Atos Q3 revenue falls as transformation plan advances, shares dip

Investing.com -- On Monday after the close, Atos posted third-quarter revenue of €1.98 billion, down 10.5% on an organic basis, as the French IT and digital transformation group continued to execute its “Genesis” restructuring plan. 

The company confirmed its 2025 profitability and cash flow targets despite the revenue decline.

Still, shares in Atos slumped more than 9% in premarket trading Tuesday. 

The group recorded an estimated net cash outflow of €38 million for the quarter, achieved without using receivables factoring or other short-term cash optimisation measures. 

The figure includes €87 million in restructuring costs as Atos continues to streamline operations and reduce its cost base.

The Atos Strategic Business Unit (SBU) generated €1.62 billion in revenue, down 19% organically, reflecting exits from low-margin contracts and a soft market. 

Meanwhile, the Eviden SBU reported a 77% organic increase to €356 million, boosted by around €200 million from the Jupiter contract.

Atos said the book-to-bill ratio stood at 66%, unchanged from a year earlier, with improving cross-selling and renewals.

It noted “signs of recovery” in North America and in the Germany, Austria and Central Europe region.

Chief Executive Philippe Salle said: “We continued to execute on our strategy and transformation plan. Business fundamentals are being restored. Our cost base is under control with further restructuring and savings achieved over the summer.”

Atos reaffirmed that it expects to meet its full-year profitability and cash generation targets and projected a return to organic growth and positive cash flow in 2026, supported by a stronger sales pipeline and further cost optimisation.

The group now expects full-year 2025 revenue to exceed €8 billion, including about €200 million of foreign exchange headwinds.

Analysts at Kepler Cheuvreux said that “revenues are therefore unlikely to return to positive in Q4,” as the Jupiter contract weighed on the third quarter, though the impact should ease with easier comparisons and new deals ramping up.

The revenue target at constant currency has been cut by roughly €300 million from the €8.5 billion previously guided after the second-quarter release.

Despite the lower top-line outlook, Kepler highlighted that “operating profit is however expected to be around €340 million,” about 7% above its estimates.

The broker added that the “return to an operating margin over 4% confirms the very heavy work that the group is doing on costs,” noting that the operating profit target remains unchanged even after the revenue downgrade.

"We keep our Reduce rating on the back of soft momentum in revenues. We also consider 2028 targets to be too optimistic," it added.

(Sam Boughedda contributed to this report.)