PARIS, FRANCE: Atos’ business division, Tech Foundations, held an Analyst Day event today to showcase its successful transformation plan and announce upgraded ambitions for 2026. The division focuses on managed services, with a particular emphasis on hybrid cloud infrastructure, employee experience, and technology services.
Nourdine Bihmane, CEO of Atos Group and co-CEO in charge of Tech Foundations, expressed his satisfaction with the progress made over the past year. The division has exceeded expectations and received positive feedback from stakeholders.
The Analyst Day aimed to provide further insights into the transformation plan and the future direction of Tech Foundations as a leader in its core businesses, an innovative actor in growing markets, and a pillar of tomorrow’s IT.
The division’s achievements thus far have laid a strong foundation for future growth and an upgrade to its mid-term ambitions.
Tech Foundations has redefined its portfolio to align with key customer priorities and capitalize on market trends.
This includes addressing the distributed workforce post-Covid, the rapid adoption of multi-cloud and hybrid configurations, the growing importance of sovereign cloud, and the increased significance of artificial intelligence.
By strategically focusing on core offerings, Tech Foundations has expanded its addressable market to approximately €705 billion worldwide, representing a 40% increase from last year’s projections.
The division’s portfolio revolves around four core businesses, generating €4.5 billion in revenue in 2022:
- Hybrid and cloud infrastructure: Managing, operating, and modernizing business-critical operations across the entire cloud continuum, from edge to public and everywhere in-between. This segment generated €2.1 billion in revenue in 2022.
- Digital workplace: Providing end-to-end employee experience through digital collaboration and productivity tools, along with intelligent customer care services. This offering yielded €1.2 billion in revenue in 2022.
- Technology advisory & customized services: Offering tech advisory and technical professional services, including expanded solutions such as AI, data analytics, automation, and IoT. This segment, now expanded, accounted for €0.9 billion in revenue in 2022.
- Digital business platforms: Encompassing high-growth solutions like generative AI, green IT, and major events. This new offering generated €0.3 billion in revenue in 2022.
To further align its focus, Tech Foundations is actively reducing exposure to non-core activities such as BPO, hardware and software resale, and UCC. These activities represented €0.9 billion in revenue in 2022.
The division is executing a comprehensive margin expansion plan to improve operational efficiency and reduce costs. Over 300 initiatives have been implemented, resulting in a gross run-rate benefit of €270 million by the end of Q1 2023. These achievements include headcount reductions, pricing adjustments, and addressing underperforming accounts. The transformation plan aims to achieve gross benefits of €1.2 billion by 2026.
On the commercial front, Tech Foundations has stabilized its performance by rebuilding a robust and selective commercial pipeline. This has resulted in new client acquisitions and significant wins in large deals, improving the book-to-bill ratio quarter-over-quarter. With ongoing actions, the division aims to further accelerate its book-to-bill ratio.
Due to its successful portfolio reshaping and margin expansion efforts, Tech Foundations has achieved significant milestones. In 2022, it stabilized core portfolio revenue with organic growth of 1.2% and achieved a positive operating margin, three years ahead of the original plan.
In light of its strong performance and long-term strategic vision, Tech Foundations has upgraded its ambitions for 2026:
- Revenue is projected to reach a bottom-out point of approximately €5 billion in 2024. From there, the division expects to resume a growth trajectory with a 0-2% organic growth rate in core revenue, combined with a managed decline in non-core activities.
- The operating margin is targeted to reach 6-8% by 2026.
- Free cash flow before interest and tax is anticipated to turn positive in 2025, reaching over €250 million in 2026.
Compared to the previous plan presented at the last Atos Capital Markets Day, the upgraded plan aims to stabilize core revenue two years earlier, achieve a higher operating margin in 2026 (100-300 basis points), and generate a cumulative free cash flow before interest and tax that is over €300 million higher over the 2023-2026 period. The total cost of the transformation plan is estimated to be approximately 10% lower, at €780 million for the period 2022-2026, with a payback period of less than two years.
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