Tieto Oyj (TIETO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to TietoEVRY's first ever Capital Markets Day. My name is Kjell Arne Hansen. I am the Head of Investor Relations for the company, and I will be your moderator and host during the afternoon. We have planned this day for a long time. And we have a very rich and interesting program ahead of us during the afternoon. And we are doing this program and hosting this event under exceptional circumstances. And I would just like to point out that we are, of course, hosting a safe event and complying with all local restrictions and regulations related to the COVID-19 pandemic. Now TietoEVRY is a fully and truly Nordic company that means that the management group that you see on the screen in front of you are situated in several different locations. So during the afternoon, we will broadcast live from 4 different locations. I am speaking to you from our offices in Oslo, Norway. And during the afternoon, we will have presentations from Helsinki in Finland; Stockholm in Sweden; and we will even visit Berlin, where we will hear from our Head of Product Development Services. So today, like every other day in TietoEVRY, we trust the technology, and we hope that everyone will enjoy the day. Now before we start the program, I would like to go through the agenda and some practical information. Our first presenter of the day is our President and CEO, Kimmo Alkio. And Kimmo is on stage in Helsinki and eager to share our ambitions with you today. When Kimmo is done presenting, we will go back to Oslo, where Thomas Nordås, our Head of Digital Consulting, will present. Then, we will return back to Helsinki for a presentation from Christian Segersven, our Head of Industry Software and Financial Services Solutions. When we are done with Christian's presentation, we will have a short break, stretch our legs, and when we join each other online again, Johan Torstensson will be ready on stage in Stockholm to present cloud and infrastructure. After Johan's presentation, we will visit Harri in Berlin, where he will present product development services. After Harri's presentation, we have also a very interesting little bit for you. Then, Ari Järvelä, our Head of International Operations will host a roundtable discussion with all our country managers. So he will be joined on our virtual stage by Christian Pedersen in Norway, Karin Schreil in Stockholm in Sweden and Satu Kiiskinen in Helsinki. And of course, as the final speaker of the day, we will hear a presentation from our CFO, Tomi Hyryläinen. Now some practicalities. You will have a chance to ask a question after each presentation, except for the roundtable discussion with the country managers. The Q&A sessions will be moderated by our excellent Head of Communications and Sustainability, Kia Haring from our main control center in Helsinki. Now if you would like to ask a question, you need to join the event via the Teams link on the event page. That link should be very clearly visible on the lower part of the event page you are currently watching. If you'd like to ask a question, join the Teams link, raise your hand by clicking the hand icon, and then our moderator will put you in the queue. When it's ready for your turn, Kia will state your name, remember to unmute your phone and state your question. You will also have the chance to raise questions via the Teams chat function, and we encourage you to do so, but be aware that we will prioritize those who would like to ask questions via the live audio. And also be aware that if you are watching the event via the Teams link, you will only be able to see the presenter and not the slides being shown. So that, I think, was all the practicalities. Now we are ready to start the show. And as our first presenter for the day, I invite our President and CEO, Kimmo Alkio, to the stage in Helsinki. Kimmo, please, the stage is yours.

A very warm welcome also on my behalf to our very first Capital Markets Day as TietoEVRY. This is a very important day to be able to share with you after 11 months of integration, the progress we have made to provide views to our businesses, hear from members of our leadership team and to paint a picture of our future ambition, views of the future and actually our ways to get there. Our future view relates extensively to the data-rich world within which we have lived for quite some time and are to begin with, very, very active in. During the past couple of years, significant progress has been made as we've been realizing many of the opportunities in creating more personalized and intelligent solutions all across the world, while much more in the very rich data oriented world is possible. I believe we are still at an early stage on what is truly possible. This technology, a data-driven intelligent world, is visible at an accelerating pace in many of our or all of our day-to-day lives. Whether we think of the reality of the data-oriented intelligent world, realizing through devices such as the intelligent wearables that are becoming more and more popular all around the world, servicing ourselves from an individual health standpoint, whether we think about our customers extending their businesses based on consumer insight, as an example, retailers extending into banking or some of our customers extending their value propositions and business models from product orientation to servitization as a totally new business model and actually creating new growth opportunities and new revenue streams. All these examples are based on smart use of data, which is being enriched continuously every second all across the world. This stride towards a data-driven world is very meaningful for all of us in TietoEVRY. And we are in full support of the ambitions and interest of all of our main constituents in creating highly advanced, sustainable and competitive societies. The opportunities moving forward from a societal standpoint, from a business standpoint, I claim will be very, very attractive once very smart adoption of new technologies are properly applied. As this phenomenon is already underway, it is fair to recognize that a fundamental change on how value is created is actually proceeding at a very rapid pace. We are shifting from the era of aiming to produce goods and services faster and better to experiences enabled by data. The acceleration of the digital world is also being elevated during the pandemic through new type of practical needs, as an example, around digital and preventive health care. There are also, by nature, a number of technology-led advancements that create the opportunity for businesses and societies to move to the data-oriented intelligent world even faster. Some of the main technological drivers have to do with areas such as cloud, data and analytics and overall software development across the world, including areas such as open APIs, which also enable much more ecosystem ways of working. This development, naturally, we also see as being good opportunities in terms of TietoEVRY's interests. Furthermore, I would like to also highlight before I go into the views of exactly what will we do in the future, let us also pay attention to how our customers are changing in their ways of working. There is a fundamental shift underway already into which we are adopting also very fast. Customers, enterprises are shifting from the traditional large systemic approaches, running larger scale, design, build, run types of development stages into what I would call highly adaptive and rapid development cycle based ways of working, where the concepts like DevOps are becoming the absolute norm on how we shall function in the industry. And with this in mind, we also recognize certain very specific market growth drivers in combination of the industry drivers, the changes in the ways of working towards more agile, the main industry-wide growth elements we'd like to be highlighting, have to do with cloud services, data and analytics, core software and automation and DevOps. I continue to be highly optimistic as we've seen in prior years throughout the new types of technology cycles, new innovation and new growth opportunities are indeed prevailing. When we think about the practical role and value we bring as TietoEVRY into the data-oriented intelligent world in a very fast-pacing environment, we provide value in 3 distinct categories in terms of what's very important from a standpoint of our customers. We support the creation of digital products and services towards the end consumers, towards the end citizens. We provide ample amount of capabilities, technologies to support our customers becoming the fast-moving, agile or digital enterprises all in support of helping our societies to continue to be some of the most advanced societies in the world through the type of digitally oriented citizen services. We also have a very strong foundation to begin with and a history of being very active in driving the type of a modernization of our customers' businesses, the industries where we operate and the regions in the world. As an example, we have in the Nordics, over 10 million citizens being served through our health and care solutions. We actually deliver some of the most competitive, some of the most advanced cloud services, both for the enterprises and the public sector. We have been recognized for pioneering roles in areas such as IoT and 5G. And as an example, we have -- actually, we are running billions of transactions through TietoEVRY financial services software on a global basis, supporting the type of FinTech developments in the world markets specifically through financial services. And furthermore, we bring to our main markets 50 years of experience in realizing complex enterprise and public sector transformations across practically all significant technology cycles. So as the combined TietoEVRY already today, we are clearly stronger than either company would have been before the merger. Through the years and through the merger, we have also built a strong proposition in the markets and businesses within which we operate. We have the largest reach of any player in this industry in the Nordic countries. We have approximately 80% of our revenues residing within the Nordic markets, while our software businesses and product development services is embarking on a much more global expansion path and globally oriented growth opportunities. Second of all, our services reach has a great fit in terms of what's required in today's and tomorrow's digital society, covering capabilities from digital consulting, advanced analytics, data platforms, cloud-native app development, big role from a cloud and infrastructure standpoint, supporting the modernization from legacy environments into multi-cloud with some of the world-leading partnerships in the public cloud domain and actually, we have our software businesses, combination of financial services and industry software making up over 30% of our close to EUR 3 billion revenues. And extremely importantly, the kind of a power of the company naturally resides with our 24,000 colleagues around the world, whereby we have 12,000 colleagues' feet on the street with our customers predominantly in the Nordic countries on a day-by-day basis. And we are seeing clearly that the competitiveness of TietoEVRY has already been augmented by the integration underway. I would also like to now turn the thinking a bit towards the future. Based on the market outlook and the solid foundation of our businesses, which you'll be hearing much more during the afternoon, we have a number of choices to build from. If I first begin with the combination of Nordics and then we go towards the international, in the Nordic countries, we believe there are ample growth opportunities in the combination of cloud and infrastructure, digital consulting, have a lot to do with the areas around cloud, data and analytics as well as the software businesses within the Nordics as well. And very specifically, the software businesses, which make up about 30% of the company, combination of industry software and financial services solutions have already been working in international markets, and the years to come will be very exciting as we look at further growth and expansion opportunities. With this in mind, our ambition is very clear to be reshaping the growth profile of TietoEVRY in the years to come based on the global capabilities, existing business knowledge footprint we have and naturally aiming to be very well-performing in terms of also financials. With this in mind, we have prioritized already for the year 2021 and onwards the main elements we believe we shall be investing into that will be the first drivers of elevating the growth profile of the company, all based on our belief and feedback from customers, reading the market signals, how to best support the advancement of our customers' businesses, building on our capabilities that we have and we have 2 categories of growth choices. First one has to do with the areas very relevant to the larger enterprise customers and the public sector have to do with public cloud services, data and analytics as well as DevOps and automation in the range of 20%, likely over CAGR growth we are looking for from these domains. The second category have to do a lot with our software businesses, including more of the international expansion potential, have to do with payment software and card services, our Nordic healthcare and citizen services as well as the continued good performance and growth potential of our product development services business, aiming at over 10% growth. So we believe these are highly important and a very good fit to specific interest that -- and the types of dialogues we have of invested priorities with our customers as well. With these growth drivers in mind, we naturally continue to see favorable views into our business mix development in support of aiming to improve our competitiveness and scale. Quite practically, the category of "digital" has a lot to do with the topics I've talked about so far: cloud, data and analytics, DevOps, automation and our high-growth software businesses, this part of the revenue mix growing to about 60% by '23 and deserving vast majority of our investments, around 70% of it, while as we have predicted for many years in a row, the traditional legacy type of infrastructure, legacy type of application services shall diminish and by -- with that in mind, naturally deserving significantly lower proportion of our investment capacity. I would also like to confirm, we fully anticipate our investment level to be between 4% and 5% of revenues. We believe with this level, we have ample investment capacity to be very competitive and look at the type of new technologies, new type of software architectures that will accelerate our competitiveness and give even greater scale in the years to come. And now it is time to move to one of the most interesting parts of today's Capital Markets Day, our financial targets. We have 5 categories, what we call financial targets by 2023, and I'd like to naturally go through in each one of these carefully. From a growth standpoint, our target is to accelerate growth to 5% by 2023. This is very specifically driven by the topics solution domains I have lot referred to earlier, cloud, data, DevOps and software. Furthermore, on the profitability side, EBITA adjusted 15% by 2023, main drivers being synergy realization, the developments in the business mix and support from the growth ambition by 2023. I would also like to confirm the definition of EBITA. This is only a technical change. It does not impact the profit level compared to EBIT adjusted. The technical change relates to where PPA amortization is practically accounted for. Furthermore, given the nature of our business and the exceptional 2020, we are highlighting the level of onetime items to be approximately 1% of revenues by '22 and onwards, and we absolutely believe the onetime items to be normalizing after 2020. Furthermore, the importance of increased dividends annually, this has been the tradition for several years. And this is based on the starting point of EUR 1.27 as the original dividend proposal from 2019. And we naturally fully anticipate to systemically improve the dividends annually as has been our historical track record. And finally, on the leverage side, net debt to EBITDA, less than 2 by the end of '22, and this is naturally based on our belief on the strong cash flow generation for the years to come. Naturally, very importantly to highlight the background to our conviction and belief that these are the type of targets we will be seeking for and to be achieving the important background from a business mix standpoint and main assumptions by service line, for which you'll be getting quite a bit more insight during the latter sessions of today. Digital consulting: by '23, 7% to 9% growth, profitability between 15% and 17%. Main drivers on revenue to be scaling, growing revenues from the data and cloud capabilities across the Nordics and being supported by very important capacity capabilities by our global operations and delivery centers from a capacity standpoint. And we naturally expect to be driving benchmark productivity and automation, which is a must do in the type of a consulting business. Cloud and infrastructure: by '23, between 0% and 2% on the growth side; and profitability, 11% to 13%; drivers from a top line standpoint, the potential from the multi-cloud services, while as anticipated, the reduction of the legacy footprint, which is an industry-wide phenomenon. And furthermore, profitability drivers, accelerating AIOps, automation and overall global delivery. Industry software, 6% to 8% growth; profitability, 20% to 22% level; drivers being software-as-a-service, continue to enhance functionality through enhanced functionality, increased competitiveness; and naturally, we look forward to the potential market expansion. And we continue to harmonize software R&D practices that have already beared fruit in the recent quarters with positive progress. Financial services solutions: between 6% and 8% growth; profitability, 18% to 20% (sic) [ 18% to 22% ]. Looking forward to expanding our core banking, payments and cards businesses, and we expect to be realizing the scale from the existing investments in support of, again, competitiveness, market expansion, better scale and elevating from a profitability standpoint. And furthermore, product development services expected to grow in the range of 8% to 10%; profitability, 12% to 14%. Here, expansion to adjacent industries and looking forward and continuing the expansion of market reach based on a very strong foothold and the recognition for high-quality services in our PDS business, and by nature, in this business, the continued drive for efficiency and smart investments for scale, as an example, around potential repeatable assets. With this business profile in mind, I would like to clarify furthermore our path to the 5% by 2023. Currently, we are, I think we would likely all agree, in an exceptional era due to the pandemic. And naturally, in the case of TietoEVRY, we are also in the heaviest period of integration, the year 2020. We expect to be back to solid growth, second half of 2021, and we do believe we will be impacted during the first half based on what is currently known, understood around the impacts of the pandemic, and we'd like to be open, as we commented in the Q3 report, that the impact of lost customers, premerger in cloud and infra will likely continue to impact us until the summer of '21. And very importantly, we believe that the accelerated growth potential, growth drivers, the related investments that are being activated, meaning being put in place across the organization, will start to deliver positive development second half of 2021; 2022, clearly accelerated growth; and then as we move towards '23, towards the 5% growth. To me, this, by the way, reminds the type of a growth trajectory we implemented between years 2015 to 2018, where we achieved in a 3-year time frame, growth up to approximately 7%, whereby about 2 percentage points were contributed by bolt-on M&A. So we feel comfortable on how to read the market signals and driving this type of a growth profile forward. Naturally, and given that we are in the era and the year of the integration, it's probably good to take a minute just to summarize the big picture on how far have we gone in the integration and which type of categories further benefits will become realizable as we enter '21 and onwards. I would like to confirm that this very interesting integration process, we are well on schedule. By nature, it's a demanding one. It is a good integration program. I'd like to split my summary into 3 categories: first, around the drive for the common set of operations, common processes and looking after the cost structure of the company, which we have shared in our quarterly reports extensively, we continue to be well on schedule, and we uplifted the synergy ambition to EUR 100 million level at the end of the second quarter, and we stand very firmly behind that we shall be achieving these. Second point I would like to mention for the FinTech value proposition, we have been expecting premerger during the merger that the capabilities in financial services from both ex companies were very strong, and this is becoming even stronger, and I believe we are already starting to gain market share and interesting wins in the marketplace within financial services. The 3 remaining drivers are growth from complementary customer base, Nordic digital consulting scale and accelerated cloud adoption, accelerated multi-cloud competitiveness, these type of benefits, I believe, will become realizable and visible as we move on into the upcoming quarters. And naturally, now we are shifting, as we'll be entering 2021, to the whole growth ambition, growth agenda and then seeking for the services, the solutions, especially software side, which do have expansion potential even internationally. I would also like to confirm the total staging, phasing how we believe we will reach all 5 elements of our financial ambition and financial targets. This year, year of integration characterized as slow growth, while continue to expand profits based on very rudimentary and detailed cost base management. 2021, the start of the growth agenda, back to growth, while continuing to expand profits, further selections, targeting of investments to high-growth areas, and we'll begin the portfolio optimization that will elevate in its importance during '22 and '23. We believe '22-'23 will see strong growth and continued systemic improvement in profitability. In our type of a business, nothing great happens without great people. It is very important, and we are highly encouraged by the developments of the value base of TietoEVRY, we were hopeful at the point of the merger announcement that Nordic heritage can work in our favor. We have had very positive experience from the customer side, employees that the whole Nordic heritage can be a very decisive, very compelling factor in the best workplaces of the future, whereby we begin our thinking -- we begin and end our value proposition to employees by thinking about that everything begins and ends with utmost respect at the individual level. With this in mind, we build on the Nordic values of openness, trust and diversity. We have also co-created on a hackathon internally in defining the culture code of the company, released about 1.5 months ago. We encourage the lifelong learning for all of us. The industry is fast moving. We have great learning opportunities on a daily basis. We offer highly purposeful work supporting the development of the societies within which we live, and we should be aiming to make our societies some of the most advanced digital societies in the world, and we offer our employees also highly demanding projects, which tend to be a very high motivational factor for technology professionals, and the considerations for highly inclusive workplace, drive for equality, drive for diversity tends to be very important for the company. With this in mind, I wanted to confirm that our belief at the early stages the merger is being confirmed by -- for all of us in the company that the Nordic value base can be a differentiating factor also in terms of winning market share. Sustainability is naturally becoming continuously more and more important in the minds of all of our constituents. Sustainability is in the core of our engagement, is core in our operations and to highlight a couple of the priorities, we have already, from a diversity standpoint, released our gender balance target by 2030 to be at the 50%-50% level, highly positively ambitious. We pay a lot of attention by nature on the satisfaction of employees through employee engagement. We are already close to 75% based on our latest VOICE surveys. Naturally, this will always continue to be super important, given the nature of our business. I also wanted to make a couple of points from a carbon emission standpoint. We have a very clear target of 80% reduction of CO2 emissions in our own operations between 2020 and 2023, and an objective for net zero on carbon emissions by 2025, and also very active dialogue with our customers, how we co-create solutions in the market that will enable reduction of emissions also in our customers' businesses. To conclude, my perspective of today's Capital Markets Day, I would like to summarize the main takeaways and the strong belief we have in TietoEVRY. We have a fantastic opportunity of elevating the digital awareness, the competitiveness of our societies, very specifically, the Nordic enterprises and public sector, and our role in it is very big. We have an opportunity to further unlock the value of our software businesses with higher scale and international expansion. We are starting to realize the value potential of the merger and I look forward to expanding the potential based on the continuous learnings we have, the combination of synergies, growth and scale. And to confirm the main financial targets, 5 in total, here highlighting 5% growth by 2023 as well as the 15% EBITA adjusted. And we have a very firm belief that we will be providing highly attractive shareholder returns systemically in the years to come. Thank you very much. This would conclude this part, and I believe it is time to go to a Q&A.

Yes. Thank you, Kimmo. And now it is time for your questions. So please raise your hand on Teams. We'll start or we prioritize first, the audio questions. I will be allocating the turns for you. Okay. We have a couple of questions here through the chat. This is a question from Daniel Djurberg. Your financial target, net debt-to-EBITDA by 2022, will this stay on long term or will you return to 1.5, I guess to open for mergers and acquisitions and higher dividends and could be considered positive in current low interest rate environment.

Thank you for the question. So very practically, at this point in time, this is the level of the target regarding net debt-to-EBITDA we are providing. And naturally, when we get to the below 2 level, we believe there will be ample room for, let's say, further maneuvering and flexibility. We fully aim to be highly mindful on the leverage level, looking also into the background and historical trends from a former Tieto side. So we'll be balancing naturally, the leveraging and the dividend potential and to be fair, our CFO, Tomi, will also be addressing this in his presentation as well.

Thank you, Kimmo. We'll continue. Software business makes up 30% of the total TietoEVRY. Is this only software-related revenues such as SaaS licenses and support or it's also software-triggered services included?

Could you please repeat the last sentence?

Is this only software-related revenues such as SaaS licenses and support or it's also software-triggered services included?

Okay. So thank you. That was the software-triggered services, I was looking for that word. So this is predominantly software-centric. As Christian will be going through financial services, we also have a utility business model in financial services, but maybe to clarify, let's say, the big picture of the 30%, this is to a huge extent, software oriented, predominant the proportion being SaaS revenues and overall on a kind of a multiyear contract basis, and part of -- maintenance, part of implementation. And to answer, it does not have any large degree of associated professional services. Those would be in our digital consulting business.

Thank you, Kimmo. You can also ask your questions directly from Kimmo through the audio. Please raise your hand on Teams, and I will be allocating the turns. But in the meantime, we'll take another question here from the chat. It is Michael Briest from USB asking, can you say what your organic growth ambition is? You mentioned 2% or so of acquired growth. So are you really targeting 3% organic growth in 2023?

So to clarify, as commented earlier, here, we are setting our target at -- target to reach 5% growth level by 2023. My example on bolt-on had to do with years 2015 to 2018. So the 5% may include smaller bolt-ons. We very much believe in the appetite and importance of organic growth.

Thank you, Kimmo. There's one more question from Daniel Djurberg. Ballpark, how large part of the software business would you say is updated to cloud native or at least cloud supportive? And how much is traditional legacy on-premise? You mentioned 22% for the full group earlier on.

So the more SaaSified is around 30%, 34%. And to be fair, Christian will describe this also a little bit more in detailed manner per business. But the answer would be 30% to 35%. And the advancement of SaaS readiness continues systematically. And we have very good readiness, and a lot of the investments have been made to continue to accelerate SaaS part of the business.

Thank you. We have 2 hands up here, Sami Sarkamies. Please unmute your mic and state your question, please.

I would actually like to discuss CapEx to sales. I think you said in the presentation that you're expecting 4% to 5% level going forward. Can you please explain why the investments will increase from earlier levels of around 2.5% at Tieto and around 4% at EVRY. Is this because of the in-sourcing decision at cloud and infra?

So I believe our investment level is staying at a very similar level as we have had at the 4% to 5% level. And that is where we plan to be, and that's from the former Tieto side we were as well. We do not anticipate any significant increase in CapEx. Tomi will talk about the investments, both from the OpEx and CapEx standpoint a bit later as well, but no significant increase in CapEx, and total level to remain at 4% to 5% level.

Okay. Can I ask another question? On financial services, when I look at one of the earlier slides where you had 2 buckets of growth, one with potential for more than 20% growth and the other one with potential for more than 10% growth, I didn't see financial services there. So does it mean that you're not expecting that area of the business to be able to grow at more than 10% rate?

So I could go back to the slide if, Sami, you would like to. The item #4, payment software and card services. So that is one of the very specific ones that was highlighted, and we very much believe that in financial services, the growth potential we can well also discover in the quarters and years to come that the global market expansion potential can also be, I would say, becoming continuously more and more attractive. We have already discovered good opportunities after only 11 months into the merger. But just to confirm the point, it is highlighted as one of the 6.

Next in turn, Michael Briest. Please unmute and state your question.

Yes. In terms of the margin progression, do you expect it to be pretty linear? Because I guess the synergies are quite front-end loaded, you're guiding to 60 to 70 this year?

So the margin development, as you noted, we have not kind of done an external modeling here at the CMD. It will be dependent on how rapidly we actually start to deliver growth and as you well know, the impact of the pandemic and the impact of the premerger lost customers. So the faster we start to grow, we will actually be kind of getting into what I would like to see is the -- what I call the systemic trajectory, how it is -- how it should develop like we've done, and as Michael, you've seen in the last 5 to 8-year time frame. So that's what we would be looking for, but we are not giving detailed guidance as you noted.

But if I look on Slide 13, I mean 2021 looks a little bit better than flat and then 2022, probably somewhere between 2% and 3% growth. Is that suggesting that next year, there's not a lot of margin expansion because you're not getting the growth? Or maybe the synergies allow you to get that margin up?

So we are trying to stay away from giving now '21 guidance. Now our financial ambition -- this is a reflection, financial ambition has been for many years and we'll very likely continue that we expect to improve on profitability also on an annual basis.

And our next question comes from Matti Riikonen. Please unmute and state your question.

It's Matti Riikonen at Carnegie. One question related to the onetime items [Technical Difficulty]

Now we seem to have lost Matti Riikonen. Let's wait a few moments, maybe we get him back on board. Matti, please continue. We lost the connection, but I can see that you are back, just go ahead and continue. Matti Riikonen, go ahead and continue, you are unmuted currently. We welcome your questions. We still have time for a couple of them. So please raise your hand, and I will be allocating the turns. It seems that there is no more question from our online audience. Now let me see one more coming up here.

Kia, we heard half of Matti. So maybe I answer it. I can likely, with 80% probability, feel the rest of his question. So if I comment, Matti's question started about around the onetime items. And just to confirm what we have commented before, 2020 is truly an exceptional year of onetime items. This we opened up at actually line item level at the end of Q2 report. We have also commented, and we stand behind that 2021 will be significantly lower, approximately half the level of year 2020. And once the integration process is completed, we expect to be getting then to the very normalized onetime item level that we have shared today as the target level.

Thank you, Kimmo. We have one more request here for Jaakko Tyrväinen. Go ahead, unmute and ask your question.

It's Jaakko from SEB. In terms of growth potential on the digital consulting side, how easy it is actually for you to attract talent in the, let's say, new growth areas, i.e., data science, DevOps and automations? Or do you already hold enough large talent pool in those areas?

Thank you for the question. So in our -- all the businesses all across the company, I think we need to always be very humble of taking care of talent and seeking for new talent into the company. So this continues every day. It's very important part of our working. And now to answer your question, we are able to recruit very good talent into the company. It is very important, we encourage 24,000 colleagues, we train ourselves into new technologies. And we have also seen some quite encouraging signals and dialogues regarding new growth domains, such as the public cloud program where the type of full capabilities we have in the type of a DevOps cycle can create additional benefits to our customers when we have a more significant history of running high availability environment and managing complexity, then, as an example, startups have. So we will continue to work on this very hard. The signals are currently absolutely fine.

Thank you for your questions. Now there seems to be no more questions from our online audience at this time. So handing back to Oslo, and over to you, Kjell Arne.

Thank you, Kia, and thank you, Kimmo, for a very good presentation. And also thank you for the -- to the analysts raising questions online, that is very appreciated. I understood that we have had some technical issues in the Teams setup, but that should be fixed now. Continue to raise your hand if you want to ask a question, and if that doesn't work, raise a question during the chat function on Teams, we really appreciate the questions coming in. Now we continue to the next part of our program. And next to me in the studio here in Oslo, I have Thomas Nordås, our Head of Digital Consulting. So Thomas, please go ahead, the stage is yours.

Thank you, Kjell Arne. And I'm honored here to present the service line digital consulting. I will present how we see the market, the market opportunity and how we are fitting our services to grasp these both traditional services, but also more digital advanced services. And also a bit about the merger and how we are able now to grasp the opportunities with a combination of Tieto and EVRY. I will finish off with saying something on the financial element on how we are driving the growth, both on revenue and, of course, on profit. We are seeing that there is a fundamental shift in consulting and application services in the market. There is a shift from a more traditional thinking where we have the thinking of the IT as underpinning processes to a more shift where technology is driving the business outcomes through also new thinking on delivery models and business models. We see that there's a shift from making engineer thinking, combining this to actually have a new thinking of the technology in the way of changing this technology as a driving part of being competitive. There's a shift also from building application and getting data to collect data, utilizing data, building the application landscape and also utilizing the data in order to become predictive in the decision-making, making the right analysis in order to become even more competitive. It's a shift from the managed application element to have this working well together to evolving the application, bringing cost-efficient also in the application landscape to drive the competitiveness. You can say that there's a shift from the big fish is eating the small fish to the fast fish eating the slow fish. We see that the Nordic is highly advanced in this. There's a very high digital maturity among every citizens in the Nordics. The COVID situation is accelerating this now, this shift, this transformation, more and more businesses are looking for this transformation because to see that the world is changing rapidly in this space. Digital consulting is in the heart of both serving the traditional -- the transformation into the new advanced services, and these are in the heart of digital consulting. If I'm looking more into what we are today, we are now -- have merged to large consultancy units one from Tieto, one from ex EVRY. We see that we have long history with our customers. We have been trusted for many, many years. We have more than 3,000 customers in the Nordics. Quite a balance between the different countries, but, of course, serving all industries and, of course, public sector. We see that this base is a fundamental element for our future growth. We also see that the merger now between ex EVRY and ex Tieto is creating us even more capabilities, stronger capabilities making us able to have a full spectrum of all the requirements that is needed to drive both the traditional, the transformational and the digital advanced services. We are the largest consultancy in the Nordics, by far. We have also global capabilities designed to serve the Nordic customers. 68% of our consultants are situated in the Nordics. We are big, but we can also be very fast. The reason for this is that we are also local, understanding the local requirements, the local situation through our customers, being adaptive to their situation and, of course, can bring the knowledge of a global organization to their doorstep, creating a good competitive and value creation for them. We have a strong financial situation or foundation, and why I'm saying this is that we have all the possibilities also to be a very vital player for the future. We can do the right investment. We have the right profile in driving this investment. The momentum of the COVID-19, the -- has been impacted during 2020. We have also used the merger now to become much more fitter to grasp the new potential of this digital consulting unit. So we are not only in a combination, we are far better than just 2 companies joining forces. We have now in-depth customer knowledge, domain knowledge on the industry and, of course, a lot of technical expertise. We have now capabilities to create a unique market position. What are our customers looking at? They want to have knowledge. They want to have the knowledge and the new thinking that the technology is driving in to the world. We see that we have now capabilities of a strong advisory practice, not only making plans on slideware, but actually making realistic plans, how they're going to grasp the new more digital advantage of the businesses and make this -- make realistic plans on how they're going to develop this further. It's also about capturing the customer. Our customers are obsessed by how can they capture the customer value. We are helping them in doing that, both with being highly digital, how they can use digital and also how they can create new business models to develop this. Also, employees are very obsessed with how can they become more digital. And of course, this is creating a lot of new opportunities for our customers. Application is still at the core. We have a huge unit working with application, both those -- with those who want to have a more traditional approach, but of course, also into the new world of managed service and trying to do this more with automated services and, of course, driving the cost efficiency. As I said, it's all about the data, creating the data, having now a strong unit where we can have a good -- how our customers can capture data and also how they can excel on this for the future is a very strong key that we are having. I talked earlier about being fast. Of course, we also have to work being fast. So being DevOps, agile and with automation, we are also speeding up how we are driving our customer engagement and that is both expected from us, but also expected that we want to push this into the market. I heard a question earlier today about people. Many companies are today saying that, yes, we are a bank, but we are really a digital business. We are a digital business, but we're really a people business. In the core of the services of 6,500 people is about how we are attracting the right talent, how we are keeping the talent, how we're developing the talent. It's all about knowledge. And our customers are extremely obsessed about how can we create that knowledge to them. To attract these talents, we really need to work with meaningful work, working with complex projects and also showing that this is creating value, either in public sector or in business outcomes. It's about also creating the career development inside our organization, making this exciting every day and also use how they can be listening into and learning from the tech leaders of the world and how we can bridge this to the customers. Because it's now during this COVID, the global teams can come much closer with another way of working, being to the knowledge, quite close to the customer, bringing the global teams to the customers, but also with the local proximity that I just described. So it's about now how we are creating that knowledge, and we are doing it. It's about creating this engagement workplace where people are doing the extra effort into becoming the best consultants in the market. Our value foundation of the Nordic values of openness, trust and diversity is, of course, a very important foundation for our business. This is just about how we can create a learning environment creating the best people to be there and how we can utilize this in creating growth to our customers and, of course, for TietoEVRY. We are now -- I might now repeat myself also in some of the growth drivers. But if you look at the revenue growth, we have been in ex Tieto, ex EVRY quite flattish on the revenue growth. We are now looking at a 2023 target of 7% to 9% of revenue growth. I will come back and comment -- I will comment that in a second, and of course, also on the adjusted EBITA, it's important also to see that we have development here from around 12% to 15% to 17% of adjusted EBIT. On the growth drivers, it's really important for us now to continue the journey of scaling the digital capabilities with new and digital advanced services because the market is more and more into this area. We are grasping that one and winning projects in that space. Cloud adoption, data and insight, managed services with automation. It's also about transforming some of the managed service and how we're doing it, helping our customers in the transformation into new ways of thinking in the application managed services. And of course, with a customer base of more than 3,000 customers, we have a unique position to use our more capabilities to even expand the total share of wallet to many customers, especially in Sweden and in Norway. On profitability, of course, automation and managed service is, of course, something that is also on the growth targets, but it also helps our profit level. It's making us even -- and of course, this -- now are talking about this in how we are doing the application managed services. It's also about attracting the right talent, and it's a war and battle every day of winning the right projects. So then we really need to have learning programs, we really need to have reskilling because we are also educating the market and what is coming the next driver. So that is extremely important. And of course, we are adaptable to different price models, both how that is done locally, but also then we can use the price models in order to how we can be more profitable. It's about the global capability development also how we are strong in our near and offshore capabilities, competence centers there and how we're pushing that into the Norwegian -- the Nordic market to create the good momentum and the knowledge in the doorstep through our customers. As a consultancy, we always really need to look at productivity, such as utilization, hourly rates, the development of the FTEs and that is a given being a consultant. We see also that on the short term, we have some very concrete business drivers. The COVID will still be carrying on over Christmas. And of course, we really need to then work on how we are mitigating the COVID impact and turning into a growth during 2021. There's, of course, high emphasis on how we are being productive, how we are using our workforce in the best possible manner. When it comes to our business mix, now our business mix is also in a constant change. If we look back one year, we probably wouldn't discuss -- see the same business mix as we're seeing today. In 2022, probably the business mix will also be a bit different. We really need to be at the edge of what is the requirements of the customers. But we see that the current business mix will expand with the digital advanced services will expand heavily into the future. We also see that there's a slowdown of more traditional services, more and more going more to cloud, more to managed services and driving a completely different cost efficiency gain on businesses. And of course, there is always a transformation path that will be a part of this. We are driving our investment more heavily into the digital advanced services and also building the digital capabilities fast. Of course, we have to be fast. We have to be quick, reactive and driving the digital agenda for our customers and not only be re-active in that. And of course, it's about also driving our own way of working with our managed services, also changing the current outsourcing engagement to more DevOps. And of course, then have a high focus on automation and the levels and the maturity of automation for the future to drive that full-stack managed service. I'm very proud when I look at our customer base. We have extremely many fantastic customers. These customers are leading customers within their industries. And also a heavily proportion of this is leading in the public sector, being driving the strong citizen agenda on digitization. If I just mention a few from this list here, for instance, Rolls-Royce, how we are helping Rolls-Royce to utilizing data to do more predictive maintenance on the machine -- the marine engines that they are driving helping Rolls-Royce to be even more on the quality and creating value for their customers. Also I want to mention Aimo Park, a leading car parking company in the Nordics. We have also been working how they can utilized in digital to drive the new business models in becoming more advanced in how they can use technology and also helping the customer experience in the parking lots. We have many, many good examples. We have a unique platform of driving that growth. To sum up, our winning formula is that we have a market momentum, we have some traditional services, we have the transformation into more digital advanced. The merger is not only a combination of 2 companies, it's actually accelerating us as digital consultants, being that 1 plus 1 equals 3 or more. And we have a proven record with many, many customers, and we can, of course, accelerate in our capabilities at the customer and the services. Critical success factors for the future is, of course, how we can drive DevOps automation -- DevOps adoption and automation in a more managed service, how we can speed up the cloud and data capability, both on services that we are -- solutions that we have provided, but also attracting the right talent. This will create and accelerate our growth and profitability. I'm very proud of the unit today. I'm looking forward to how this can be in the future and I'm looking at a very bright future together with the team in digital consulting. Thank you for your attention, and now I'm ready for some questions.

Thank you, Thomas. And now the floor is open for your questions again, and I see Sami Sarkamies raising a hand. Go ahead, Sami.

My first question would be just on the general promises, I think you're accountable for probably the biggest improvement thinking of '23 targets, be it growth or margins. Looking at past performance, your development may have been held back by both market demand and your ability to recruit talented consultants. How will you address these challenges going forward?

If I start with recruiting talents, I think that already, we have a unique position working -- and what consultants really want is work with where they can excel the most on the knowledge. I think that we are very attractive for talents because they can utilize their skill. And also, they are part of a bigger environment, bigger team where they actually are on continuous learning curve. This is for many, many consultants, the most attractive part to be. Also, I think that we have high ambitions for the future. Yes, we have it. But we really need to also say that we have the potential of driving this stronger into the market, both with the services at current state, but we're already doing it. So it's not just a wishful thinking that we are now from the traditional and now moving into the more advanced services, we see that we have to do more into the advanced services. Is this answering your question or do you want to have a follow-up?

Yes. I can maybe ask another question. I mean if you look back, it's been difficult for you to grow the consulting business profitably with high utilization ratios. While you're promising both rapid growth and margin expansion, how can you achieve these 2 goals simultaneously?

Yes. Of course, this is a challenging task. It's not an easy task. But we have, I think, a potential now with the new merger to grow on the customer base. So the share of wallet at the customer base, we know the customer, we know the requirements of our customers, we can sell more to each customer that we are serving. And of course, then attracting more people and also to do more time and material, ex EVRY had a lot of time and material business, and we can expand on that and also transform some of the more traditional time and material business more into also managed service. So I think that we have a fantastic potential now to drive it. But there's, of course, as a consultant, we really need -- also need to how can we do more or better utilization of our workforce is also, of course, on the agenda every day. So it's -- this is work that we have to do -- are facing every day on utilization, how we are driving this and how we are winning in the market every day, but we also want to have bigger assignments driving this profitability and revenue for the future.

Thank you. The next question goes to Jaakko Tyrväinen.

A bit of a general question from my side. How would you describe your key competitive advantage in the digital consulting side and in which kind of projects you think you hold a strongest position in relative terms?

Thank you for the question. I think it's a very good question, and I have to make this clear because we have an extremely unique position in the Nordic. We are -- our competitiveness is, of course, that we have these local consultants being very close to customers, understanding what is happening in the market of some of the customers in Malmö, in Stockholm, in Oslo, in Helsinki, Tampere, and so forth. It's very important to have the local proximity into it. And there's no local company that can bring the global capability to the doorstep. We will, of course, fight hard to win local businesses and work with them in the transformation also to do more managed service. And also, we are having a huge and good portfolio with driving managed services big projects. We can utilize this much, much more in Sweden and Norway.

Thank you. I have a question here from chat regarding DevOps. Is this megatrend creating a better stickiness to clients on back of the integrated way of working with the upside of things?

Being -- working with this is -- it's, of course, I think that as a fact is a new way of working. It's a way that we're working integrated together with the customer. And I think that being -- having also local people in the Nordics, we are very trustworthy in both how we can work DevOps together with the customers. And of course, we are internally also being DevOps agile way of working, how we are developing more managed services to our customers. Being sticky with this, of course, I think that it's still a profession where the people matters extremely much in how we are working together with customers in this way.

Thank you. We take the next question from Michael Briest here. What is attrition like in Consulting? And what would you like it to be by 2023?

Attrition level. Now, of course, we have -- it varies between units. And attrition is something that we always are monitoring. And we are very -- we have a very good system, so we can do mitigating actions rapidly when we see that we are at too high attrition. The norm of us is that we always have attrition because we are educating the market. So it's not like attrition should be 0 because we are now educating the ambassadors of TietoEVRY in the market. So some attrition, it will always be there, but we see that around 15% or less -- 12% to 15% is a normal attrition level that we will be at and we are currently within.

We have time for one more question here before moving on. So George Webb is asking, on utilization rates, and that being a clear area of focus, can you talk about where you were on utilization pre-pandemic? And what levels you need to achieve or sustain to be able to hit 2023 margin targets?

Utilization rates is the most volatile rate or component in consulting time and material world. And we are having many, many units in digital consulting. Some of these units are, of course, with very high utilization rates, some with lower. And for us, it's important that we have this scale of different utilization rates because we should be able to take shorter assignments to -- with that naturally drive the utilization rate lower. And of course, the longer assignment that naturally increase utilization rate. Utilization rate is that on a top agenda of how we're driving the productivity. But I won't comment the utilization level that we are aiming at for the time being.

Thank you, Thomas. And now we need to move forward in our program. So back to Oslo, and over to you, Kjell Arne.

Thank you, Kia. And thank you, Thomas, for a very solid presentation. I'm also happy to see and hear that the technology in the Teams link also seems to be working. Many good questions, and I'm very glad to hear that we are able to have some interactions between the presenters and the audience. So keep that up. Now we continue with our program. And our next presenter is ready on stage in Helsinki. You will now be hearing from our Head of Industry Software and Financial Services Solutions, Christian Segersven. Christian, please go ahead, the stage is yours.

So good afternoon, everyone, also from my part. I have the pleasure of introducing you to our software-centric businesses, being financial services and industry software. I really hope that I'm able to bring live the strength of our software businesses and the impact they have for the society. My presentation will have 4 sections. It will have an introduction to business deep dives into the business units, FSS and IS and a very short closing. So software is changing the world we live in. And it's in the core of the digitalization of the society. Softwares of today have to be user-friendly, real-time and automated, actually making choices based on advanced analytics and AI or at least guiding the users to make the right decisions. It needs naturally to be accessible anywhere and secure and compliant. This is extra important, of course, in the financial services and health and care industries. And as we have seen, during this year of pandemic, COVID is actually accelerating the digital agenda across many industries globally. TietoEVRY software businesses operate across 3 main domains: the FinTech, the government tech and industrial tech. FinTech, the financial services, being roughly half of the business volumes; government tech being 35%; and industrial tech, 15%. The combined revenue of these businesses is close to EUR 1 billion, of which 75% is recurring. I'm privileged to be working with my teams in this highly interesting markets where the pace of digitalization and investments continue being substantially high, both in the Nordics and globally. Let me now give you a couple of real-life examples of how our software actually impacts our everyday lives. So when you visit the hospital, the staff will use multiple of our softwares to treat you, like our hospital information system, our lab and digital diagnostics, clinical systems and imaging tools. When you apply for a building permission in your hometown, the process is managed by our P360 software utilizing state-of-the-art analytics. If you then need a loan to build that house, our lending software is utilizing AI to automate the process and actually gives recommendation to the bank on what terms the loan can be issued at. When you receive an invoice in any of the channels, digital or physical, there is a fair chance that it is produced by our billing and invoicing platform. When you use a credit card, it is most likely produced in one of our card production factories and issued via our issuing platform. If fraudulent behavior involved in your card is detected, it is our fraud detection software detecting it and by utilizing machine learning, the platform actually now got smarter. When you make an investment and you buy your share in TietoEVRY, the transaction is processed by our trading platform. And while everything is happening, our global customers in oil and gas and forest industries continue to run their operations powered by our software. This was just a sneak peek of what our softwares are doing in the society and how it affects our everyday life. When it comes to developing these softwares, this state-of-the-art modern softwares, we have built global capabilities and functions that work across all our business units. So we have a design lab working with user group, communities, creating superior user experience across all our softwares. All our softwares are available on SaaS, and our cloud team has an ambition to have 60% of the software ready for public cloud by 2023. Our data and AI team make sures that our softwares get AI-powered automation and utilizes all modern analytics technologies available. We have an innovation factory that creates new innovative technologies, such as speech and face recognition that can be utilized all across the portfolio. We are daily working with modernizing our engineering operations that creates huge efficiency across our businesses. Our biggest investment areas of today is actually our banking platform, our payment suite, health and care portfolio and data and AI. Here, I will take a short pause, and now we will switch into the second part of my presentation, being the Financial Services. I will start by sharing with you a short video that hopefully will give you a perspective of how impactful our softwares are in the society. [Presentation]

So now let's deep dive into the world of Financial Services. I will go a bit deeper into our offerings in a minute. But in general, you can say that we have a full software suite that run any financial institution in the world. We serve both Nordic and global Tier 1 clients as well as local players in the Nordics. We also work with the central banks around the world to enable them to run instant payment services. This is truly the leading FS powerhouse in the Nordics. And I'm very happy to say that we are also among the leaders globally in the areas of payments, cards and ATM. The characteristics for the financial services market of today is everything needs to be real time. It's all about real-time transactions, an ever-increasing pressure from regulators and central banks. Unfortunately, increasing fraudulent behavior, and as we have seen for quite some time already, an increased cost pressure. The market growth remains very attractive in the domains we operate in, as can be seen here. Let's go back a little bit in time. So premerger, both Tieto and EVRY had a strong position in the FSS industry. This is, however, a very good match with only limited overlaps. I see significant opportunities to scale and grow, both in the Nordic market and internationally. In Q3, we launched the new organization, the TietoEVRY Financial Services. We have now 5 distinct software units that is developing our softwares. We have our payment unit that has capabilities going all the way from the payment infrastructure on the national level up to the instant payment, mobile applications that we use in our daily life. Our credit softwares are actually enabling loans and the portfolio also goes all the way into the collection system. So a full credit suite. Core banking, I already addressed, we have a full suite of core banking capabilities. In wealth management, we are actually the backbone of both the stock markets and fund markets in the Nordics, and financial crime prevention is about KYC, anti-money laundering and crime prevention. These products are actually independently implementable into any existing architecture. And they can be deployed on-premise or as a SaaS. In cards and banking, we can onboard customers also onto our comprehensive standardized platforms, providing them with pre-integrated solutions stack. The demand for these type of platforms and services are actually rapidly growing and enables the banks to focus more on the core business and less on the IT challenges. This is a visualization of our full portfolio. As said, all deployable as SaaS. All our products are leaders in their respective domains in the Nordics. A differentiation factor is really our high level of sophisticated localization layers and interfaces for the Nordic markets. Our cards and payment software suites already global leaders. And I would like to highlight our ambition to further expand geographically in the credit and financial crime prevention. Now allow me to deep dive into our banking platform. Our banking platform is a full-scale end-to-end digital platform. We run both the digital front-end services like we consume, the cards, the loans, the payments, the deposits as well as the back-end services like reporting, risk management, security and authentication. On this platform, we are currently running over 50 Nordic banks and growing as fast as we can on board. We are fully localized for Norway, Sweden and Finland. That gives us a huge benefit in competing against the global giants like Temenos and TCS, who struggles to adapt the local functionalities and requirements. We have a proven track record in outperforming the competition, calculated in cost and income ratios for the banks running on our platform, and our customer satisfaction is actually very high. They appreciate our expertise of the Nordic market and that we have over 3,000 experts available to support them. We have a strong pipeline and the backlog, and that gives us a very solid growth profile going forward for this business. I hope by now, I have been able to increase your understanding of the strength of our portfolio and what lies behind our growth and profitability ambition. We have an ambition to be growing at 6% to 8% by 2023 and produce a profit around 20%, even up to 22%. Our growth drivers are, as explained, on aggressive expansion in the Nordic banking platform, new Tier 1 customers in the payments area, expansion of credit market footprint, significant market expansion in cards and high growth in financial crime prevention. The profitability drivers are the normal ones we see in software businesses, with scale of global delivery, R&D efficiency and technology harmonization. Also SaaS adoption is picking up and is improving our profits. I would like to end this part of the presentation with some recent wins. With SEB, we are, as we speak, implementing virtual account management solutions, transaction monitoring to prevent card fraud being implemented for DNB, an extremely interesting new win in the Maldives with Maldives Monetary Authority, where we are implementing instant payment solution actually enables the Maldivians to switch, as they would say in Sweden. With OP, we are piloting biometrical payment cards that could actually be the first deployment in the world. Very recently, this week, on the 1st of December, we actually announced our partnership with Nordea. Providing Nordea with the state-of-the-art card service that includes card issuing and processing as well as dispute process for Norway and Sweden. This is only the beginning of a very fruitful partnership with the largest Nordic bank, Nordea. Here, I would like to end my presentation of Financial Services and switch into Industry Software. In Industry Software, as said, we provide services primarily within 2 domains: the government tech and the industrial tech. This is the other half of the portfolio, representing over EUR 500 million of revenues. Here, we work with customers, such as central governments, municipalities, hospital and health care providers, energy industry and the global pulp and paper industry. We can proudly state that we are #1 in the Nordic health care and well recognized globally in oil and gas as well as the forest industry. In addition to the obvious global market trends, I would like to highlight the public sector in the Nordics. We see large national initiatives in health and care, a huge pressure to improve efficiency and automation and the rapid acceptance of cloud deployments. Very promising above market average growth also to be expected in our core domains for industry software. Again, a snapshot of our full portfolio. Energy components and production excellence are well recognized leaders globally in their respective domains already, while we have embedded -- while we are embedded into the fabric of the Nordic society in health and care as well as the public sector. This is an extremely sticky business for us. Given the success we have in the Nordics, we have an ambition to push for international expansion in health and care as well as with our Public 360° software. I will now try to go a bit into details explaining our softwares in each of these domains. So health and care. Here, we work with private University and regional hospitals primary care centers and municipalities. We provide them with hospital information systems, primary care solutions. And we are actually the leader in the Nordics, serving over 1,500 public and private caregivers. In the public sectors, the customers are naturally, the governments, the regions, the municipalities, and we provide them with digitalization services. Information services. We also work with government, regions and municipalities to provide them with data platforms, data analytics, and we are actually #1 in Norway with our infotorg.no service. In billing and invoicing, industrial messaging, we work with customers like Klarna, DNB and Swish. We have multichannel billing and invoicing services and business-to-business integration platforms. We are the leading provider of messaging services in the Nordics. In pulp and paper and fiber, we work with the global giants like Metsä, UPM and Ahlstrom-Munksjö to provide them with wood purchasing, production planning and our state-of-the-art mill execution system. Our MES solution is running over 300 paper mills worldwide. In energy sector, we work with the real global giants, the Chevrons, the Shells to provide them with our state-of-the-art Hydrocarbon Accounting Solution that has over 100 global customers. Looking at the full potential for the Industry Software business. We will be able to grow at a pace of 6% to 8% by the year of 2023, reaching a profit level of over 20%. And here again, the growth drivers, health and care domain, rapid expansion in the digitalization of public sector, consistent demand that we see from the industrial sector and the profitability drivers being the same as in FSS, typical for the software business, scale of global delivery, R&D, efficiency, technology harmonization and a very rapid SaaS adoption. Also with this business, I would like to end with a little bit of bragging. We are with Ahlstrom-Munksjö digitalizing and modernizing over 40 plants globally. Digitalizing case and document management with P360 for Innovation Norway across 30 countries. During 2020, our welfare unit secured 14 new Swedish municipalities, 50 new municipalities in Norway and onboarded 40 municipalities to the Finnish National service Kanta. This is digitalization of the society in the Nordics. Last but not least, in India, we were able to close our very first deal in the oil and gas industry with Reliance Industry implementing our Hydrocarbon Management Software. Here, my industry software presentation ends, and very shortly, I would like to give you the takeaways. So we have great industry know-how, and we are the leader across fintech, govtech and industrial tech in the Nordics. And in some domains, even globally. We have very competitive software products, beating the global competition in our core industries. We have a solid financial trajectory and a proven impact in the society. We have a very stable and growing pipeline and solid backlog across all of our businesses to support our growth and expansion ambitions. I thank you for your patience. And now I can open up for questions.

Thank you, Christian. Now we welcome your questions to Christian, and you can ask questions through the audio. Just raise your hand at Teams, and I will be allocating the turns. While we are waiting for the hands, there's one question already coming in through the chat. So George Webb is asking, we saw the SmartUtilities product be wound down this year. Can you talk about the health of the rest of the Industry Software product portfolio? And how can you prevent a rerun of the problems you saw with SmartUtilities?

Thank you for the question. Yes, naturally, our TSU product was a huge problem for us, and we have now luckily been able to overcome it. The rest of our portfolio is extremely healthy. And of course, we will make sure that we are not running into -- to those kinds of problems anymore. It is, of course, with strict governance of what kind of engagement we go into and accept.

Thank you. We have a hand up here. So Michael Briest, stage is yours.

If I look at the margin ambitions, the biggest expansion is expected in your business, both the general and Industry Software and the Financial Services. What's driving that? Because I'm assuming it's getting the most investments. Is it mix improving? Is it the R&D coming down in the later years? What are you expecting?

Thank you for the question. Very relevant one. Actually, it is a mix of many things. It is when we are able to drive scale in our R&D, that absolutely drives efficiency. Where we are harmonizing the ways we are working, the technology stacks that we have, absolutely driving efficiency. So it is a mix of many things. Then, of course, when we are able to provide growth and produce growth that is also helping the scale. But this is all about software development. Developing super software in a very efficient way that drives scales. We have been both in Tieto and in EVRY having too much siloed operations in our software industries, and now we are able to harmonize them.

Okay. And can I just ask about SaaS? I missed some of the presentation, unfortunately. But have you got a target or a proportion of the products today that are SaaS-enabled or cloud-delivered?

Yes. The question was about SaaS, I guess. Could you confirm?

Sorry, I said what proportion of your portfolio is SaaS-enabled? Or what is your ambition?

So first of all, I think you really missed some of the presentation, I was trying to highlight that. But our full portfolio across both software businesses is SaaS-enabled. We can deploy a SaaS in any of our softwares today, if the customers so want. Or from our business mix, if you look at the EUR 1 billion of revenue, roughly 35% are SaaSified. We have an ambition to be 60% public cloud native in 2023. That was a couple of data points related to SaaSification and even public cloud.

I see your hand here from Daniel Djurberg. Please unmute and state your question. Was that the old hand? It might have been an old one. The next question goes to Sami Sarkamies.

Can you elaborate on the split between software product revenue and product-related services revenue for both Financial Services solutions and Industry Software separately?

Yes. Thanks for the question, Sami. Yes, I will answer as a combination of both of the businesses. So as I said, around 35% coming from SaaSified revenue, 40% from license and maintenance and around 25% from professional services related to our softwares.

We have a question here from Daniel Djurberg. Some 70% of all Nordic payments pass a TietoEVRY solution today. But on payment software, there is, what is this, [ J/way ] among Nordic banks called P27 aiming to build a common instant payment platform also for fintech to use. In your view, will this risk to make your payment solution obsolete? Or is this project company instead an opportunity?

There is a fair amount of NDAs actually around that program, but I would say that, that's a huge opportunity for a vendor like us. We have basically what it takes to power a P27 service from beginning to end.

We have room for some more questions to Christian regarding our software business. Please raise your hand or post your questions through the chat. We have a hand up here. So Michael Briest, welcome. Michael Briest, do you have a question to Christian? Stage is yours.

Yes. Sorry. I was muted. Just in terms of international, what countries are you considering would be appropriate? I know you have a lot of Baltics presence on the payment side, but I mean, hydrocarbons, you sell into Brazil and places like that. How international do you want to be?

I need to answer that question. It is very separate between our businesses. So we don't have an ambition to go international with all our full portfolio. We are picking and choosing, and I highlighted a couple of examples in my presentation. So we will take it step by step. And naturally, Europe, is the natural first steps. But as said, or as you stated yourselves, we are providing services already to 50 countries globally.

Okay. And the acquisitions in software, would they be part of the road map?

Naturally, when we expand our business, that's an opportunity that we have, of course.

Thank you. Michael will continue from online here. Daniel Djurberg is asking, again, in FSS international market expansion in credit and financial crime prevention, mergers and acquisitions opportunity or organic greenfield expansion, go-to-market strategy, could you please elaborate on those?

Yes. So naturally, it can be a mix of both inorganic and organic growth. I was referring more to organic, but of course, every company has an inorganic opportunity to grow as well. So both, I would say. Was there another part of the question, could you repeat? I missed it.

Yes, it was about the go-to-market strategies.

Yes. Basically, when we are in the software-centric businesses, there is not that much required if you have the portfolio in place that you have the standardized software in place. And even more going to SaaSified solutions and public cloud-enabled that doesn't actually require that much of a go-to-market strategy, but we are able to deploy from cloud anywhere. So I wouldn't emphasize on the go-to-market strategy of SaaS. If you have attractive softwares and you are public cloud native, anyone can take them, partners or yourself. That is not the trick anymore. The trick is to develop the software.

Thank you, and let's continue with Daniel. There's a question regarding AI and machine learning, both in FSS and IS. How is your business model looking?

Yes. Our business model in the software-centric business is to create the functionality and capability and embed it in our softwares. And then we sell it as part of our software. That's definitely the business models. In some engagement, we do co-create with our customers. We have use cases that we test and pilot with our customers that then become features in our softwares. But the go-to-market model and the only logic is to create the functionality in our softwares.

Thank you, Christian, and thank you for all the good questions. And I think it is time for us now to go back to Oslo and Kjell Arne.

Thank you, Kia, and thank you, Christian, for sharing your insight into our software units in Industry Software and Financial Services Solution. Now we are a little bit ahead of schedule. So we will go into our break for the day. Now it's time to stretch your legs, get some coffee. You've gotten a lot of information, so let that sink in. And we will join up again in roughly 30 minutes at 3:30 CET, 4:30 EET. So see you soon. [Break] Welcome back, everyone. I hope you all have had a chance to relax and stretch your legs a little bit and are ready for the second part of the program. Now before we move into the next part of our program, I would just like to repeat and encourage you all again to keep raising questions. [Operator Instructions] I would also just like to clarify that after the final presentation of the day from our CFO, Tomi Hyryläinen, there will be a final Q&A session where you are -- where you have the chance to raise questions to all the presenters that have presented during the day. And now we move on to the program. Our next presenter is in Stockholm, and I know Johan Torstensson, our Head of Cloud and Infra, is on stage and raring to go. So please, Johan, go ahead. The stage is yours.

Hi. At first, I want to say a warm welcome to Stockholm. My name is Johan Torstensson, and I'm heading up our Cloud and Infrastructure Unit, or as we want to call ourselves the digital heartbeat of the Nordic Society. We are very strong believers is that the companies who can harness the new data coming from the digital business using cloud technology and the hyperconnectivity of new devices will be the industry leaders. And I hope that during these 20 minutes that I will share with you how we will help those company to succeed with digital advantage. But first, let me talk a little bit about Cloud & Infra. We are a unit which have services all the way from the connectivity, meaning the digital touch points, their connected devices via the edge compute into private and public cloud and all the way to what we sometimes call traditional infrastructure like a mainframe and other type of servers. We work with customers in all industries and both in the private and the public sectors. And we're proud to say that we are the market leader in the Nordics for the cloud and infrastructure services. And when we do that, we see also that we are already the leaders when it comes to private cloud, and we are gaining a lot of market share and recognitions when it comes to the public cloud. In the market today, we see that the data growth is exploding. In the -- between 2018 and 2025, there will be a growth of data of over 500%. And that is fueled by digital technologies, like, for example, all the automation, analytics and AI, where companies are using the data to become an autonomous enterprise. To get a lot of this data, not only from the traditional enterprise environment, but actually from the digital business, where you have connected devices powered by 5G being rolled out all around the world. That means also that the companies are becoming a software company. They are software-driven business models. And we see that over 500 million new apps and digital services are going to be developed on cloud with the cloud-native approach. So the foundation for this transformation in the companies is the multi-cloud and companies are now going multi-cloud at scale. But there is some things also stopping these trends not maybe stopping, but hindering the speed and that is all about the cybersecurity area where companies are more and more being aware of the threats coming from state sponsored hackers or also other areas in the world. But it's not only about cybersecurity, it's also about the compliance and demands from the countries, EUs, and we're seeing that 80% of all companies worldwide would have some kind of compliance demands for their industry, which they need to meet. So if the companies are going to then succeed using the data and drive towards digital advantage, they need to have an underlying platform for them which are enabling this. That platform needs to be a stable platform, an always up platform, so to get the full value of the business. It has to be resilient in case of an emergency is something happening. But it also needs to be scalable, not only for Black Friday, but for many other events, like, for example, COVID-19. You need to be able to scale up and scale down in order to be flexible. This platform can also -- need also to be connected. It's a big risk when companies are going into different kind of clouds that instead of having the benefit of a multi-cloud, they're creating multi-silos, and the data will not be connected. The data is also the new gold. So it's all important that it's protected. And also that it's, like we say, compliant to the industry-specific regulations. And finally, the speed is of essence. So this platform needs to be highly automated, both from getting the speed needed, but also, of course, to be fit-for-purpose when it comes to cost. So we in, Cloud and Infra, believe that we will enable the customers to focus on the transformation, focus on their customer and that journey by having a partner, which can help them with this platform and taking care of it. So we are building these kind of services for our customers which are based on our 3 S. It's built in security, they are stable and they are scalable. And we will do that to make sure that we can support the customers' journey to the cloud from the traditional environment, building a multi-cloud environment with both private and public to meet the demands. We also are providing the edge technology and supporting the connected devices in order for the customer to make sure that the data is transported all the way in a cost-efficient and secure way. We will also have specific services, like, for example, private clouds in the country to meet the regulatory demands which are -- the different industries are having. And finally, it's about connecting the digital business data with the enterprise data. When the company makes that happen, that's when they get the full benefit of the insights of data. And we see that we can help our customers as we have 300 large enterprises already working with their enterprise IT and we're now getting requests to actually help them with their digital business part of the company. So when we do that, we believe that our growth areas are going to be in 4 specific areas. We are changing our way of working for more traditional outsourcing to be a much more advisory-led services, connecting, protecting and managing the data of companies. That means we have a full multi-cloud service portfolio, all the way from cloud migrations and transformations to cloud management of a multi-cloud environment and the specific public, private and hybrid cloud services. We're also providing our customers with connected devices at edge. That means compute power close to where the data is created in order to make things like latency issues but also costs be as good as possible. We will have compliance and security services like in areas that we will manage identities across the portfolio, not only for people but also for devices. We also have secured operation centers in a traditional way, but also managed by AI and automation in order to be much more proactive. And finally, we will deliver services as we call them in an enterprise IT as a Service. You can also call it the next-generation outsourcing, where we manage the stack from the applications and downwards to the whole compute power for our customers so they can focus on transforming their business and helping their customers. But why should they use us in Cloud & Infra for that? Why should they use TietoEVRY? Well, we believe we have a winning formula, which is a unique combination of 4 techs. We are a full-scale service integrator, as I talked about before. We can help our customer from end-to-end so they have 1 partner and simplify that environment. All the way, again, from the connected devices via edge into private/public cloud and also included in their traditional and help them with that. So of course, as other companies can do that, but we also had the Nordic presence, the presence of talent and experts close to customers, which is a very important, as you heard my colleague, Thomas talking about in the DevOps environment, where customer wants to be close to their partners and work physically close to solve new problems or new possibilities. But when we have these people close to our customers, we also have the possibility to give them a flexibility on how they want us to operate. We can operate for industries like in the telecom, finance and the public sector, operate the data in the country to meet all the legislations there. But we can also do it in EU, if that is the way the customer prefer. But finally, we have our global capabilities in India to do it in a very smart, automated and cost-efficient way. The fourth component is about a strong partner ecosystem, where we, as a company, has a -- well, we are the market leader. So we're getting requests from a lot of tech companies to actually partner up with us and helping them in this market. That means that we can actually get the new technology first and provide it to our customers in order to be very proactive on what the next step is for them. So the combination of this is our winning formula. So when we're now changing, evolving to an integrating -- integrator of cloud businesses and data-driven digital business, we will see a change of our portfolio. We see that the traditional infrastructure are decreasing rapidly, meaning services which are very dedicated, customized and asset-heavy for our customers. In the same time, we're seeing our new part of the portfolio, talking about the multi-cloud, the connected devices, cybersecurity and all our advisory-led services are growing and it's going to take a much larger part. Here's where we see growth up to 20% to 30% over the next coming years. And this is in a space where the digital business is driving the demand. It's much more about higher customer values, co-creation with the customers and also co-creation with partner ecosystems. And that type of business will be more asset light. There will be assets in the hybrid cloud solutions, but it's compared to the others much more asset light. In the middle, you have more, you can call it, a technology-driven demand part. It's where the CIO was buying a lot of services and is still buying a lot of services. That market is a very mature market. It's all about scale. It's all about standardization. And we're seeing that market still going up at about 1% to 3% for us, and we see growth opportunities. In the future, in the next 5 years, our portfolio will look totally different. The digital business part of our customers is going to be the dominant part of this. We are still working and supporting our enterprise IT customers because this is the combination of those 2 which will make these -- our customers the leaders in their industry. So when we do this, we, of course, need to drive our profit in the right direction, and we need to stay cost competitive in this market. And we're doing that from a number of things, but 2 things are dominating. One is the scale. Going -- putting Tieto and EVRY together means that we, for example, in what we call sometimes mid-range workloads went from 28,000 in EVRY to 35,000 plus in Tieto, now together 70,000, moving those workloads to more consolidated platforms drives profitability as such. AI automation, the whole part where, of course, we do certain parts of off-shoring and going to increase our off near-shoring compared to today. But that's not the name of the game anymore. The name of the game is automation and actually having fewer people servicing our customers and operations. That will lead to, of course, the cost-efficient operations, but even more importantly for our customers a much higher quality. We will also move to an advisory-led service portfolio. Our advisory-led part today is about 3%, and we see it's going up to between 5% and 10%, which will both mean that we lead our customers into the preferred solutions, but also that is a higher value and higher margins from our side. We will do service consolidations, especially when it comes to our private cloud solutions. We will consolidate that in our data center by about 50%. And finally, by having the right technology partners, we will make sure that we don't have to invent the wheel ourselves. We will co-create with our partners, and they will come with a full stack, so we can focus on integrating that with our customers instead of developing it ourselves. And also with size gets procurement power. We already seen it this year, but we see in the future, bigger volumes, bigger discounts, which help us with our profitability. So we are going through transformation as a Cloud & Infra. We have done 2020, which is the year of merging capabilities. But for Cloud & Infra, it was more than just merging Tieto and EVRY. It was also about in-sourcing the IBM delivery. That has gone according to plan and actually better than planned. So we are -- we took over all the services of all people in the beginning of September. And we're now trimming it and integrating it into our portfolio with the same tools and processes to drive more automation, which would lead into 2021, where we start transforming that workload to cloud, together with our customers. 2021 will be the year of transformation and growth. Here's where we start transforming even more our environment to cloud with our customers. You will see edge and connected devices services coming together and coming out to the market, co-created with some of our customers. And the whole security compliance portfolio will have a major enhancement in order to meet the new demands. We also see an acceleration in the AI ops. We have some customers we've been now going full-blooded edge-to-edge -- end-to-end, sorry, automate operations. And finally, you will have major consolidation of tooling and data centers coming up here in 2021. This will lead into that we have a portfolio, we're going to see growth acceleration in '22, '23. We're talking about multi-cloud at scale, we're talking about AI-ops automation at scale and the edge and the connected services will take off even more. We will have a spend of investment about 4% to 7% of our revenue, where about 4% to 6% of that has to do with CapEx, both in our transformation and also into our existing platform, new platforms. So this leads to our financial ambitions. Cloud and Infra is an area where the public cloud plays a big, big role. But we see that as a great benefit not only for our customers but also for us to go up the value chain. We see that we will have a growth of about 0% to 2% depending on how fast the public cloud growth is going. It is the whole multi-cloud transformation is the big data and a digital business data which will make us grow and actually compensate for the traditional infrastructure going down. And we see joint go-to-market with many of our important technology partners in order to deliver new services to new parts of our customers. This will -- this, together with the profitability drivers, will lead that we will move up to about 11% to 13% EBITDA coming to 2023. We have, first, one thing we need to walk over and that is H1 of 2021, where we see due to temporary lower profitability -- we see a temporary lower profitability due to certain customers we lost before the merge, and also COVID impact and the IBM transformation. But we have a high focus on driving efficiency and automation across that portfolio, and we will see both a growth and EBITDA turnaround in the second half of 2021. So, I finally just want to give you some evidence that actually our growth bets are taken off. We're seeing that our capabilities in the multicloud is being requested. It's being requested by customers like Ilmarinen, where we are helping them on the transformation journey. And we are also seeing that actually from new employees who want to join us to see that we have a lot of really fun public cloud projects happening. We also see customers like DigDir in Norway, which is like responsible for the whole digitization of the Norwegian public sector, asking us to come and support them on their cloud journey when it comes to security and compliance. They want expertise, and they want to have people close to them working with them. Then we have a customer like Kesko, who comes to us and say, we want to work with you because you have the end-to-end portfolio, including Cloud & Infra, but also we did the Consulting. So they have somebody that can give their enterprise IT to automate that and using AI Ops. And finally, we have customers like in the retail like Systembolaget in Sweden, who wants us -- who we worked with to help them with the digital touch points and the connected devices to use that data to make -- give them more insights and actually to compute that data for them on a regular basis. So with that, I hope you've seen how we are helping our customers taking advantage of digital by being the platform provider for them and how that also will help us in making us a better business with high profitability and how we're transforming from a traditional outsourcer into actually advisory-led company supporting with the digital platform. So with that, I'm ready to take on some of the questions from you.

Thank you, Johan. So the line is now open for your questions. [Operator Instructions] And as the first question, let's give that to Sami Sarkamies. Please go ahead, Sami.

I have actually 2 questions. Firstly, on the contract losses that have taken place at EVRY side more recently then -- that drove you to the in-sourcing decision from IBM. Why are these customers leaving? And are we talking about a few large contracts or a larger number of smaller contracts? And have you been able to stop the bleeding already?

Thank you. Very good question. So we in-sourced the IBM services so we could get control of the end-to-end quality. And the type of questions -- customers we lost was more medium to smaller customers, some a little bit larger but it was more in the medium to small. What we're seeing now when we bring this in is that we are getting our quality up. We see that in our services when it comes to cost of poor quality. We see that in the number of -- we measure something we call customer downtime is going in the right directions. So we're starting to get that recognition back from our customers saying, we see that, that was a good thing. You took it back. And now we will see the strength of TietoEVRY. We can also see it in actually that we're now seeing -- when it comes to new deals, both in Finland, but also in Sweden, Norway, that we now are getting tractions and are winning deals, especially actually in the public cloud area, but also in the private cloud area. So we have stopped that, and we haven't seen any customer leaving us for these reasons in the last 9 months, I would say.

Okay. And then I would also have a second question. You will at least partially be competing against the global cloud hyperscalers going forward as they will try to sell to larger customers directly. How do see your ability to compete and remain relevant as a smaller regional player?

Yes. And I assume when you say hyperscalers, is we talking about the AWS, the Azure and the Google. And I could see them as a competitor as they are taking a lot of the infrastructure, but I don't see them as a competitor. I actually see them as a partner. And it's us together with them which gets the benefit for our customers. So our customers are looking for someone to help them integrate because a number of customer wants the best of different public cloud providers, together with private cloud. So for us, it is the multicloud, which is the future. And when we go there, we need to hook arms with the hyperscalers, which we are doing right now. Ilmarinen was an example, what we did with Google. You have seen how we are working very closely with Microsoft Azure. And we also have big dialogues with AWS.