Year FY 2016 FY 2017 FY 2018 H1 2019 FY 2016 FY 2017 FY 2018 H1 2019 18
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