© Tieto Corporation

Public

Public

Kimmo Alkio, President and CEO

Lasse Heinonen, CFO

Tanja Lounevirta, Head of IR

26 April 2018

Q1 2018

Strong start for 2018

© Tieto Corporation

Q1 2018 in brief

2

Strong start for 2018

› Growth in local currencies 6%, organically 3%

› Strong profitability in Technology Services and Modernization and

Product Development Services

› Industry Solutions renewal progressing – investments continue

› Order backlog supports the growth ambitions for 2018

Outlook in the Nordic IT market remains healthy

› Solid economic outlook continues to support IT market

› Current currency trend unfavorable for Tieto

› Tieto expects the Nordic IT services market to grow by ~2% in 2018

Mahdollisuuksia

Market drivers in the data-driven world

› Design-led services

› Advanced analytics/AI

› Software driven

› Ecosystems

› Cyber security, DevOps, SIAM

› Cloud

› Business process optimization

› Technology modernization

› Robotics process automation

New

businesses

and innovation

Agility and

efficiency

Public

© Tieto Corporation

2015 2020

Traditional services Emerging services

Business mix change driven by growth businesses and

application services*

WE AIM TO GROW FASTER THAN THE MARKET*

*IT market growth expectation (CAGR

2015–2020) for the Nordics at 1.5–3%

SHARE OF IT SERVICES Q1/2018

Growth

businesses**

Other services and

solutions***

Traditional services42%

GROWTH Q1/2018

9%

17%

-1%

* Application services growth in local currencies 8%, incl. in traditional services

** Growth solution portfolio described on the next slide

***Including Avega

39%

19%EMERGING SERVICES

TRADITIONAL SERVICES

© Tieto Corporation

Selected industry solutions

Customer Experience

ManagementData-Driven Businesses Cloud services Security services

Enhanced solution portfolio to drive growthUp by 9% in local currencies

+12% +23% -2%+34%

+5%

Lifecare

Payments

Credit solutions

Case management

Production excellence

SmartUtilities

Hydrocarbon

management

© Tieto Corporation

392 384 354 408 393

1 21

2 13

9,0 9,2

11,612,0

9,0

0

2

4

6

8

10

12

14

0

100

200

300

400

500

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Net of divestment and acquisitions

Customer sales adjusted

Adjusted* EBIT, %

Q1 2018 key figures

Net sales up by 3.4%› EUR 406.3 (393.1) million› Growth in local currencies 6%› Organic growth in local currencies 3%

EBIT margin 9.2% (5.6%)› EBIT EUR 37.3 (22.0) million› Adjusted* EBIT EUR 36.6 (35.6) million, 9.0%

(9.0%)

Order backlog EUR 1 787 (1 864) million› Negative currency impact› Order backlog for 2018 provides support for the

growth ambitions for the year

7

MEUR %

*) adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

© Tieto Corporation

79,7

-6,110,8

66,6 61,5

-9,3-16,9

-9,2 -11,6 -8,2

-25

-5

15

35

55

75

95

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Net cash flow from operations and capital expenditure

Net cash from operations Capital expenditure

13822 13754 13851 14329 14581

48,6 49,0 49,6 48,7 49,4

0

10

20

30

40

50

60

0

5000

10000

15000

20000

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Number of full-time employees and offshore ratio

Number of personnel Offshore ratio

0,2

0,90,8 0,8

0,5

0

0,5

1

1,5

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Net debt/EBITDA

392 384 354 408 393

1 2 1 2 13

0100200300400500

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Net sales

Net of divestment and acquisitionsCustomer sales adjusted

Quarterly development

8

Number of personnel up by a net amount of 760

Offshore ratio: IT services 47.0% (46.8%) PDS 69.9% (66.0%)

%

MEUR

Employees

MEUR

© Tieto Corporation10

Service Lines

Technology Services and Modernization

Industry Solutions

Industrial and

Consumer ServicesPublic, Healthcare

and WelfareFinancial Services

Product Development Services

New

data-driven

businesses *)

*) Reported in Industry Solutions

Business Consulting and Implementation

Support Functions

© Tieto Corporation

198 194 180 199 199

10,911,9

13,8 13,211,6

0

2

4

6

8

10

12

14

16

0

50

100

150

200

250

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

%MEUR

Net of divestment and acquisitions

Customer sales adjusted

Adjusted* EBIT, %

Technology Services and Modernization

Customer sales in Q1› EUR 199 (198) million, +1%, or +3% in local

currencies

EBIT› Adjusted* EBIT EUR 23.1 (21.6) million, 11.6% (10.9)

Q1 highlights› Growth (in local currencies) driven by infrastructure

cloud, up by 23%, and application services, up by 8%› Decline in traditional infrastructure services continued,

down by 6% › Continued service standardization and strong add-on

sales contributed to profitability› Q2 profitability anticipated to be close to Q2/2017

level

11*) adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

© Tieto Corporation

39 38 32 38 37

413

7,1

4,0

2,8

4,85,5

0

1

2

3

4

5

6

7

8

0

10

20

30

40

50

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

%MEUR

Net of divestment and acquisitions

Customer sales adjusted

Adjusted* EBIT, %

Business Consulting and Implementation

Customer sales Q1› EUR 50 (39) million, +28%, or +31% in local currencies› Organic growth in local currencies -3%

EBIT› Adjusted* EBIT EUR 2.8 (2.8) million, 5.5% (7.1)

Q1 highlights› Growth supported by the acquisition of Avega› Good growth in CEM continued› Lower number of working days and currency changes

impacted both growth and profitability› Ari Järvelä appointed as Head of BCI as from 1 April › Q2 profitability anticipated to improve from Q2/2017

12*) adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

© Tieto Corporation

123 121 113 134 123

1 11

1

8,09,0

14,415,8

7,6

0

2

4

6

8

10

12

14

16

18

0

50

100

150

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

%MEUR

Net of divestment and acquisitions

Customer sales adjusted

Adjusted* EBIT, %

Industry Solutions

Customer sales Q1› EUR 123 (124) million, -1%, or +3% in local currencies

EBIT› Adjusted* EBIT EUR 9.4 (9.9) million, 7.6% (8.0)

Q1 highlights› Good growth in SmartUtilities, Production Excellence and

Case Management› Lifecare growth slightly above the market› Sales for Payments lower – preparations for new product

launch ongoing› Technology renewal and business model change

continue in a number of key solutions› Adjusted EBIT affected by technology investments and

negative currency effects› Q2 adjusted operating margin expected to remain close

to Q2/2018 level

13*) adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

© Tieto Corporation

32 31 29 34 34

13,6

8,37,5

10,3

12,7

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

30

35

40

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

%MEUR

Net of divestment and acquisitions

Customer sales adjusted

Adjusted* EBIT, %

Product Development Services

Customer sales Q1› EUR 34 (32) million, +7%, or +11% in local

currencies

EBIT› Adjusted* EBIT EUR 4.3 (4.3) million, 12.7% (13.6)

Q1 highlights› Strong volume development with the largest key

customers and good development in automotive› Periodical licence sales contributed to growth and

profitability› Strong EBIT margin despite the negative working day

impact› Q2 adjusted EBIT margin anticipated to be at

Q2/2017 level

14*) adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

© Tieto Corporation

Business Consulting

& Implementation

15

Industry Groups

Technology Services and Modernization

Industry Solutions

Product Development Services

New

data-driven

businesses *)

Public, Healthcare

and WelfareFinancial Services

Industrial and

Consumer Services

*) Reported in Industry Solutions

© Tieto Corporation

96 97 92 100 95

1

0

25

50

75

100

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

MEUR

Customer sales adjusted

Net of divestment and acquisitions

Financial ServicesCustomer sales Q1› EUR 96 (96) million, at Q1/2017 level, +3% in local

currencies

Sales split by service line

Q1/2018 Q1/2017TSM 58% 57%BCI 6% 5%IS 36% 38%

Q1 highlights› Good development in TSM, especially in cloud-based

platform services, volume growth and new agreements in application services

› Investments, specifically in Payments, to drive future growth

› New agreements include Kraft Bank and Ilmarinen

16

© Tieto Corporation

128 127 112 136 131

2

0

25

50

75

100

125

150

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

MEUR

Customer sales adjusted

Net of divestment and acquisitions

Public, Healthcare and WelfareCustomer sales Q1› EUR 133 (128) million, +4%, or +7% in local currencies

Sales split by service line

Q1/2018 Q1/2017TSM 47% 47%BCI 9% 8%IS 44% 45%

Q1 highlights› Development strongest in Technology Services and

Modernization, driven by cloud, end-user and application services

› Large Electronic Medical Record procurements ongoing in all Nordic countries while delays in some large-scale renewal projects

› Several agreements, e.g. Nynäshamn and Värmdö municipalities

17

© Tieto Corporation

137 130 121 139 133

1 21

1 10

0

25

50

75

100

125

150

175

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

MEUR

Customer sales adjusted

Net of divestment and acquisitions

Industrial and Consumer ServicesCustomer sales Q1› EUR 143 (138) million, +4%, or +6% in local

currencies› Organically, sales in local currencies at Q1/2017 level

Sales split by service line

Q1/2018 Q1/2017TSM 56% 60%BCI 22% 17%IS 22% 23%

Q1 highlights› Growth supported by the acquisition of Avega› Healthy development in Energy Sweden continued› Good growth especially in SmartUtilities and

Production Excellence solutions› New agreements include Posti, S Group, Sodexo

18

Way forward

Performance drivers

2018 – IT services

› We aim to grow faster than the market

› Based on current rates, currency impact on is ~EUR 37

million and on profit ~EUR 8 million

› Efficiency programme: drive for productivity continues

› Offering development costs around 5% of Group sales

› Restructuring costs 1–2% of Group sales

Q2 revenue and profitability

› Negative currency effects

› A higher number of working days

Guidance for 2018 unchanged

› Tieto expects its full-year adjusted*)

operating profit (EBIT) to increase

from the previous year’s level

(EUR 161.4 million**) in 2017)

*) Adjusted for restructuring costs, capital gains/losses,

goodwill impairment charges and other items

**) Restated due to the adoption of IFRS 15

Public

© Tieto Corporation

2018 – strong start for the year

Shareholders

Value creation and

sustainability

Market

Dynamic

data-driven world

Employees

Celebrating

Tieto50