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Atos SE (AEXAF) Q4 2022 Earnings Call Transcript

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Atos SE (OTCPK:AEXAF) Q4 2022 Earnings Conference Call March 1, 2023 2:00 AM ET

Company Participants

Nourdine Bihmane - Group Chief Executive Officer & Co- Chief Executive Officer, Tech Foundations

Philippe Oliva - Group Deputy Chief Executive Officer & Co- Chief Executive Officer, BDS & Digital-Evidian

Diane Galbe - Senior Executive Vice President

Nathalie Senechault - Chief Financial Officer

Conference Call Participants

Frederic Boulan - Bank of America

Laura Metayer - Morgan Stanley

Laurent Daure - Kepler

Mohammed Moawalla - Goldman Sachs

Alexandre Faure - BNP Paribas

Nicolas David - ODDO BHF

Nourdine Bihmane

Thank you, usability and bully morning, everyone, and convey you for joining america for nan position of nan Atos’ Full Year Results for 2022. I'm Nourdine Bihmane, Group CEO and Co-CEO successful complaint of Tech Foundation, and I person pinch maine coming Diane, Group Senior Executive Vice President; Philippe Oliva, Co-CEO successful complaint of Evidian; and Nathalie Senechault, our Group CFO.

For nan schedule today, Philippe and I will first stock nan highlights of nan group capacity successful 2022. We will past screen nan capacity of Tech Foundation and Evidian. Diane will past supply an update connected nan important advancement we person made successful our translator project, and Nathalie will past spell done our financial performance. And astatine nan end, we will stock pinch you our outlook earlier going to Q&A.

As you know, 2022 was an eventful twelvemonth for Atos. The cardinal arena was nan announcement successful June of our strategical translator plan, which we began to execute immediately. Through this strategical scheme and acknowledgment to nan beardown committedness of our 111,000 labor our translator is already good underway.

In position of financial capacity 2022 was a communicative of 2 halves arsenic we delivered a beardown betterment successful each KPIs successful nan 2nd half enabling america to execute our afloat twelvemonth objectives. In Q4 successful particular, we recorded a important pickup successful our commercialized momentum pinch a book-to-bill of 112%, which renewed commercialized traction, show Atos’ beardown position successful its halfway markets and nan enduring attractiveness of nan group's offering. In addition, we person made bully advancement successful focusing our portfolio on halfway offerings that are differentiated and meet emerging customer needs.

Moving forward, we are embracing 2023 pinch confidence. While we are mindful of nan existent macroeconomic discourse we spot up of america a wealthiness of opportunities and are assured successful our capacity to proceed improving our capacity passim nan year.

Finally, we person achieved important advancement towards our envisioned separation wrong only 8 months and we are connected a clear way for completion successful H2 of 2023. This separation will beryllium a turning constituent successful nan group's history unleashing nan imaginable of some early entities and maximizing worth for each our stakeholders.

Looking now astatine our cardinal financial figures astatine nan group level. 2022 Atos returned to growth. Our gross reached €11.3 cardinal increasing 1.3% astatine changeless currency, which is astatine nan precocious extremity of our guidance. We stabilized our gross organically pinch a continued betterment passim nan twelvemonth quarter-after-quarter.

Operating separator was 3.1%. I will punctual you that successful H1 our operating separator was 1.1%. So successful H2 pinch nan squad we managed to drastically amended nan separator to 5.1% contempt continued costs inflation. This was driven by important actions focused connected improving structural cost, underperforming contracts and pricing.

Free rate travel was minus €187 cardinal successful 2022. Excluding nan costs related to nan group translator plan, free rate travel was successful truth minus €58 cardinal amended than nan group 2022 nonsubjective of minus €150 million. Nathalie will elaborate connected this constituent later during nan call.

Net indebtedness was minus €1,450 cardinal astatine nan extremity of December resulting successful a 2.4 OMDA ratio providing a really ample headroom for our covenant of 3.75. Headcount astatine nan extremity of nan twelvemonth was 110,797.

Let's spell now into much item astir our quality resources successful nan adjacent slide. Our headcount was somewhat up by circa 1,700 group nett complete nan year. However, you whitethorn retrieve that we were adjacent to 112,200 astatine nan extremity of June. This intends that we decreased by a nett 1,400 group successful H2. This is nan consequence of much selective hiring successful H2 arsenic we said pinch circa 13,000 hiring compared to nan 16,000 successful H1 and much restructuring which doubled successful Q4 versus Q3 arsenic we started to instrumentality our translator scheme successful countries specified for illustration nan US aliases UK.

Lastly successful September for nan first time, Atos was listed arsenic 1 of nan Europe Best Workplace successful nan Great Place to Work 2022 yearly list. As of today, we person achieved Great Place to Work certification successful 19 countries and we are expecting doubly this number successful summation complete nan coming weeks, representing an all-high clip successful nan number of countries and successful our worker affirmative engagement. We proceed investing successful our group pinch much than 85,000 certification achieved successful 2022.

So to summarize this slide, Atos remains an charismatic employer. We proceed to attraction connected offshore and nearshore locations, representing 62% of nan caller prosecute successful 2022. And astatine nan aforesaid time, we started successful H2 to beryllium much selective successful hiring and to accelerate our restructuring successful statement pinch our plan.

So now looking successful item astatine Tech Foundation, and I would for illustration to commencement by thanking nan full Tech Foundation squad for nan awesome turnaround they achieved already successful H2. In 2022, we delivered accelerated and tangible first consequence connected our strategical roadworthy map, which I remind, is based connected 3 pillars: Refocus, Recover and Rebound.

In Refocus, we mobilized our squad astir an eager turnaround task and put afloat attraction backmost into nan business. We managed to walk connected immoderate value summation to our customers astir €50 cardinal successful 2022 successful bid to mitigate costs inflation. In addition, a broad group of actions were initiated to reshape our portfolio by reducing our vulnerability to immoderate BPO and to nan value-added resale. Additionally, you person seen that we announced besides nan strategical waste of UCC pinch Mitel Networks.

In our 2nd pillar, Recover, successful 2022 we took awesome steps to commencement reducing costs, successful peculiar important accommodation of our costs guidelines successful nan US and UK. Overall, we executed connected nan €100 cardinal of tally complaint costs action driven by simplification successful high-cost state headcount. We launched beardown action to trim besides underperforming contracts.

And our 3rd pillar, Rebound, we accrued add-on gross connected our existing contracts, drove gross retention arsenic our triumph complaint connected renewal was 10 points higher successful 2022 than successful 2021 and we're successful successful winning caller logos and ample deals. We accelerated building partnerships to heighten our unreality offering and upscale our delivery. We besides revitalized our task roadworthy representation for Edge, Sovereign Cloud and Public Cloud offering.

Furthermore, we person reduced by 40% our number of offerings successful 2022 arsenic to reposition our portfolio astir nan area of strength, which are world activity successful managed infrastructure services and worker experience, European activity successful backstage hybrid and sovereign cloud, visionary offering successful managed services enabled by AI and we proceed pioneering tech successful decarbonization.

Looking now astatine Tech Foundation capacity connected descent 10. Tech Foundation gross was somewhat successful excess of €6 billion. In 2022, our apical statement momentum improved dramatically arsenic we were down only 1.6% organically, which is simply a crisp betterment compared to nan minus 11.4% successful 2021.

You retrieve we achieved an earlier than anticipated integrated maturation successful Q3. And successful Q4 we accelerated nan rationalization of our portfolio arsenic we tackled ample underperforming contracts, peculiarly successful BPO pensions and further reduced value-added resale. Excluding non-strategic activities, BPO and VAR, wherever gross was deliberately reduced arsenic good arsenic UCC, Tech Foundation halfway business grew organically by circa 1% successful Q4.

Also absorbing to item is that our halfway infrastructure business, which accounts for astir one-third of nan Tech Foundation revenue, declined by circa minus 5% successful 2022, excluding VAR. So we are now backmost successful statement pinch nan market.

Digital Workplace, wherever we are world leaders serving much than 5 cardinal users, recorded a robust maturation truthful did Professional Services unit, which is simply a structurally increasing and profitable business.

Operating separator was 1.3% for nan twelvemonth turning affirmative 3 years up of nan plan. Further, our separator successful H2 was 3.6%, we presented a 470 ground constituent betterment complete H1 driven by important costs actions we took.

Let's now attraction connected our commercialized momentum. Overall, you will spot a important acceleration successful our commercialized momentum quarter-over-quarter. In Q4, Tech Foundation book-to-bill picked up astatine 94% compared pinch nan 83% successful Q4 past year. We are intelligibly starting to reap nan benefits of our refocused commercialized strategy while being cautiously selective connected nan caller contracts we return in, successful bid to thrust our separator up.

Looking astatine nan cardinal metrics. We importantly accrued our bid introduction by 16% pinch cross-sell and up-sell increasing wide by 20%. In particular, caller logo accrued by 50% which is simply a important betterment versus 2021. Furthermore, we are backmost connected nan ample woody front. Order introduction from ample woody I mean much than €50 cardinal grew to 20% of nan operation and we purpose to proceed to thrust this moreover higher.

I will mention 2 examples. We signed an 8 twelvemonth business pinch nan European Soccer League, UEFA to supply a broad and unafraid end-to-end integer solution. We won besides a ample statement for an industry-leading integer workplace engagement hold pinch a ample worldwide wellness attraction company. We besides triumph different caller logo wherever we will supply arsenic good integer workplace services complete 3 years to a recently formed world user companies.

Lastly, a connection astir nan strategical business we signed pinch AWS precocious November. This type of business betwixt infrastructure subordinate and hyperscaler is really demonstrating nan displacement to accelerate workload migration to nan unreality and execute integer translator for our customers. Atos has selected AWS astatine its preferred endeavor unreality supplier and AWS named Atos arsenic a strategical partner for IT outsourcing and information halfway transformation. As of today, we already person jointly built a pipeline of circa US$0.5 cardinal and launched a group-wide up-skilling programme successful AWS certification since nan announcement.

So pinch each those bully news, I will now walk connected to Philippe.

Philippe Oliva

Thank you, Nourdine, and bully greeting everyone. Regarding Evidian, we besides had a very move and productive year. So we position our beardown worth proposition astir our cardinal differentiation factors and unsocial cardinal competitory advantage that we will build connected to present nan occurrence that we're expecting. If I'm looking astatine nan halfway building blocks that are making america unique, you tin spot nan lead that we person world activity successful Managed Security Services emerging end-to-end unreality capabilities that we're building pinch 100% cloud-native operating model, very beardown offering successful sovereign unreality and decarbonization.

And fto maine insist connected nan truth that we are nan sole European shaper of high-performance computers and precocious computers operating pinch much and much sovereignty requirements coming from nan clients and from our market. Our expertise successful exertion guidance and translator is besides cardinal modulation factors and each those cardinal capabilities are leveraging and helping america retired successful showing our capacity successful everything that is related to mission-critical systems.

We person a clear roadworthy representation to pat nan important synergy imaginable that exists betwixt these offerings. With nan purpose to position Evidian arsenic a starring supplier of precocious value-added services and solutions to customers, we are progressively mindful of sovereignty and information requirements. Our integration strategy of our cardinal exertion assets is uniquely positioning our institution to supply invention that matters to our clients, connected precocious computing, artificial intelligence, cybersecurity and information analytics.

Now turning now to nan adjacent descent to reappraisal Evidian's performance. In 2022 Evidian delivered gross successful excess of €5.3 billion, up 4.8% astatine changeless rate and 2% organically. As expected, maturation accelerated powerfully done H2 astatine positive 5.4% successful H2 and positive 11% successful Q4. This acceleration was delivered acknowledgment to nan important ramp-up of our Advanced Computing business. But you retrieve is pursuing a very beardown bid introduction that we delivered successful Q2, not only connected high-performance computers which ramped very powerfully successful Q4, but besides successful our precocious servers and high-end servers wherever we person cardinal differentiating expertise connected some nan capacity side, but besides nan decarbonization side.

Also what I want to item is nan dependable beardown maturation successful cybersecurity services, wherever Evidian is capitalizing connected our world activity and wherever fundamentally we are continuously gaining marketplace stock successful nan marketplace increasing faster than nan marketplace growth. We're besides seeing a beardown acceleration successful integer and our unreality business.

Evidian delivered 5.2% operating separator successful 2022, besides pinch a beardown betterment successful H2 astatine 6.7% compared to 3.5% that we had successful H1. This betterment was driven by each nan cardinal actions that we started to instrumentality astatine nan opening of our fiscal year, amended subject connected our costs base, different pricing strategy, expanding our utilization rates and readiness of our workforce, and evidently higher volumes successful our Advanced Computing business that facilitated our expertise to sorb nan fixed costs of our manufacturing plants. As you tin spot successful H2, Evidian imaginable of profitable maturation started to show up and we are only astatine nan commencement of our travel towards our 2026 ambition.

Now turning to our commercialized activity. We are continuously delivering a very beardown book-to-bill successful Q4, opinionated astatine 130%, driven some by BDS and Digital. We proceed to beryllium very selective successful our portfolio strategy that we started to instrumentality wherever we tin show nan powerfulness of our portfolio and our differentiation factors. This translated into much short-term signings are offering america a faster gross output assumptions. 51% of our Q4 bookings were little than 18 months of full statement long compared to 43% successful Q4 past year.

We besides person later smaller size, which is simply a awesome objection of nan ratio of our income force. 66% of our Q4 bookings were beneath €10 cardinal compared to 59% successful Q4 past year. Obviously, smaller deals connection a little consequence profile, but besides generating a amended separator potential.

In position of important statement that we won successful Q4, I will conscionable mention a fewer that illustrates our beardown marketplace positioning. First of all, we are going to instal a brand-new high-performance machine of nan Max Planck society, a world-leading subject and exertion investigation organization. This caller strategy is based connected nan latest BullSequana HX3000 platform, and it's successful its last configuration this caller situation will present a capacity that will beryllium 3 times higher than nan existent strategy that Max Planck is operating.

I will punctual you that we delivered six retired of 8 high-performance computers arsenic HPC program, including successful Italy, BullSequana, nan 4th astir powerful supercomputer successful nan world, which is simply a awesome achievement. In Cybersecurity, we besides won a important statement to Eurocontrol that is simply a civilian subject statement dedicating to supporting European navigation.

What I deliberation is very important is that nan projected objection of our powerfulness successful artificial intelligence connected managed discovery and consequence that is nan eventual improvement of our cybersecurity portfolio. And that's besides thing that is generating a important traction connected nan market.

In Digital, we won a statement for awesome world unit institution wherever we will creation build and rotation retired caller IT strategy based connected mobile exertion embracing nan caller integer world and supporting, let's say, enablement level built connected Microsoft Azure. That is 1 much clip reinforcing our unreality migration capacity and strategy.

And still successful Digital, we won a very ample statement pinch Siemens to present next-generation integration connected IT work guidance leveraging besides our ecosystem, particularly related to a marque caller work guidance capacity that matters to nan seamless cognition that Siemens is trying to implement.

To summarize, I'm really pleased pinch nan momentum gradually building up astatine Evidian. We are intelligibly going successful nan correct guidance and I'm very impatient to show really overmuch much we tin advancement each year, particularly successful 2023.

I will now manus complete to Diane for an update connected our translator project.

Diane Galbe

Thank you, Philippe, and bully morning, everyone. So, 2022 was a pivotal year. We announced past June our strategical task to toggle shape and divided nan group into 2 beardown leaders wrong their respective markets successful bid to unlock worth and instrumentality an eager turnaround plan. Since past wrong only 8 months and successful summation to nan beardown operational betterment presented by Nourdine and Philippe we person already achieved important progress.

First, we are pleased to denote to you coming that we person now afloat completed nan accusation and consultation processes pinch our worker typical bodies. It did reside nan 2 cardinal dimensions of our strategical roadworthy representation namely our translator task and our separation projects.

At European level, nan consultation process was completed successful a three-month play pinch a bully collaboration. At section level, we completed each nationalist processes successful nan 31 countries wherever specified consultation was necessary. This is simply a awesome step. Then we besides made important advancement pinch our separation activity streams and our divestment programme connected which I will travel backmost to shortly.

And finally, we precocious announced that we received an suggestive connection from Airbus to participate into a semipermanent strategical and technological agreements and to get nan number liking of 29.9% successful Evidian. At this stage, our Board of Directors decided to further prosecute pinch Airbus let a owed diligence process and discuss connected mutually satisfactory position for some imaginable agreements. This projected transaction would beryllium afloat successful statement pinch our strategical plan.

Let maine specify that nan ongoing discussions are conducted connected a non-exclusive ground and that nary guarantee tin beryllium made connected their outcome. As we antecedently stated, nan group besides remains committed to study each denotation of interest, which would create worth and support nan awesome financial and business projects.

Going to nan adjacent slide. Thanks to nan accomplishment of nan advancement we conscionable described we are good connected way to complete our separation successful H2 2023 arsenic announced. Our adjacent steps are to complete each carve-out activity streams truthful that we will beryllium internally 100% fresh by nan extremity of H1 2023.

We would past beryllium successful a position to determine and administer and database nan stock of Evidian successful H2 2023 taxable to our governance and wide shareholder gathering approvals. We are arsenic of coming afloat connected way pinch this objective.

Moving connected to our divestment program, which is different magnitude of our transformation. Last June arsenic portion of our strategical scheme we announced nan divestment programme of non-core businesses representing astir €700 cardinal of expected proceeds. After 7 months, nan group has already secured astir 80% of this letter cover astatine favorable conditions for nan group.

It demonstrates nan attractivity of Atos businesses arsenic good arsenic our expertise to present connected our commitments and execute quickly and efficiently. At this stage, we person closed our secured 5 transactions nan past 1 being connected nan disposal of our UCC activity announced connected January 24, which is expected to adjacent successful H2 2023. We person been very assured we will unafraid this full programme earlier twelvemonth end.

To decorativeness connected this section, we would for illustration to springiness you a speedy overview of Atos other financial indicators and nickname wherever we are a clear manufacture leader. The outstanding efforts and initiatives of our awesome Atos teams were recognized by nan astir salient standing agencies.

To sanction only a fewer Atos was classed successful nan apical 1% of nan IT services manufacture successful nan 2022 S&P Global Corporate Sustainability Assessment. Atos was awarded nan EcoVadis Platinum Award for its CSR capacity pinch nan highest people ever received by nan group past year. And Atos was recognized for its activity successful firm transparency and actions connected ambiance alteration by nan Carbon Disclosure Project securing a spot connected its yearly A List.

For galore years now, Atos has been 1 of nan astir precocious companies successful nan IT manufacture successful position of sustainability. And we are moving guardant to our envisioned spin-off pinch a clear volition to support sustainability arsenic nan portion of nan strategy of some early entities.

With that, I'll now walk it complete to Nathalie to tally you done our financial results.

Nathalie Senechault

Thank you, Diane and bully greeting everyone. I'm pleased to stock pinch you nan financial highlights of 2022. Atos achieved its nonsubjective connected each financial KPIs, acknowledgment to a beardown betterment successful H2 arsenic Nourdine and Philippe explained.

You tin see, these KPIs connected nan descent and I'm going done each of them, successful detail, successful this conception starting pinch gross and operating separator past nett income, free rate travel and yet nett debt. So let's commencement pinch nan 2022 gross evolution. The group recorded gross of €11.3 cardinal successful 2022, which intends that Atos was backmost to maturation astatine 4.6% and positive 1.3% astatine changeless rate which was successful nan high-end of our guidance. We achieved integrated stabilization successful 2022 astatine positive 0.1%.

Scope effect represented positive 1.2% reflecting, nan publication of Cloud Edge which acquisition was finalized astatine nan opening of 2022, nan publication of smaller acquisitions made successful 2021 and nan disposal of Russians activity. Foreign speech contributed to 3.3%, chiefly coming from nan appreciation of nan U.S. dollar against nan euro.

On nan adjacent descent you will spot that Atos integrated maturation improved consistently passim nan year, turning affirmative successful Q4 astatine positive 4.6% aft a unchangeable Q3. Note that, we did person a favorable comparison ground successful Q4 notably impacted by nan reassessment of a ample BPO statement successful nan U.K. arsenic we person mentioned astatine nan opening of 2022. Still our Q4 capacity was solid, arsenic Evidian was powerfully up successful Q4 astatine positive 11% while Tech Foundation decreased owed to portfolio rationalization arsenic Nourdine explained earlier.

Turning now to operating margin, we reported 3.1% successful 2022, successful statement pinch our guidance. While H1 operating separator astatine 1.1% was impacted by respective headwinds we saw a singular betterment successful H2 astatine 5.1%. This was achieved acknowledgment to a alteration successful our building costs selective hirings, costs discipline, simplification successful underperforming contracts and associated losses and immoderate value increases. More specifically, we generated much gross successful H2, €240 cardinal much astatine changeless rate pinch less group arsenic our headcount alteration successful H2 by 1400 people.

Second, an improvement of our operation arsenic hirings, were predominantly made successful offshore and nearshore locations and wrong a younger talent pool.

And third, incorporate net ostentation which wide stay constricted to nan group astatine 2% H2 versus H1.

And lastly, we kept subcontracting nether power and trim non-personnel costs arsenic a percent of our revenue.

Moving now to a speedy summary of our income connection from operating separator to nett income, nan main items to item are nan following. Reorganization, rationalization and integration costs amounted to €451 million. This magnitude notably includes €266 cardinal of costs related to Atos translator plan, which is successful statement pinch what was communicated astatine our Capital Markets Day. Structure costs included costs related to reskilling actions taken by some Tech Foundation and Evidian arsenic portion of our translator plan, arsenic good arsenic immoderate one-off costs linked to nan mentation of nan contemplated separation.

On nan others line, you spot nan magnitude of minus €359 million, which chiefly includes a minus €210 cardinal one-off impact, resulting from measures taken by Tech Foundation to reside immoderate ample underperforming contract, which includes settlements and one-off losses resulting from statement exit. These measures will amended nan value of our portfolio going guardant and a €37 cardinal nonaccomplishment from nan disposal of our Russian activities.

Lastly, nett financial disbursal astatine minus €175 cardinal see a nonaccomplishment of minus €109 cardinal related to nan disposal of our Worldline shares, which I will punctual you generated a €219 cardinal of nett proceeds contributing to nan financing of our plan. Cost of indebtedness was unchangeable compared to past twelvemonth astatine minus €29 million.

Now turning to our free rate flow. Our free rate travel was minus €58 cardinal excluding costs related to nan translator plan. It was chiefly driven by OMDA arsenic €1,020 million, CapEx and lease represented 5.8% of revenue, somewhat little than past twelvemonth astatine 6.1%, a affirmative alteration successful moving superior astatine positive €126 million, chiefly resulting from a alteration successful nett statement assets and a bully level of customer collections.

Excluding nan costs of our translator plan, RRI was astatine minus €154 million, which see €60 cardinal refund from our German restructuring scheme announced successful 2021, which was closed earlier completion.

The different changes statement correspond nan rate effect of nan different operating expenses elaborate previously. This gets america to a minus €58 cardinal free rate travel for nan year, excluding costs related to nan translator plan. Such costs amounted to €129 million. This is little than nan €250 cardinal estimate that we person antecedently communicated owed to firstly nan timing of nan rate retired of translator costs and a little effect than anticipated connected nan 2022 financial costs.

All together, free rate travel was minus €187 cardinal successful 2022, stronger than anticipated, starring america to nan group nett indebtedness connected nan adjacent slide. In summation to nan free rate travel acquisition amounted to €312 million. This is chiefly nan Cloudreach woody and nan proceeds from nan waste of our Worldline shares successful June wherever €219 million, overseas speech fluctuations and different items amounting to €55 cardinal starring to €1,450 cardinal nett indebtedness astatine nan extremity of nan year. This intends each operating ratio was 2.4 times, providing ample headroom to our covenant of 3.75 times. Lastly, our liquidity astatine nan extremity of nan twelvemonth is beardown pinch €3.3 cardinal of gross rate and €2 cardinal of undrawn in installments facilities.

I will now manus complete to Philippe and Nourdine for nan outlook.

Philippe Oliva

Thank you, Nathalie. In 2023, Evidian will proceed to rollout our acceleration scheme truthful contempt a much challenging macroeconomic environment, our markets will support increasing and we person galore avenues to amended our capacity this year. We will peculiarly attraction connected 3 main group of actions.

One, driving gross maturation acceleration. We will proceed to deploy our caller customer worth proposition and portfolio of offerings, maximizing nan synergies betwixt our cardinal area of expertise and leveraging nan associated go-to-market. We will build up our income capacity notably to summation our sum and ample woody triumph rate.

Two, transportation excellence and profitability. We will continuously attraction connected targeted separator betterment actions astatine cardinal relationship level. We will besides negociate our talent excavation successful nan discourse of continued ostentation unit by being selective successful hirings, expanding utilization for illustration what we delivered successful 2022 and continuously improving our skills.

Three, achieved nan successful translator of our organization. We will displacement to our caller operating exemplary and thrust invention to nan adjacent level. This action will consequence successful an acceleration of our integrated maturation and an summation successful our margin. We person a unsocial worth proposition, very beardown exertion assets and a committed team. Driving invention to nan adjacent level of integer translator era, we are committed to our clients and institution successes.

Now, fto maine move it complete to Nourdine.

Nourdine Bihmane

Thank you, Philippe. So, for Tech Foundation 2023 priorities. We will proceed to present connected nan 3 pillars of our turnaround plan: Refocus, arsenic I mentioned, we will accelerate nan reshaping of our portfolio by further addressing underperforming contracts and winding down noncore activities. In particular, we'll proceed to rationalize our value-added resale business and non-strategic offering.

On nan Recover phase, successful 2023 we are going to measurement up nan adjustment of our costs structure. Now that nan societal consultation processes are completed, we person a clear way to trim our headcount arsenic we announced astatine nan Capital Markets Day, and nan target is complete 7,500 complete nan adjacent 3 years pinch important actions planned successful 2023. We will besides behaviour structural changes successful our transportation exemplary pinch much offshoring artificial intelligence and automation.

Rebound phase, we will pave nan measurement for early growth. We will proceed our commercialized momentum done attraction connected ample deals, maturation squads and nan integration of advisory successful our go-to-market motion. We will besides standard our caller offering, successful particular, Edge Public Cloud and Sovereign Cloud. This intends that successful 2023, we will corroborate and solidify nan stabilization of our halfway business, astatine nan aforesaid clip we will accelerate nan rationalization of our portfolio, resulting successful a managed alteration successful gross successful 2023.

We will wrap up our separator description actions. They will mitigate ostentation and nan effect of our portfolio rationalization. All together, our separator will stay successful affirmative territory good up of nan plan. Beyond that, I americium profoundly convinced that Tech Foundation will beryllium a increasing profitable business erstwhile we are done our turnaround. We person value assets, marketplace activity successful our halfway business and we had a very encouraging commencement successful 2022. We are innovative agile and quiet for success.

What does it mean astatine nan group level? So we expect integrated gross maturation betwixt minus 1% and positive 1% arsenic an acceleration of Evidian will beryllium much aliases little offset by nan managed alteration of Tech Foundation non-strategic activities. Group operating separator astatine nan existent perimeter is expected betwixt 4% and 5%, representing a beardown betterment compared to 2022. Regarding cash, we will pass abstracted objectives for nan 2 entities successful their respective upcoming Investor Days.

To reason and earlier turning to your questions, we would for illustration to reiterate Atos is delivering connected its strategical scheme and we person shown tangible results wrong only 8 months. We person delivered a beardown operational betterment successful H2, demonstrating our expertise to negociate nan business efficiently and thrust capacity astatine pace.

We are assured for 2023. The economical situation has go much challenging, but we person a batch of opportunities up of us, and intelligibly identified roadworthy maps to present results.

Our separation task is progressing good and is connected way for completion successful H2 2023. We are connected way to execute our 2026 nonsubjective for nan 2 early entities. Evidian started to accelerate its profitable maturation for illustration Philippe mentioned, and Tech Foundation is performing up of plan.

Lastly, we will beryllium happy to invited you astatine 2 Investor Days that will beryllium held anterior to nan spin-off 1 for Tech Foundation and 1 for Evidian.

And pinch that, I deliberation now we are fresh to return your questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We will now spell to your first question. One infinitesimal please. And your first mobility comes from nan statement of Frederic Boulan from Bank of America. Please spell ahead. Your statement is open.

Frederic Boulan

Hi. Thank you. Good morning. First mobility is astir nan galore description of liking you received successful nan past mates of months some connected Tech Foundation and Evidian. If you tin thief america understand a small spot really you measure them successful position of value of nan partner, and to what grade financial information enters successful nan equation?

Second constituent astir nan headdress structure, if you person immoderate item you tin stock pinch america connected nan updated targeted structures station spin. Do you still scheme to person Atos stay co-owning Evidian, and if you tin thief america a small spot astir nan targeted rate aliases nett indebtedness position successful some entities? And possibly a follow-up connected nan rate side, you're saying you're going to springiness america an update a spot later connected nan 2 respective assets. But erstwhile we look astatine nan level of costs provisions you've taken successful 2022, should we see that nan mostly of that will travel done successful nan rate travel successful 2023 aliases 2024. And truthful thing you tin thief america astir wherever we tin spot nett indebtedness landing successful wide nan group level successful 2023 would beryllium very helpful?

Nourdine Bihmane

Thank you, Frederic. So Diane, will return nan mobility connected people of interest, and Nathalie whitethorn beryllium complementing connected superior building and cash.

Diane Galbe

So connected people of interest, first of all, nan people of liking that we received demonstrates attractivity of some of our perimeters. In position of status, we reported wherever we guidelines rather clearly. So I do not deliberation that, further point to adhd isolated from nan truth that, obviously, we will look astatine nan people of liking pinch a clear position connected worth creation and besides that we would see each people of liking and reappraisal them carefully, pinch awesome financial and business projects connected nan apical of our mind successful examining specified marketplace future.

Nathalie Senechault

Yeah. So, connected your 2nd mobility connected nan superior building of nan 2 caller ineligible entities. We are moving connected it, and we'll coming it to you successful nan pursuing Investor Days of Tech Foundation and Evidian. Again, nan cardinal script arsenic we ever explained remains i.e. we would transportation nan enslaved and leverage Evidian, because Evidian is simply a cash-generative entity, and we'll beryllium capable to deleverage very shortly.

On your past mobility connected nan rate travel of 2023, arsenic you spot successful our position successful nan different line, we already cashed retired a large portion successful 2022. So we'll still person immoderate rate effect of proviso that we book successful 2021. But connected nan biggest portion of 2022, we already cashed retired 3 aliases six successful our rate of 2022.

Frederic Boulan

Thanks.

Operator

Thank you. We'll now spell to your adjacent question. One infinitesimal please. And your adjacent mobility comes from nan statement of Laura Metayer from Morgan Stanley. Please spell ahead. Your statement is open.

Laura Metayer

Good morning. Thank you for taking nan questions. I person 2 coming please. One, could you please explain whether location was immoderate one-offs that benefited nan 2022 free rate flow? And what was nan factoring equilibrium astatine nan extremity of 2022? Have immoderate payables being reverse factored besides successful 2022?

And past 2nd mobility would beryllium nan 2022 rate retired connected translator was astir €120 cardinal little than you had flagged astatine Q3 2022. Should we still expect this rate to travel retired successful 2023 and 2024 meaning that you would person somewhat higher rate retired successful those years versus nan first plan, aliases will nan scheme now person somewhat little costs overall? Thank you.

Nathalie Senechault

So, connected your first mobility connected -- truthful our rate -- connected rate travel successful 2022, I mean, was owed to a amended OMDA, a amended moving capital. I mean, besides immoderate -- arsenic you mentioned, immoderate timing effect of nan rate retired of our translator cost, and it besides includes arsenic we mentioned €60 cardinal effect of nan Jupiter plan. Remember successful 2021, we booked a proviso for nan German restructuring scheme and we were capable to adjacent it quicker than expected and past we sewage a €60 cardinal refund, which is included successful our free rate travel this year.

And I would besides mention that we -- connected nan factoring portion did €30 cardinal much than we did past year. And location is nary reverse factoring successful nan free rate flow.

On nan translator costs part, yes, successful 2023, we person a rate retired and translator costs. And it will beryllium higher successful 2023. Totally we person €130 cardinal successful 2022. We will person a higher number successful 2023 fixed nan truth that it's shifted it's a spot of timing. It shifted to 2023, but it has ever been nan plan. And now nan societal consultation is completed. So yes, we'll incur nan costs further successful 2023 arsenic expected.

Laura Metayer

That's helpful. Thank you.

Operator

Thank you. We will now spell to our adjacent question. One infinitesimal please. And your adjacent mobility comes from nan statement of Laurent Daure from Kepler. Please spell ahead. Your statement is open.

Laurent Daure

Yes. Thank you, and bully greeting all. I'll effort 3 connected my side. My first mobility is regarding Evidian. You showed immoderate sequential betterment connected nan profitability side. But I was wondering nan underlying betterment erstwhile we exclude nan hardware business that trended overmuch amended successful H2 for nan different activities moreover stripping retired nan seasonality, do you commencement to spot immoderate first betterment connected nan profitability side?

My 2nd mobility is connected your Tech Foundation plan, you said that you were delivering a profit measurement higher than expected, but you are still maintaining nan number of restructuring ahead. So really tin we reconsolidate those 2 elements?

And my past mobility is connected nan losses connected statement losses and nan further cleanups you are expecting to do, shall we expect akin magnitude of colony fees successful nan adjacent future? Thank you.

Philippe Oliva

Thank you, Laurent. So Laurent, connected nan Evidian broadside for -- yes, we person a bully sequential betterment particularly H2 against H1 connected some activities nan precocious computing portion and besides nan integer portion and unreality part. So erstwhile we look astatine nan dynamic, moreover though we had let's opportunity you remember, we said astatine nan opening that we would beryllium back-end loaded particularly connected nan computing portion related to nan beardown book-to-bill that we delivered successful Q2. So this is materialized particularly successful position of gross output successful Q4. But some businesses are really recovering fast. Digital is embracing let's opportunity steady-state maturation wherever arsenic I mentioned related to nan floor plan of our book-to-bill. We're expecting to continuously increasing successful 2023 because of nan gross output that we tin extract from a short-term signings floor plan that we had successful our book-to-bill. So some business lines are increasing successful nan H2 powerfully successful Q4 arsenic we mentioned opinionated astatine 11% and are still expecting to continuously amended that inclination successful 2023.

Laurent Daure

Thank you.

Nourdine Bihmane

Thank you, Philippe. So Laurent, your -- to adjacent mobility connected Tech Foundation particularly nan restructuring topic, arsenic I already mentioned before, we request to do -- we request to run a pyramid displacement successful our statement that has been agelong overdue. So astatine this shape location is nary denotation to make maine judge that we request to revisit that yes. We still request to proceed shifting our pyramid skills and location to make judge that we build up a sustainable profitable business moving forward. So connected that mobility for now nary reappraisal of nan plan.

On nan statement losses, nan largest 1 we person been capable to put it successful 2022. We are not envisioning specified a large magnitude moving forward. However, arsenic you cognize and arsenic I already mentioned, I'm going pinch nan squad to reside each those underperforming contracts and making judge that -- aliases we settee pinch nan customer pinch a higher price. So for higher profitability by descoping aliases adding aliases if we don't scope an agreement, we will person to exit immoderate of those contracts. So I cannot foresee nan full future. But for now, I will opportunity nan largest 1 is down us.

Laurent Daure

Okay. Thank you.

Operator

Thank you. We will now spell to our adjacent question. One infinitesimal please. And your adjacent mobility comes from nan statement of Mohammed Moawalla from Goldman Sachs. Please spell ahead. Your statement is open.

Mohammed Moawalla

Great. Thank you. Good morning. I person two. The first 1 is connected Evidian. Could you break down nan maturation betwixt nan Cybersecurity business and nan Digital business. And I judge you identified a benignant of 1 ample statement what would nan benignant of maturation look for illustration by stripping that effect out? And past secondly connected nan rate flow, could you break down nan free rate travel and nan moving superior betterment nan receivables, possibly if there's immoderate alteration connected [indiscernible]. And past tin I corroborate connected nan restructuring project. Should nan rate and nan [indiscernible] broadly akin successful 2023 and 2024? Thank you.

Philippe Oliva

So you cognize it is ever let's opportunity nan greater anticipation really to let's opportunity breaking down successful mini buckets, let's opportunity nan portfolio. What I tin show you that we didn't disclose successful nan net merchandise is that our integer information is afloat successful statement pinch our expectations is increasing double-digits. That intends it's supra nan market. That's nan logic why I mentioned that we were continuously gaining marketplace stock connected that marketplace owed to nan beardown portfolio and assets that we have. On nan Advanced Computing part, we were a small spot down particularly owed to nan HPC change and cyclicality of by quality of nan business and nan proviso concatenation challenges that we highlighted astatine nan opening of fiscal twelvemonth 2022, but we are ramping up very powerfully and our Q4 came up really beardown wherever we grew besides double-digit successful H2.

Nathalie Senechault

So Mohammed connected your 2nd question, really we count successful nan existent position of our instrumentality divided nan rate travel betwixt Evidian and Tech Foundation. We are presently successful nan process of allocating nan assets and liabilities and we will supply you pinch nan afloat accusation for some early entities connected their rate travel astatine nan adjacent Investor Day that we will person successful nan spring.

Nourdine Bihmane

Thank you. Thank you, Nathalie. Long clip nary speak. No movement. Nice to perceive you again. On your past constituent restructuring you will person an [indiscernible] scheme betwixt nan P&L and nan cash. As you cognize nan rate retired erstwhile you moreover motion statement is not needfully connected nan aforesaid moment. So I would not return arsenic an presumption like-for-like P&L and rate retired view. It will beryllium deferred particularly successful immoderate of nan Continental European countries. You person besides immoderate pre-retirement cases wherever nan rate retired happened overmuch faster.

Mohammed Moawalla

Yes. Thank you. Can I conscionable travel up connected nan moving cap? Can you corroborate if location were immoderate benefits from delayed payables?

Nourdine Bihmane

Could you building it again possibly it's difficult to perceive you.

Mohammed Moawalla

I mentioned connected nan moving superior improvement. Was location immoderate benefits from precocious payments?

Nourdine Bihmane

Benefits from precocious payment.

Nathalie Senechault

No. We – successful nan moving headdress nary – location is nary use of precocious payments.

Mohammed Moawalla

Okay. Thank you.

Operator

Thank you. We will now spell to our adjacent question. And your adjacent mobility comes from nan statement of Alexandre Faure from BNP Paribas. Please spell ahead. Your statement is open.

Alexandre Faure

Good morning. Thank you for letting maine on. Just a mates of questions for maine if I may. One is again connected moving cap, possibly not for 2022 and 2023 but reasoning of nan full [indiscernible]. I deliberation you presented successful June immoderate headwinds from moving headdress unwinding and normalizing pinch manufacture believe broadside conscionable wondering if is still existent and we should expect a bigger rate retired successful nan coming years?

And my 2nd mobility was connected Tech Foundation. I deliberation again successful June you presented your expectations of seeing Tech Foundation's apical statement agreement by astir 20% by 2024. I deliberation Nourdine you commented that you're now declining successful statement pinch nan marketplace for halfway infrastructure truthful possibly up of plan. So successful that context, really should we deliberation of that 20% apical statement contraction successful TF by 2024?

Nathalie Senechault

So connected your first question, truthful nan moving headdress normalization that was anticipated did not hap but we still stay prudent for nan 26 [ph] play successful nan discourse of nan separation of nan group.

Nourdine Bihmane

Thank you. Alexandre connected nan TF apical statement – really I was reasoning successful nan Investor Day that will hap successful outpouring I will travel backmost pinch much elaborated answer. But I would opportunity what I person discovered Alexandre, we person a much resilient business baseline and particularly connected our expertise to heap connected apical of our ample statement add-ons activities and turn arsenic good successful immoderate caller managed services area. So I would say, I do spot a amended days possibly much person to mid-single digit than what I announced backmost to nan Capital Market Day. But again, I springiness you a rendezvous successful our adjacent Investor Day.

Alexandre Faure

Terrific. Thank you.

Operator

Thank you.

Nourdine Bihmane

The past 1 usability and past we could close.

Operator

Thank you. Your adjacent mobility – 1 moment. Your adjacent mobility comes from nan statement of Nicolas David from ODDO BHF. Please spell ahead. Your statement is open.

Nicolas David

Yes. bully morning. Thank you for squeezing maine in. I person a mobility from my side. The first 1 is, astir nett unit summation successful Q4. Could you springiness america a inclination for this telephone and Evidian separately successful Q4 regarding that? And my 2nd mobility is connected Evidian. So I understand you expect a maturation acceleration for 2023 versus 2022, but do you expect besides maturation acceleration towards nan year?

Or should we understand that fixed nan macro and nan beardown booking you had precocious successful 2022, you whitethorn participate beardown successful nan twelvemonth and you person taken a much cautious presumption for H2. You had to facet nan difficult macro and nan precocious cyclical quality of this business. And my past point, would beryllium conscionable to understand your integrated maturation guidance. Does it see aliases not nan plus -- publication of assets, aliases do you deconsolidate already successful this maturation nan assets, which are nether nan process of being disposed? And I'm reasoning really, chiefly astir UCC. Thank you.

Nourdine Bihmane

Thank you, Nicolas. Maybe, I will return your first mobility and past Philippe will travel connected Evidian but taxation connected that. In Q4, we had nan nett decrease, we had a nett alteration of 1,400. Most of nan alteration is successful TF and Evidian is growing. So headcount connected Evidian is increasing and headcount connected TF broadside are decreasing.

Philippe Oliva

Well, I deliberation Nourdine, you answered perfectly. So we request to support let's say, a very move workforce guidance actions connected nan Evidian side, because of let's say, nan stronger maturation move that we had particularly successful H2 and we already mentioned, let's say, nan awesome maturation that we delivered successful Q4. So yes, we're going to beryllium arsenic I mentioned, coming up pinch a batch of subject connected our workforce guidance particularly successful 2023.

But support successful mind, pinch nan maturation inclination that we person and still let's say, nan outlook that we're expecting for 2023, we request to stay connected nan Evidian side, let's say, capable to present nan growth. And arsenic we person a large portion that is related to a labour services model, we person to guarantee that we tin continuously hiring. And arsenic I mentioned, improving nan skills of our workforce.

Nathalie Senechault

On your past question, nan integrated growth, we are guided on, is astatine aforesaid scope, truthful aforesaid scope arsenic of today. But support successful mind, that UCC is dilutive for Tech Foundation successful position of growth.

Nourdine Bihmane

Thank you. So, pinch that...

Nicolas David

Regarding nan pacing of nan maturation of Evidian crossed nan year. Thank you, for nan reply regarding headcount, but possibly a colour regarding.

Philippe Oliva

But nan maturation is that's what we mentioned. You remember, that arsenic we were entering successful fiscal twelvemonth 2022 particularly successful H1, we were down nan marketplace to beryllium wholly transparent. We mentioned that we would beryllium back-end loaded and we delivered a very beardown maturation successful H2, particularly successful Q4 opinionated astatine 12.7% growth, astatine changeless rate and 11% integrated growth, which is simply a awesome capacity supra nan market. Now arsenic I mentioned, we are -- powerful reality to nan macroeconomic situation particularly successful 2023, but still coming let's say, pinch an betterment compared to what we delivered successful 2022, successful position of Evidian scope.

Nourdine Bihmane

Thank you. So I deliberation pinch that we are astatine close. Thank you, Nicolas. Thank you all. Thank you for listening and giving you rendezvous successful nan adjacent publication. Thank you

Editor: Naga



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