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Introduction & Market Context
TietoEVRY Corp (HEL:TIETOS) shares jumped 7.79% to 177.2 on October 23, 2025, after the Nordic IT services provider presented third-quarter results showing early signs of margin recovery despite mixed organic growth. The company's transformation efforts, including cost optimization and the divestment of its Tech Services business, appear to be gaining traction in a challenging market environment.
The company, which employs approximately 15,000 experts globally, operates through four main business segments: Create (digital consulting), Banking, Care (healthcare solutions), and Industry. While market conditions remain difficult, particularly in the consulting space, TietoEVRY's focus on profitability improvement has begun to yield results.
Quarterly Performance Highlights
TietoEVRY reported revenue of €454 million for Q3 2025, representing a 4% increase compared to €436 million in the same period last year. However, organic growth was -1% when excluding a €22 million revenue contribution related to a court ruling in the Banking segment.
The adjusted operating profit (EBITA) showed significant improvement at €88 million or 19.3% of revenue, compared to €56 million or 12.8% in Q3 2024. Excluding the court ruling effect, the adjusted EBITA margin was 15.2%, still representing substantial year-over-year improvement.
As shown in the following key figures from the presentation:
The company's order backlog increased by 11% year-on-year, providing visibility for future revenues. However, cash flow from operating activities decreased to €45 million from €58 million in the comparable period, while the net debt to EBITDA ratio rose to 2.4 from 2.1.
Business Segment Analysis
TietoEVRY's four business segments delivered mixed results, with Banking and Industry showing growth while Create faced challenges:
Tietoevry Create, the digital consulting arm, reported a 3% decline in organic growth with revenue of €184 million. Despite this, its adjusted EBITA margin improved to 12.8% from 12.1%, driven by delivery capacity management and SG&A reductions. The business continues to be impacted by challenging market conditions across geographies.
Tietoevry Banking delivered the strongest growth at 14% (organic), with revenue reaching €157 million. Its adjusted EBITA margin jumped to 27.8% from 13.3%. However, this performance was significantly boosted by the €22 million court ruling. Excluding this effect, underlying revenue growth was -2% and the margin was 16.1%, still representing an improvement from 13.3% in the previous year.
Tietoevry Care, focused on healthcare solutions, returned to growth with a 2% organic increase and revenue of €55 million. The segment maintained its strong profitability with an adjusted EBITA margin of 31.7%, virtually unchanged from 31.6% last year. Growth was particularly strong in Finland, though legacy product business in Norway and Sweden continued to decline.
Tietoevry Industry also returned to growth with a 3% organic increase and revenue of €64 million. Its adjusted EBITA margin improved to 19.4% from 16.3%, driven by cost optimization measures. The segment reported healthy growth across all business units except Pulp, Paper & Fibre, which continues to face market-driven decline.
Strategic Initiatives & Cost Optimization
A central element of TietoEVRY's transformation is its cost optimization program, which aims to deliver €115 million in run-rate savings by the end of 2026. By the end of Q3 2025, the company had achieved €75 million in savings, with approximately €15 million contributing to the quarter's results.
The following chart illustrates the progress and targets of the cost optimization program:
The company expects total one-time costs associated with the program to be in the range of €45-50 million, with €41 million booked year-to-date. These cost-cutting measures have resulted in a net reduction of approximately 600 full-time employees during the quarter, with Tietoevry Create accounting for 515 of these reductions.
Another significant development was the completion of the Tech Services business divestment on September 2, 2025. The transaction generated a consideration of €223 million, with a net cash impact of €201 million. However, the divestment resulted in a net result of €-129 million, primarily due to the reclassification of foreign exchange losses from equity to the income statement.
Forward-Looking Statements
For Q4 2025, TietoEVRY provided a mixed outlook across its business segments. Tietoevry Create is expected to continue facing headwinds from weak demand across all markets. Tietoevry Banking will be impacted by the ending of a significant margin-dilutive mainframe contract, which will have a negative impact of approximately 5 percentage points on growth.
The company's profitability outlook by business for Q4 2025 is summarized below:
Looking further ahead, TietoEVRY has updated its outlook for the full year 2025, projecting organic growth between -2% and 0%, with an adjusted EBITA margin between 12.7% and 13.3%. The company has also announced a Capital Markets Day scheduled for November 25, 2025, in London, where it plans to provide more details on its long-term growth strategy.
According to CEO Endre Rangnes, "We don't need a new strategy, we just need an execution of the strategy that we already have." He also noted that "2026 will be a year of transition in terms of the top line," suggesting that while growth may remain challenged in the near term, the company is positioning itself for improved performance through its ongoing transformation initiatives.
As TietoEVRY continues to navigate a challenging market environment, its focus on margin improvement and cost optimization appears to be resonating with investors, as evidenced by the positive stock price reaction following the Q3 results.
Full presentation:
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