Atos SE (ATO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Atos Management Conference Call. [Operator Instructions] I would now like to hand the conference over to the Atos management team. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today for the presentation of Atos Q1 '23 revenue. I'm Nourdine Bihmane, Group CEO and Co-CEO in charge of Tech Foundations, and I will be joined today with Diane Galbe, our Group SEVP; Philippe Oliva, Co-CEO and in charge of Eviden; and Nathalie Sénéchault, our Group CFO. In today's call, I will first share the Group's quarterly highlights, then Philippe will give you a little bit more color on the performance of Eviden, and I will lead also on the Tech Foundations. Following that, Diane will provide an update on our steady progress that we are making in our strategic transformation project and Nathalie will then go into more detail about Q1 revenue. And lastly, I will finish with a full year outlook before going to Q&A. So now taking a look at our highlights. In the [ wake ] of our full year results, our Q1 performance exhibits the ongoing momentum we are experiencing and the benefits and improved fundamentals that we are gaining quarter-after-quarter through our transformation plan and the relentless efforts of all the Atos team, which we would like to thank here. Specifically, at the Group level, we delivered in Q1 a robust organic growth at 2.8%. Eviden, who recently launched its new commercial brand, reported another solid quarter with high growth at plus 9.5% organic growth. And Tech Foundations confirmed the earlier than anticipated stabilization of its core activities, which had flat year-on-year organic growth. Our portfolio reshaping actions have driven the stabilization of that core revenue and simultaneously the deliberate reduction of our non-strategic activity, the value-added resell and BPO, resulting in a minus 2.6% managed revenue decrease across the entire portfolio. We also continue to make significant progress on all fronts of our strategic transformation. In Q1, we finalized the sale of our Italian operations. We launched the Eviden brand. We continue to ramp down the non-strategic business in Tech Foundations, and we rolled out our new client-centric organization, which we will talk about more later on. We confirm our objective to finalize our transformation project in H2. Lastly, with our ongoing momentum and the positive changes we are all seeing, we are glad to confirm our full year outlook for 2023. Now looking specifically at Tech Foundations on Slide 7. The first quarter of 2023 has been another milestone delivering on our road map, as we continue the stabilization of our core business, which is hybrid and multi-cloud, digital workplace and professional services. These are our core synergistic activities, where we have strong position and deep industry expertise and in which we are investing and regaining traction to continue our turnaround. In Q1, those core activities delivered a flat organic revenue, confirming the stabilization for 3 quarters in a row now. At the same time, we continue to deliberately decrease revenue in our non-strategic activities, BPO and value-added resales resulting in a contraction of minus 2.6% in total for Tech Foundations. This decrease is deliberate and embedded in our plan and is needed to extract the best value possible for our core business. So the top line is where we want it to be. And the same goes for our recovery plan, which is going full steam on all fronts, in particular, the adjustment of our cost base. Restructuring was twice as high as in Q1 last year at the Group level. Diane will touch on this later on. This is essentially coming from Tech Foundations and the benefits in term of margin are already following through. So the turnaround is happening and the results are really, really encouraging. Let's now move to Slide 8 and focus on the commercial activity. At 68% in Q1, Tech Foundations book-to-bill continued showing improvement year-over-year, as it compares to 59% in Q1 last year and 54% in Q1 in 2021. Are we happy with the progress? Yes, we are. Even more so because we continue to apply strict selectivity in our order intake, which is showing tangible benefits in terms of project margin in the order entry with an increase of circa 150 basis points of project margin this quarter versus same quarter last year. That said, are we happy with the current level? Of course, not. We are working hard on rebuilding strong business development team with large [ deal hunter ], as well as a solid commercial pipeline, which takes, as I mentioned before, between 12 months to 18 months, given the duration of our contracts. The good news is that the opportunities are there. You can see from the top right chart, the commercial pipeline for this semester is as high as it has never been over the last 2 years. So it is really up to us to go out and seize these opportunities in the next quarter. Demand is increasing and especially in the current macro context demonstrating the defensive and contracyclical nature of our TFCo business model. Importantly, our focus on margin and cash ensures that we are winning and signing this deal at a better cash profile than current business. We won interesting deal in Q1, and our sales of new logo and new offering represented 36% in our order intake, significantly higher than the 25% we had in Q1 last year. Let me walk you quickly through some of the deals we closed. We signed a major contract with Airbus and Atos Tech Foundations will digitalize Airbus' help desk to transform the support experience. We will support 190,000 user, employee and subcontractor in France, Spain, U.K., the U.S. and Canada via an omnichannel solution focused on service excellence and customer -- and user customer experience. In the Nordics, we have signed an up to 7-year deals with Ambu, the Danish medical device manufacturer to enhance their digital foundations. With Ambu willing to move towards a cloud-based and scalable future, Atos will [ pave ] its wider transformational program, including laying the foundation for an upcoming digital twin solution. We also won a large contract with Technip Energies to provide digital workplace services for 22,000 end users across more than 30 countries. Finally, we won several deals with National Grid in the [ U.S. ]. Atos will migrate the existing digital identity estate and move to a state-of-the-art AI solution in the cloud. So as you see, a lot is happening right now at Tech Foundations. We are performing better than anticipated a year ago. The transformation has already started. We have the right teams, the right plan and the right mindset. We believe that beyond the turnaround, many opportunities lie ahead for Tech foundations. So I'm pleased to invite you to take a fresher look to -- at our business during our next Investor and Analyst Day, which will take place June 7 in Paris. We will update you on the venue and agenda very, very soon, but I invite you to mark the date, and I'm looking forward with my team to see you all and share more with you at this event. So with that, I will hand over to Philippe.

Thanks, Nourdine, and good morning to everyone. So in Q1, if I'm putting aside, let's say, the financial figures, we all saw exciting developments at Eviden in particular, with the launch of our new commercial brand and logo, which I'm pleased to share with you today, and going forward, the business line of digital, cloud, cybersecurity and big data will be presented to the market under the Eviden brand. Believe me, it's not only about branding and communication, it's much more than that. Our new name and identity are really creating a strong traction with our employees and our clients, notably in the U.S., where our digital business is mostly made of recent acquisitions, particularly in the cloud environment. And the word to be honest, the Atos brand was not strongly [ anchored ]. So we have a real and strong momentum in our employee engagement, restoring the pride, building up a motivation and creating a new sense of belonging, which will no doubt will translate into enhanced business performance. If we are now looking at the great result that we delivered in Q1, so if we're turning to next slide to discuss the Eviden's Q1's revenue, we delivered another quarter of high growth, standing at 9.5%. As Nourdine mentioned earlier, we are pushing our momentum forward and really driving a sustainable acceleration of our revenue growth. You may remember that I mentioned during the earnings release of Q4, that the profile of our order entry was skewed towards short-term signings that will yield revenue rapidly. This is exactly the demonstration of what I said in the fourth quarter, and it's really the case and already showing in our Q1 numbers a strong momentum in our ability to drive short-term revenue. Q1 growth was also well balanced between digital, cybersecurity and big data. That means that all the engines of Eviden are working well. Growth did accelerate in digital, mainly driven by our new business around application development, cloud modernization, move to cloud, particularly in Europe, where we are seeing a very strong traction at the moment. This strong growth in advanced computing has been delivered also in our high-performance capability with the continuous ramp-up of our revenue. And what I want to reinforce is that as Nourdine mentioned on Tech Foundations, the rise of sovereignty is creating a significant momentum in terms of pipeline development on our high-performance computing, as we are currently relying on the largest pipeline that we've seen for years. Our cybersecurity business continues to outperform the market with double-digit growth in Q1 in digital security, and you remember that it's a business that we are increasingly focusing our next generation of services and improvement of our portfolio, especially around artificial intelligence applied to cybersecurity in our managed detection and response offering. Now if we look at the next slide in our commercial activities, you can see that our book-to-bill stand at 79% in Q1. But keep in mind that we delivered an outstanding [ fourth ] quarter that was running at 130%. As you may know, in our industry, Q1 is always lower than other quarters in our business, and moreover, we have a large HPC deal that slipped into Q2, and I will make an announcement later on related to the size of this contract. We've also continued to be very selective and focused on deals that are more short term, as I mentioned before. Why? Because they're offering faster revenue yields, 59% of our Q1 bookings were a contract with less than 18 months of contract duration compared to 51% in Q4 that I mentioned in the last earning release. [ They ] are also smaller in size. That means that 73% of our Q4 bookings were below EUR 10 million of total contract value compared to 66% in Q4 last year. Why am I mentioning those 2 KPIs. First, because it's showing a very strong performance of our go-to-market strategy to build a reliable volume-based engine, and that is what is giving us the level of confidence [ we pride ] related to the revenue growth performance that we're expecting on the Eviden side. If we look at the key deals that we signed in Q1, first in cybersecurity, you've seen over the past quarters that we were really doing well on the connected cars capabilities. So we signed another large contract with a German car manufacturer to provide the best capabilities to start, let's say, delivering very strong protection of connected car vehicles and to ensure, let's say, the architectural design of the future. In cloud, we are also performing quite well. We mentioned the grand opening of our new cloud migration capabilities and cloud engineering capabilities in India and in Eastern Europe. And I want to reinforce that very strong reference that we have and the name will be disclosed also in the coming weeks that is related to a very large application migration and extraction of a mainframe to move to AWS with our -- the [ entire ], let's say, application layer that is shifting to a born-in-the-cloud solution. It matters because we all know that in the financial services industry, this is a massive market, and we are currently improving the capabilities that we have on that front. In decarbonization through our commercial brand EcoAct, we won also a very large carbon offsetting contract that is covering 5 continents for a major transportation and logistics company that is located in Europe. Through EcoAct remember that we provide carbon offsetting solution and helping our clients to deliver better commitments in sustainability and decarbonization commitment to their company, their employees and, obviously, for the benefit of the world. Lastly, to illustrate the new momentum that we are creating on our computer vision platform, computer vision platform is all about artificial intelligence applied to image recognition. We won a large contract also with LaLiga. That is one of the major European football league, where we are delivering our automated content production in all the clubs that are linked to first and second division. This innovative solution is also generating very strong traction on multiple use cases, especially in terms of public safety capabilities, and we can now demonstrate that we have a very differentiated solution that is also running with a very cost-effective capabilities. With that, I will now hand over to Diane for an update on our strategic transformation project.

Thank you, Philippe, and good morning, everyone. So 10 months after we announced our strategic transformation project, we are pleased to report tangible results quarter-after-quarter. First, the fundamentals of Atos keep improving. As Nourdine and Philippe explained the strategic and operational refocus is driving continuous improvement in our financial performance, and this was again, truly visible in our Q1 with Tech Foundations delivering on its turnaround, well ahead of plan and Eviden strongly accelerating its growth. Second, we are progressing quickly on our organization. With the rollout of our new client-centric organization, Eviden and Tech Foundations are able to operate according to 2 distinct business models, which are tailored to their respective go-to-market specificities and focus on operational performance. Third, we are executing rapidly and efficiently on our divestment program, which is an important part of the [ standing ] of our transformation. In Q1, we closed the sale of our Italian operations to Lutech with a 100% cash consideration. As you know, in less than 10 months, we have managed to close or sign 5 transactions, enabling us to secure circa 80% of the EUR 700 million total expected proceeds. And lastly, on this slide, governance, Atos is committed to continuously improving its governance practices. In 2022, the company appointed 5 new directors, including 4 independent ones. The Board also reorganized its committees, which are now all chaired by independent directors. In addition, our Chairman and the Board intend to propose further changes in the upcoming weeks. To summarize, Atos is pursuing a broad-based transformation with already tangible structural improvements achieved on all fronts, thanks to the engagement of all Atos teams. Turning to Slide 15. We are on track for the completion of our strategic transformation project in H2 2023. The key upcoming milestones are Tech Foundations Investor Day on June 7 and the completion of the internal operational separation of the 2 perimeters in July. We intend to convene a specific general meeting later in H2, 2023, dedicated to the finalization of the contemplated spinoff project. All in all, we are on track to execute and complete our transformation project with one target, maximize value for all our stakeholders. Turning now to headcount on Slide 16, which is another tangible outcome of our transformation project. It was slightly down in Q1 compared to end of 2022 by a little over 500 people [ net ]. First thing to mention is that Atos is a very attractive employer. We have achieved Great Place to Work certification in 44 countries out of 69 in total, that is 12 more countries than 6 months ago, an achievement that we are really proud of and that demonstrates the strong engagement of our amazing teams around our transformation projects. Attrition has started to come down. The last 12 months attrition rate is 20% compared to 22% at the end of December. But if you look at the in-quarter number, attrition in Q1 was [ 15% ], meaning we are back to pre-COVID levels. On headcount, to be specific, in Q1, we hired close to 5,000 people compared to 8,200 in Q1 of last year. This is fully in line with our objective of adding more efficient and selecting hiring this year. We also had more restructuring in Q1, which doubled compared to Q1 of last year. Majority of this restructuring is on the Tech Foundations part of the business and in line with our strategic plan. To summarize, I will say that we are managing our talent completely in line with our plan and that employee engagement is currently remarkable. We see it every day, as we work in making our transformation a success. And with that, I now pass it over to Nathalie.

Thank you, Diane, and good morning, everyone. Let's start with the Q1 revenue evolution on Slide 18. The Group recorded revenue of EUR 2.8 billion in Q1, growing by plus 2.2% quarter-on-quarter with a good performance in terms of organic growth at plus 0.8% on which I will come back on the next slide. Scope effect was slightly negative, reflecting the exit of Russia, as well as 2 small divestments that were completed in Q1. Foreign exchange had a limited impact at minus 0.1%, reflecting the depreciation of the pound sterling against the euro over the period, mitigated by the appreciation of the U.S. dollar. Looking more closely at our organic growth on Slide 19, it was indeed robust in Q1 at plus 2.8%, which is essentially a complete turnaround from Q1 last year and continued momentum from Q4, which was up to plus 4.6%. As you have understood, Group revenue growth is now the combination of 2 distinct trajectories. First one, Eviden, which is accelerating its growth with a strong plus 9.5% in Q1 and [ when ] well balanced between digital, cybersecurity, big data, as Philippe explained. Tech Foundations is deliberately reducing its top line this year, minus 2.6% in Q1 in order to improve its business mix, while stabilizing its core business. And if we restate the Group organic growth from Tech Foundations reshaping, it would be at plus 4.3% instead of the 2.8%. So this is a good achievement for Q1, and it is slightly ahead of our full year guidance for revenue growth. But as you can see on the chart comparison basis get tough, as we progress through the year. This Q1 is very encouraging, giving us the confidence to confirm our full year revenue growth guidance at minus 1% to plus 1% organic. Turning now to revenue growth by regional business unit on Slide 20. Clearly, we see good traction in Europe at the moment. Southern Europe grew at plus 9.7% organic in the quarter, with good trends across the board, strong cybersecurity, HPC ramp-up, good growth in digital and resilience in Tech Foundations, where the region is heavily skewed towards professional services, which is growing business. Central Europe was up by 4.4%. Eviden is performing particularly well, offsetting the deliberate decline in Tech Foundations, non-strategic activities and underperforming contracts. Northern Europe and APAC, slightly down, but this is entirely due to the exit of large underperforming BPO contract at the end of last year. Here again, as part of Tech Foundations portfolio reshaping, masking good resilience in its core business, as well as dynamic growth at Eviden. Lastly, the Americas, slightly down by 1.1%, where robust growth at Eviden is more than offset by Tech Foundations. As Nourdine mentioned many times, it is in the U.S. that Tech Foundations commercial momentum mostly needs to be fixed, which we are working on at the moment, and we expect results to come through later in the year. With that, I will hand it back to Nourdine for the outlook.

Thank you, Nathalie. So moving to the last slide. So on the back of this encouraging Q1, we confirm our revenue growth outlook between minus 1% and plus 1% organic at the Group level for the full year. Eviden acceleration compared to last year will be more or less offset by the managed decrease of Tech Foundations, non-strategic activities, while our core business will be stabilized. As you know, we don't disclose margin in Q1, but I can share with you that we saw positive trends in terms of margin, leading us to confirm our objective of 4% to 5% at the Group level, representing a strong improvement compared to 2022. We mentioned during our annual results that we are embracing 2023 with confidence, and this remains true, as of today, as we have seen our performance and fundamentals are getting better quarter-after-quarter. Eviden is accelerating its growth with a balanced set of highly attractive activities and Tech Foundations is successfully reshaping its portfolio, positioning itself as a key player in its core business of managed services and hybrid and multi-cloud. In short, our transformation project is working, and we are eager to share more with you in the coming months. This concludes our remarks. We are now ready to take your questions. Operator, back to you.

[Operator Instructions] The first question from Frederic Boulan from Bank of America.

If I can start with a question around the spin structure if we still have a base case of monetizing Eviden at or around the spin, are you still exploring third-party monetization? And anything happening as well on the Tech Foundations side, we've heard about expression of interest over the last couple of months. So if you could give us an update on this? And then secondly, around Eviden, so strong quarter, can you maybe give us a bit of a sense of base effects through 2022 and whether you're still confident when we look at your kind of target growth rate over the plan considering kind of slightly more complicated macro scenario? And any color you can share between the businesses, BDS, HPC and digital business, would be great?

Thanks for the question. So on the -- I will start with the last one. So on the Eviden side [indiscernible] answer precisely to the macroeconomical environment. So first, you know that we're operating on a very large market, and we decided, let's say, on purpose and deliberately to narrow down the addressable market to be much more selective. So I'm not really worried by the macroeconomical environment because we are operating on -- mostly on the Eviden part on the core business that we're going after, where the market is still growing, let's say, quite rapidly, and I'm mentioning especially on digital security, on HPC and obviously, move to cloud and digital transformation. So the fact that we're narrowing down the focus is giving us, let's say, much more confidence in our ability to extract the growth plan that we have. In terms of [ color ], I mentioned previously that we are outperforming the market on digital security. The market analysis is basically showing a 8.8% growth on digital security. We are running at a much higher revenue growth. And the main explanation is really related to the factors that on the managed security services, we are really well positioned with a very strong portfolio. And one point I want to insist on that, Nathalie mentioned in the [ RBU ], let's say, dynamic is the rise of sovereignty is helping us out in Europe. The fact that more data protection are required, more, let's say, ring-fence solution related to encryption, identity management and managed security services, it's really generating very strong traction and great momentum in our portfolio.

On the separation question, so yes, this is our central scenario. And as you can see in our results in Q1 and also in the past 2 quarters, the fact that we are refocusing the Group around 2 activities, which has very different fundamentals is driving a very sharp turnaround earlier than expected. So [ in terms of ] industrial side, we show already tangible results on this separation project. On the operational side of things, we are moving forward with implementing the new organization internally that we are going to do in July. And then we confirm that in H2, 2023, we will convene a dedicated General Meeting on -- we intend to convene such meeting to pronounce itself on the contemplated spinoff. Now on the potential alternative on how to implement this separation, we have disclosed in the past that we were studying market interest for the acquisition of Tech Foundations. So this is still ongoing. And we do not have, I would say, a change in [ status ] versus the communication that we made on that respect.

The next question is from Nicolas David from BHF.

[ The first ], I have is regarding the current growth trend and the fact that you are just reiterating the annual guidance. Should we think that you expect a marked slowdown of growth? And if so, is it just due to the comparison basis you will face? Or is it also kind of a slowdown linked to the macro environment, I think Frederic [ has had ] a question regarding that or is it just a cautious tone? And actually, you are now more confident to reach the high end of the guidance, maybe a bit of flavor about that would be helpful? And my second question is, could you share in Q1, the level of net organic hiring for Eviden compared to TFCo? And my last question would be on the commercial activity, you mentioned Q1 was a bit weak, but do you expect already a nice improvement [ as of ] Q2, both regarding TFCo and Eviden, even maybe excluding the big HPC deal, you already mentioned, do you expect like an improvement even excluding [ these lager ] deal.

Thank you, Nicolas. I will take the first one, and Diane will comment the one on the headcount, and I will finish with the last one. On the growth and the strength of the growth in Q1 and does it impact or not our guidance. I think we -- with the team I, Nathalie, Philippe and Diane, we have showed you that we prefer rather to be conservative and making sure that we are delivering what we told you then [ stretching it ]. So it's true that we are starting with a really, really good and encouraging result for Q1. But the comparison base, as you remember, will be more and more difficult, as we go into to H2. So overall, we don't see any macro impacting the current demand on both sides because as we mentioned, and as Philippe mentioned for Eviden, we have our own market share to win, so they are not impacting directly by the macro. But we do believe, as I continue in Tech Foundations deliberately taking out the non-qualitative revenue, which is impacting cash and OM, we want to keep some headroom to be able to manage our guidance. So for now, I will mostly answer, it's more on the second side of your answer. So it's more a cautious approach than anything coming from the business pushing us to believe differently. With that, the headcount net evolution on each company, Diane?

Yes. So the restructuring part amounted to minus 1,200 headcounts, mainly on Tech Foundations side, which means that we are around the net hiring of 1,000 at Eviden.

And regarding Q2, so I will comment for Tech Foundations, and then, Philippe will talk about Q2 for Eviden. On Tech Foundations, so as you mentioned, there is an effect of seasonality Q1, Q2, Q3, Q4, indeed. So we do see a strong -- really strong Q2 upcoming for Tech Foundations. As I presented in the slide, we have the highest pipeline in Tech Foundations since almost 2 years and mostly fueled by some renewal. We have some [ larger ] renewal coming up, obviously, but also some large new logos coming up that I hope we'll be able to communicate during the quarter, as we close them, [ right ]. But we are really confident about our Q2 performance.

So on Eviden, same message or -- and back to the initial question related to, are we facing an easy compare? Yes. You remember that H1 last year on the [ Eviden's Group ] and also for the Atos Group was quite a challenging one. So obviously, we are benefiting from that effect, but that's also giving, let's say, and I want to reinforce the confidence that we have in the growth trajectory on the Eviden space. You remember that we delivered the [ fourth ] quarter at 11% of revenue growth. So that's going to be, let's say, a real challenge to outperform this capability. But as I mentioned before, we are still seeing very strong momentum. And I'm also very confident on the profile of the book-to-bill, and I detailed that during the first part of our call. That's the short-term signings, obviously, the best way to feel confident about the trajectory in terms of revenue generation, and that's currently materializing both in Q2 and also what I'm seeing for H2.

And now taking the next question. The next question is from Laurent Daure from Kepler Cheuvreux.

Couple of questions for me as well. Nourdine, the first is -- for you is on the Tech Foundations. Where do you stand at the end of the first quarter regarding the loss-making contracts that you had to renegotiate to terminate? And how much of further negative impact you expect on revenues from this [work ] in the coming quarter? The second point is on Eviden. It would be nice if you could share with us the performance of digital, specifically and the outlook for 2023, you expect just for this piece of business that is probably a little less volatile than the HPC deal? And final, we had no news on the litigation, Syntel litigation. I thought you were expecting something to be out by the end of last month, early this month. So what is happening there? And do you have a firm deadline regarding the outcome of this litigation?

Thank you, Laurent. So on TFCo and the loss-making contract, you remember the last year, we presented circa, I think, EUR 700 million overall of revenue that we were addressing in the underperforming contract, I think, in the Capital Market Day. And what I could tell you by the end of Q1, we have addressed a little bit more than half of it, okay? So we are still -- and when we say addressed, you remember, the overall outcome when we address a sub-performing contract, obviously, we negotiate and the negotiation goes well, and you end up rebalancing or bringing back to profitability your contract. So there's no impact to the top line or you descope some part of the contract to -- that are loss-making. So you reduce it and you focus, where you are making money and the customer is appreciating your services or sometimes, unfortunately, you terminate the contract. And then in that case as well, it does impact your top line too. That's the detail I wanted to say. So coming back to your point, we addressed a little bit half of that wave, and we are addressing now the other half, which will, as I mentioned last time, which will go until end of 2023.

And in fact, could you share with us on the half you've done on average, the outcome, you say half of the contract was terminated or is it less or more would be helpful?

Yes. I think on that, I will give you more detail, I think, in the next Investor Analyst Day, so we could go a little bit more deeper on that. But for now, that's a level of my answer.

So Laurent, you know that we are not providing for now, let's say, the breakdown between our digital and the big data and security, the only additional comment that -- that I did this time is that the growth is balanced between digital security and digital in Q1. So that means that -- we were a lot better growth generation on the digital side compared to where we were standing in 2023, and it's coming from 2 effects. The first one is that we are seeing more and more traction on our not application maintenance services, but application development. And thanks to the new capabilities that we are going to market with, especially around the full stack development capabilities that is, let's say, growing much faster than the modernization services. And the other part is that you probably remember that's part of the strategy of Eviden is to come up with a born-in-the-cloud operating and migration and control cloud capabilities. we are seeing significant traction on this market. We started late on cloud. I never hided that to the market and to the analysts, except that sometimes it's coming with a positive effect is that we are not replicating the mistake of the past. We are capitalizing on the lesson learned, and we are now officially going to market with new 3 cloud delivery center that are 100% born-in-the cloud and benefiting from all the best practices that you can find in the industry. So that's also what is triggering more revenue growth on the digital side.

Philippe, sorry, I'm trying to push you a bit further. But I mean, would mid-single-digit growth would be a fair assumption. I'm trying to see just on digital because we have little doubt on the performance on cyber, and we know, HPC is bumpy anyway. But on this piece, it would be really helpful for us, investors and analysts to have a better view on how you perform and to be able to check if you now perform at par with market trends?

So I'm performing in the high range of the mid-single-digit on digital.

On your third point, Laurent, so we still have no news on the outcome of the litigation of TriZetto. So it's under the court of appeal review. The benchmark for the duration to obtain, let's say, an outcome was normally 4 months to 6 months, so positioning us in Q1, 2023. However this is U.S., I would say, judicial time, and we have no way to know exactly when the outcome will be known.

Diane, my question was -- is there a maximum time frame [ under which ] they have to give you an outcome? Or they are not under any constraint?

No.

No constraint. We can have to wait for another 6 months.

Yes. But we don't believe we were expecting in Q1. So -- but it will -- it will come soon. But no way to concern.

The next question is from Mohammed Moawalla from Goldman Sachs.

And well done on the Q1 performance. I had just one from my end. Obviously, we've seen this volatility in the book-to-bill due to what you flagged around sort of HPC contract. At what point would you expect the book-to-bill to show maybe more of a normalization between the sort of revenue growth and the book-to-bill? And then also just coming back on the growth, there's obviously some fears in the broader ITC services market around what's going on in financial services and I know you don't have huge exposure to that vertical, but the kind of compounding effect on decision-making, more broadly is something that the vendors are talking about. So I'm just curious if you have seen any of that? And is it simply just better execution right now, but how have you kind of incorporated that into your guidance?

Thank you, [ Mohammed ]. So let me -- let's do that. I will give you some color on both questions for TFCo, and Philippe will do the same for Eviden, okay? So on the book-to-bill stabilization, as I mentioned last year, this was after -- sorry, after the reorganization, the spring reorganization, we had to rebuild and rebuild our sales force, especially on the large deal. As you know, in the managed services world, it's pretty important to have those kinds of skills. We have to rebuild them and taking into account the cycle of, I will say, of our deal, especially some of the large RFP and some of the large deal [indiscernible] 12 months to 18 months. We knew that it will take us at least until H2 of this year to get back on track and be able to have a much more, I would say, comfortable pipeline, yes and that's what the team are working on. The ratio, I think when you are between 4x and 5x your target in terms of pipeline, then you are in a more comfortable situation to deliver in, I would say, comfortable way your targets. So for now, the team are rebuilding the pipeline. We are between almost at 3x what we need, okay? I will feel comfortable when I will be closer to 4x and obviously, much more comfortable between 4x and 5x. So the -- my outlook as of -- to now, with my team is to be at that stage by the end of 2023. So you will see the improvement of a book-to-bill still quarter-after-quarter compared to the previous year, but getting us above the target, which I want for the team, will take us until the end of the year on Tech Foundations. But the good thing is with the current macro, the managed services demand is growing, I'm getting more and more deals and demand on top of what we are shaping ourselves with our customers, I'm getting more and more deals coming to the table. And not only that, but especially with our partner, ecosystem of partner, and I think I mentioned in the previous call, the strategic partnership we did with AWS. And that strategic partnership has been bringing a little bit more than EUR 1 billion of [ qualified ] opportunity, but EUR 1 billion into our pipeline. That means the entire ecosystem is working also with us to rebuild that capabilities. So here from me, the macroeconomical context is for now more helping me because the managed services value is to help our customers to contain their digital cost, to [ contain their ] IT right, especially on the run side, including some transformation. And the second point, remember, we walked away from the large deal, which has generated a lot of noise in the past and in the performance of Tech Foundations. Now that we are addressing with specific teams that segment of large deal. It's also an additional contribution to that pipeline growth, yes. So coming back to your answer, I think, yes, execution and strategy will help us getting back into a stabilized book-to-bill or at least a better book-to-bill. But on top of that, the current macro is increasing also the level of demand in that book of business.

So yes, [ Mohammed ] and on the -- on the Eviden side, so you mentioned it, you know that we are not totally immune to macro slowdown obviously. But the fact that we're operating on the -- largely also on public sector, on defense, on energy and utilities, that's -- those markets are much more protected from macroeconomical slowdown. So that's something, where we are seeing a very strong traction and very strong momentum in terms of the size of the opportunities that we're going after and also the resiliency of decision-making process on those segments. First, because we all know that on the defense side and especially in Europe, the investments that have been made by the different states are drastically increasing. We saw that on what we call our mission critical system with a larger and larger transformational projects around digitalization, strategic communication, encryption and cybersecurity. But so far, the fact that even if the market is slowing down on the financial services industry, but we are also seeing, especially with the penetration that we have on the manufacturing environment, I mentioned previously that we're doing really, really well in terms of digitalization around connected cars with massive capabilities in our nearshore center and also offshore center in India. I'm currently running with more than 3,000 strategic artificial intelligence developers that are working on connected cars projects for all the large car manufacturers in Europe. So it's really something, where we need to continuously improve. We need to continuously increase because this is what is going to protect us from any kind of macro economical slowdown. What I also want to say is that I mentioned rapidly that the rise of sovereignty on our high-performance computers business was helping in terms of, let's say, opportunity generation and the reliability of the pipeline that we're going after. It's really material. It's -- we have currently for the next 24 months, the large -- the largest pipeline that we've ever seen on the high-performance computing business. So it's giving us also the level of confidence that we need to first reinforce our research and development investment on that front and to continuously demonstrate the great capabilities that we have. And it's not hard to sell our [indiscernible], but you probably remember that we announced last quarter that we delivered the [ first ] largest supercomputer in the world, and I think that's something.

That's great, Philippe, Nourdine. If I could just fit one more in. Just in terms of the pathway on Eviden going forward, given Airbus is sort of not kind of pursuing a strategic stake. How do you think of the time line? Is this simply a perhaps a shifting of the time line by sort of matter of months on the kind of Eviden spin-off? Or are you likely to kind of potentially, it could be a longer delay, just curious.

No. We are -- as you noted, we confirmed the H2, 2023 time line. It's true that the Airbus [ 29.9 ] interest, if it materialized, would have been an possible acceleration, but our central plan was H2, 2023, and we maintain H2, 2023 in that respect.

And so do you still need kind of strategic partner to pursue with this? Or would you still go ahead without a kind of strategic investor?

No, no, our plan was not especially contemplating a strategic, I would say, single buyers, and we do not need a strategic player to perform our plan.

And the next question is from Amit Harchandani from Citi.

Amit Harchandani from Citi. My first question goes back to the topic of cash flow generation. We still do not have a formal guidance for this year understandably, given what's going on with regards to the separation project. But clearly, with the Tech Foundations event in the first half and Eviden event in the second half, when do you think you might be in a position to give a better clarity on cash flow generation profile for both businesses or is there something you can share with us today that would help us better understand how we should think about it as this clearly remains a big topic of discussion with the investors. And then I have a second question.

Amit, thank you for your questions. So as you just saw the performance of the Group is well on track. The separation process is also progressing very well. And we will give you -- think we intend to give more information on the guidance and give color on it closer to the separation.

So would we expect that detail in June for Tech Foundations, as well as for Eviden because separation is in the second half by which half the year is done. So anything that you can tell us at this stage, that would help us, as you think about the rest of the year?

Again, it will really be given closer to the separation in H2.

Thank you, Nathalie. Thank you, Amit. So with that, we would like to thank you, and we will close here the Q&A session. Thank you, again, everybody. And I give you [indiscernible] for the Tech Foundations Analyst Day on the 7 of June. Bye-bye.

[ That's conclude ] the conference for today. Thank you for participating. You may all disconnect.