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Good morning, and welcome to Tieto's Second Quarter Earnings Webcast. My name is Tommi Jarvenpaa, the Head of Investor Relations at Tieto. In the second quarter, the market weakened further, which impacted our growth. At the same time, we delivered a significant improvement in our profitability, underlining the resilience of our business and the progress we have made over the past year. This morning, our President and CEO, Endre Rangnes; and CFO, Tomi Hyryläinen, will walk you through the highlights of the quarter and our financial performance. After the presentation, we will host a Q&A as usual. And with that, I would like to hand over to Endre. Please go ahead.

Thank you, Tommi , and good morning, and welcome to Tieto's Q2 presentation. As Tommi alluded on, the second quarter was shaped by 2 distinct developments. On one hand, market conditions became more challenging than expected, particularly in Tech Consulting. On the other hand, we delivered a significant improvement in profitability, 5.5 percentage points compared to Q2 last year, confirming that the measures implemented over the past year are developing and delivering tangible results.

So during this presentation, we will address both these developments. We will outline the market dynamics we experienced during the quarter, discuss the actions we are taking in response and explain why we remain confident in our long-term strategy and outlook. So with that, let me start by briefly revisiting the strategy that we presented at our Capital Markets Day last fall. As communicated back then in November of last year, 2026 will be a year of transition and execution. Our objective this year has not been to maximize short-term performance, but to build a stronger company for the years ahead. So during the past 12 months, we have fundamentally reshaped our cost base. We have simplified the organization, and we have strengthened execution across the group profitability.

While market conditions have become more challenging than anticipated, particularly in technology consulting, our strategic priorities, therefore, are the same and unchanged. We are confident that the actions we are taking today is strengthening the company's competitiveness and supporting the medium-term ambitions we presented at our Capital Markets Day. Let me now illustrate how the strategy has translated into concrete progress during second quarter as we also did for Q1 of this year. Starting then with customers first. So we continue to invest in customer-facing capabilities. AI has become an increasingly important part of customer discussions across the group. And we are seeing clearly growing customer interest in -- particularly in AI applications.

At the same time, we have invested heavily in developing our own people with now 1,500 employees already completing Microsoft's Rapid AI Skilling programme. Then the simplification of the group has continued according to plan. So in Q2, we completed the divestment of Edlevo and HR & Payroll businesses within Indtech, and we continue to accelerate the transformation of tech consulting through competence renewal and also organizational changes. Our expansion priorities also continue to progress well.

We are seeing encouraging momentum in our target markets, particularly in DACH and Iberia with new customer wins and a healthy commercial pipeline. Our cost optimization programme continues to deliver ahead of plan. We have already achieved annual run-rate savings of EUR 115 million and remain firmly on track towards our EUR 130 million target. And then more importantly, I would say that cost discipline is now embedded across the organization and has become part of how we operate on a daily basis. Then, of course, it's one theme that cuts across all 4 strategic priorities, and that is artificial intelligence. AI is no longer a separate initiative within Tieto. It is increasingly integrated into our products, customer solutions and the way we develop software also internally.

AI continues to be one of the most important long-term technology shifts shaping our industry. So during the past year, the discussion have evolved rapidly from R&D and experimental projects towards practical deployment at scale. We see increasingly also competitive advantage is built in on trusted software, deep domain expertise and also business-critical customer workflows rather than access to AI models alone. And we believe that this plays directly into Tieto's strengths and our client base.

While AI investments continue to increase, we are not yet seeing a broad-based recovery in technology consulting. Instead, customers are prioritizing targeted AI use cases, data foundation and productivity improvement over large-scale transformation programs. So we believe this represents a transition in how technology budgets are allocated rather than a reduction in overall technology demand. And the slide that we have ahead of us illustrates a few examples from across our businesses. AI is now embedded into our software portfolio, customer solutions from software engineering and tech consulting to anti-money laundering in Banktech, clinical documentation in Caretech and then financial automation in Indtech. The common denominator across all of these examples is that AI is solving real customer problems and creating measurable business values.

At the same time, we are applying AI internally across the company. AI tooling increasingly become a part of how we develop software, improving engineering productivity and enabling us to deliver solutions to customers faster and more efficient. And this is, of course, the request that we daily get from our clients as well. So I would say that this is an important capability that supports all our businesses as we speak. Turning now to Q2 itself.

The quarter was characterized by 2 very different developments. We did see market conditions weakening further, particularly in technology consulting, resulting in revenue development below both our own and market expectations. On the other hand, we also did see that our profitability remained very strong, an improvement of 5.5 percentage points versus Q2 of last year, demonstrating that the actions we have taken over the past year are clearly delivering results. The market environment became more challenging during the quarter than we anticipated at the beginning of the year as customers continue to postpone larger transformation programs, and we also saw some softer demand in parts of our software portfolio.

And as a result of that, we have updated our full year revenue growth outlook to reflect the current weaker market environment and also the shift on customer spending. At the same time, our execution continues to be strong. The cost optimization programme is delivering according to plan. Profitability improved across all 4 businesses, and we continue to accelerate the transformation of Tech Consulting. And as discussed earlier, this includes reshaping our competence base, investing in AI capabilities and strengthening the business for next phase of growth.

During the quarter, we also completed the divestment of Edlevo and HR & Payroll businesses. And following the completion of the transaction, we have decided to launch a new EUR 90 million share buyback programme and the current programme has been completed. This, again, is in line with our capital allocation principles and our commitment to return excess capital to shareholders. So overall, while the market environment has become more challenging, the quarter reinforces our confidence that the company is becoming stronger operationally and strategically.

Let me then briefly summarize the quarter through the key financial metrics. Revenue for the quarter was, as you can see to the left, EUR 427 million, corresponding to an organic growth of minus 5%, again, mainly driven by the minus 6% in Tech Consulting. And as discussed, the weaker development was primarily by the deterioration of the consulting market, while our software business continued

to be affected by previously communicated legacy headwinds, like we have said with Banktech and Caretech and slightly softer market conditions also in selected areas. The highlight of the quarter was clearly profitability.

As you can see to the right, the upper right, adjusted for EBITDA -- adjusted EBITDA improved to EUR 63 million or 14.9%, reflecting the structural benefits of our cost optimization programme together also with improved operational execution across the group.

So we are now seeing the tangible financial impact of the actions that we have taken now over the past year. Then also the balance sheet seems to be -- not seems to be, but it remains to be very strong. Net debt/EBITDA was 1x at the end of the quarter. And even if you exclude the temporary impact from the recent divestment proceeds, leverage would remain comfortably below the target range of approximately 1.9x, providing financial flexibility. Order backlog declined by 4% year-over-year, and this is primarily reflecting the exceptionally strong comparison period last year when we signed several large contracts in Banktech and then together also with a slightly softer market demand during the quarter.

And finally, cash flow from operating activities remained healthy at EUR 21 million. This is 16% up year-over-year (if you then are) factoring in from a comparison point of view that we also had divested businesses in the 51 [ EUR 51 million ], that you can see below the 21 number. So with that overview, let me then move into each of the 4 business areas. Starting off with Tech Consulting. As mentioned, market conditions continued to weaken during Q2. And as discussed earlier, increased geopolitical uncertainty, the technology shift driven by AI resulted in customers postponing larger transformation programs, leading to lower demand than we had anticipated, and this is reflected in the organic growth of minus 6%. At the same time, the quarter also demonstrates that actions we have taken are working. Despite a weaker market, profitability improved significantly to 12.7%, supported by high utilization and continued cost optimization. We need to keep in mind that if you are excluding now the divested businesses from revenues minus 6%, and we have improved profitability to 12.7%. So it's important to underline that our focus is not only on managing today's market, we are also preparing the business for where the market is heading.

And AI is changing the consulting market rapidly. Customers increasingly expect higher productivity, smaller delivery teams and faster execution. This is why competence renewal, AI capabilities and software engineering productivity has become a central part of the transformation of Tieto's Tech Consulting. Our competence shift is well underway. As mentioned, around 1,500 consultants have completed Microsoft Rapid AI Skilling programme. More than 400 employees are participating in advanced AI training for rapid certification, and we continue targeted recruitment in areas where we see future customer demand developing.

We also continue to strengthen our position within strategic customers. So during the quarter, we expanded engagement with customers such as Gjensidige, as you can see on the bottom and PV, Austrian pension company, supporting their business transformation and technology modernization initiatives. So these engagements reinforce our strong customer relationship and demonstrate that customers continue to invest business-critical capabilities despite the weaker market environment. Turning then into Banktech. Organic growth remained affected then again by the previously communicated legacy contract run-off, which reduced the growth by approximately 6 percentage points in Q2. Excluding this impact, growth was around 0, which is clearly below our ambitions. So market conditions were also a bit more challenging during the quarter. Customer decision-making took a bit longer time than normal and delaying then partly the timing of new business.

However, despite the weaker market environment, profitability improved significantly from 10.5% last year to 15.6% this year, supported by continued cost optimization and disciplined operational execution across the business.

So then looking ahead, -- we remain encouraged about the strength of our order backlog, which provides good visibility into second half and beyond. We continue to see good customer interest in our strategic software offerings, although project timing partly remains affected by the current environment. So despite the softer market environment, we continue to strengthen our customer base through several strategic wins. So during the quarter, Luminor selected our cloud native Payment as a Service platform. NOBA adopted our Verification of Payee solution, helping them strengthen fraud prevention. And then NorgesGruppen extended its partnership with Tieto Banktech for another 5 years with modernized card services and FCP solutions.

We also signed a new agreement with a leading Australian bank to modernize its cash management platform. So again, these agreements reinforce our position as a trusted provider of a business critical banking software and support also our long-term growth ambition. Turning then to Caretech. Underlying business continued to perform well during Q2, growth of minus 2%, affected then by the legacy business decline, which reduced growth by approximately 5 percentage points.

In addition, we have 2 customer contracts currently waiting for regulatory approval that had a modest also impact on the growth during the quarter. So excluding these temporary factors, the modern software portfolio continued to develop well. We saw particularly strong performance in our social care business in Sweden, reflecting continued customer demand for the modern software solutions. Caretech continues to deliver excellent profitability, 25.3% margin, as you can see. And that is demonstrating the strength of our Lifecare product portfolio and the operational discipline that we have built into this specific business. We also have a good second half order backlog in Caretech, and our European expansion also continues to progress according to plan. So during the quarter, we signed 2 new customers in the DACH region and continue to build a healthy commercial pipeline that supports the long-term international growth ambitions.

Finally, the quarter also demonstrated continued customer confidence in our software portfolio. We expanded our customer base across both health care and social care, including new wins such as Sophies Minde and additional deployment of Lifecare platform in Finland. So this example supports our ambition to expand our software business beyond the Nordic core markets as well. Then finally, turning to Indtech.

Organic growth was flat during the quarter, which was below our own expectations. And then the weaker development was primarily driven by 2 factors: First of all, our Pulp, Paper & Fibre business continued to be affected by challenging market conditions. And secondly, softer demand impacted our volume-based business during the quarter due to customer driving their internal efficiency impacting our volumes. Then it's also quite important that these challenges were isolated to specific parts of the portfolio. At the same time, several of the software businesses within Indtech continued to perform well. We saw continued solid growth in both Eye-Share and Public360, demonstrating the resilience of the modern software portfolio that we have built.

And then we also saw that we have now going into second half, we have solid backlog in Indtech, providing good visibility for second half and beyond. Profitability was another clear highlight from 10.2% last year to 16.2% this year, supported primarily by the continued cost optimization programme and also disciplined execution across the business. So the quarter also marked an important strategic milestone with the successful completion of the divestment of Edlevo and HR Payroll businesses, so further simplifying the portfolio in line with the strategy that we outlined at our Capital Markets Day.

In Q2, we also continued to strengthen customer relationships across our software portfolio. So during the quarter, we signed new agreements with customers, reinforcing our position in energy, financial services and then document distribution while continuing to expand on our modern software offerings. Then we are moving to the CFO report. So Tomi, please.

Thank you, Endre, and good morning, everyone. So from a CFO point of view, Q2 highlights were improved profitability in all businesses and launch of our new EUR 90 million share buyback programme. As discussed, our growth of negative 5% in Q2 was not at the level we expected. This was primarily due to weaker market demand. However, we were able to significantly increase our profitability by over 5%, as mentioned. This confirms the success of our cost base reset programme and the company's resilience even in weaker market conditions.

In addition to adjusted EBITA improvement, we also improved reported EBIT by EUR 35 million or over 170% after adjusting for M&A gains and non-cash impairments. Our onetime items for Q2 were positive by EUR 50 million, which was impacted by gain on sale from Indtech divestments of EUR 57 million. Full year one-time items expectation is unchanged at 1.5 percentage points of revenues, excluding capital gains. Other Q2 events include issuance of a new 5-year EUR 300 million bond, which secures our long-term financing needs and updating our full year growth outlook, as Endre mentioned, reflecting the softer market conditions. Then to our new EUR 90 million share buyback programme. So the programme is connected to the sales proceeds from the divestment of Edlevo and HR & Payroll software businesses, which were closed 1st of June.

The share purchases will begin after completion of the current EUR 150 million share buyback programme, which is expected to be completed early September. In accordance with our capital allocation policy, we aim to keep our leverage level close to 2x and distribute excess capital to shareholders. This EUR 90 million share buyback programme will ensure continued effective capital structure and deliver solid shareholder returns in tax-efficient way.

The shares will be bought in public trading in NASDAQ Helsinki and canceled on a monthly basis. The execution of the programme will take approximately 5 months depending on the trading volumes of our shares. So in Q2, we delivered healthy operating cash flow of EUR 21 million, which was supported by improved profitability. Our net working capital increased by EUR 29 million due to normal seasonal decrease in liabilities. Note that Q2 '25 cash flows include contribution from the divested businesses as cash flows are not restated for prior periods. On a comparable basis, as mentioned, Q2 operative cash flow improved approximately 16%. On reported net debt/EBITDA, it improved further from Q1 being 1x at the end of Q2. Main reason for the sharp decline in leverage are the divestments with divestment proceeds decreasing the net debt and the gain on sale increasing the EBITDA.

During the year, when we execute the share buyback programs, our leverage will gradually increase. On a fully adjusted basis, our leverage at the end of Q2 is at targeted levels, so slightly below 2x. Then to our cost optimization programme, where we have reached EUR 115 million run rate savings at the end of Q2 and are well on track to deliver the full EUR 130 million by the end of '26.

As communicated earlier, this programme aims for a permanent cost base reset of approximately EUR 50 million while mitigating the cost burden from Tech Services divestment and reducing overcapacity primarily in consulting business. Our estimate of the onetime cost from the programme is unchanged at EUR 55 million to EUR 60 million, of which we have incurred EUR 49 million at the end of Q2. On employee matters, LTM attrition was at very low level being 7.3% at the end of Q2 -- these low levels are market-driven. We consider normal healthy attrition to be around 10%. During the quarter, we have continued with planned personnel reductions impacting primarily Tech Consulting, Group personnel reduction year-on-year has been significant with 15% reduction of which approximately 4% relates to acquisition and divestments.

We expect group salary inflation for the year to be lower than last year with 3% to 3.5%. Next outlook remarks for Q3. On growth remarks, Tech Consulting will continue to be impacted by weak market demand, and we expect Q3 growth to be slightly below Q2 level. Banktech growth is impacted by the known events in 2025, namely the legacy contract run-off with negative 4 percentage points and SB1 one-time income with negative 14 percentage points. However, Q3 revenues are supported by strong order backlog.

Caretech continues to be impacted by legacy contract run-off with negative 5 percentage points, which is at the same level as in Q2. Revenues continue to be supported by growth in the modern software portfolio and the strong order backlog. Indtech growth momentum is expected to improve from Q2, which is supported by strong order backlog. On profit remarks, the cost optimization programme continues to contribute to profitability in all businesses. And to notice that comparison period Q3 '25 included SB1 one-time income, which had positive impact on Banktech level at 11.9 percentage points and at group level, 4.1 percentage points.

On other remarks, there is only minor impact from working days. Then as usual, Q3 profitability outlook per business. We expect Tech Consulting and Banktech to be below prior year. Here, you can see Banktech's high comparable at 28.1%, which I just commented. Excluding the SB1 one-time income, we expect Banktech to improve profitability from prior year. We expect Caretech to be at and Indtech to be at or above prior year profitability level. Overall, we start to reach higher comparables as the cost optimization programme benefits become visible in prior year numbers. Then a few words on our updated guidance. So last Friday, we updated our full year growth outlook due to weaker-than-expected market demand, especially impacting Tech Consulting.

The geopolitical uncertainty has further softened the market, which we expect to continue for the rest of 2026. Accordingly, we lowered our growth outlook to negative 5% to negative 3% from previous negative 2% to 0%. On the other hand, we maintained our profitability outlook of 14.8% to 15.8% EBITA adjusted. And as discussed earlier, we have been successful in executing our cost optimization programme and have delivered consistent profitability improvement. Our H1 profitability was at 14.8% with seasonally strongest quarters still ahead of us. As the year 2026 includes some specific headwinds, we created this growth dynamic slide to help everyone to navigate the growth expectations on a quarterly basis. We have updated the information to reflect the weaker outlook for Tech Consulting for the remaining of the year. And in addition, we have adjusted the Q2 that reflect the actual growth outcome, which included some softness, as discussed earlier. Back to you, Endre.

Thank you so much, Tomi. And I would like to summarize now as we are 22 days into Q3 already, I would like to summarize a bit of where we stand with the company.

As we have discussed today, market conditions have become more challenging than we anticipated, particularly than in Tech Consulting, and this has affected our short-term growth, and we have updated our revenue outlook accordingly. However, our strategic direction has not changed. As we have outlined at our Capital Markets Day, 2026 remains a year of transition and execution for Tieto. So given the pace of the technology change and also what's happening with AI, I believe that 2026 has actually become a year of transformation. We are reshaping the company, strengthening our competitiveness and preparing the business for the next phase of growth.

Across the group, we have continued to execute against our strategic priorities. We are simplifying our portfolio, strengthening customer relationships, expanding into selected growth areas and building a more competitive cost base. And at the same time, we continue to invest heavily in future capabilities through large-scale AI upskilling, targeted recruitment and continuous competence renewal, ensuring that our people have the skills needed for the next generation of software and consulting. Everything starts in the market, and that's a driving factor for everything we do. Then we are only halfway through the year.

There is still a great deal of work ahead of us, and the coming quarters will continue to require discipline, focus and execution. Having said that, I'm really proud of the progress that we have made over the past year. The actions we have taken are strengthening the company, and they give us confidence that we are building a stronger Tieto going forward. So with that, we are opening up for Q&A.

[Operator Instructions]

The next question comes from Mark Hyatt from Morgan Stanley.

I've got 3 to start with, please. Firstly, just on the growth guidance revision, obviously, H1 organic growth is about minus 4%. And so the new 5% to 3% range -- negative 5% to negative 3% range still implies quite a wide range of outcomes into the second half. So could you just explain what the main swing factors between the top and the bottom end of that range, in particular, what you're assuming for the sequential growth trajectory in Tech Consulting and the software businesses through Q3 and Q4?

Secondly, on Tech Consulting specifically, you said that the market demand has deteriorated further and customers are postponing investment decisions and delaying transformation programs. Could you give us a bit more color on specifically what types of projects are being or postponed? And what reasons are you hearing from clients? Are customers prioritizing spend elsewhere in the short term, for example, on AI projects or hardware procurement? Just a bit more color on that would be really helpful.

And then finally, on the cost savings plan, clearly having a big impact to the margin result very solid. How much of that EUR 115 million that you've already achieved was already reflected in the second quarter P&L? And how much have you still got left to flow through? And once the current programme is finished, what are the remaining levers to help protect margins, particularly if revenue performance in Tech Consulting remains challenged?

Yes. So let's take the first one first related to the full year outlook, minus 3% to minus 5%. As already mentioned by Tomi, when you look at now the Q3 number and the guidance related to the top line for Tech Consulting, we are saying that, that's going to be weaker than we had in Q3, indicating that this has an impact on the overall picture for the total group. I mean Tech Consulting is approximately 40% of the revenue of the group. And that, of course, has a huge impact on the totality, as you understand. When you look -- when you put this into perspective, I think that is quite important, like they say in Spain, [Foreign Language].

And I think it's quite important that -- I mean, there are some millions taken out now of the outlook, but from a EUR 1.7 billion company, this is not a big amount. So we need to keep that in mind all the time. From the software businesses point of view, we have a very strong visibility on second half in terms of the backlog. The impact in second quarter, why we came in a bit short relative to expectations on Banktech and Indtech was mainly related to some of the volume-based business, which is part of those software entities. Looking at second half for both of them, we are quite confident that they will deliver underlying solid growth.

Tech Consulting, when we're talking about postponement of -- your second question about postponement of investments, I would say that still there is a level of uncertainty how AI is impacting the processes and the different kind of industries and companies. Still a bit wait and see how is this going to affect us? What should we invest into? What is happening month by month with the new launch of different softwares impacting the software development through AI tooling.

And again, I think it's also still a level of uncertainty what will be the cost driver related to all the prompts and all the kind of programme that you do with AI tooling what's the hardware effect of that and what's the total cost effect of that. So it's still a bit wait and see from the clients. I think it's also important to say that when you look at the overall, and this was communicated also in connection with Q2 -- sorry, Q1 from my side is that -- we still are coming into 2026 with a too high level of time and material in Tech Consulting, and that is where we clearly see the market turning down. And then you see the more kind of agile project through smaller teams jointly developing with clients, that is the market now growing and not necessarily time and material. So that is also part of why we explained at Capital Markets Day that 2026 will be a year of transition and transformation, especially in Tech Consulting. When it comes to the cost optimization programme, like...

Maybe Endre, I will take that question.

Yes. You should take that one. Absolutely.

So that's a good question. So we're now EUR 150 million (sic) [ EUR 115 million ] into EUR 130 million. This translates into EUR 10 million quarterly impact from the structural cost reset of in total EUR 50 million. So when we're maxed with the EUR 50 million cost reset programme, we delivered EUR 12.5 million on a quarterly basis improvement. Now we're at EUR 10 million, which is roughly 2.5 percentage points impact to the company's profitability. Then when we think about going forward, obviously, all successful companies need to grow the top line in order to protect the margin and improve the margins going forward.

Yes. But I think there's also one more element into that is that, I mean, we're coming from a situation starting off in June of last year, where we had north of 20% SG&A in the company. That is what we have taken down massively. And my point is that this needs to be monitored closely unit by unit based on market demand, based on how are we delivering the top line to ensure that this is now part of the cadence, monthly cadence of the company to monitor revenue and the cost and the bottom line. And if the revenue is not coming, we need to have the discipline in the company to reduce the cost. That is a very simple equation in this business.

The next question comes from Felix Henriksson from Nordea.

I got 2, please. One is on Indtech. Basically, just wondering what gives you the confidence to expect growth going into Q3 and the second half of the year. I think you were quite confident previously about Q2 as well, thanks to the backlog. So I just wanted to hear about the puts and takes on that and how much of that business is actually volume-based where the weakness was in Q2? And secondly, as you think about your 2027, 2028 revenue growth target of over 5% as a CAGR, do you think that's realistic if the market doesn't improve? And if not, what are you sort of prepared to do to generate earnings growth and incremental shareholder value?

Very good, Felix. Thank you. And first of all, on Indtech, I would say that when we look now at Q3 and Q4, we have, as I said, very good visibility on the backlog, which is a contracted backlog. Part of what happened in Q2 is that the projects that we were kind of expecting to come in Q2 has been postponed to Q3, already started up, but not giving effect in Q2. So that's why we have very high visibility on the backlog. And then on top of the backlog, of course, we have the pipeline, which we are monitoring also quite closely for all the businesses. So that's why we are confident about second half of Indtech.

When it comes to the 5% CAGR, '27,'28 -- we are still looking now at the backlog that we have for all the software businesses, especially Banktech going also into '27 and '28. Looking at the comparables for Tech Consulting, there is no reason to adjust the CAGR target that we communicated at CMD at this stage. Like you said, if something extraordinary should happen, then, of course, we need to take necessary cost measures to protect the bottom line. But we have still the ambition to deliver more than 16% margin by end of '28 and a CAGR of 5% by '27, '28 stands.

The next question comes from Sami Sarkamies from Danske Bank Markets.

I have 3 questions. We'll take this one by one. Firstly, on Tech Consulting, you're expecting a slightly weaker top line development in the third quarter. Do you have any visibility on improvements thereafter?

Improvements in terms of top line or?

In terms of top line, yes.

Yes. So we give guidance quarter-by-quarter and then we have the full year guidance. And if you factor in the minus 3% to minus 5% and you factor in what we have said about the software businesses, you can understand that we are still expecting a negative Q4 year-over-year in Tech Consulting. Having said that, we also now are looking at the bottom line, which we delivered 12.7% in Q2. And we are quite comfortable that we will deliver solid margins also going forward based on the outlook we have for the top line and based on the cost measures that we have already implemented.

Okay. And when it comes to the top line guidance downgrade, was that purely driven by Tech Consulting outlook for the second half?

Or have you also changed your sort of assumptions regarding some software segments that saw weakness in Q2?

So it's mainly driven by 2 elements. First of all, second quarter coming in a bit weaker than anticipated, especially in Tech Consulting. Then the main effect for second half is driven by Tech Consulting for sure. We are still maintaining the internal outlook for the software businesses adjusted for what happened in Q2. Any comments from your side .

Yes, that's it. So of course, Indtech and Banktech, the slow Q2 from the volume businesses, we will put that into our full year forecast, obviously. But those are the elements.

Okay. And then regarding cost actions, I guess you didn't announce any new plans today, but are these likely during the second half of the year? Or do you think you will be sticking with this EUR 130 million savings target throughout the year?

Yes. That should be sufficient. We are sticking to that one, of course. And then I would say that we have pretty good visibility on the cost levers. Like I said, we have reduced the manning in -- if you exclude the sales of Tech Consulting, we have reduced the manning with 16% within Tech Consulting. And of course, we are now monitoring closely what's happening, number of people on the bench, et cetera, and we will take immediate actions if the market continues to be weakened during second half. But I would say that this is also when you look at the risk picture that we have for Tech Consulting, we have a very, very modest risk currently.

Okay. And then finally, I'd like to get some additional color on the software weakness in the second quarter. I think you mentioned that some of the projects didn't start, let's say, during Q2 as anticipated, so like some timing factors. You also talked about like volume-based contracts not materializing. So can you be a bit more specific on what you mean there?

Yes. I would say that if you take Banktech as the first one, I would say that we have, as you know, volume-based business there in ATM, in card issuing, card personalization, et cetera. And part of that came in a bit slower than we anticipated for Q2. No reason to believe that this will continue in second half. So that's the main effect in Banktech during Q2.

Related to Caretech, we are more or less spot on where we should be. A couple of court cases or escalations to the court, hopefully then coming in with a positive decision, and then we will put those into production now in second half. When you look at Indtech, we had 2 main effects. One was related to Pulp, Paper & Fibre, which has been weak during the whole year, more or less 1.5 year now based on the market conditions. Then we also saw some of the volume-related business within Indtech coming in a bit slower than anticipated due to also cost-saving programs with our clients. So I think that was the main effect. Then on top of that, as I mentioned, and like you referred to, is that part of the project that we signed end of last year was anticipated to go into production in second quarter, early second quarter. They are now in production, but giving effect in Q3 and Q4. So that was kind of the main elements. Then, of course, we have solid growth in Eye-Share, Public360 and the new modern software, which will continue also during second half.

I don't have any further questions.

Just alluding a bit more...

The next question comes from Matti Riikonen from DNB Carnegie Investment Bank.

It's Matti Riikonen from DNB Carnegie. How would you compare your softness related to Accenture and IBM, who have reported or communicated of more headwinds as they see for this year. So do you think that your challenges are basically the same as IBM has been talking about shifting -- customers shifting their purchasing from traditional IT projects to more like AI. Is this a concern? Or do you think that your problem as are basically the same as before and related to specific customers and specific cases?

Yes. I would say partly, we see the same picture, of course, as IBM and Accenture that there is partly a shift and partly clients holding back on investments in terms of wait and see what's happening with AI. Having said that, -- when you look at the software businesses as such, they are very robust in terms of having a lot of legacy, which is very difficult to substitute with new, completely new modernized solutions. We have very, very deep competence in terms of the industries for Banktech, Caretech and also within Indtech.

We have a very high level of integration, which creates complexity. So from that point of view, I would say that for the software businesses, it's quite difficult to disrupt what we have. When you then compare Tech Consulting to Accenture and IBM, I will say that we came into 2026 with probably a higher content of time and material resources compared to those companies. So I would say that partly, yes, we are seeing wait and see. based on AI impact, but partly also something is unique for Tieto, that we had the too high content of time and material compared to some of the competitors.

I think that's fair to say. And that is also why we have now accelerated this AI upskilling through the whole Tech Consulting organization and of course, for the software entities as well. This is a very, very, very detailed programme happening as we speak. And still, we have an ambition to go through 5,000 people within the company to do full upskilling of AI with the Microsoft upskilling programme.

The next question comes from Jaakko Tyrvainen from SEB.

Still a couple of ones from me. Starting from the order book, which was down 4% after being several quarters in more favorable development. You already touched it a bit, but could you give a bit more color what caused this? And especially, is this largely reflecting the momentum in consulting?

Yes. It's quite clear that we are coming from a comparable point of view, 2025 Q2, we signed several large deals within Banktech. We have -- I don't exactly remember, we had Sparebanken prolonging 2 years at Sparebanken Norge. We had Frende Gruppen. So we had a lot of signings during Q2. So I would say that we had a kind of all-time high situation back to Q2 in 2025. So from a comparable point of view, we are still quite confident that we are on a good traction on the backlog situation going into second half. And the visibility, as you know, in Tech Consulting is usually quite low, has historically been, and it is also currently they are reflecting to -- or going back to what I said about also large implementation projects, we don't see that currently happening. So it's more like in the software businesses, we are looking quite optimistic on the second half and into 2028.

Okay. Good. Then on the kind of current new sales in software. How is the sales pipeline and the activity looking if you compare it, for example, a year ago? And especially, I'm curious on the momentum in the international arena.

Yes. That is like you have seen, we have now signed 2 smaller contracts in Iberia. We have a very strong pipeline now into second half in Iberia. That goes mainly for Banktech and partly Tech Consulting and partly also Caretech. We are also looking at the market opportunities related to digitalization of invoices and tax reporting in Spain as a specific segment, tying into our Nexus business. So that's an opportunity maybe into 2027. Also, when we look at the DACH region with Caretech, we signed 2 deals during Q2, I would say, smaller deals as well, but as a kind of pilot starting point, hopefully to ramp up.

And we have several, I would say, numerous deals in Europe related to our new EHR or Caretech product. So we are according to my view now, we are on track towards what we communicated on Capital Markets Day in terms of the international expansion.

And just to clarify, -- we are, of course, monitoring this closely through our business view cadence that we have at monthly basis, looking at the development of the backlog. So both for installed base, but then also new business or hunting. So this is followed quite thoroughly.

Thank you, Jaakko, and thanks, Endre and Tomi. There are no further questions at this stage. I would like to thank everyone for active discussion and watching. See you next time. Have a good day.

Good morning, and welcome to Tieto's First Quarter 2026 Earnings Webcast. My name is Tommi Jarvenpaa, the Head of Investor Relations at Tieto. In Q1, we delivered strong profitability and solid performance in software businesses. This morning, we will present our financial results for the quarter and provide an update on the progress of the strategy execution. After the presentation, we will open the line for questions. With me here are our CEO, Endre Rangnes; and CFO, Tomi Hyrylainen.

And now I will hand over to Endre. Go ahead.

Thank you, Tommi, and welcome then to Tieto's Q1 2026 presentation. I will say that we have clearly been through an eventful quarter with execution of our 4 strategic priorities and then also coupled with the market development. And as part of this, we clearly see strong momentum from the rapid adoption of AI across the line. And at Tieto, we regard this as a clear opportunity. AI is an integral part of all our businesses and is already helping us create value and to drive efficiency.

In Q1, we again see the effects of the cost efficiency program implemented last year. So I will say also despite the challenging market conditions, we have improved the profitability by more than 4 percentage points if we look at Q1 '26 versus Q1 '25. So we continue to move forward towards our 2028 strategic ambitions and goals, which was also communicated in connection with Capital Markets Day.

I would also remind you about our strategy. So our ambition is to become a European software and Tech Consulting market leader within selected industries and niches. And then we are executing this through 4 main strategic priorities: number one, customers first; second one, simplified core; thirdly, selective expansion internationally; and then number four, a competitive cost base to position us for the future. Then we have also set out clear ambitions in terms of financial targets, so to be more than 5% growth CAGR '27, '28 and then about 16% margin by end of 2028, and we are tracking towards these targets still.

So let's see how we are progressing then on these priorities in practice. So let's start off with number one. And I would say, overall, the execution is continuing across all the 4 main areas. And importantly, we are making tangible progress. And it starts with the market and with the customers. So during Q1, we have been focused on making the organization more customer-oriented and then commercially sharper. And this is visible now in how we are strengthening client governance and sales, and we are already seeing this reflected in increased AI-related demand from customers and the backlog buildup is happening.

Also reminding us about the announcement last week, the Microsoft partnership is also quite important for us and will contribute to strengthening our market position going forward. And at the same time, we are simplifying the company to improve focus and scalability. So the divestments we have announced and completed are about freeing up capital and also management attention and capacity. So while the harmonization of the Tech Consulting operating model is a key enabler for scaling our business more efficiently going forward, we continue to expand selectively also in Europe from a kind of growth point of view.

These are very targeted moves. We see clear opportunities going forward. Iberia is a good example where our acquisition end of last year, beginning of this year created an entry point, and we are now building on that with 2 new signings in Q1, O2 Madrilena and then FORVIA. And similarly, we see Indtech's moves in the U.K. and Denmark reflects also expansion in areas where we have attractive opportunities. At the same time, we are actively managing our cost base, while we are making good progress on our savings, we have also today announced additional actions in Tech Consulting to adjust to the current market environment and to ensure competitiveness going forward.

So overall, this is about disciplined execution across all levers, strengthening the commercial side, simplifying the structure and then investing selectively in the different markets and then adjusting the cost base going forward. And then AI is for sure, reshaping the tech industry. And understandably, there is a question in the market around disruption, who benefits and who are at risk. Our view is that the impact is not uniform. In fact, AI tends to benefit vendors that are deeply embedded into customers' core operations through local presence and that manage business-critical data and operate in regulated environments where security, industry expertise and long-term relationships are essential. So in other words, the parts of the market where customer relationships matters, where data is sensitive and our systems are mission-critical, those are structurally more resilient to disruption.

And this is exactly where Tieto is positioned. We have a strong foundation with deep presence in vertical software through high regulatory requirements, a large installed base, long-term customer relationships and our software and services are already embedded in core processes. And again, AI is not something that is new for us. It's already integrated into our products, deliveries and modernization work, and we continue, of course, to invest in this area.

Our position is also supported by what we see in the market. According to our Nordic AI survey, which we completed in February, organizations are now clearly moving from experiments to production with around 1/3 of the participants in the survey already using AI actively. And at the same time, the biggest barriers are security, skills and governance areas where customers typically rely on trusted partners.

For us, this is not about theory. AI is already embedded across our operations and offerings. We have AI tooling in all our software units with multiple tools in place. We have also a very advanced AI innovation center in Bangalore that is not going to be replicated to other geos. And we are also using AI in areas such as sales, business development and automation of internal processes. This is also visible in concrete customer and business use cases.

So for example, in Banktech, we are already embedding Agentic AI into core solutions such as lending, ATM, financial crime prevention. In Caretech, we have moved from proof of concept to production in several solutions in Lifecare, such as Lifecare Smart Notes, which is a kind of AI-assisted documentation solution that helps health care and social care professionals to create high-quality notes using speech or text.

Last week, we took a further concrete step to accelerate this through the strategic partnership with Microsoft. And together, we are moving AI from pilots to production at scale and building also capabilities across 5,000 consultants within our Tech Consulting business. So overall, we absolutely see AI as an opportunity to strengthen our role in the value chain and also increase our relevance in the years ahead.

Let me then summarize the key highlights from Q1. Overall, we delivered strong profitability and solid performance within our software businesses. Then I must also say that I'm not satisfied with the revenue at minus 3%. However, it's also important to note that this includes around 2 percentage points of expected headwinds from legacy runoffs in Banktech and Caretech. Adjusting for these effects, the underlying growth in our software businesses remained healthy. At the same time, the weak market environment in Tech Consulting continues also to impact the overall growth. On profitability, we saw a strong improvement with adjusted EBITA increasing by over 4 percentage points year-over-year to 14.7%, and this is driven by our cost optimization program as well as strong margins in the software businesses.

So then given the continued softness in the Tech Consulting market, we have also initiated additional cost actions to ensure competitiveness going forward. And as mentioned earlier, our strategic transformation continues, including large-scale AI capability buildup and then strengthening of the key partnerships like we saw with Orange, like you have seen also with Microsoft, and there's more to come. So overall, while the market environment remains mixed, we are improving profitability, continuing to execute our strategy. And as communicated in connection with Capital Markets Day, we regard 2026 as a year of transition for Tieto.

As mentioned, underlying growth in our software businesses was healthy and profitability clearly improved during the quarter. In addition to that, let me highlight a few other points. So first of all, the leverage improved significantly and is now at 1.3x, supported by the completion of the Bekk Consulting divestment and also reflecting a strong balance sheet position. Secondly, our order backlog continued to grow. It's up 8% year-over-year, providing good visibility going forward. And it's also important to understand that we delivered a very high order intake in Q1 of 2025. And despite that, we are up 8%.

And then finally, cash flow from operations was solid. If you compare like-for-like, we are actually up 9%. The number that you can see to the right includes last year, including Tech Services and then Bekk Consulting. So like-for-like, up 9%. So I would say that overall, alongside the profitability improvements, we are also strengthening our financial position and maintaining good forward visibility.

Let's then have a look at the 4 different business units, starting off with Tech Consulting. And I would say that the market environment in Tech Consulting has remained weak, we have recently seen that increased geopolitical uncertainty has continued to delay decisions and the overall demand remains soft. I think I read this new article this morning from BCG. I think the kind of geopolitical picture is impacting a lot of different industries.

And we can also see that this is reflected in our performance. Growth was somewhat below our internal initial expectations for the quarter and lower activity levels have also then impact utilization, which again has impacted the profitability. So based on this, we have taken additional actions to protect profitability. This includes targeted capacity adjustments in the delivery side, ensuring that we remain competitive while aligning with current demand levels.

At the same time, we are ensuring simplification and strong execution going forward. So as part of this, we have also made a leadership change in the business. So Johan Nygaard, who previously led our Indtech business is taking over the leadership. This is to maintain momentum in execution while we initiate a broader search for a permanent leader. And while the short-term market remains a bit challenging, our long-term transformation continues, including strengthening our AI capabilities and partnerships as discussed earlier.

So based on actions initiated, we have a good reason to believe that we will improve the relative performance already in Q2 2026. Furthermore, we see that AI is well visible in our agreements during the quarter. So for example, our partnership with Park Holidays is focused on AI-enabled enhancement, helping them improve customer-facing digital platforms. We have also helped one of our clients Offshore Qualific with enhanced end-user functionality through AI. So AI is used on the supplier portal for qualification and follow-up of suppliers within Energy and Utility sector. So again, overall, we are adapting to the market conditions while continuing to drive the transformation of the Tech Consulting business.

Moving then to Banktech. And here, we continue to see good momentum. Profitability was strong during the quarter and underlying growth remains solid. So reported organic growth was impacted by a legacy contract runoff communicated earlier, which reduced the growth by approximately 5 percentage points. At the same time, the quarter included a one-off positive impact from a customer contract also resulting in a kind of 2-year extension of that specific contract. But adjusting for these items, underlying growth is around 3%, which we see as a solid performance in the quarter. Profitability clearly improved 17.3%, supported by our cost optimization measures initiated last year, and we are now operating at a strong margin level within Banktech. In addition to this, our order backlog remains strong, providing good long-term visibility, '27, '28 based on also signings back in 2025 and now during Q1 of this year.

So this is absolutely visible in the backlog, and we have concluded also several agreements during the quarter. We entered into a strategic partnership with Danish BEC Financial Technologies. Our modern cash management solution will provide large corporate customers with real-time visibility of the liquidity. We also entered into a multi-year agreement with Sparebanken on the development of a new mortgage solution. So this solution is built on modern technology, real-time data that will automate assessments, decisions and process flows, of course, enabled by AI and also micro services components as part of this, which make it a kind of open industry standard solution to be also resalable. So overall, Banktech continues to deliver stable growth, strong profitability and a good forward visibility.

Looking then at Caretech, we continue to see strong and stable performance. As in Banktech, reported organic growth is impacted by legacy business decline, which is washed out when we come into 2027, but which is also reducing the growth by around 5 percentage points in Q1. Adjusting for this, underlying organic growth is around plus 3% like in Banktech, which we see as a solid level. Profitability, as you can see, 26% margin is a very strong number, also improvement year-over-year. And during Q1, we also saw strong order intake supporting future growth.

Importantly, we continue to develop our offerings with AI-enabled solutions. So for example, AI is already being used across the Care pathway from data capture, imaging to clinical decision support and risk prediction, helping them improve both efficiency and quality of care. On agreements, we have made good progress across the Nordic countries. So during the quarter, we signed a significant agreement with City of Stockholm to deliver Lifecare solutions for municipalities and welfare services. So agreement is valid for up to 13 years.

Our solutions then offer support in daily operations, enabling efficient workflows across the entire care process from planning, follow-up to documentation and the mobile work. In Norway, we deliver a Lifecare workforce planner solution to Nittedal municipality, providing a modern resource management system to support workforce planning across the municipality. So overall, Caretech continues to deliver stable growth, very strong profitability, and I would say, a good momentum going forward.

Then finally, in Indtech, we continue to see solid overall performance. Growth was 2% for the quarter, and it's worth noting that this includes clear negative impact from our Pulp, Paper and Fibre segment, absolutely also part of the geopolitical picture where the customers' activity has slowed due to the current situation. So with then also projects being postponed globally. So this alone is around 2 percentage points negative effect for Indtech impacting then the overall growth. Excluding this, the rest of the businesses are performing well with solid growth across most areas. Profitability again improved further and remains at good solid levels, supported by both the momentum of what we did last year in terms of cost efficiency, but also the top line growth, of course.

So from a strategic perspective, the highlight in the quarter was the expansion of our Multichannel and BIX offerings into the U.K. market, which is an important step in scaling the business. At the same time, the order backlog remains healthy, supporting forward visibility. And as mentioned earlier, we have also announced the divestment of Edlevo & HR & Payroll businesses, which is closed -- expected to be closed in Q2 of this year.

So we have also strengthened our position in the Danish public sector. We were selected by Denmark National Bank to deliver an electronic case and documentation management system based on our Public 360 solution. Furthermore, Butterfield Bank chose Tieto's Multichannel to consolidate document distribution and then this bank is a full service bank and wealth manager operating across Bermuda, Cayman Islands, Guernsey, Jersey, the Bahamas, Switzerland and Singapore and the U.K. So with our platform, Butterfield will consolidate document distribution across digital and physical channels. Overall, Indtech continues to perform well, solid underlying growth and good strategic progress.

So Tomi, that leaves us with the CFO report.

Thank you, Endre, and good morning, everyone. So Q1 highlights were significant profitability uplift in accordance with our plan and solid performance in our software businesses. Group overall growth was impacted by known legacy contract runoffs and continued weak market demand in Tech Consulting, as mentioned. Our profitability improvement of 4.1% compared to prior year was driven mainly by our successful cost optimization program, which aims for a significant EUR 50 million cost base reset. Good to note that we continue to compare against prior year with IFRS5 cost burden, which accounted for 1.8 percentage points of the improvement.

Our onetime items for Q1 were positive by EUR 15 million, impacted by gain on sale from BEKK divestment of EUR 20 million. Full year one-time item expectation is unchanged at 1.5% of revenues, excluding the capital gains. Other Q1 highlights would be our strong cash flow and continued solid order backlog with 8% year-on-year improvement. Our EUR 150 million share buyback program, which returns BEKK sales proceeds to our shareholders is ahead of the original time line, and we expect to finalize that early September.

As mentioned, we delivered strong operating cash flow of EUR 85 million in Q1. Our net working capital decrease of EUR 14 million was seasonal. This is resulting primarily from the prepayments received in the beginning of the year. Note that Q1 '25, so prior year cash flow includes contribution from the divested businesses as the cash flows are not restated for prior periods. On a comparable basis, our Q1 operating cash flow has improved approximately 9% compared to prior year.

We also delivered strong free cash flow of $202 million, which included net cash proceeds of $147 million from the BEKK divestment. As discussed already in our Q4 report, our net debt to EBITDA improved significantly and was 1.3x at the end of Q1. Main reason for the improvement is the BEKK divestment with divestment proceeds decreasing the net debt and the gain on disposal increasing the EBITDA.

During the year, when we execute the share buyback program, our leverage will gradually increase. And on a fully adjusted basis, our leverage at the end of Q1 is already at targeted level, so slightly below 2x when we consider the impact of the BEKK divestment, completion of our share buyback program and the IFRS5 cost burden impact.

Then a few words on our cost optimization program, where we have reached EUR 105 million run rate savings by end of Q1, and we are fully on track to deliver the full EUR 130 million run rate savings by end of 2026. As communicated earlier, this program aims for a permanent cost base reset of approximately EUR 50 million while mitigating the cost burden from Tech Services divestment and reducing the overcapacity in the Consulting business primarily. Our estimate of the onetime costs from the program are unchanged with EUR 55 million to EUR 60 million, of which we have incurred EUR 46 million by end of Q1.

On employee matters, LTM attrition remained at low levels being 7.6% at the end of Q1. This reflects the soft market environment. During the quarter, our net personnel reduction was 800 FTEs, of which 430 FTEs relate to M&A activities, namely BEKK divestment and Tieto Iberia acquisition. Overall personnel reduction year-on-year amounts to approximately 14%. We expect group salary inflation for the year to be between 3% and 4% compared to 4% in '25. The lower inflation expectation reflects the overall softer market environment.

Next, some outlook remarks for Q2 '26. On growth, we expect group revenue growth to improve from Q1 levels. Tech Consulting will continue to be impacted by weak demand across all markets. We expect growth nevertheless, to improve from Q1, but still to remain negative. The improvement is primarily driven by easier comparables. Banktech continues to be impacted by legacy contract runoff impact of 6%, which is an increase of 1 percentage point from Q1. However, revenue growth is supported by continued underlying growth in the software businesses.

Caretech continues also to be impacted by legacy contract runoffs by negative 5 percentage points, which is at the same level as Q1. However, revenues are supported by continued underlying growth in the modern software portfolio. Indtech growth continues to be supported by strong order backlog. On profit remarks, cost optimization program contributes to profit improvement across the whole company. Consistent with prior year, our annual salary increases take effect in April. On other remarks, there is only a minor impact from the working days.

Then as usual, Q2 profitability outlook per business. We expect Tech Consulting, Banktech and Indtech to be above prior year profitability level and Caretech to be at or above prior year. As the year 2026 includes some specific headwinds, we created this table in Q4 to help everyone to navigate the growth dynamics of 2026 on a quarterly basis. The outlook for the year remains unchanged in terms of the growth dynamics, and we continue to believe on neutral growth momentum for Tech Consulting in Q4. To note, Caretech legacy runoff impact in Q1 was 5% instead of the estimated 6%, which we have adjusted in this table. Remaining of the year is unchanged. In summary, these specific headwinds amount to negative 3 percentage points at group level and are fully accounted for in our guidance, which remains unchanged.

Now back to you, Endre.

Thank you, Tomi. And then summarizing then the quarter, Tech Consulting performance was slightly behind our expectations. However, we have taken good progress with transformation and then also taking new actions to ensure a future competitive cost base. Secondly, our software businesses are delivering according to plan, and I would say actually slightly ahead. Thirdly, we have a good order backlog build in the quarter, giving high visibility going forward. Number four, leverage is at a healthy level. And number five, we delivered a very good cash flow in the quarter. So I would say that our focus remains unchanged. We keep focused on execution of strategic priorities where direction is clear.

So with that, we should open for the Q&A. And Tommi, I don't know if you have got any questions so far.

Yes, we have.

[Operator Instructions] The next question comes from Daniel Djurberg from Handelsbanken.

Thanks for the detail and good work on transformation. I have a question on Banktech. Looking at your current customer installed base and annual exposure, do you have any knowledge or should we expect any more of the additional legacy extensions in the remaining part of '26 similar to what you saw here in Q1?

I would say that on the negative side, we have the one main contract that was terminated end of August of '25, which gives now this 5 headwind or minus 5 percentage points in the quarter. That will be ended in the year comparison, as we all understand, and when it comes to end of August this year. When it comes to the kind of one-off effect related to that specific contract, we also have the kind of 2 years or extension of that contract, which also gives us an order backlog buildup. So I don't know if that's kind of answering your question.

I guess it's hard to be more detailed. May I ask you on Tech Consulting on the continuous work there with up to 500 employees. Can you comment a little bit on early days, I guess, but regions involved, will you also be in U.S. with the MentorMate and will that also include some divestments or similar on such as MentorMate?

I would say that this will be more or less equally divided between offshore and nearshore. And then it's based, of course, on who are on the bench in which geos. So that's the deciding factor. So 1/3, like you saw in the Q1 presentation, 1/3 of this is related to already announced reductions of SG&A. 1/3 is related to people on the bench, which is, I would say, equally divided more or less between the different geos. And then the last 1/3 is related to one specific client where we are in a transition from one geo to another geo, and we had to carry part of that cost as part of the transition.

Okay. Fair enough. And also, if I may ask you on the solid order backlog, up 8% for the group. You commented that you have a strong backlog in Banktech and good order intake in Caretech but no real comments on Indtech in terms of backlog or order intake. Is it a big deviation within Indtech? Or can you give any more color would be good.

Of course, we have the different business units or the entities that we have with Indtech. But I would rather say that we didn't comment specifically related to Indtech, but we have for second half, a very solid backlog based on signings that we did in Q4 last year for elements that has not yet been put into production. There's a ramp-up period for some of these contracts. So we have high level of comfort in terms of delivering on the guidance for all the software entities based on the visibility we have on the backlog.

I think it's also quite important to factor in when we look at the different quarters, Q1 is traditionally the weakest quarter. Then second half is also traditionally a better half compared to first half. So I think -- I mean, that is also why we keep the guidance levels when you look at both top line and the profitability. This is basically based on the visibility that we have in terms of the backlog. I would also say that we have good early signs of the results from what they have invested into in terms of sales. So that's part of the explanation why we have the backlog buildup, and we can also clearly see this in the CRM measurements that we have now at a quite close monitoring going forward.

The next question comes from Felix Henriksson from Nordea.

I have 3. I can take them all individually. It seems like in Tech Consulting, there are additional cost savings on the table beyond the current program from the new headcount reductions as well as the Orange capacity agreement. Can you quantify these by any means in terms of monetary value? Or is there a reason why you choose not to do so?

Can you be more specific?

He was talking about the monetary value effect of the 500 reductions because -- like I said, 1/3 is already factored into the cost saving program that we have announced and then the 2/3 was related then to people on the bench and then 1/3 related to one specific client where we have a transition from one geo to another geo where we have already built up 150 people approximately in the new geo. The reason why we're taking that 1/3 of the 500 is that we have to take the cost of the reductions in the one geo transferring to the next geo. But the monetary effect of this, Tomi?

Well, I would probably break it into these elements. So this SG&A is part of this EUR 50 million cost base resets, which I have commented and also the -- how it's intended to be visible in our P&L. So EUR 15 million was visible in '25, incremental, EUR 25 million visible in '26 and the remaining EUR 10 million in '27. This is how the skew of the cost base reset will be in our P&L. So that 1/3 is embedded in that and all the OTIs are also in our OTI 1.5% guidance. The second one is taking out the bench from Tech Consulting. And of course, that's a 1:1 because these people are now not contributing to revenue. So that's kind of a 1:1 of the 1/3. Then the remaining 1/3 is more of a shift from other geo to the other. So yes, there is no revenue implication per se and the cost implication works similarly to the bench, what we take out because we need to pay some of this cost ourselves.

Okay. And the capacity agreement with Orange, is that a meaningful savings contributor as well?

Absolutely, it is.

There are 2 factors into the Orange deal. First of all, we are transitioning from different vendors into a consolidated environment of Orange, which will give cost reductions when we come into '27. So there is very, very limited effects of this in '26. The second part of the strategic partnership with Orange is that in order to do the expansion internationally, the selective expansion that we have announced, we also need a strong infrastructure partner. Orange being a global player, that's a quite important thing for us then to have that in the different delivery structures that we have going forward, of course, in addition to what we have done now with Microsoft in terms of also public cloud Azure, et cetera. So we have several partners playing on this. So there are 2 angles of Orange. One is kind of cost reductions. One is the revenue growth.

Got it. And also on the Microsoft deal, it seems like correct me if I'm wrong, but this is kind of a way for you to make the Consulting business more productized as an implementation partner and less dependent on time and materials-based billing. So is that the correct way to think about it? And are there other similar deals in the pipeline with other vendors?

Yes. I think this is actually spot on, and we have been quite transparent on this before that part of the market growth has been clearly related to application development and maintenance and not necessarily time and material. We have been too heavy on time and material. That's why we have been through in all this transitioning within Tech Consulting, of course, still ongoing. And this is also quite important. When we look at the ecosystem of Microsoft, that's a big part of the IT spending. That's a big part of application development and maintenance and also handling then, I would say, the infrastructure management towards public or private cloud. So it's a quite fundamental shift. We're talking about 5,000 people that we go through upskilling eventually during '26 and '27, also to become, like you say, to become more relevant in terms of where is the market demand.

Got it. And then final one for me. You mentioned the low leverage, and you also have these 2 divestments in Indtech closing soon. Would you consider upsizing the existing buyback program after that? Or are there any other ways to sort of act with that additional capital?

Yes. We need to go back to what we communicated on the Capital Markets Day. We have a clear capital allocation principle and not yet decided what we will do with the surplus from that sale. But we have also communicated that with surplus capital that will be delivered back to the shareholders, if it's dividend, extraordinary dividend or share buyback, that will be decided when we come to the closing of those 2 deals, expected to happen first half of June this year, and then there is a Board decision what to do. And we will, of course, communicate it immediately after having kind of closed that deal, what we will do with that surplus.

The next question comes from Sami Sarkamies from Danske Bank Markets.

Okay. I have 2 topics. We'll take this one by one. Continuing on Tech Consulting. You're clearly not happy with Q1 results as you're doing these leadership changes and announced new cost programs. Can you help us to understand what part of the sort of disappointment is market related and what is related to your own actions that you can improve during the rest of the year?

So first of all, I think this is spot on. And I would say that like we are seeing now on the cost measures, 1/3 is related to people on the bench, and that is partly explained by the geopolitical picture. It's partly explained by the kind of supply, demand and supply in the market that we are not necessarily 100% relevant. And that is also why we announced this Microsoft upscale structure.

When it comes then to looking forward and based on the cost measures now taken and also previously announced related to the 1/3 SG&A, which is 1/3 of the 500, we are quite comfortable that we have seen the bottom of the fall in Tech Consulting and that we will deliver according to the plan rest of the year. And the reason for saying that, that we have pretty good visibility on Q2. We need also to keep in mind that a relative performance, we had weak Q2, Q3 and Q4 in 2025. So based on the transformations that we have been through, based on the cost initiatives that we have been through, based on also then the upskilling that we do, we are now seeing that Tech Consulting is tractioning towards what we have communicated in connection with Capital Markets Day.

Okay. And then second question related to Tech Consulting. Just trying to understand that how much lower your capacity will be, let's say, during the second half of the year once you have implemented all these actions relative to the starting position in first half last year?

If you're talking about upskilling, is that your question or the effect on the upskilling?

No, like delivery capacity like FTEs.

Yes. So I would say that we have now come to the FTE level where we can start also then performing at a higher utilization rate. Then, of course, implementation of this upskilling of 5,000 people, like I said, that will happen gradually. It's not going to be in one big chunk. This will happen gradually during 2026 and 2027, not necessarily impacting the top line. So this is a quite important thing that we need to -- we have a very thorough plan now geo by geo, skill level by skill level, how to execute on this going forward. It will be a combination, of course, of some weekend training, some evening training, some on-the-job training, et cetera. But the important thing here is that the different 8 geos that we have, they need to be accountable and responsible for the implementation and execution of this. It doesn't help that group headquarter is driving this. This needs to be driven by the different geos.

Any comments, Tomi?

No. So what we now today released as the reductions, this is accounted for now as what we commented on the Tech Consulting of stabilizing growth momentum towards the end of the year. So of course, we size this to the way that our utilization is at reasonable levels.

Okay. And then I have a final detailed question for Tomi. Just to clarify, sort of EUR 4 million onetime item you booked at Banktech in Q1 related to this contract renewal that was visible in both sales and adjusted EBITDA. And when we think ahead, there's not going to be like a change to the run rate of this agreement?

Yes, that's correct.

Correct. That's correct. The only change is that we got 2 years extension of the contract. That's the change.

[Operator Instructions] The next question comes from Deepshikha Agarwal from Goldman Sachs.

Just I had like 2 basically. First one on the margin trajectory. Clearly, this quarter was helped by the cost optimization program as well as the software business being strong, which we see is also helped by that contract in banking. So how should we be thinking about like the good -- the margin trajectory over the course of this year, especially keeping in mind, it's typically for Tieto, it's always second half weighted? And I don't know, the line was, I think, a bit unclear when you talked about the employee reduction in Tech Consulting. Is there any one-off cash costs related to those reductions that we should be mindful of? So that's on the margin side of things.

Then the other one is basically you've talked about like the ongoing simplification of the core, and there are 2 assets which have been announced today and which are to be closed. Are there any -- like are there any more assets that you're looking at? Any color on how do you plan to go about the further simplification of core for Tieto?

So first, on the margin, maybe also, Tomi, you can comment on this one. But I will say that we have communicated a target of EUR 130 million run rate by end of this year based on the cost efficiency program that we launched in 2025. As you have seen, we are at end of Q1 at EUR 105 million. So you will see also then for the next quarters, the cost saving efficiency coming through in the following quarters.

Second comment on this one is that Q1, like I said, is usually the weakest quarter in the year. Second half is usually the best quarter that has been the historic trend since many years. So we are -- also when you add on then the visibility that we have in terms of backlog, especially for the software businesses, we don't have a high level of visibility in Tech Consulting for second half, quite good for second quarter. But when you look at the software businesses, we have very good visibility now for the full year. So I think that is also impacting the bottom line for sure, meaning the revenue coming through -- the revenue growth coming through going forward. I think that is basically the main effect on the bottom line. Margin?

Yes. I would maybe still comment that, yes, you will continue to see the benefits coming from the cost saving program throughout '26. Then when we reach the latter part of '26, we start to have the comparables also including some of the impact from this program. So if you model that, you should be mindful for that change. So then the delta will become lower, but of course, the profit levels are higher.

Then in terms of the Q2, so we typically, as I commented, have our annual salary inflation kicking in Q2. So that's why seasonally, typically, Q2 is lower from the profit point of view than Q1. And then the second half, as you yourself mentioned, that is typically stronger. One of the driver is Q3 vacation periods and of course, sort of getting towards the year-end and getting the growth in, as we have commented, that strengthens the profit profile towards the year-end.

And it's probably also worthwhile mentioning that the headwind in Banktech with big mainframe contract from a top line point of view, which was also kind of a negative margin will also kind of help the year-over-year comparison when you go to Q4 already actually from Q3, September. So that's also worthwhile factoring in. Then when it comes to simplification, as you have seen, we have a lot of initiatives ongoing. So for example, we have now integrated more or less all the components of different entities within Tech Consulting. So talking about Infopulse, MentorMate, we have sold out Bekk Consulting. We have EVRY India, which is now integrated. And the last piece out was the kind of conglomerate of entities in Sweden called Avega, which will be now fully integrated during Q2. So that's a quite important part of the simplification.

Then, of course, when it comes to M&A, we don't have any plans in terms of adding on any large M&A. And it's also important to say that we are kind of having the shareholder value creation view on what gives top line growth and what gives a solid bottom line effect for each and every single entity that we have in the company. That's the kind of optimization and simplification that we will constantly be working on. So I think that's basically it.

I would still comment on your question of the 500 FTE reduction and the cash impact. So it's not onetime cash impact. So typically, when -- as we commented in here, these reductions will happen during Q2 and Q3. Once these reductions happens, it's typically between 3 to 9 months, 3 to 12-month period when this cash flow -- cash outflow happens. So just to be clear.

Thank you. And thank you, Endre and Tomi. There's no further questions at this point. So I would like to thank everyone for participating, and have a great rest of the day.

Thank you very much.

Thank you.

Good morning, and welcome to Tieto's Q4 and Full Year 2025 Earnings Webcast. My name is Tommi Jarvenpaa, I'm the Head of Investor Relations at Tieto.

This morning, we will present our financial results for the quarter and for the full year and provide an update on the progress of our strategy execution. We will open the line for questions after the presentation.

With me here are our CEO, Endre Rangnes; and CFO, Tomi Hyrylainen.

Now I would like to hand over to Endre. Please go ahead.

Tommi, thank you so much, and then welcome to Tieto's Q4 and Full Year 2025 Presentation. I must say that 2025 has been a year of significant changes and transformation within Tieto, positioning the company for future profitable growth.

In Q4, we can clearly see the effects of the cost efficiency program implemented last year coming through. We improved the profitability by almost 4 percentage points Q4 '25 versus Q4 '24. CMD in November was an important event with launch of the rejuvenated strategy, new financial targets, and also capital allocation principles. And then we also launched our new Tieto brand. I will say that we are well positioned to deliver on our 2028 strategic ambitions and targets.

I would also like to start off with a reminder of the strategy we introduced at our Capital Markets Day, a few months ago. And it's clear the direction remains unchanged. Our ambition is clearly to become a leader within selected industries in the European software and technology consulting markets.

Execution is focused through our 4 main strategic priorities, ensuring clarity, accountability, and also disciplined capital allocation. In the end, of course, our success is measured by financial outcomes: more than 5% revenue growth CAGR, '27-'28, and also profitability above 16% by 2028, also clearly communicated in connection with the Capital Markets Day in November. Then also looking then at the 4 main strategic priorities. So across all of them, execution is well underway and we made good progress, and we have delivered substantial results already.

On the customer side, number one, we have strengthened long-term visibility through large contract wins, particularly in Banktech and also lately in Caretech. We have significant focus on sales with strengthened client ownership, new hires, new sales incentive plan implemented from January, sales forums, CRM monitoring, and also investing in AI skills building.

On the second point, we have taken actions to simplify the core, including a new operating model, portfolio optimization and a clearer accountability. One example is then the divestment of Bekk Consulting in Norway, which then enables us to simplify our Tech Consulting business. On the third point, we have targeted our selective international expansion with partnerships and a small bolt-on acquisition in Spain, supporting our future international growth.

At the same time, number four, we have reset the cost base, delivering substantial run rate savings and progressing ahead of plan, and that's why we have announced today that we are uplifting the EUR 115 million originally communicated to EUR 130 million run rate by end of 2026, and we have delivered EUR 95 million by end of Q4, according to plan or ahead of plan actually.

When we are summarizing 2025, it was absolutely transformative year for the company, marked by significant structure and leadership changes. We simplified the portfolio through divestments of Tech Services and also strengthened leadership with a renewed leadership team. And also at the same time, we actively reengaged with key stakeholders and reset the cost base to support long-term profitability. Yes, organic growth remained at negative minus 2%, and we're coming back to that point also during the CFO section. However, we saw early signs of recovery in terms of order backlog buildup and also improved profitability.

So I would say that these actions lay the foundation for improved cash flow, stronger execution and a clear strategic directions going forward. So we still have a way to go. We are fully aware of that to regain stakeholders' confidence, but we are making good progress.

AI is absolutely a key priority for our group and also for our clients. And I will also say that with the large client base we have, our strong industry knowledge, and proven technical capabilities, we are well positioned to capture the emerging AI opportunity. And we clearly see significant potential in assisting our clients to apply AI in a very practical way as well, while also using it to strengthen our own operations, including product development.

Sustainability remains high on our agenda with focus on climate actions, social impact, and also then ethical conduct. So just a few highlights from 2025. We again made good progress. We received the highest rating, Rating A from Carbon Disclosure Project, CDP. Our new long-term targets were validated by the science-based targets initiative. We received encouraging recognitions as a top employer and workplace for women in several of our key markets. So we will publish our annual report and the sustainability statement for 2025 a bit later today. So we are referring those being interested in the details go into this, and we have all this disclosed during the day of today.

Then let's then look into the Q4 results. In Q4, we delivered strong profitability, and we continued the execution of the new strategic priorities. Yes, organic growth remained at a negative minus 2%, reflecting continued market weakness, known headwinds in Banktech and Caretech, with the legacy product runoffs. At the same time, adjusted EBITA improved significantly to 16.2%, driven by execution of our cost optimization program.

We progressed on strategy implementation through a targeted acquisition in Spain and also further simplification of the portfolio. So then strong profitability and strong cash generation enabled us to propose an attractive dividend and also to launch a share buyback program at EUR 150 million, enabled by the divestment of Bekk Consulting. This was announced also this morning.

Turning then briefly into the group key figures for the fourth quarter. Revenue, as you can see, was EUR 464 million, with organic growth of minus 2%, reflecting the same market conditions discussed earlier. Adjusted EBITA increased to EUR 75 million, corresponding to a margin of 16.2%, again, demonstrating strong profitability.

On the positive side, we also increased the order backlog by 13% year-over-year, supporting improved revenue visibility into 2026. And it's also worthwhile when you look at the total order backlog that we now have for Banktech and also for Caretech, that is also supporting the long-term growth '27-'28.

Cash flow remained solid. We are stable on leverage, like 2.2x net debt on EBITA. And I would also kind of look at the cash flow numbers comparable because in the EUR 128 million, as you can see at the bottom right, that also includes the cash flow from Tech Services, which was part of the cash flow in 2024, and kind of comparable. This is like 14% also improved cash flow if we take out the discontinued business.

Let's then look at the different business units, starting off with Tech Consulting. In Tech Consulting, we continue to operate in, I would say, a challenging market environment, and we expect those conditions to persist into 2026. And the CFO will come back to a bit more of visibility for all the business units in terms of the 2026 outlook.

In Q4, organic growth remained negative, reflecting then the macro uncertainty and also lower client spending across the IT consulting market. At the same time, I would say that we have also taken actions now to turn the business around, fully aligned with the strategy presented at our Capital Markets Day.

We have a new country-based operating model with a clear accountability and responsibility in terms of profit and loss measurement by each market in which we operate. And this has also been supported by changes in leadership in key markets like Norway and then also in Americas.

The divestment of Bekk Consulting further also simplifies the portfolio and sharpens our strategic focus going forward. So this is in addition to integrations of [ EVRY India ] -- Infopulse, Avega in Sweden, and then MentorMate in Americas.

You can also see at the bottom of this page that we were winning several deals during Q4. So we are developing a national pharma repository for the Finnish Medicines Agency. We were selected as SAP consulting partner for GATX Rail in Europe.

Then on the Banktech side, we delivered strong profitability. And I would say also, like I already mentioned, a solid order backlog build. Why organic growth came in at minus 3%? That includes a 5 percentage points technical impact from the expiry of margin dilutive mainframe contract. So excluding this effect, underlying growth was modestly positive, so in line with the current market environment.

It's also worthwhile looking at the software portfolio that continues to grow well, demonstrating the long-term strength of the Banktech offerings. Profitability was strong, reflecting our good progress in cost-saving measures. Order backlog continues at a record high level and will support Banktech's growth from '27 and onwards. And I would also say that our recent acquisition in Iberia will be an important enabler for Banktech selective international growth.

A couple of wins also during Q4 worthwhile reflecting on. We were selected by D&B as a partner for renewal of part of their payment infrastructure. Tieto Caretech again came in with very solid profitability while top line growth was impacted by continued decline in the legacy solutions. However, growth in the modern lifecare software portfolio remains strong, but was then largely offset by legacy decline and with some impact also from ongoing market court cases. Underlying demand for our modern Caretech solutions continues to develop well, supporting then the long-term growth outlook also presented at Capital Markets Day in November.

We signed a partnership agreement in Austria, supporting the international expansion ongoing. And in Finland, we strengthened partnerships with private care providers, including contract extensions and then also renegotiations to replatform to modern dynamic health platforms. And we see also at the bottom here several of the wins that came through in Q4.

Then Indtech delivered a very good performance in the quarter with solid growth and improved profitability. So organic growth was 6% supported by, I would say, improving market activity. We had revenue growth across 6 product units, while pulp, paper, fiber, and energy and utilities remained softer, largely due to weaker market conditions in those sectors. Profitability improved to 17%, driven by, I would say, strong business momentum and growth, and then continued cost optimization. Interesting win as well. We are enhancing Bank Norwegian's digital multichannel invoicing and payment integration in the Nordics, Germany, and Spain.

So before going into the CFO details, I would say that we are delivering a very strong momentum in our software businesses, and we will come back to more details through the CFO report. So Tomi, please.

Thank you, Endre, and good morning, everyone. Q4 highlights were clearly the significantly improved profitability and solid execution of our 4 strategic priorities. Our improved profitability was primarily driven by the successful execution of our cost optimization program, which aims for a significant cost base reset while mitigating the cost burden from Tech Services divestment and reducing overcapacity primarily in our consulting business. At year-end, we were ahead of our cost saving plan, as mentioned, and we have increased the target from EUR 115 million to EUR 130 million.

Our annual dividend proposal, which is paying from the upper end of the range amounting to EUR 0.88 per share, combined with the EUR 150 million share buyback program is set to deliver double-digit shareholder returns in 2026.

We're also today announcing a proposal to simplify our listing venue structure with delisting from Oslo Stock Exchange and a consideration, which we're currently looking through to delist from NASDAQ Stockholm. Main driver for the proposal is the low trading volumes and shareholdings in these stock exchanges as the main trading happens in NASDAQ Helsinki.

Then our annual dividend proposal. This is aligned with the CMD communication and our new dividend policy. I have included in the right-hand side a table to illustrate the dividend proposal logic. As you remember, our dividend policy is to pay 60% to 80% of net profit, which we adjust with noncash items.

Our net profit for the year was EUR 26 million, which we have adjusted for noncash impairments of EUR 86 million and the IFRS 5 cost burden of approximately EUR 19 million. This gives us an adjusted net profit of EUR 130 million. Our proposal is to pay at the upper end of the range, meaning 80%, which gives us the total dividend of EUR 104 million or EUR 0.88 per share. This represents a dividend yield of approximately 5% using the recent share price.

Then to our announced share buyback program. So we announced EUR 150 million share buyback program, which is connected to the sales proceeds from the divestment of Bekk Consulting, which was closed 2nd of February. In accordance with our capital allocation policy, we aim to keep our leverage level close to 2x and distribute excess capital to our shareholders. This EUR 150 million share buyback program will ensure continued efficient capital structure and deliver solid shareholder returns in tax-efficient way. The shares will be bought in public trading in NASDAQ Helsinki and canceled on a monthly basis. The execution of the program can take up to 12 months, depending on the trading volumes of our share.

Then on cash flow. So we delivered strong operating cash flow of EUR 103 million in Q4. Our net working capital decreased by EUR 30 million, primarily due to seasonality. Good to note, as Endre also mentioned, that Q4 cash flow is the first quarter with our discontinued operations and the cash flows are not restated for prior periods, so they are not comparable. On a comparable basis, Q4 cash flows were slightly higher compared to prior year.

Our net debt to EBITA improved slightly from Q3 being 2.1x, excluding the discontinued operations impact. When we look into Q1, our net debt to EBITA will decrease significantly. This is due to the Bekk divestment proceeds decreasing net debt and the gain on disposal increasing the EBITA. During the year, on the other hand, while executing the share buyback program, our leverage will gradually increase.

So as mentioned, we've been very successful in our cost optimization program execution, and we're ahead of plan with EUR 95 million run rate savings by end of Q4, and we were able to increase our target to EUR 130 million. The program already delivered EUR 22 million savings in Q4. With this program, we aim to permanently set the cost base EUR 50 million lower while mitigating the cost burden from Tech Services divestment and reducing overcapacity, primarily in consulting business. We estimate the total one time cost from the program to be EUR 55 million to EUR 60 million, of which we have already booked EUR 45 million in '25.

On employee matters, LTM attrition remains at low levels, 7.8%, reflecting the soft market environment. Impact from cost optimization measures are visible in reduced personnel across the company with 450 FTE net reduction in Q4, and approximately 10% reduction year-over-year. Group salary inflation ended up being 4% for the year compared to 4.5% in prior year, and we estimate 2026 salary inflation to be below the 25% level.

Next, some outlook remarks for Q1 '26. On growth, we expect group revenue growth to be at Q4 level. Tech Consulting will continue to be impacted by weak demand across all markets. Banktech continues to be impacted by the ending of the significant margin dilutive mainframe contract with negative 5% impact. However, revenues are supported by growth in the software portfolio. Caretech continues to be impacted by legacy contract runoff by negative 6% compared to 4% in Q4. However, revenues are supported by continued underlying growth in the modern software portfolio. Indtech growth continues to be supported by strong backlog.

On profit remarks, cost optimization program continues to contribute to profit improvement across the company. On other remarks, there's only minor impacts from FX and working days. Then as usual, Q1 profitability outlook per business. We expect all businesses to be above prior year profit levels.

Then to '26 outlook. So our 2026 guidance is fully aligned with market environment to continue into 2026, which will impact primarily the growth of our consulting business. We expect our growth in 2026 to be slightly negative between minus 2% to 0. And in profit, we expect a step change to 14.8% to 15.8% adjusted EBITA. With this, we're guiding an underlying growth of plus 1% to plus 3% when we exclude the known legacy contract runoffs in Banktech and Caretech, which have approximately 3% headwind to our organic growth for the year. Our profitability step change is primarily driven by cost optimization program resulting from cost base reset as discussed earlier. The profitability impact in '25 from the SB1 compensation and an IFRS 5 cost burden combined amounts to net zero.

As the year 2026 includes some specific headwinds, we have created this table to help everyone to navigate the growth dynamics of 2026 on a quarterly basis.

On Banktech, you can see the quarterly impact of the mainframe contract runoff, which ends in Q4 and the impact of the SB1 one time compensation, which was received in Q3 '25. On Caretech, you can see the legacy runoff impact per quarter, which are overall higher than in 2025. This impact will gradually decrease and will only be minor in 2027. Then we have aggregated the specific headwinds at group level, which for the full year amounts to negative 3%, as mentioned earlier.

Now I'll hand over to Endre.

Very good, Tomi. So then looking ahead into 2026, quite clear, our focus will be execution of strategic priorities and building momentum towards our 2028 targets. We will continue strengthening client relationships and build sales capabilities across the group, develop strategic partnerships, simplification initiatives and finalization of the cost base reset will be done as well.

With the foundations now in place, our focus shifts from restructuring to consistent performance delivery. We are committed to regaining and strengthening stakeholder confidence through execution and measurable results.

So with this, we are opening up now for Q&A. So please...

[Operator Instructions] The next question comes from Felix Henriksson from Nordea.

Congrats on the strong results and thanks for the helpful guidance details. I have three questions. I'll take them one by one.

Can you maybe add a bit more color on the sources of cost cutting because that's an area where you seem to be executing extremely well compared to the company's history, for example. Where are these specifically coming from? And are you sort of doing these by any means at the expect of revenue generation and growth?

So the cost saving program that we initiated in second half was actually based on several key areas. So first of all, we had the benchmark on SG&A. We were quite high on that one. So that was the first area. It took SG&A analysis by group functions and then also by the business units. So we have reduced especially the G&A part significantly during the year. Secondly, we had overcapacity in our kind of Tech Consulting part. So there has also been a combination of SG&A and cost reductions within the Tech Consulting part.

Then when we now are into 2026, it's more like focusing on some other elements in terms of sourcing, purchasing, locations reductions, capacity reductions, more like premises, et cetera. So it's some of a lot of activities that we initiated based on the very thorough mapping that we did in Q2 and into Q3 of 2025. And this has impacted more or less the total company, both group support functions, but also, like I said, business unit by business unit. But the majority in 2025 is coming from reductions of FTEs.

So I guess one of the main points is that we are actually now structurally resetting the cost base. So through simplification, we are creating a setup, which is continuously at lower cost. And much of this external cost also relates to facilities and reduction of the space in facilities, which will be staying. So we feel very comfortable with this EUR 50 million visible in the P&L. We are foreseeing that coming in roughly, if you want sort of metrics, EUR 15 million already visible in '25, EUR 25 million in '26, and remaining EUR 10 million in '27. This is consistent with the guidance that we've given you as well.

Great. Then on the order backlog, you highlighted that, that will start to yield growth towards the end of the year. Can you perhaps discuss a bit about the backlog composition on which segments that comment applies to primarily? And how is the phasing of that backlog expected to materialize compared to late this year and the years after?

Yes. If you look at Banktech, where we have a substantial backlog based on the signings that we did end of 2024 and then beginning also of '25, meaning first half, that is kicking in '27 based on a couple of factors. So there are kind of mergers happening in the core bank area in Norway. There are mergers, there are transitions happening with long-term planning.

We have some win backs also coming into a transition period during '26 and '27. So I think the main part of close to EUR 1 billion related to Banktech will come through end of '26 and into '27. Also then when we have replatformed some of these banks to the modernized platform and then getting new additional sales on that, which is part also of the backlog and the contracts that we signed up for several of the key clients in 2025. And it's more or less the same picture when you go to Caretech. We signed substantial deals in Q4. And of course, there is a transition period from legacy to the new modernized platforms coming through in '26 and then '27.

So that's the kind of backdrop for saying that the majority of this will come through in '27.

That's great. And then finally, you've now done a couple of these acquisitions in Spain. Can you perhaps discuss a bit on how these will sort of help you establish a platform for growth in the country? And should we expect similar bolt-on acquisitions in other European markets, where you see potential for expansion?

Yes. So first of all, I think we have been quite clearly communicating in connection with the Capital Markets Day that we are focused on some few selected markets with also products, SaaS-ready products that are ready to go internationally.

So with regards to Spain, that company is around 200 people, mainly focused on financial services and I would say, tech consulting to financial services, that's 70% of the current business. Meaning that we now have established, first of all, a local presence, local competencies, local connections, positioning us also in the banking sector quite well and insurance as well, so that we have a good foundation for channeling our Banktech products, software products through that organization locally, benefiting from the strong relations that the company has with the banking sector in Iberia actually.

When it comes then to the kind of Caretech software portfolio where we have decided to go with partners locally. So we have the breakthrough that we made last year in Catalonia health region. Now we will have a presales organization to be set up in the Spanish market and also quite important that when you look at the kind of market for health services in Spain, they have a special construction in terms of insurance companies handling the invoices, et cetera. And one of the big, big constellations in Spain insurance company is also having a large number of hospitals across Spain. So there are different ways also going to the market now in Spain. I spent, was it 2 weeks ago, full day with client meetings in Spain. So there's a lot of activities now happening locally in that market.

The next question comes from Sami Sarkamies from Danske Bank Markets.

I have three questions. We'll be taking this one by one. Firstly, starting from savings, you have increased the target to EUR 130 million. Can you elaborate your thinking here? Is this driven by weaker-than-anticipated market conditions, or I -- just like finding new areas for savings here?

Yes, thanks for the question. This is the new savings. So we have clearly identified more opportunities to simplify Tech Consulting, and then we're driving more extensive external cost savings, including facilities. That's the driver.

Then regarding Indtech, you're seeing quite good growth even though you're not firing all the cylinders yet. Do you think we could see even higher growth rates during this year if we assume recovery in areas where you're not performing yet? Or is it so that in Q4, you were supported by some onetime deals?

From a top line point of view, I said that we were delivering growth year-over-year in 6 out of 8 areas. Pulp, paper, fabrics is a quite big part of the totality of Indtech. That area, we still have headwind. And you know that approximately 50% of the revenues within PPF is related to services and we have low production currently in that quite challenging market for PPF companies. So that's the one.

Energy and utility is also an area where we didn't deliver growth year-over-year. So I think that we will come back to this, of course, a bit later on, but it's quite clear that we shouldn't expect a kind of dramatic improvement in terms of growth. I mean we are delivering 6% in Q4. And you should expect growth in this area as well going forward, but not kind of significant ramp-up.

When you look also at the bottom line of Indtech, you can clearly see that there is a combination, of course, of the top line growth, but also the measures that were taken actually in Q2 in terms of reduction of banning within this area.

Then my final question would be on divestment. I asked about this already at the CMD, but I don't think you really answered. Are you still planning on making further divestments in the portfolio? Or is it so that you're just like being opportunistic that some things might be for sale if there is a potential buyer?

Yes. I think the latter one is probably the correct answer. We are working constantly looking at simplification of the structure of Tieto, and this is also reflections coming from our clients. And then it depends on kind of what is the market conditions, what's the shareholder value creation. That's the kind of -- a guiding factor on what we do.

Thanks, Sami, and thank you, everyone, for the questions. There's no further questions at this point. So I would like to hand over back to Endre, for final remarks.

Very good, Tommi. So I would summarize the quarter and also 2025. We have made good progress with the 4 strategic priorities. And when we look into '26, priority #1 is, of course, to improve sales, then to finalize the cost reset program and then to continue simplification to drive focus of the company going forward. Thank you for calling in.

Good afternoon, and welcome to Tieto 2025 Capital Markets Day. It is great to see so many of you here in London and a warm welcome to all of you joining us online. Today is more than an event. Today marks a reset, a restart, a new era for our company. We are making a fundamental shift toward sharper execution, stronger discipline and a relentless focus on value creation. We are changing how we work, how we compete and how we win.

This is not just a strategy update, it is a mindset shift. And to symbolize that shift, yesterday, we brought back the Tieto name, reconnecting with our heritage while signaling a bold forward-looking future. We also introduced new financial targets. And today, we will show you exactly how we plan to reach them. You will hear from our top leaders across the business. This is a unique opportunity for you to learn how we intend to deliver and why we are confident in our path forward. Throughout the day, we want your questions and your challenge.

We will open the floor for Q&A after each presentation. And then we'll finish the day with a final Q&A with our CEO and CFO. We will take questions from the audience here as well as from those of you joining online, please submit the questions through the platform. We have an exciting afternoon ahead, and I hope you're ready. So let's get started. Please join me in welcoming our President and CEO, Endre Rangnes.

So thank you, Tommi, and a warm welcome to Tieto's 2025 Capital Markets Day, and thank you for joining us here in London and also on the web. Like Tommi touched upon, today is an important moment for Tieto. It's not just another event. Today is a moment to look forward with new focus and also with a new purpose. And I would like to start off also acknowledging that we, during the last decade or so, have not delivered the growth and shareholder returns that our shareholders should expect. I would also say that we are acknowledging that we need to be more transparent going forward, so we have learned from the past.

Today is a new beginning for Tieto, a new beginning anchored in three main principles. One is customers focus, customers first in everything we do; secondly, operational excellence; and thirdly, sustainable shareholder returns. So this is really not about the new strategy. This is about a mindset shift. And I can tell you, we are changing gear to deliver future growth. So I will go through three main sections in my next 25 minutes or so. Tieto has a very strong foundation to capture the market opportunities and the market growth.

We are today launching four new strategic priorities in terms of ensuring that we are accelerating the growth and execution going forward. And thirdly, we are committed to deliver more than 5% top line growth CAGR '27, '28 and also then more than 16% margin by end of 2028. Having now been in the position as the CEO since 6 months, I have spent a significant time with our different stakeholders, vendors, investors, employees and of course, clients. And I would say that the feedback is quite clear. We have not been sufficiently focused on our clients.

We have been far too much product and tech-oriented, also partly pushing the products too hard. And thirdly, we have not been executing on the different, I would say, strategies that has been launched in the last decade. And the result of this is that we have delivered less than 1% organic growth CAGR during 12 years, while the market has been growing 5% to 7%. And that has also partly resulted in the buildup of a cost base that we couldn't afford. So today, we will spend the time on -- yes, we have identified the challenges.

We will spend the time now on what are we going to do, how to ensure execution and to capture the future growth of this company. And also the business units we will go in detail to visualize what's happening now with the company. Having said this, I think it's also quite important to underline that Tieto has a very, very strong foundation. When we look at our client base, we have long-term relations with our clients. And we have a very solid client base. So it's a good starting point to really have better interaction and also a better and stronger partnerships with our clients going forward.

Secondly, we have distinct capabilities as a company. We have invested a large amount into replatforming our software vertical products. We have renewed products now in more or less all the different product lines. I would say also that we have invested heavily into building AI competencies, both in terms of driving internal efficiency during the last couple of years. We will come back to examples on this. But also interacting with our clients related to AI. We have a very strong needs for offshore delivery structure, which could be utilized better in the future.

And then we have also started to simplify the structure and the setup of Tieto when we sold Tech Services. The closing was done, as you know, in Q3 of 2025. And I think it's also the third point related to solid financial foundation. We have a pretty stable margin. We are a capital-light business. We have delivered solid cash flow historically. And I would also say we have a very high level of visibility in terms of repetitive business, but also having a very strong backlog, which we carry now into '26, '27 and '28. So a good starting point for a company like Tieto.

When we also look then at the market share and how have we kind of developed the company during the last years, we have the leading position within banking. We have the leading position in the Nordics in health care. And we have also a leading position globally in pulp, paper and fiber software and associated services. And then we have also kind of a leading Nordic position within Nordic case management software. This is a good starting point. And within banking, we are delivering everything from core bank solutions to payment transactions to fraud monitoring to AML, so a full stack delivery from core bank to end user solutions.

And the same goes within Lifecare. We have a very strong position with our new Lifecare portfolio, where we are delivering to hospitals, to home care and also social care, and we have already started to see signs of positive development also in terms of expanding internationally with the Lifecare products. So we are running mission-critical society-critical transaction, every millions of them every single responsibility that we have as a company. When I met with investors the last months, it's also quite clear that many investors now regard AI as a disruptive threat to the IT services industry.

I regard it as a big opportunity for those capturing and being able to leverage on the AI opportunity going forward. If you look historically, going 30 to 40 years back, we have had many examples of disruptive technologies entering the market. What happened in terms of IT spending during this last 30 to 40 years? Did it go down? Absolutely not. The annual CAGR IT spending is growing and it's been growing like 30 to 40 years, driven by the digitalization of the society.

And we saw clear examples of that, partly also having a kind of artificially high level of investment during the COVID period. So from my point of view, I regard AI as a big opportunity for us going forward. Then talking to clients, which I do more or less on a daily basis, it's not all about AI. It's really also about basic things. It's about cost optimization through also AI tooling. It's about process reengineering. It's about focusing on cybersecurity and not only for banking, this goes for more or less all businesses currently.

And we have also seen a lot of companies investing now heavily into skills upgrade of their employees in terms of meeting the AI wave coming. Then how is now Tieto going to capture the market opportunities going forward. And we are launching today four main strategic priorities. One, customers first. Everything starts with our clients, everything starts in the market. Secondly, a simplified core to have a more agile organization and company going forward, selective international expansion with selected products -- software products into selective European markets.

And then, of course, we need to ensure that we have a competitive cost base going forward so that we are also from a pricing point of view -- market pricing point of view, we are competitive going forward. So let's take this one by one and starting off then with customers first. And what you see on this page is actually mirroring or a reflection of the input I've got from our clients.

When I was the Managing Director for Banking 9 months before taking on the assignment as the CEO of this company, we spent a lot of time implementing a new governance model with our clients, meaning a clear definition of demand, supply and a rigid follow-up in terms of KPIs, both operational, tactical and then strategic level with our clients.

That was one of the basic reasons why we were able to renew a lot of banking contracts during second half of '25 and also -- sorry, second half of '24 and into also 2025. But it's not all about governance. It's a lot of practical elements that we are working on as we speak. It's about recruiting new sales resources. It's about rejuvenation of our key account management structure. It's about launching, which we will do in January, a new sales incentive structure to also incentivize high performance in sales.

And it's also about involving our clients in product development. One example of that, which actually goes a couple of years back, is also together with SpareBank in South in Norway, which is now part of SpareBank in Norway, we developed a leading-edge mobile solution, which is now replicated into other banks as we speak. So I think we have good examples of also co-development, which we will put more effort into going forward. And we can see that this client centricity is actually now bearing fruits.

So we saw during Q2 and Q3 new signings, Local Bank Alliance, 16 banks signing up for full-fledged delivery from core bank to end user solutions, 10 new banks, 6 existing clients of Tieto. We saw Gig in Austria, where we also have embedded AI into their help desk and to structure client request and to improve also client service. So clearly, we see that we are moving in the right direction. The second point is then related to simplified core. And we have seen the sales and closing of tech services as one step, and you will see more to come in the near and long term.

We are not disclosing anything related to that today, but you will see it coming. This is about creating a more agile organization and a more focused organization going forward. You also saw yesterday that we launched the new brand, Tieto. And in that context, we also launched the new four names of the four entities, meaning Tech Consulting, Caretech, Banktech and Indtech. And the go-to-market strategy is very clear. We have the industry verticals covering the market and the clients with a distinct software and associated services, and then we will leverage Tech Consulting through those industry verticals going forward.

And this is basically feedback that we have received from our clients that ask us to be a bit more coordinated in the interactions with the clients. And for those customers or prospects not requiring one-stop shopping, we will go directly with tech consulting directly to the market. I'm really lucky to have a new leadership team in place. And the four business unit leaders will go through the go-to-market strategy entity by entity, including also financial targets, which you will see later on today. The third point is related to ensuring that we are focusing on the growth going forward.

So first of all, we are coming from a very strong home base in the Nordics, like we have been presenting already. The ambition is to grow with the market or more going forward in the Nordic market. However, we have already seen opportunities in the European market with some of our selected software products into selected European markets. Examples of that is that we signed in Q2 an agreement with Basel Hospital University in Switzerland. You saw in Q3, we signed a deal with Catalonia Health region, 8 million citizens and deal with NTT DATA as a systems integrator.

And you will see more to come from Banktech, Indtech and Caretech going forward. We have an ambition to deliver a total contract value of EUR 500 million by end of 2028. And then you could say, okay, this is not a very ambitious target. But we need to keep in mind that it takes some time to penetrate new markets. We need to have a realistic approach on this and realistic expectations. That's why we are now shooting for the EUR 500 million TCV mark. Currently, we have approximately EUR 100 million from the software and associated services to that software outside the Nordics, approximately EUR 100 million.

So we still regard this EUR 500 million as a relatively ambitious and realistic target. And part of the go-to-market strategy, you will also see evidence of that in the future that we are also emphasizing to really go with strategic partners going forward, and you will see also some of the business units coming back to that during their presentations later on. All of this in terms of growing going forward, capturing the international growth needs to be done with a competitive cost base.

So when I went through the Q2 cost base when I took on the assignment as interim CEO, May 2025, also partly triggered by the sales of 1/3 of our business, namely Tech Services, I clearly saw that we had a far too high cost base. So that's why we announced the cost efficiency program in connection with the Q2 results, and we are tracking ahead of plan. You saw that evidence in connection with our Q3 results. You saw that on Thursday, we upgraded the guidance for 2025 outlook.

And we will come back to in connection with the Q4 interim report in February, how are we now tracking into 2026. But as said, we have committed to deliver EUR 115 million run rate by end of '26, and we are ahead of that plan. We are approximately 1,300 colleagues less as we speak today compared to 1 year ago, mainly driven by takeout in sales, general administration, but also partly taken out from delivery capacity. And we are, of course, focusing on all nitty-gritty details related to expenses and costs. We are looking at premises.

We are looking at driving initiatives on streamlining procurement and to take out synergies there as well. So a lot of practical operational initiatives ongoing. What will then be the effect of these four strategic priorities from a financial point of view? And we have already communicated to the market several times that 2026 is going to be a year of transition and execution. Why are we saying that? First of all, we have seen now lately both McKinsey and Deutsche Bank came out with new updates in terms of 2025 outlook for the sector.

And also now looking at how the companies are taking down the outlook for 2026, we are experiencing a headwind currently in the general market spending. On top of that, when it comes to revenue, we, as a company, have a couple of unique headwinds, which are related to our legacy within Banktech and also Caretech. That has an effect in 2026 of approximately 3 percentage points negative growth. Big part of that will be out year-over-year comparison-wise when we are ending 2026 and even more important, when we look at how we are now growing our new services and new software offerings, we have an underlying growth already going out of 2025.

So we are quite comfortable that we will deliver the top line growth CAGR '27, '28 in terms of more than 5% growth. That growth will fundamentally be driven by growing more in the Nordics. We will see the results coming from international expansion. And then also the shift that Pär will come back to after my presentation today, we have also a shift ongoing within Tech Consulting to really be more relevant in the market going forward. We have also communicated to the market that when we look at 2026, -- we will improve the margin.

There will be a margin expansion happening basically based on the cost measures and cost initiatives that we have taken in 2025. On top of that, when we look at '27 and '28, we are comfortable about delivering more than 16% margin end of '28, driven by, first of all, cost efficiencies coming through, then Nordic international growth and then also further kind of efficiency measure, also partly driven by what we do internally in terms of streamlining AI.

We saw also yesterday that we have launched a new brand. We have got a lot of positive feedback already today on the new brand. And the point with the new brand is really that this is underlying the shift -- this is supporting those four strategic initiatives. And keep in mind that Tieto really has a meaning. It means knowledge or information in Finnish. And it's, from my point of view, it's actually capturing also the heritage of the company. We have been in the Nordic market since 1968. So this is kind of also underlining the positive part of the legacy that we are carrying as a company.

But it's more than a symbolic thing for me, this is also underlining the mindset shift that we're going through. And it's also supporting our image -- not image, but our ambition to also be the impact partner for our clients going forward. The most important asset we have is our 15,000 employees. And first of all, we have changed the leadership team. Out of 11 in group executive team, 9 are new to drive the focus and the shift going forward. We will invest more into leadership development, which we have not done in the last years.

It's quite important also to focus the organization much more on a fact-based discussion and also with sense of urgency, which is one of my favorites because that is really what the clients require. Also in terms of accountability and responsibility and then also back to my initial remark on transparency, we need to have also to ensure that we have a more transparent organization going forward. Again, -- this is not going to be a quick fix. This is going to happen quarter-by-quarter going forward. This is about the cultural change that we, as a leadership team, have to drive.

Then on top of that, we are actually investing in skills development. We have been through now around 14,000 employees with a basic education on AI. We have also invested heavily into product development, so tooling and kind of enabling our people with new tooling related to AI. We're coming back to that later on also by the business units. So we are investing into the future and into also enabling our people. And specifically about AI, when we look at AI -- we have structured that across the company now during the last 6 months.

We have actually three main areas that we are focusing. One is related to sales and value propositions. We have already kind of Bidbots. We are using R&D to develop RFPs, et cetera. But where we have kind of clear evidence already in terms of productivity improvement is within our product development. So Ari will come back to this related to Lifecare product development, where we had AI embedded into product development in the last 3 years, where we have documented a 30% productivity improvement.

Second example is that we are running now COBOL, the last remaining part of the new -- or the old core bank solution to the new modernized one. We are running our AI tooling for COBOL conversion to UNIX and .NET. We have invested in AI embedded into our fraud prevention systems in card monitoring, card transaction monitoring since 2 years, and we can continue with this example. We will also go through this with Indtech, where we have also now invested into a public portal where the clients can actually use AI tools to develop their own applications. So a lot of initiatives ongoing.

And of course, we are also now looking at internal efficiency. We have HR Assist as an example, we are looking at now also to streamline all the paper documentation that we have from a compliance point of view, doing machine reading, applying AI on top and then we will drive this in a more efficient way going forward. Having said that, it's quite clear that AI usually starts with a kind of innovative project R&D. And then we discover and this goes internally and with our clients, we see that, yes, we are dependent on other technologies.

We are dependent on data. We are dependent on infrastructure. We are dependent on the legacy. And usually, then we see the scale of the projects ramping up. So from my point of view, companies with a strong client base, a large client base with a lot of legacy are well positioned to leverage on the AI opportunities going forward. As you saw yesterday, we have also now launched a new capital allocation strategy or principles. And again, it's a very, very clear feedback from our investors. We conducted a quite extensive survey in June of 2025, clear feedback from our investors, more than 50% said you guys need to invest more into growing our company organically.

So we have listened to the investors. And I think that we still have a very lucrative dividend policy. It's a solid policy with 60% to 80% of net profit as a dividend. And on top of that, I think it's quite important to underline what we have on the right side of this picture is that with excess capital, we will do share buybacks/extraordinary dividend going forward. And we're keeping then the leverage less than 2x net debt to EBITDA as a target also going forward.

Looking at then the targets that -- or the KPIs that we have set out for 2028, more than 5% CAGR, 27%, 28% top line growth, more than 16% margin by end of 2028, 60% to 80% dividend and then also less than 2% leverage. The point of going through this now as a summary is that we are committed to deliver. We regard these targets as realistic and these targets are more or less set independent of what's happening market-wise.

So let me summarize. First of all, we are coming from a situation where we have been lagging in terms of growth. We have identified the challenges. We have identified how to grow the company going forward. The growth will come from the Nordics and then also international selective expansion, driving towards the revenue targets that we have set out for '27 and '28 and also looking then at the margin by end of 2028.

So having said this, I am really looking forward to our Capital Markets Day in 2028, where I can present the achievements and the results. Thank you very much. Q&A opening.

Thank you, Endre. We are now opening the floor for questions. [Operator Instructions] We have first question, I think, here on the second row...

It's Mark from Morgan Stanley. Can we just maybe start with the bridge to the 2027 and '28 guidance Obviously, there's an illustration here, but if you could be a bit more specific around how much of that 5% plus is coming from growth in the Nordics versus international expansion and then tech consulting, that would be great.

And then also, I noted that on the slide, it said mainly organic. So what role will M&A play in the growth of the midterm? And then just finally, could you talk to us a little bit about what investments you've already made in international expansion, both on the go-to-market side and the product side? And what further investments do you plan to make in 2026? What confidence does that give you in achieving that EUR 500 million target?

So let's start with the last one first. I think that, first of all, we have invested now into generating more like industry -- European industry standard Lifecare platform, and that's why we clearly see the results now with a huge interest internationally. Then we have selected a kind of international go-to-market strategy with partners for Lifecare in order to not carry too much cost in terms of the international expansion.

So we are quite confident that we will succeed with there's a huge demand for these types of products across Europe. In terms of Banktech, we are also looking now at international expansion in selected markets. We have pinpointed U.K., Ireland, and we have pinpointed also Spain. And this is, of course, based on a very thorough mapping of the European market and with our product portfolio, which products are applicable by each market.

So for example, ATM, Spain has the highest per capita penetration of ATMs. That's one of the products that we are looking at. We're looking at card issuing, card monitoring, fraud monitoring, AML, et cetera, where we have leading edge products already up and running. So that's the kind of main focus. The investment will be fairly limited. In terms of M&A, we are not going to do any big M&A. That has been also a clear feedback from our investors. Don't do any big M&A because we have a disastrous track record in terms of doing M&A.

So when I'm talking about M&A, I'm talking about small bolt-ons, which is more or less like from my point of view, a rounding and organic growth. So we are looking now -- when you look at the growth trajectory that we're looking now for '27, '28, it's -- I would call it purely organic growth. Then we are not disclosing which pockets of growth are coming, but you will see clearly after my presentation, you will see the breakdown business unit by business unit.

But as you can see from the chart of financial performance, '27, '28, the majority is coming still from the Nordic growth, repositioning ourselves there, capturing the opportunities there. And also we get the effect, for example, in banking of legacy out of the books by end of Q3, not legacy fully out of the books, but the negative 2%, 3%, 4% effect that we have in banking will be out of the books in end of Q3 2026. And then, of course, also within Caretech, you will see also a huge difference between '26 and '27 in terms of the effect of legacy. So the majority coming from then the Nordics and then partly also coming from software expansion internationally. And then we also have the shift that is happening. Pär is coming back to that to illustrate what shift are we going through to be more relevant in terms of market demand.

And this goes very closely back to -- we are coming from a situation, again, to be transparent, that we have had too much [ CV ] sales and time and material. The market is moving quickly in another direction, namely more like building services on industry standard software like Microsoft Dynamics, et cetera. So that's also part of the game plan, which Pär will come back to how we are going to work closer with a set of strategic partners to enable the expansion for tech consulting going forward.

So you will clearly see at least get some more meat on the bone when you see the different business units coming with their kind of graphs. And then let's see at the end if you still have the same question.

I am Sami Sarkamies, Danske Bank markets. Also wondering about growth. Can you somehow try to explain that what explains this step change from historical 1% organic growth to above 5%. There's been the portfolio change from divestment of Tech Services, but it doesn't fully explain it. You still have the same people, the same products and the same businesses, except for Tech Services.

And then maybe secondly, can you put those growth rates into some sort of context? 1% has probably been well below the market growth. But looking ahead, what kind of market growth are you expecting in '27, '28 time frame?

Yes. So first of all, I think this is, like I said, it's about a mindset shift. And why do I believe that we will succeed because we succeeded in banking to turn around that business. So we will -- we are doing more or less replicating what we did in banking now for the totality of Tieto. And we don't have the same people. It's not correct. We have a complete new leadership team in place. So like I said, we have 9 out of 11 in the leadership team are new.

We have a team that is prepared to show leadership and to drive on a fact-based basis and to ensure that we are executing on what we have told the market. And I think the early evidence of this, and it takes time, like I said, to regain the trust of our investors, but we have seen clear evidence already looking at Q3, looking at what we announced on Thursday last week in terms of being ahead of plan on the cost saving program.

And this is not coming by itself. It's a lot of operational doing to get there. So I'm 100% confident that we have the right leadership team in place. This is about leadership and walking the talk and structuring the business in a different way going forward, but also keeping people responsible and accountable.

This is new in my books and also looking back at how we built up an artificially high cost base. Yes, it's okay. It's one of the reasons why we had to look at the cost was, of course, the sales of Tech Services, but it was far too high anyhow. So that monitoring the cost base versus the benchmark in the market, et cetera, that is kind of the fact-based driven business that you will see from Tieto going forward.

Let's take one question from the online audience as well. First, congrats to prudent ambitions and relevant new financial targets. How autonomous will the four divisions be? Slide 10 shows that Tech Consulting will supply the foundation, if needed, IT services to Caretech, Banktech and Indtech. How to secure that no suboptimization processes are built in?

Yes. So from my point of view, at least, it's a very clear new go-to-market strategy. So the industry verticals are responsible for the market penetration and their clients. And then they will hopefully benefit from having technical consulting to deliver generic services integrations, et cetera.

Then we can deliver what the clients are asking us, deliver more of what we have, take responsibility and do this in a coordinated way. At least when we look at how we have prioritized now strategic accounts and strategic prospects, we believe that this is the right model going forward. And that I have seen this before, then we get results. Then we still have tech consulting to go directly if the client doesn't require one-stop shopping.

We have time for one more quick question. Go ahead.

This is Matti Riikonen, DNB Carnegie. You mentioned earlier in your presentation that you for 2026, expect a headwind of 3 percentage points internally from issues -- but when you guide flat or slightly declining top line in 2026, what is the positive element compensated that 3% negative then coming from?

That's a very relevant question because we clearly see that our new software offerings, so we have a lot of new products. It's not the old products and the same people. We have new product offerings, which will drive and we clearly see evidence of it already, will drive the underlying growth through 2026 already, meaning that we have the right traction into 2027. This goes for banking. It goes for Caretech and it goes for Indtech and it goes for Tech Consulting as well.

Thank you, Endre, and thank you for the questions. And as a reminder, we will have a chance to ask more questions from Endre then at the end of the day as well.

Absolutely. Thank you.

We will now continue the program and dive into the consulting business and see how Tech Consulting is changing to capture future opportunities. Welcome, Pär Johansson.

Good afternoon. Very happy to be here. Good to meet you all. I started this assignment in the middle of the summer. And to get a good understanding about our business, I spent a lot of time together with our most important customers, our employees and our strategic partners. It has been quite clear feedback and it is mainly related to three things. First, our customers choose us because of our local proximity in the way how we understand the customer. That's why the customer come to us otherwise they'd choose someone else.

Secondly, we have a broad portfolio, which needs to be aligned with the recent market trends. And thirdly, we have been operating with a high cost structure. We have started activities connected to all these areas immediately here during last year and during the autumn. So just to take a couple of examples. We are operating now in November in a new both organization and operating model setup where we've been moving from a global operating model into more local operating model, creating country-based consultant units.

And this is to get very close to our customer and get a much more close interaction between supply and demand. Secondly, we also completed here in October, the integration of our largest subsidiary, Infopulse. And then as Endre also mentioned, we are also running a lot of cost optimization program as such as well. So before moving into all the details here, I just want to go through a little bit on what it is that we're going to talk about today. We are driving change in three main areas: customer centricity, service mix and efficiency.

There is a huge opportunity out there in the market related to AI, cloud and data. And we will and aiming to capture that. But before we are able to do that, we have to go through a refocus. During this period, we will deliver a growth of 3% or above 3% and a profitability above 12% -- before going into deep diving into the numbers, I just wanted to give you a little bit more understanding on what is Tech Consulting. So Tech Consulting is a consulting unit, and we operate in three different regions: Nordic, Central Europe and U.S.

We are supporting five industry segments where several of these industry segments are directly connected to our software businesses. In the service portfolio, we are splitting that in two different areas. One of the areas is what you would call maybe classic IT consulting. So customer experience, AI, cloud data, et cetera. The other area is what we call engineering services and engineering services might need a little bit more explanation.

So we are developing software for OEMs. This could be that we are developing a sound software for both and then both sell the full package to a car manufacturer or we are developing software for telecom equipment providers and then they sell it to an operator. So a very special kind of business compared to the classic IT business. We have a very solid base for further expansion in Tech Consulting.

But as I already -- with 1,500 customers and 8,200 employees. But as I already indicated in the last slide, we have some challenges that we need to take care of, which has been there for a long time. Our customer portfolio is our largest asset, but it is also our largest challenge. It is too wide, so we can't really work with our clients in the way we really want. This is also leading to transactional engagement. And the issue with transactional engagement is that we need to resell this engagement time after time.

So you need, of course, some transactional engagements to manage the high and lows in the market, but we have too much of them. We are also quite heavy into the engineering areas. And as I already explained a little bit on engineering, this is a very global market with global competition and heavy price pressure, especially where we stand right now in the market. Then Tech Consulting has been operating in a federated manner for a long time. So with many fully or wholly owned -- fully owned subsidiaries. And this creates a non-optical optimized cost structure to have it basically.

It also drives service fragmentation. So all these things we have to deal with at the moment. So what is it -- and our financial performance is a testament to the situation and that we have to do something with this. What is it then that we do? We are focused on three main areas: customer centricity, which is mainly a focus on strategic customers. Service mix, that is a transition into the high-growth areas within the service mix.

And thirdly, operational efficiency, which is mainly related to simplification. So I will go through a little more detail what it is that we actually do. We are focusing on 60 strategic customers. This is the customers which we will implement full governance on. They will also get a new -- and I think Endre mentioned it, a new governance model, which we are implementing at the moment.

Our focus is also on the regulated industries. This is really our sweet spot, both because it's connected to our software businesses, but also because it drives the customer proximity. So if I just take one example from banking because that's an area I know the best maybe and in the lending area, it's not enough to be and understand lending generically on mortgages if you are in U.K. You have to understand, of course, both the process in U.K., the regulations in U.K. as well as the ecosystem in U.K. as these things varies between countries.

So this is really areas where we can show our customer proximity and that we understand the environment the customer operates in. We are doing also changes as strengthening our key account management. And this is mainly related to people, process and tools. To drive our change in the service mix, we are also investing in hunters and increasing the amount of hunters in the unit. I really believe in the AI cloud data area, but I also very much believe in the enterprise application area. And the reason for this is that this is very much connected because what we see is that many AI projects are creating a lot of downstream revenues today.

And usually, it starts with a smaller project in the AI space, then quite quickly, you are in a data project, you need the technology is usually cloud and then you also come down to the enterprise layer or into the core systems. So I just want to take an example from a customer we have in Europe. They are responsible for the expressways and motorways in the country. And we set out together with academia to -- and the customer to create an AI solution, which would help them to predict queue situation and both from an environmental point of view, but then, of course, from an efficiency point of view in general.

And this starts as a fairly small project to start with. But quite quickly, it becomes quite complicated. First, you need to integrate thousands of cameras through the country to get the video footage from the traffic. Secondly, you need to manage regulations because you are not allowed to store video footage. It's not theirs. And which means that they have to -- in real time, it has to be translated into synthetic data. And then you can start to train your AI models on top of that.

But then you also need to update the core systems because they are need to be able to act on the analysis and recommendations it gets. So all of a sudden, you're moving from a fairly simple situation and a smaller project into a very complicated project. And this is the real opportunity as we see today around all these AI cases that it brings a lot of things with you in the end. To focus in these areas and increase our footprint, we are driving a competence shift of 1,400 people through the unit.

On the operational efficiency side, it is more about simplification. I already mentioned that we made a change into a new kind of structure where we focus more on the country local aspect with a very closeness between supply and demand that help us to make sure that we have exactly the amount of consultants that we need. Secondly, it is very much about the simplification. So we are continuing and we are continuing to do integrations of our subsidiaries.

So in the end, what is it -- where are we going? What are we trying to become? So we are trying to become a leading Tech Consulting company or unit. With the customer in the middle, we are focusing on Nordic, Sweden, Norway, Finland, Central Europe, which is mainly a focus on DACH. We have, since many years, a very good and established operation in Austria, which have been growing very nicely, where we also have created a beachhead into Germany. Their task is to continue to drive and expand Germany. If we can find the growth we're looking for in Germany, we don't need to really go to many places in the coming years.

And then, of course, we also have U.S. We are doing this together with our strategic partnerships. Microsoft, IBM, Databricks, Snowflake, super important in its journey. But then also our software businesses within Tieto, Banktech, Caretech, Indtech. Here is a huge potential for us to work much more closer. And the same thing as for the enterprise application as well as our core system we have in our software units.

These are the software which is creating pretty much all the data. So here, we see a great opportunity to extend those offers with these other areas. And this connects, of course, also directly to the competence shift we are driving right now from the engineering areas over to these new high-growth areas.

There is a bit of headwind in the market at the moment, but I am certain that we will see growth in this market for many years to come. And we are also aiming at the segment of the market, which grows twice as fast as the general market as such. We do that, as I mentioned, by taking and utilizing and taking care of the investments in AI Cloud and data and going for the downstream revenues.

And as I said, we do this both with the strategic external partners as well with our software partners in the company. We are approaching this refocus in three different steps. During 2025, this year, it's about to build a foundation to work from. So -- and this is very much related to the change in our structures and the new operating model with a much higher customer centricity and a lighter overhead. Secondly, of course, it is about the integration of our subsidiaries.

And then we also started a sales performance program to increase and make both our hunting sales as well as our key account management much better. Several of these activities will continue to move into 2026. But gradually during '26, we will expand more together with our strategic partners and accelerate our competence shift. In the later part of this period, we will see growth from the strategic customers, and we also will have improved the service mix as such. So how does this look like in numbers?

As I mentioned earlier on, we are coming from a low growth situation, and I expect a small decline also during next year. But then we should be in a good phase and shape to start growing with our strategic customers, but also from the service mix change as such as this is more high-priced areas. During this refocus period, I expect a quite moderate profit expansion.

To recap, AI cloud and data creates a huge opportunity and the downstream revenues it drives. But to capture that opportunity, we need to drive change through tech consulting. We are focusing our change into three areas: customer centricity, the business mix change and then a simplified cost structure or lower cost structure.

We have already started the execution in all these areas. And I'm certain that when we are through this, we are in a good shape for further growth and also margin expansion. Thank you very much for listening to me. I see you later on in the break.

Thank you very much Pär, let's take couple of questions, we have a little bit of time here.

Sami Sarkamies, from Danske Bank Market. Looking at the financial targets, you seem to aim for quite modest growth below 5% market rate with margin level that is below the level you had in '22 and '23. Are you pulling to pull out from some business areas? Or what explains the cautious target setting? And can we assume that internal targets are much higher than what you are presenting to us?

As I tried to explain, if you look at the last 12-month performance, we're coming from a pretty bad growth situation. And it will take a bit of time to change this and making sure that we get the shift into the cloud and data area. So this is more an effect of the actual change that we need to drive rather than the external factors as such, then, of course, I get a higher target from Endre than what I present to you. That's, of course, correct.

Jaakko Tyrvainen from SEB. Regarding the continuously improving productivity, thanks to AI, how do you see the overall demand for consulting hours to develop in the markets overall, meaning that will the kind of increasing demand for outputs and outcomes be able to more than offset the improving productivity and reducing hours in that sense?

In the manner Endre answered this question or talked about this earlier, we see this more as a big opportunity for us, and we have not really seen that kind of impact yet. But if we think about create -- sorry, Tech Consultant consulting as a consulting unit where we're selling sort of our experience to customers. We are also, of course, utilizing these experiences and tools to deliver to the customer.

But I don't see any -- at the moment, we don't see any such risk and it's more about productivity that you can increase the productivity and get more done. It's not like it becomes less because if we look into the legacy situation of our customers, it's huge. So there's so much work out there.

So I'm not so nervous about that. Then I just want to answer as well that to hedge this a little bit, we're also doing this competence shift from traditional engineering areas, which is more about just development into the cloud and data area. That's our way to hedge this and also jump on to more higher growth train.

Let's take one question from the online audience next. What can you do to avoid giving away the productivity gains from AI to the customers in a business heavily based on time and material billing?

I think that all development we do in this industry have always been about automating manual work. So this is not the new thing with AI. This is what the IT industry always done. It doesn't matter if it has been coding a manual process or if it's AI, which does it. So as usual, it's a matter for us to making sure that we have our way of working and our IPRs and doing the work better than competition, then there is a possibility to take out premium.

Thanks, Pär. It's time to move on now. So thank you for the answers, and thanks for the questions as well.

We will now move to our unique software offering and here how we plan to expand our Lifecare product across growing European markets. Please welcome the Head of Caretech, Ari Jarvela.

Good afternoon. Tieto Caretech is one of the technological leaders in health care digitalization. We belong among the largest European health care software providers with our 1,600 dedicated professionals and 1,000 customers. We are ready to introduce our Lifecare software to a wider audience and capture opportunities in European health reforms.

Our success in the Nordic reforms has secured our leadership position. This brings us the opportunity to continuously introduce our latest software to this extensive customer base and increase the wallet share. Building on this Nordic success, we are expanding the European markets. This strategic move aims to replicate our achievements, broadening our impact and bringing our Lifecare to wider markets.

Tieto Caretech remains dedicated to delivering robust financial results. Our targets above 7% growth and 28% profitability reflects our commitment to sustained growth and high operational efficiency. In this presentation, I am going to open you up our plans. Reforms, digitalization and data utilization are driving the market growth in our industry. Aging population, together with the continuous demand of higher quality of care at controlled cost is putting a lot of pressure to care systems.

At the same time, the digitalization level in our industry has been lacking behind of many other industries like retail or banking. When we are talking about reforms, typically, there are two kinds. One is aimed to integrate so-called full care value chain from social care to primary care to secondary care. The target is to get the visibility to this value chain and especially its resource utilization, avoid overlapping services and improve the citizen experience.

The second type of reform is aimed to move towards more preventive and cost-effective ways of doing care like virtual care or home care. Regulation is evolving all the time, especially within EU. As an example, European health data space regulation, demand for openness and sharing of data. To a large extent, Nordic countries have this in place, but many other countries like Germany or the Netherlands do not. Better data utilization can improve the quality of care, both in treatments as well as in research.

Entering to the wider European markets opens us an addressable market of EUR 3.7 billion compared to EUR 650 million currently in the Nordic only. Health care market is in demand of open modular and interoperable software. And as a technological leader, we are ready to capture that opportunity. We at Tieto Caretech believe that the time for monolithic so-called all-inclusive systems is just over. They are too complex, too costly. There's no speed and no innovation. We have been undergoing a significant transformation, moving from a country-specific software approach to a platform-based modular and interoperable, scalable Lifecare portfolio. Today, this Lifecare portfolio consists of a comprehensive set of software covering social care, primary care and secondary care settings. We claim our technological leadership since we have the only electronic health record software based on open standards and modular architecture in wide-scale production use.

Furthermore, we have the only data platform certified under EU's medical device regulation as a basis of our advanced data and AI solutions. This brings the compliancy and reliability to our customers' health care data management. When looking at our key differentiators and what we promise to our customers, they include interoperability. Because of the open standards, open data models, open API interfaces, open user interface framework, we ensure seamless data flow without locking.

This gives our customers full visibility to their viable health care data. We promise flexibility. Because of our modular approach, our customers can build their preferred tailored solution combination, avoiding monolithic solutions and vendor locking. This boosts our customers' ecosystem collaboration and innovation. We promise less complexity. We offer our customers a stepwise implementation approach, avoiding complex costly multiyear transformation programs before getting any tangible benefits.

For the Nordic markets, naturally, we offer our full Nordic suite covering social care and health care settings. Our data offering is available in all of our go-to-market countries and include our Lifecare data platform and insights applications, as an example, resource optimization. For the European markets, specifically, we offer our modular clinical core applications like patient journaling and diagnosis management. This is the clinical component of our Nordic full suite.

Tieto Caretech is the pioneer and innovator of open and modular software that promotes interoperability. And this approach has made us the winner in the Nordic health reforms. Nordics has been seen and is seen as a frontrunner in health care digitalization, and Tieto is playing the key role in building this. Even though we have approximately 1/3 market share in the Nordic countries, we still have a good amount of growth opportunities. In Finland, we have now secured 16 out of 21 well-being services counties and Helsinki University Hospital as our customers.

This gives us the opportunity to continuously introduce the latest software, as an example, in the area of AI to this extensive customer base and increase the wallet share. In Sweden and Norway, our approach is similar. In both of these countries, we have 50% market share in municipal social care segment. To this specific segment, we are broadening our offerings by combining our social care and primary care software together to a wider solution. In addition, we have a good growth opportunities in regional health care settings, especially with our data and AI solutions.

While valuing Nordic countries as our home, we are also entering to a wider European markets. When looking at the markets and customers, we have a clear criteria. One, we are looking at customers who has high need for electronic health record modernization. Only in DACH countries, there are more than 1,000 hospitals having outdated system technologies. We are focusing on countries where national focus is on integrated care because Tieto is the company behind the Nordic interoperability, we can bring this expertise to these customers.

And we are working with the customers who are interested in open standards. Our Lifecare is based on open standards and modular architecture, and we can bring this experience to our customers. To summarize the cornerstones of our go-to-market strategy, they include focusing on markets where national reforms require interoperability. Out of our vast portfolio, we are offering the modular clinical core, the clinical component of our Nordic full suite, and we are working through partners.

We work with the partners, system integrator company who has existing extensive health care customer base. They are keen on working with the innovative software vendor, and they have strong local consulting capabilities. With partners, we get faster time to market without being forced to ramp up extensive own sales force. Partners are mostly responsible of sales consulting and implementation tasks, whereas Tieta Caretech focus on software and software support. I'm extremely proud of our recently announced strategic partnership with NTT DATA to build Catalonia's open health platform.

Just last week, we signed a partnership agreement of software reselling and implementation with Austrian-based health care consulting and system integration company, extension. They have 2,000 hospitals as their customers in the DACH regions. To be able to capture these opportunities, we have also shifted our investments towards growth initiatives. As an example, partner network, international product support and clinical core applications. Currently, the investment levels represent 17% of our revenue, and we are planning to maintain that proportion going forward.

However, the capitalization is expected to reduce from the current 7% levels down to 3% to 5% levels of the revenue due to the fact that the big part of our extensive modernization program starts to be over, and now we are focusing on enhancing our Lifecare with the new functionalities. One key area is AI, where we have divided our investments into stand-alone AI products, AI embedded to our core suites and any AI within our operations, especially in the area of product development.

As an example, our Smart Nodes tool in automated patient record transcriptions saves up to 50% of care personal time in documentation. 80% of our R&D engineers have been using GenAI tools since 2023. And we have gained more than 30% productivity improvement with notable improvement in the code quality. The shift in these investments also supports the healthiness of our portfolio mix. By '28, 96% of the revenue is coming from the modern Lifecare portfolio.

The key levers to achieve this are continue outpacing the market growth with our best of suite in the Nordics, expand to the European markets with clinical core and phasing out our declining noncore portfolio mainly by the end of next year. This portfolio mix helps us to better meet the customers' evolving needs and improves our competitive position in the markets.

These growth levers and especially expansion to the European markets and phasing out the noncore portfolio accelerates our CAGR to above 7% level during '27 and '28. It's naturally that the political agendas and public sector procurement processes may impact the timing. We will keep our profitability to a very healthy above 28% level while steadily increasing the investments to our growth initiatives, decreasing the capitalization and managing the rising depreciation.

These very same growth levers also supports our world-class performance. Software recurring revenue will reach 78% by '28, supported by growing Software-as-a-Service part and our partners' contribution to consulting and implementation tasks in Central Europe. Good to be noted that the greater subscription license proportion and lower Software-as-a-Service contribution to total revenue reflects the market trends and what we have seen in the latest reforms.

We have been doing a portfolio simplification, transforming towards the modern Lifecare portfolio. And this development has been demonstrated with our wins in the Nordic markets. For us, the year of execution and transition means that we are gearing up the international sales to European markets. We are phasing out our declining end-of-life portfolio, while we are keeping above-market growth rate with our best of suite in the Nordics. The next step is to accelerate by continuously advancing our clinical core software with the new functionalities and expand to new customers through partners.

So to summarize, we have the technological leadership by having the only electronic health record software based on open standards and modular architecture. We have proven our capabilities by our wins in the Nordic markets. We get access to wider EUR 3.7 billion market through partners in selected European countries. And with this, Tieta Caretech remains dedicated to delivering robust financial results. Thank you.

Thank you, Ari. We are now opening the floor again for questions, and then Matti is the first one there.

Matti Riikonen, DNB Carnegie. I was really puzzled to see your profitability guidance, which is actually below what you have achieved in the past. I mean, when you talk about growth in a software business, which should be scalable, then of course, operating leverage alone should imply that you are ending with higher margins. And also, if you talk about more SaaS kind of products sold to the European markets, then of course, the sales mix should be better, so also lifting the margin.

And when you also talked about the modernization of your key product coming to an end, I would imagine that, that would mean that the profitability could then increase because the cost base is going to be lower. So is the pressure from these discontinued products really so big that it basically eats out everything that you achieve on the other side? Or do you expect that there would be perhaps more price competition, lower prices or that sales mix would be inferior compared to the history or more sales costs related to the new areas. So could you please explain why you think that your business actually is doing worse in the future when it should be doing the other way around?

Yes. Okay. Thank you. There are a few main explanation. You said it once. So of course, we are investing more to go to market. We are setting up the partner network, partner support organization. It's not only letting our partners go free, but of course, we are there to support our partners as well as the end customers to get to our platform. And this, of course, requires OpEx expenses during the next -- this time period.

You are absolutely right that when we will get this international expansion truly to fly, our scalable software can be extremely profitable. So that is one example. Then what we have seen now in the Nordic reforms and especially those ones that we have won -- when we have won our existing customers to continue with us.

The competition is hard in the markets and everybody wants to hit us as a market leader. It brings, to some extent, not hugely, but to some extent, cost pressure because of the lower prices. And then thirdly, we are managing, in my opinion, smartly the capitalization also in our product development versus what are we taking as an OpEx cost. And like I said, compared to the current level, we are reducing the capitalization, and that has some few percentage point impact to our profitability. Those are the main things.

I guess, we have time for one more question.

It's Aditya from Bank of America. On the chart ratio, the portfolio mix changing over time, you have the contributions from the noncore products at 4% even in 2028. So does that mean there's still some drag from that in '27, '28 as well? And coming to the underlying growth, which you said is still pretty strong. How does that look like in '26, '27, '28? So just the core business which you have, how is that growing?

Yes. Okay. Thank you. Yes, in any business, there will be in the product business, certain long tail, and we expect that roughly 4% being this kind of we call it legacy software that our customers still wants to run during this time period. That is the reason for that we have reported during this year on a quarterly basis that this end-of-life portfolio will be roughly -- that impact -- has had some 4% impact to our -- 4 percentage point impact to our growth.

And that will continue most likely as is next year. We have also informed that we have had several cases -- won cases in the market court, and those has impacted 2 percentage points. We believe that we are extremely strong. We have a strong case for those cases. And hence, the underlying growth has been, first of all, and will be above this 4% plus then whatever we gain from these won cases.

Thank you, Ari. Excellent. Now it is time for a short break. Coffee and snacks will be served right outside the room, and then we will continue in 15 minutes at 3:45. See you in a bit.

[Break]

Welcome back. I hope you all had an energizing break, and now we will continue with even more energizing presentations. We will next have two more software businesses presenting. And then after those, we will dive deeper into the numbers with our CFO. And then as a reminder, we will also have the final Q&A later with both CEO and CFO joining. Next, we will hear how Indtech is scaling its software products across new markets. Please welcome Johan Nygaard.

Ladies and gentlemen, good afternoon. I took on this role in late June. And in the past months, I've been looking into what Indtech is. I have been listening. I have been learning. But I've also taken those opportunities to take it with curiosity and maybe also some kind of critical review as well. During these months, I have seen that there is a lot of strengths in Indtech. We have a lot of expertise. We have been there for many years, decades.

We have really good customers and clients and pretty large logos as well. And we do have a really good portfolio of product or software solutions. We see that there are some improvements that need to be identified, and we have identified some of them as well, and we have taken the action. Going now into the next phase of Indtech, we will build on our strengths. And we also see that we have some improvements that we could do. But we will also take up a clear growth path on how and where we should go forward.

As I said, Indtech is maybe not only one company, but it's a portfolio of software businesses. And maybe during the time now in the past months looking into how we have been treating Indtech also, it's maybe so that we try to get every of these eight product businesses fit into one size, but they are totally different. They have the different markets. They also have different kinds of customers, and they are also regionally in different markets when it comes to countries and so on as well.

And they also approach those customers and the market in different ways. But in all this portfolio, as I see it, it's quite strong, and it's also a strength that we have this diverse foundation in the total of the portfolio. So two things, as I said it, we have a strong position and especially in the Nordics, but with opportunities and some of the business also having clients internationally. At the same time, we have software and the technology that we're able to scale.

So this brings us the opportunity also to go abroad the Nordic countries. And we are then looking into how we could now utilize some of those product businesses. I will come back to this later on, that will give us also the growth of more than 6% with also a profitability above 17% in 2028. If you look on the left side, you see those charts and the bars there. And as you see from those span, there is a huge span of the total of the portfolio.

As I said, we do have eight product businesses, and they span really wide when it comes to the geographic concentration, but also the customer retention and also when it comes to the high retention we have with all of our customers. Nordics is our home market. And if you look at the market there, we are still very much to the Nordic side. But at the same time, we also see that we have opportunities with growing internationally.

And we have some of the product businesses that already have customers internationally and also some of them expanding into new markets globally. There are different go-to-market models. So if I move to the right side, you see those eight different product businesses. And five of them, they have 87% of the total of the revenue in Indtech. If we look into multichannel and [ BICS ] the first one, we have really had a strong position there for many years, both in Norway and Sweden.

We see some growth opportunities there as well into other Nordic countries. But at the same time, we see also the opportunities that the digitalization going on now in Europe with also more focus on tax and tariffs coming. And this is both a B2C and a B2B software business. Public 360, that's a case management and is really strong in the public sector in the Nordics. But we are also exploring new opportunities there in Europe. And we see that they have a good market share now in the Nordics.

But with this new technology and the strong regulations that is taken care of by Public 360, we see that there's a lot of opportunities outside of the Nordic as well. TIPS or pulp and paper and fiber that was mentioned by Endre is a place where we see that we have some headwind. This is a global, more or less business for paper industry. That's where we also see that we will gain some new opportunities now by renewing some of the software that we have had there for the last years.

But still, this is a good opportunity with more than 300 mills globally going forward also with TIPS. Edlevo is a strong one in -- especially in Sweden, having growth in Finland. And if you look to share, that's one of also our growth bets, especially because they are strong in Norway, but they have also been really strong when it comes to the maritime sector. So that's where we see that we should have the opportunity also to grow more with Eye-share. So to summarize this, we do have eight products, five of those are 87% of it. And at the same time, we do have three really good product businesses that we see could give us an opportunity going more abroad of the Nordic countries, and I will come back to this later on as well.

So just to give you some examples. We are maybe not -- the portfolio is maybe not typically household names. But as I see it, we are really critical for many parts of the society. We are what is doing with the software and the platforms behind everything. So just to give you some examples, if you register a car in Norway, for example, or you do some interactions with the local administration, probably all of this data is going through some of our platforms.

If you are a Nordic citizen and you should pay some of your invoices, I'm pretty sure that some of this is also taking care of our software in those Nordic countries. And just as one example also, we do have 2 billion transactions in that software business in a yearly.

So I think also if you take another example, when you go every week as a Nordic citizen and do your weekly grocery shopping, all the infrastructure when it comes to those retailers, that's also handled by our software, where we have those large [indiscernible] and so on in the Nordics.

So that's why I say that more or less, there is a lot of critical services in daily that runs through our systems. And I think that this is also one of the great things with Indtech is that we have everyday moments that is more or less covered by our technology and our software. If you look at the growth, this performance is quite significant spread in the portfolio.

Going from a lower number up to a higher number as well. And you see where we are on the average, the mark there for the portfolio. And we also have a target there. And I think that if we look on the total contract value we have had in the last year now and the book-to-bill, we have seen a huge increase in the opportunities we have there. And if you look on the TIPS, as I mentioned, that have had some headwind as well, this is recovery ahead as we see it. So we mean that TIPS will give us another opportunities as well.

Those that are going to bring us the opportunity to grow outside of the Nordic. That's Eye-share. It's Public 360 and it's a Multichannel & BIX.

And we have done a lot of things now when it comes to profitability. We are aiming for SG&A costs lower than 10%. We have done something already now, as mentioned also by Endre. And we have done a lot of turnaround also with 2/3 of the software we have in the total of the portfolio.

I think also it's going to be a clear split because some of the software units, they are really strong in the Nordics and they had opportunities also to grow in the Nordics. While we really need to bet on some of our software units as well on how we could be able to grow outside of the Nordics.

We are well positioned in many of the markets. We do have a proven playbook on some of our software. And I bring up -- I shared again. It's an industry -- #1 industry solution, at least in Norway. But with the focus they have had and we have been following our customers, especially in the maritime sector for many years, and we've selected now to be the #1 when it comes to the maritime sector globally with Eye-share.

Public 360, as I mentioned, that's only pan-Nordic solution. And the strength there is that we have a really good position going into Europe with high security. I think we have the highest security you could get from different military organizations and so on. So I think that, that's a big value of going into more regulated case management systems in Europe. And from everything we see in the daily now with the challenges in Europe, I think that this is going to be more and more important also.

Multichannel & BIX as I said, there's billions of transactions. And I think we have been pretty far when it comes to digitalization in the Nordics compared to the rest of Europe. And this is something we have been delivering all the software solutions for large banks, credit card companies, municipalities, large retailers and so on. So we have the total business-to-consumer and the business-to-business communication there. So this is also something we see that we could utilize going into new markets, and we have been starting exploring new markets.

But I see that the digitalization rate in Europe will be much faster than we have seen in the Nordics. It took maybe 20 years to become in more or less or 95% digitalized when it comes to e-invoices, or invoices in the Nordics. While, then I think it's going to take 5 to 6 years to reach the same thing in the rest of Europe. Because we see the technology, we see AI, and it's also by regulations coming from authorities, that's going to accelerate this utilization. And I think we will be spot on when it comes to our heritage coming from the Nordic being a part of this digitalization and grasp that opportunity going forward.

We have modernized and this is the same also where you see the bars on the left side, it's also a span here. But with the marker, it's more to the right. We have renewed some of the portfolio already. We are continue doing this. AI will support us on this as well. But we do have a few legacy left as well.

We do have a strong market positions. And when it comes to AI, I would like to focus on Public 360°as well. We are today covering 90% of the citizens in Norway, with a totally AI solution in Public 360°. So we have come pretty far. The other thing is that also mentioned by Endre, is that we now give the customers or clients opportunities to use AI portal as a framework where they could use the AI technology to make their own apps. And this is quite revolutionary also when it comes to using those opportunities for a case management system that is really important when it comes to security. This is something we implemented as well.

Then with Eye-share, we have been working with AI for 2 to 3 years, maybe more as well. And today, we see that invoice approval has increased to above 80% by using this AI technology. And this is also coming back to what I said when it comes to digitalization. This is also a part of the digitalization. One thing is the automation of it, but it's also to be able to bring this AI and the technology. And the software and the understanding we have in those niches that these 8 product or software businesses have their focus.

At the same time, we also see that the R&D productivity secure AI. I think that's one of the most important things, accelerating a lot. Then I think that AI also will help us boost the R&D and the productivity that we do. Maybe we want to have the same number of people in 2028. But those people will produce much more high-quality software compared to what we do today because of the use of AI. So this is one of the things that we have been working on for the last 2 years. And this is a rapid change in that technology happening every day.

So I think that we do have strong products. We do have a strong customer base. We are still in very strong in the Nordics because that's our home market. But we also co-developed together with our customers coming from the Nordic heritage going into new opportunities also in new markets.

And we have these 3 growth tracks. And 3 products, Public 360°, Eye-share, and Multichannel & BIX that would like to go out with in new markets.

We are shifting our portfolio to higher recurring revenue. We are on a quite decent level today, but you see that we even now need to also change some of the professional services. And we have done a lot of this in Public 360°and Eye-share where we changed from professional services more into SaaS revenue. And this also gives us an opportunity with shifting the portfolio also more into the SaaS revenue, but also a bigger and addressable market.

If you look on the bottom side there, there is a strong demand, as I said, for automation. There is increasing also from regulatory needs. It's coming more and more regulations from Europe. That's really good for us because we are already ready to meet those regulations. And that's especially when it comes to tax and also the tariffs. And I think that when you have this really significant niche product businesses, it's also barriers for others to entry into this one.

So growth from our core geographies and our customers. I think that we see that maybe 20%, 25% of our expansion is going to be -- our growth is coming from new markets. We see that we should have a CAGR, as I mentioned, above 6%, and also then profitability of 17%. There are a lot of cost reductions already done. I think we need to keep on with this as well. It means that we need to utilize everything we could when it comes to be crisp and clear on the strategy also going forward for each of these 8 product businesses.

So in 2025, we sharpened the profile. And if we look into now, what's the most important things now going forward. Simplify in 2025, reduce the SG&A that's what we have done. 2026 is about taking those growth products, expand outside of the Nordic. I think that Denmark, U.K. and Netherlands is really good opportunities for those 3. And then at the same time, take the opportunities when it comes to regulations also into '27, 2028.

So to wrap it up, we are in a really strong Nordic position with 8 distinct proven products. We have the opportunity to grow from those 3 winners. They're already in a scalable and also global potential. We have modernized parts of the portfolio already. AI is important where it adds value. And AI capabilities also where they truly, so to say, bring value for our customers. So we know the markets, we know our customers. And I think we are ready to grow. Thank you.

Thank you very much, Johan. Once again, we are ready for your questions. And there, Matti was first one with the hand up.

Matti Riikonen, DNB Carnegie. When you say that you have 8 products bringing 87% of revenue and only 3 products with growth opportunity, it means that your entity is actually very complicated and very diversified. And if it was listed separately, many would consider that it's too wide, too complex. It would need to be restructured to have some kind of focus. And now it's part of Tieto, which makes it even bigger question. So what is stopping you from making some structural changes to the company so that you would basically skip focus and maybe divest the ones that are not core for you, then focus everything on the ones that bring you the growth, and then see what happens?

So is it kind of lack of growth opportunity in those 3 or maybe too low valuation to sell the others, which are not performing? Or is it just that you don't have the resources to develop those remaining ones that would be interested. So I mean, there is a reason why you have had these businesses, I think, for the past 10 years or maybe more and nothing has happened. So I would like to hear your view that why are they still there? And why haven't you done anything?

I think we have -- first of all, we have addressed that this is a portfolio. It's not one unit. And those 8 product businesses, they are totally different, as I said, with different markets. So we had to take the strategy from each of those also going forward.

There are things that gives, as I said, for example, Public 360°, Eye-share and also Multichannel & BIX. Those we see that are opportunity to grow abroad the Nordics. But we still see that some of those product businesses also, we still have an opportunity in the Nordic market. We see that we have, for example with Edlevo we're really strong in Sweden, and we have started now with growth and opportunities in Finland. We still see that's the growth, but we don't go abroad the Nordics with Edlevo. We said that those 3 are the most important things.

And then also see from the technology and also kind of how major are those different 8 units. And have any experience on customers abroad of the Nordics as well. So yes, I fully agree that we are still in a process now looking into it, but we mean that we have a pretty well, clear strategy on where to go with this 8. And then we have to see also what is -- and that's the beauty with the portfolio as well that you should treat it as a portfolio. So -- but now we have a clear strategy for a total of it as I see it. And there will be opportunities also for those that doesn't go outside of the Nordics. I hope it was answering your question here.

Any more questions? Sami here.

Sami Sarkamies, Danske Bank Markets. I have two questions. You have quite a high share of recurring revenues, but margins don't necessarily reflect for that. What explains this? Do you need to, for example, sell low-margin services to complement your solutions?

And then secondly, which products are best suited for international growth and what kind of investments you need to make to reach that growth?

When it comes to low margin, we have some of those, as you saw on the spend there. We have some of the product units that have a really low margin. So that's one of the things when it comes to the strategy of how to accelerate those now with new opportunities and how to do the cost reduction as well. So yes, you're correct with your question there, that there are some more things, as I said, that we need to do with the portfolio to bring it up. That's why I'm really confident also that we should be able to be above profitability of 17% in 2028.

So then I think that -- that's also a question then on how we could utilize the technology more also because the technology changed it as well. So -- and the second question was...

European growth.

Yes, yes. You talked about 87%, or [ 87 ]. So I see that the growth now will come from those 3 when it comes to new markets. The 5, there will be 2 to 3 of those that will grow in the Nordics. And then we have a challenge with a couple of those also. How should we renew the software? Or how should we go strategically forward when it comes to potential new markets?

Thanks, Johan. All right. Time to move on. Next, we will hear from our last software business also with a strong ambition to grow in the European markets. Welcome, Mario Blazevic.

Good afternoon, everyone. It's great to be here with you today. I will start with some recent examples. Just 3 weeks ago, I had a conversation with the CEO of a Nordic bank. And she told me there are so many things happening in our bank at the same time.

First, our customers are highly digital and they require even more or better user experience in our digital channels. Then she said, at the same time, there is so much compliance coming our way, and we use a lot of energy and investments to just stay compliant. And there are increasingly rapid changes in fraud trends and security trends. She asked how can Tieto Banktech help us?

Then 2 weeks ago, I had similar conversation with the CEO in the European bank, and he told me a bit of the same story. He said on his side, we have stopped growing. Our customers are not digital and the cost for our customer center is increasing. And at the same time, we need to invest in new anti-money laundering technology. How can Tieto Banktech help us?

And this is what I'm going to talk about today. What is going in the market? What we are providing to our customers? And how we are going to create shareholder value in the future?

If we start with Nordics, we have been transforming banks and financial institutions in the region for decades. Now recently, we have become very digital society where more than 95% of payments are fully digital and where we utilize very advanced digital identity solutions.

Now we are expanding internationally with the basis of our Nordic growth we are looking into selected parts of international growth in Europe. And we have actually carefully selected software suites that we are taking to this market. So how do we create shareholder value from this? Well, we are doing simplification and margin expansion. And today, we announced our target of growth and more than 6% CAGR, and profitability more than 18%.

Banking technology is really fantastic place to be. There are so many powerful trends that are transforming the industry, and I see fantastic opportunities for Tieto Banktech to grow in this market. So let's start looking into the market, what is happening?

First, we see that market dynamics is changing dramatically. Banks are facing at the same time, 2 different elements. On one side, banks need to grow. And at the same time, banks need to be more efficient. This leads us to position where banks actually are increasingly looking into scalable software solutions that they can buy in the market and not build themselves. At the same time, we see that current geopolitical situation is also complicated. That means that banks are looking into regional and reliable software providers that have proven track record of transformation in large projects.

This is a complex environment for banks. But I see a clear path for Tieto Banktech to contribute, to create value, and to create growth for the company. We see the same patterns in the Nordic market as we see in the European markets. Let's now open up a bit more what do we have in Tieto Banktech?

24% of our revenue comes from our Norwegian banking platform that we have delivered for many years. Here, we have 60% of market share, and this is backbone for many banks in the region. At the same time, we have flexible, modular software suites that are covering all of the key parts of banking processes. And these software suites are tightly integrated into our Norwegian core banking platform. But at the same time, they are integrated into leading core banking platforms in other parts of the Nordic and Europe.

Then if we think about our key capabilities, I would like to outline our people and our competencies. Today, we are over 3,000 people in 10 countries, and we have unique knowledge of banking value chains. And banking technology. We have a proven track record of transforming large complex projects and portfolios within large banks.

As an example, just a few weeks ago, we transformed one of the leading Nordic banks to one of our scalable software portfolios. And what is interesting here is that the bank executive told me that they have tried to do this two times before in the last 11 years. And now they finally made it with us. This makes me really proud. But at the same time, it is a proven track record that we are able to transform complex banking projects with our people, proven technology and methodology.

We have a broad customer base and high level of recurring revenue, and we are ready for growth and scale up. Let's now look into two areas where we are going to grow in the future, Nordic and Europe.

Starting with the Nordic. We have renewed the contracts and confidence in the last year with key banks in the region, giving us record high order backlog of more than EUR 1 billion in this market. This is important because it gives us predictability for the future.

For example, we have renewed our contracts with DNB and Sparebank Norge and we have had recent wins with Fana Sparebank and Lokalbank corporations.

Then if we look into the Nordic region, it is a EUR 2 billion market. And here, we see that forecasted growth is 5% annual and currently, we have 22% market share. This gives us with excellent opportunities for further growth. And we are ready to take that growth. So what we are going to do?

Firstly, we are going to deepen our relationship with Tier 1 banks and expand share of wallet with them. Secondly, we are going to continue to develop and develop our relationship and deliver to regional saving banks and niche banks that we have in the region. Then we are going to penetrate the market with cross-selling and upselling and also introduce new products into the market.

Example for this is our next-generation mobile bank, where we are adding AI capabilities and advisory services. And also our real-time loan processes where we are fully automating loan processes, making sure that banks gain efficiencies in their processing of loans. This is how we are going to grow in the Nordic region. We have clear ambition and clear plan.

Now if we look into the second part of our growth, which is international growth in Europe. The other pillar that we have for growth is our European expansion. And here, we are starting -- when we look into U.K. and Ireland, we start strongly because here, we already have 30 customers, 30 banks that are using our card and payment value chain. Here, we are investing in expanding our sales. We are going to grow with more customers and also introduce new products to this market.

Then if we look into other parts of Europe, we have already proven with our ATM software, how we can transform a country like Netherlands. Now we are taking that same software, and we are entering the German market. We have already been certified with our software. And approved by the local FSA authorities. We have been certified by the local payment scheme [indiscernible], and we've got first customer, IC Cash. That means that we are really ready to take our modular software into the new markets, and we have clear proof points.

Remember, in Germany, 40% of people are using cash in their daily life compared to only 5% in the Nordic. And this usage of cash is driving cost for the banks.

So we see huge potential for simplification and modernization of this infrastructure in this market. Then regarding Spain, we have done careful analysis of the market and mapping of our software portfolio. We see in Spain that 60% of the people are using cash in their daily lives. And in Spain, they have the highest concentration of ATM per capita in Europe. This gives us a lot of opportunities with our selected Software-as-a-Service offerings within ATM, payments, card value chain and also financial crime prevention. As we are approaching the Spanish market with the local sales, for example, last week, we are gaining traction because we have gathered 20 banks and gave them the introduction for our payment value chain.

As we are building momentum and pipeline in the European market, I am certain that this will translate into new contracts over time. With that, I see clear path for our growth, both in the Nordics and in the selected European market. And we see that trends are the same. We have selected carefully our projects, and we have a clear plan for growth. So now let's look a bit more into our products and how we are developing new technology. We are experts in creating new technology, and we are very good at embracing the new technology and using it in our daily work. We understand AI, and we can embed it in a responsible way in line with requirements from banks, and banks are heavily regulated.

We are doing 3 things at the same time. First, we are embedding AI capabilities to our core products. For example, when I talk to banks executives, they are saying that their employees are using general AI copilots, but they are asking really, when are you going to add AI capabilities to your products? And this is exactly what is happening now. We are rapidly embedding AI capabilities to all of our products, and we have several of them in our road map ready for rollout. As mentioned before, we have been working with AI technology for many years. Within, for example, financial crime prevention, fraud monitoring, we have been using machine learning and deep learning for many, many years. Now we are adding also Gen AI capabilities in areas to, for example, reduce number of false positive significantly.

The other example that we have is new products and services that we are introducing to the market. Example here is our next-generation mobile bank, where we are adding advisory solutions embedded, both to create better user experience, but also to enable cross-selling. As we are using this new technology in our development projects that we do together with our customers, we see good examples of efficiencies when we use state-of-the-art AI tools in our development.

Now I will go through our investment profile. We are dramatically changing our investment profile. Here in the last few years, we have been investing heavily in banking -- core banking modernization in Norway. Now that we have successfully completed that assignment, we are actually moving a lot of investments into new products and new services. This is important because our growth muscle will be strengthened as a result of this shift. Our development projects are always done in close collaboration with our customers. And in the future, we are not going to develop new products only for one customer. When we develop, we look at scalability and standardization. At the same time, the investment levels remain the same.

Now let's have a look at our technology modernization ongoing. We are rapidly reducing our low-margin portfolio, and we are moving customers to new modernized platforms. We know how to do this. We do this with our people, with proven methodology and modern technology. And we do this safely step by step. Why is this important? From profitability point of view, this is a clear point that we are simplifying our technology, our development and maintenance become simpler, and we are reducing the cost of technology such as mainframe. At the same time, we are able to fully automate our operations. And this gives us strengthening opportunity for long-term competitiveness.

Now let's look into our financials and our business plan. 2026 is a year of execution and transition. We have already mentioned that we have 2 distinct happenings that we have communicated in our Q3 report this year. We have a EUR 22 million onetime effect of court ruling in Norway. And also, we have effect of exit of our low-margin mainframe contract that has a negative revenue impact of minus 2 percentage points. Having said that, we have a clear plan. It is job to be done. We know where to expand, and we know how to do that.

Moving ahead, I see good opportunities for growth, both in the Nordic and internationally. And we are aiming for growth of 6% CAGR and profitability of more than 18%. Leaving our strategy and financials, we have very clear KPIs. We are slightly going to increase our recurring revenues to 80%, and we are going to increase our SaaS revenues to 65%. This at the same time as we are providing flexible delivery model in line with our customer expectations. Our OpEx and CapEx remained stable at 8%. Looking into the time line, we have done significant simplification and harmonization in 2025. We have strong Nordic routes, and we are ready to expand in Europe. In '26, we focus on transition and execution.

While in 2027 and onwards, we will see market expansion and profitable growth across the Europe. To sum up, Tieto Banktech ambition. The addressable market is EUR 18 billion. We have strong customer base. We have modern solution portfolio, and we are adding Gen AI capabilities to our products rapidly. We are driving digital transformation in the Nordics, and this proven success is the foundation for our growth in Europe. We are dedicated to drive growth of more than 6% CAGR and profitability more than 18%. We have teams and competencies in place. We have a highly motivated management team and, we are ready for a strong focus on execution. Thank you for your attention.

Thank you, Mario. And once again, we are opening the floor for questions, and Matti was fast again. So first question goes there.

Matti Riikonen, DNB Carnegie. Since much of your growth is depending on your success in the new European business tenders, what is your current hit rate in the new tenders? And how do you choose which projects you decide to bid for? And how do you manage the cost of that bidding activity so that it doesn't hamper your total cost and profitability?

Thank you. So first, looking into the tenders. There are really a lot of tenders ongoing in Europe, and we are carefully selecting the ones that are within our targets. So as I explained earlier today, we have selected which of the scalable software products we are aiming for which markets. So we are going very focused. And then once identified, we have separate teams that we have allocated that are working on Hunter sales. They are highly trained to handle these complex RFPs and processes. And given the track record that we have, I cannot disclose the exact numbers, but then many of the cases we have actually been winning and materializing as also recently announced the case that we have won in Germany.

Then we all know that these processes take time. So there is really a lot of time that banks and financial institutions in Europe use to analyze the providers. And we have also good proof points of winning and delivering these projects.

Let's take one question from the online audience. What is the time frame for realizing EUR 1 billion order backlog to revenues?

Yes. So as shown before, many of the contracts that we have in banking, they are long-term contracts. So typically, the contracts within banking sector are 5 to more than 7 years. And now renewing the confidence that we've had in the market in the last year, these will materialize in the next few years.

Any more question there in the back?

[indiscernible]. I wanted to understand a little bit better how you guys think about churn as you're talking about replatforming and moving from older platforms to new. Is there any way for you to disaggregate for us how to think about the walk from today to '28 where, say, half the growth is coming in the Nordic core, but there's also a substantial amount of migration from legacy platforms to modern ones?

So thinking about modernization and churn, as we are having deep relationship with our customers, in most of the cases, we are actually the safest path for customers to migrate and modernize from the old legacy solutions to the new scalable ones. Then having said that, of course, as we are modernizing our platforms, then customers are looking into open processes in some cases. And even there, we see that we are competitive and are winning in regards to the processes that are open in the market.

One more question then from Jaakko.

Jaakko from SEB. Looking at your market -- margin ambition of more than 18%, you were just -- last year, you were around 12%. Could you walk us a bit through on the drivers there? Where are you expecting to get such a bigger step? Is it just coming from growth, as you point out in the slide deck?

So as I mentioned, part of our margin expansions come from the growth as we are expanding both in the Nordic and European market. Then you can say when we are growing now, we are growing on our scalable software portfolios where we can add more customers and gain economy of scale. Then the other part of our margin expansion comes from simplification that we have done, as mentioned earlier, reducing our G&A cost. And then the third lever is as we are modernizing and sunsetting the old technology, we also see a good opportunity for margin improvements when we are migrating customers from old legacy solutions to the new scalable solutions.

Thank you, Mario, and thank you for the questions. Now we will move on. And now next, we will hear how everything you have seen and heard today will translate into numbers. Please welcome CFO, Tomi Hyrylainen.

Good afternoon. So as you have heard, we are changing gear to deliver improved financial performance. Our businesses have clear strategic priorities on growth and building a more competitive cost structure. We have renewed our financial targets. And in my opinion, those are both realistic and achievable. But more importantly, they are not dependent on any specific market condition. I have my 3 main points for today on this slide.

Firstly, we have a strong foundation. All of our 4 businesses are either leader or among the leading companies in the Nordics. We have clear strategic priorities on growth we aim to strengthen our position in the Nordics with selective international expansion. Our businesses are building lean cost structure to improve competitiveness and our cost optimization program is well on track to deliver on that. Naturally, our aim is to improve shareholder returns where our capital allocation principles are supporting that with focus on organic growth and returning excess capital to shareholders via share buybacks or extraordinary dividends. When we look at our businesses, the business mix is twofold.

So our Tech Consulting has relatively short contract periods, and it's a highly cyclical business. Whereas our software businesses have quite long contract periods from 5 to 7-plus years and total contract lengths often extending to 10 years and above. In addition, our software businesses have high share of recurring revenues anywhere from 74% up to 80% in Indtech. Our software businesses also have increased share of SaaS revenues well above 50%, except in Caretech, which Ari referred to earlier, which is market-driven, where often our customers want to own or control their own infrastructure.

To conclude, our software businesses are very sticky. Our products are often in the core of our customers' critical business processes. Here are the financial targets per business. As you have heard today, all of our businesses have clear plans on how to improve their financial performance. Tech Consulting over 3% CAGR growth, 27% to 28%. As explained, it's slightly muted due to the change period that the business is undergoing. Our software businesses, Banktech, Caretech and Indtech, we are targeting to grow over 6% to 7% CAGR over '27 to '28. And on margin, we are already making tangible improvement with our cost optimization program. And these target levels are well achievable in my opinion. And good to note as referred here today as well, Caretech is already performing at these levels.

This is the summary of all of our financial targets, and I'll go through these one by one. Starting on growth. As mentioned, year 2026 is a year of transition. This is due to the known headwinds in Banktech and Caretech having approximately 3% headwind for '26. This is why we expect the '26 growth to be flat or slightly negative. For 2027 to '28, we expect our target is to grow over 5% with growth drivers being in Tech Consulting, the focus areas of AI, cloud, data and enterprise applications. And Banktech and Caretech, we expect the growth to roughly come 50% already from the international expansion as discussed today. In Indtech, we expect primarily the growth still to come from the Nordics.

On profitability, we expect significant profit expansion into 2026. This is driven both from the cost optimization program as discussed today, but also the technical IFRS 5 cost burden ending. From 2027 to 2028, growth will be the primary growth -- sorry, profit improvement driver. Then to our investments. As mentioned already, one of our key principles in capital allocation policy is to focus on organic growth and organic growth investments. We expect a relatively stable investment level of approximately 6% to revenues, where 50% is CapEx. What will change is our focus on investments. We will have much sharper focus investing into growth and delivering on the new technologies such as AI.

We're also enhancing our investment follow-up process and aim for shorter investment payback periods in general, less than 5 years. With this increased controls over our investments overall, we aim to deliver higher returns from our investments. More concretely on our capital allocation principles. So we invest, first and foremost, to our organic growth. Secondly, we pay dividends 60% to 80% from our net profits, which we adjust for noncash onetime items. Thirdly, our leverage metric, which we continue to measure as net debt-to-EBITDA, we aim to be below 2x.

More importantly, we aim to stay close to 2x with excess capital to be distributed back to shareholders through share buybacks or extraordinary dividends. We are not intending to make any large M&A during this strategy period, but only smaller bolt-on to fuel our growth. We're also today outlining our considerations for '25 dividend where we expect to pay out 80% of net profit, which we will adjust for the noncash impairments and the IFRS 5 cost burden, which has been approximately negative 1 percentage point of profit. We understand that with these announcements, we are resetting the euro-based dividend level. However, we have clear plans on how to improve our net profit level for the coming years, and that creates a good foundation for increased dividend profile going forward.

For 2026, we expect already a significant net profit increase driven by the already mentioned profitability improvement, but also decrease in PPA amortizations of EUR 29 million, which is a result of our every merger intangible assets reaching the maximum 5-year depreciation period. For 2027 and 2028, the profit improvement will primarily be driven by growth, but also supported by lower OTIs as we're sufficiently done with our cost activities or cost programs. I've also included a cash conversion metric in this picture to illustrate the dividend payout ratio to free cash flow. '26 to 2028, cash conversion to be below 1, which is driven by higher CapEx to depreciations and the restructuring provision decline towards '28.

This in practice means that our dividend ratio of 60% to 80% of net profit represents closer to 80% to 100% of free cash flows being paid out as dividends. Here, I want to further confirm the leverage logic. So we will most likely meet our leverage target by the end of 2026. This is driven by mostly the profit improvement here, the EBIT reported EBITDA. More importantly, you can see in this picture, we aim to be close to 2x with excess capital distributed back to shareholders, as mentioned.

I'll conclude my presentation with my 3 main points. So we have a solid foundation. We have good market position in the Nordics. Our businesses have clear strategic priorities on growth and building competitive cost structure. Of course, our ultimate aim is to improve shareholder returns and our capital allocation policy, which is focused on organic growth and returning excess capital to shareholders through share buybacks or extraordinary dividend. We are in a very good position to deliver improved shareholder returns. Thank you. Ready for Q&A.

Thank you, Tomi. We are now ready for the final Q&A, and I would like to invite our CEO, Endre, also back to the stage. And we are all ready. Questions. And Matti is #1 again.

Matti Riikonen, DNB Carnegie. A couple of very technical questions mainly to Tomi. First of all, the level of depreciation going forward. Could you shed some light on how quickly your normal depreciation would decline, let's say, in how many years it would decline by 50% now that you have basically less CapEx going into Tech Services. So the number is coming down. But what we don't know from the outside is that what is the average depreciation period. So could you help us kind of setting the depreciation levels in the coming years to the right ballpark?

Thank you, Matti. Extremely difficult to do an average over all our products and businesses. So they tend to be from 3 to 5 years. And then some of our products, of course, like the banking platform in Norway going to 10 to almost 15 years. So there's a huge variety of different depreciation periods. If you would use a rule of thumb, you should stay closer to 5 years.

All right. And then regarding the one-offs, you have quite a long history with quite large one-offs in the company. And now you say that you expect that they would be declining to below 1% of net sales. So for which time frame -- is this valid for '26 to '28 period or which time frame? And how do you really think that you can do that given the history that it hasn't been possible in a long period of time?

I can appreciate the comment and well recognize the frustration, if I may call it that way. So we think that towards '27, we will be ready for this roughly 1% level and below 1% definitely running towards the end of '27. We are doing some restructuring slightly into '26, which is a result partly due to the TSAs ending with Tech Services. So you should be looking for those to come towards the end of '26. But towards '27, the below 1% would be realistic.

Right. And then thirdly, about the TSA agreement that you still have, how long will that continue? Is it for a certain period of time?

Maximum 18 months. Maximum 18 months from closing. So here we are kind of on a good track to kind of deliver ahead of that plan. So let's see.

Right. And how will you scale those costs down when the 18 months period is coming to an end? So are you able to basically reduce your costs so that when the TSA agreement ends, you would have a kind of smooth sailing from the cost point of view that you don't bear the burden anymore?

Everything is relative. So smooth sailing is a relative term, but I think you have got the point that, of course, we will position the cost base accordingly when the TSA is coming to termination. So I would say that, that's part of what Tomi also said related to the OTI. And historically, when you look at the majority of the OTI has actually been coming from Tech Services. Yes, we have an extraordinary year in 2025 in terms of taking OTIs related to the restructuring that we're going through. And then we'll have some OTI reflecting also the TSA termination, as you have indicated.

Your next question, Sami.

Sami Sarkamies, Danske Bank Markets. Starting with a clarification on the previous question. So you said that you're not planning any restructurings next year related to business segments. So we're only talking about group costs. And then my second question would be on divestments. You said today that you're not planning any material acquisitions, but do you see a need to do divestments, I guess, in Banktech and Indtech, you might have some low-margin areas?

So let's answer this at the more kind of -- in a general perspective. So first of all, I would say that the sales of Tech Services was a strategic decision. It was a correct decision. Then we have also said that we need to optimize the portfolio going forward. It will be based on what is creating shareholder value. We have also said that we will simplify the structure going forward. And we need to keep in mind that what we have in front of us currently is a portfolio, which is a result of many mergers, many M&A happening during the years. So there is probably a potential to simplify the structure going forward to create a more agile organization.

And I think that you will see simplification happening both near term but also long term with this company. So we have a lot of operational tasks ahead. We have initiated a lot of, I would say, practical operational initiatives internally in addition to what we have said underlying under those 4 strategic initiatives that we presented today. So you'll see kind of these operational tasks coming through the next couple of quarters for sure. But this is really not -- like I said initially, this is really not about a new strategy. This is about really walking the talk and ensuring that we are now executing on what we have presented today. Then what was the second question that was related to...

Yes, that was the restructuring. So we don't rule out any -- we will continue the simplification so we don't rule out any further -- that we wouldn't do any further restructurings in '26.

Any more questions? All right. Seems it's all clear. Thank you for the active dialogue, and then I will now hand over back to Endre for the final remarks.

Yes. So I would say that, first of all, thank you for joining us. And secondly, my personal ambition for this Capital Markets Day was actually to take one step in the right direction to build investor and also client credibility and trust going forward. As I also said and like the business units have been covering, we have a solid foundation to capture the growth going forward. And I believe also that the business units will have clearly documented that we have a viable plan going forward. But it's all about execution. It's all about operational follow-up going forward.

And it's also more than the perspective of '26 to '28 because I believe that we have a strong position also to accelerate the growth after 2028 when we have refocused the company, we have a clear vision of what we should do going forward. So I really look forward to presenting the achievement and the results when we come to the Capital Markets Day in 2028. So thank you for joining us and looking forward to the dinner later tonight. Thank you very much.

Good morning, and welcome to Tietoevry's Third Quarter Earnings Webcast. My name is Tommi Järvenpää. I'm the Head of Tietoevry's Investor Relations. This morning, we will be discussing our Q3 results as well as progress with our actions to improve performance. The teleconference line is now open. And as always, we will be hosting Q&A after the presentation. With me here today are our CEO, Endre Rangnes; and CFO, Tomi Hyryläinen.

With this, I would like to hand over to Endre. Please go ahead.

Thank you, Tommi, and welcome to the Tietoevry Q3 '25 Quarterly Presentation. It's been a very active and I would also say, a productive quarter marked by the execution of our cost efficiency program. Over the past few weeks, we have also held a large number of meetings with investors and clients to gather valuable data points and insights to preparation for our Capital Markets Day on November 25. And my message is clear. We don't need a new strategy. We just need an execution of the strategy that we already have. We have entered into a new era now following a major milestone in Q3, namely the successful completion of the Tech Services divestment.

Our business is now comprises of three focused software units and a consulting arm, and I would say, each well positioned in their respective domains. We have a much more focused Tietoevry. We are excited to move forward. And when we look at now the current revenue split, approximately 44% is coming from the Create business, Digital Consulting, Banking represents 30%; Care, 12%; and then Industry approximately 14%. So in less than 5 weeks from now, we will unveil the next phase of plans for Tietoevry at the upcoming Capital Markets Day.

While the market environment was, I would say, a bit of a challenge also in Q3, we are starting to see early signs of margin recovery, mainly supported by the measurements taken then in Q2 and Q3. We delivered a top line growth of 4%. However, the underlying organic growth remained slightly negative, still impacted by a weak market. Then our transformation efforts are progressing well.

Everything from cost optimization to our customer focus has resulted in improved profitability across all businesses, delivering a 19.3% margin in the quarter and 15.2% eliminating the banking court ruling effect. EUR 75 million of the year-end 2026, EUR 115 million cost optimization target is already achieved by end of Q3, and we are now 1,500 colleagues or FTEs less compared to end of Q3 2024. So with the divestment of Tech Services now completed, we are operating with a sharper focus and a more resilient structure going forward. So these current developments gives us also a confidence that we are going to continue executing on our transformation agenda.

As communicated in connection with our Q2 report, we have initiated a set of actions to get back on track with Tietoevry. As the first step, we have started to strengthen customer-focused sales and delivery capabilities. As an example, we have launched a new governance structure with our clients to build trust and to ensure a better interlock with the clients. We have started the sales harmonization project across all business units in Tietoevry, including our CRM reporting structure, and we have kicked off also a sales recruitment program during Q3.

Then, of course, the AI boost program has been initiated to harmonize AI governance and also then compliance across the group. It covers case and role-based AI education, sharing our best practices of embedding AI into our products, services, and also sales and AI tools also for internal productivity, all of this with clear KPIs. We have also executed actions to reorganize our Create business to strengthen our position as a local partner with global delivery capabilities. This transformation involves a significant competence shift that is already underway. It marks an important step towards a more agile and customer-centric operating model with a tight future link to strategic software partners. And we have also seen already mentioned that the cost optimization program is absolutely on track.

Looking then at the Q3 performance. Growth was partly driven by the court ruling in Tietoevry Banking. This had a positive effect also on the margin. However, the underlying profitability improved also when excluding this additional revenue. The quarter ended with strong order backlog, especially in Industry and Banking. Organically, the order backlog is up 11% year-over-year, but then also partly due -- partly to a long lead time in some of the contracts, this will start contributing largely in 2027 and forward, but this is a good foundation for our future growth ambitions, of course.

Our operating cash flow was solid, while the numbers are not fully comparable. While we presented -- we are presenting now figures for continuing operations, cash flow includes Tech Services for 2 months only in Q3 of this year compared to, of course, 3 months of the last year. Leverage is at 2.4. If we exclude then the IFRS 5 effect, we are at 2.2 from a leverage point of view.

Let's then have a look at the Q3 business highlights, starting then business unit by business unit, starting with Create. Our consulting business, Create, we still have a challenging market condition across the geos in which we operate. But capacity adjustment and SG&A reductions are showing results, and we are able to improve profitability while we operate in an environment with salary inflation and also partly some price pressure. As part of Create's focus initiatives, we are now actively working towards an operating model to improve customer centricity to become a strong local player with local and global deliveries and with a strong link to selected strategic software partners.

Also on the positive side, we won several new agreements during the quarter, for example, Park Holidays UK, which is a leading provider of holiday products across the United Kingdom. They choose Tietoevry Create as its 3-year exclusive partner to accelerate the digital modernization. We will then focus on mobile apps, websites, data processing and human-centered design services, among other things. The Finnish Patent and Registration Office, PRH, selected Tietoevry Create as its partner for delivering low-code, no-code development platform. And this will be a platform that will enable rapid and efficient development of web applications without requiring deep programming expertise. So this agreement covers an 8-year period.

And then the third example, a leading European Tier 1 supplier selected Tietoevry Create to support the development of the next-generation automotive audio platform. The objective is to develop modular and generic audio solutions that can be easily customized for future weekly programs across major automotive manufacturers. And this approach is leading to reduced development cost and faster time to market.

Looking then at banking. In banking, profitability improved also without the revenue related to the court ruling. So underlying margin is over 16%, up from 13% last year. Then we are not satisfied with the underlying revenue growth. It's down by 2%, mainly impacted by an expired margin dilutive contract, the mainframe contract, having a negative impact of 2 percentage points. We are positioned -- we are -- I would say also that we have a positive development in Banking as a Service, mainly the core bank solutions in the Norwegian market and then growth in financial crime preventions continues. Looking at also then the order backlog, it remained at a high level, well above EUR 1 billion, which is a 20% increase versus Q3 2024.

Again, the contribution to growth will mainly start in 2027 and forward because of a relatively long lead time for implementation. The agreements examples, we can start off with the SaaS agreement with IC Cash Services, which is a cloud-based ATM platform. So it's a 5-year agreement with IC Cash Services, marking their entry into the German ATM market. And the partnership provides ICCash with a fully regulatory compliant private cloud-based ATM platform designed to enhance security, scalability and operational efficiency across its European network of more than 2,500 ATMs.

And then also following the merger of SR Bank and SB1 Southeast Norway to become SpareBank 1 Sør-Norge Tietoevry Banking, then jointly with the client and other parties has completed a very complex technical consolidation covering approximately 1 million accounts. SpareBank 1 Sør-Norge is currently now among top 3 banks in Norway.

Then looking at Care. Also Care turned back to growth in Q3, driven by a healthy growth in Finland of 6%. So by now, we have won 16 out of 21 well-being services counties in Finland. However, due to transition periods, the full growth again will -- the contribution will come starting mainly in '27 and forward. 4 of these contracts coming from 6 last quarters, 4 of these contract wins are still waiting for the market court decision, which has an impact on growth and profitability of approximately 2 percentage points.

Also, growth continued to be impacted by the legacy product business with a minus 4 percentage points effect in Q3. Then we are very proud of the progress in international expansion with Care. We announced yesterday a win in Catalonia, Spain. So with this strategic agreement, Tietoevry Care and NTT DATA will jointly participate in the development of Catalonia's new open health platform. This is one of the core projects of the region's digital health strategy from '24 to '30. So the project based on European open HR standards includes architectural components and application marketplace, platform services, et cetera. So the partnership reflects a shared commitment to openness, innovation, and excellence in digital health. And of course, this is another significant step for us in the expansion into broader European healthcare market.

We also signed a Lifecare EHR contract with North Karelia Wellbeing Services County, a new customer of Tietoevry. Lifecare client and patient information system will cover specialized medical care, primary healthcare, social services, dental care as well as mobile documentation and operational management for home care.

The third example is Lifecare client information system that was signed with the Wellbeing Services County of South Savo with a value of EUR 35 million. This will be Lifecare EHR, which is streamlining the works of social and healthcare professionals to provide a real-time comprehensive view of client and patient information.

Going then to industry. We made good progress in industry in the quarter. Revenue turned to growth. Development was healthy in all businesses, except Pulp, Paper, and I would say, kind of a market-driven decline. Overall, market activities are improving, visible in significant increase in the order backlog, which is up double digit organically 34% growth. Also, profitability improved, again, mainly driven by the cost optimization initiatives launched in Q2 and also in Q3.

And we have several wins, I would say, across the businesses in the Nordics. Some of them are the National Government Services Center, Statens Service Center, which is a central government agency in Sweden. Tietoevry has signed a new long-term contract for the continued delivery of HR payroll system called Primula to Swedish government agencies. So for public sector organizations, this will be stability, ease of use, and security in all aspects, which is quite important also in this sector, of course.

Kesko in Finland entered into a strategic agreement with Tietoevry Industry for provision of the Tietoevry Create big supply chain messaging services for business transactions with customers and suppliers. So these services enable smarter stock level management, ensuring that the supply chain operate with speed, agility, and reliability demanded by today's market, of course. And then thirdly, Oslo City Council in Norway launched Plan & Bygg 360, I would say, a next-generation digital solution developed by and with Tietoevry. This will replace a 25-year-old legacy system, and this cloud-based platform supports 600 employees in streamlining planning and building applications. So key benefits again include automated invoicing, AI-powered decision support, and improved transparency for residents and businesses. That brings us to the CFO report. So Tomi, please.

Thank you, Endre, and good morning, everyone. So Q3 highlights were our improved profitability in all businesses, which was supported by our cost optimization program and closing of the Tech Services divestment. Our organic growth of 4% included a positive revenue contribution from the court ruling in banking of EUR 24 million in total. Out of this EUR 24 million, EUR 22 million related to prior periods and EUR 2 million related to deliveries in Q3. This EUR 2 million price increase element is recurring and will continue also in the coming quarters.

Our Q3 profitability was positively impacted by contribution from our cost optimization program with approximately EUR 15 million of gross savings. Cost burden from Tech Services impacted margin negatively by approximately EUR 4 million or 0.9 percentage points. As a result of cost optimization program, our onetime items were relatively high at EUR 23 million. However, by the end of Q3, most of the restructuring costs are now booked.

Closing of the Tech Services divestment had primarily two main implications in Q3. Firstly, we received consideration from the deal of EUR 223 million with net cash impact of EUR 201 million. The delta is primarily coming from transfer of debt-like balances and the cost to sell, which includes bankers and lawyers fees. Secondly, we derecognized the tech services from the group, which resulted in a loss of EUR 129 million, which is recognized in discontinued operations. This amount includes relatively small changes in the carrying amount of net assets from the initial recognition and the majority relates to technical reclassification of FX differences from equity to discontinued operations P&L. These are the so-called cumulative translation differences in equity.

On 15th of September, we updated our guidance for the year. We saw a strong September month, and we currently believe that we're tracking towards the upper end of our profit guidance. As mentioned, we made good progress with our cost optimization program and reached EUR 75 million run rate savings by end of Q3. This resulted in the EUR 15 million savings already realized in Q3. We expect to reach approximately EUR 85 million to EUR 90 million run rate by the end of this year. By the end of Q3, we have recognized EUR 41 million of the onetime cost from the estimated EUR 45 million to EUR 50 million total program costs.

In this slide, I'll highlight some of the key financial profile changes resulting from the Tech Services divestment. Upper left-hand corner illustrates the cost burden impact to each of the reported quarters, including the Q3, where we have still 2 months cost burden impacting our profitability. You can see that minus EUR 4 million there in the picture. From Q4 onward, we expect the TSA income to offset the cost burden and relevant cost reductions to happen in line with the TSA services reductions. This can take over 12 months depending on the service being delivered.

Upper right-hand corner illustrates the CapEx change from tangible assets to intangible assets. However, the overall CapEx levels compared to revenue as a percentage are roughly at the same level being approximately 3% of revenues. Below on the left hand, you can see the significant reduction of net debt from EUR 875 million to EUR 552 million. However, due to reported EBITDA decline, the leverage remains at 2.4, excluding the IFRS cost burden, as mentioned, leverage would be at 2.2. Below on the right-hand side, you can see that net working capital level improves and changes from positive to negative. So the continuing businesses tie up less capital compared to the earlier group setup.

So as mentioned, we continue to deliver healthy operating cash flow in Q3, which is seasonally a weak cash flow quarter. Our net working capital increased by EUR 52 million due to seasonality. Prior year net working capital increase was abnormally high due to positive weekend impact in accounts receivable. Note that Q3 cash flows include 2 months of Tech Services and comparable periods include full 3 months. And of course, going forward, none of that will be visible.

Free cash flow was impacted by Tech Services divestment, as commented earlier, and the leverage net debt reduction to EUR 552 million was driven by the Tech Services divestment with main elements being the received net cash on disposal of EUR 201 million and the reduction of lease liabilities of EUR 102 million. Net debt to EBITDA, as mentioned, 2.2. On employee matters, LTM attrition has remained at low levels being 7.1 -- 7.5% at the end of Q3, reflecting the soft market environment. Impact from cost optimization measures are visible in the reduced personnel across all businesses. Our net personnel reduction from Q2 was approximately 600 employees with over 9% reduction year-over-year. Group salary inflation is expected to be approximately 4% in 2025, which would be slightly lower than prior year.

Next remarks on Q4 outlook. On growth, Create will continue to be impacted by weak demand across all markets. Banking continues to be impacted by the ending of the significant margin dilutive mainframe contract with negative 5 percentage point impact. Care continues to be impacted by the legacy product decline by negative 4 percentage points. Then on profit remarks, Banking is negatively impacted by increased nondeductible VAT due to Tech Services divestment by 1 percentage points. This impact is recurring and continues in the coming quarters.

All businesses will benefit from savings delivered through cost optimization program. And then as mentioned, cost burden from the IFRS 5 is mitigated by the transitional services agreement income. On other remarks, FX impact to revenue is positive by EUR 4 million. Q4 profitability outlook for businesses. Tietoevry Banking and Industry are expected to be above prior year profit level, Create at or above prior year, and Care at or below prior year level. Now back to you, Endre.

Thank you, Tomi. And then a couple of final remarks from my side. We are now heading into, I would say, a really exciting phase with Tietoevry. And in just under 5 weeks, we will be in London for our Capital Markets Day. With our client base, our software and services portfolio and our great people, we have a solid foundation to build on. Currently, we are focused on execution of our cost efficiency program, turning towards much more customer centricity actions and then simplification and further growth initiatives. At the CMD, we will share how we plan to accelerate the long-term growth, sharpen our portfolio, and unlock new opportunities is really going to be a forward-looking session.

We warmly invite our investors and stakeholders to join us in London on November 25. We look forward to engaging with you there. And then I think we are opening up for the Q&A session. Thank you.

[Operator Instructions] The next question comes from Mark Hyatt from Morgan Stanley.

Can we start with the outlook for Q4? You've obviously reiterated the guidance that you adjusted down in September, but there's still quite a wide range of outcomes implied in the final quarter of the year. So maybe you could just talk about some of the main swing factors into Q4? And how much confidence does the improvement in Care and Industry give you into that final quarter? Secondly, the backlog, as you say, stands at over EUR 2 billion, up double digit year-on-year. But you know that most of the contribution from that is expected in 2027 and onwards. Can you just break down the moving parts here? How much visibility does that give you into 2026?

And then maybe just finally, just one on kind of AI. You mentioned in the release that you're adopting AI across all your offerings. I suppose there's been some reports elsewhere in the industry that some of the potential cost savings around project delivery as related to AI are being passed on to customers. Do you see any evidence of that in the market that you operate in today? And maybe just a general comment on the price environment would be very helpful.

I could take the first one, maybe the Q4. So as you know, typically, Q4 is quite an active quarter. And then when we consider the market environment currently, we've commented if we specifically talk about Care first, we've commented on the Finnish well-being countries budget restrictions. That is a bit of an unknown how those will materialize. So there's risk in terms of Q4 for Care. And then overall, the market, it's a bit volatile. So I wouldn't say it's like sort of very clear how that will turn out, and that's why we have this range. Now as mentioned, the September came in quite strong, and that's why we gave a comment that we're tracking towards the higher end of this profit guidance. But overall, the uncertainty is still within the market and Q4, that's the reason for the range.

And on the backlog side, I think we have clearly communicated during Q3 that 2026 will be a kind of a year of transition in terms of the top line. We are experiencing headwind in the market, especially in the digital consulting part. And a lot of these contracts signed now in Care and in Banking are contracts that will materialize after kind of conversion migration project, which is Phase 1, and then you get the full scale effect of that in '27 and onward. How much is hitting '26 is not going to be disclosed at this stage. But I've clearly communicated lately that -- sorry, 2026 will be a year of transition in terms of the top line. However, the ambition is absolutely then to expand on the bottom line margin going into 2026. Like Tomi has already commented, we had a strong September, and that's why we are also saying that we are tracking towards the upper end of the guidance range.

In terms of AI, we have now set out many initiatives internally, and we see clearly also that there is a huge interest in the market from the client side to start off with AI projects. But it's relatively early stage currently. How much of the effects of the productivity effects that will be kind of given back to the market side based on competition, that's also a bit premature to say. But we have also a clear kind of evidence when we're looking now at also implementing distinct KPIs by business unit related to AI.

We have already evidence in one of the business units, we have like a 30% productivity improvement in terms of software development. Then it's a question should we kind of -- what's the effect of that? How should we position ourselves in terms of growing going forward, which I think are we able to kind of deliver on these productivity improvements in the future, we will actually take market share. That's the ambition. Price pressure, nothing new in Q3 going into or being into Q4. It's a relatively, I would say, challenging market condition, which we also communicated, especially for our Create business, nothing new, not the kind of higher price pressure. It's more like we have been through in 2025 in total. So yes, that's a comment to that.

The next question comes from Aditya Buddhavarapu from Bank of America.

Just a couple from my side. So on Create, you spoke about the reorganization. Could you just give a bit more color maybe in terms of what are the specific actions you're taking there to revive growth? And also, you spoke about the links to selected strategic software partners. If you could maybe just expand on that as well. Second question, given the impact from the headwinds in Q4 on banking and especially Care, do you still think -- especially in Care, do you think they could still grow in Q4 given the continued headwind from the legacy product business?

And then final one, you've seen margin expansion in Care in Q3, again, but in Q4, talking about margins being below -- at or below last year. So just going forward, how should we think about the margin outlook for the Care business? Do you think there's still more investments that need to be made? Or should we start to see a bit more operating leverage coming in there?

We're going to start off with the margin in Care. Margin is slightly up compared to Q3 '24, mainly driven by the cost efficiency effects. However, we have the seasonality usually in Q3. So I think it's a bit difficult to say that we are going to continue at that level. But I mean, we have been at relatively high levels for Care during a relatively long time. So I would say that we should continue at the levels we have been on historically with Care. Having said that, of course, the international expansion will also kind of implicate investments into expanding globally, but we shouldn't kind of experience any significant dip related to that from a margin point of view. So pretty much stable going forward on the margin side of care.

Top line, yes, it takes some time to materialize what we do in terms of international expansion. However, we have no breakthrough in several countries, but that's also why we commented that on the top line -- from a top line point of view and looking at the backlog, majority of this will materialize in 2027. I would not say that we are experiencing a lot of headwind in Q4 compared to Q3. So yes, there are challenges within the Create area. Back to your question then on what do we really do with Create in terms of repositioning.

I think there's a couple of things which we can mention now, and then we will come back to this in connection with Capital Markets Day. But first of all, we are changing the focus from aiming to be a global digital consulting player to turn this much more, which is our strength, to be a local player with local deliveries and, of course, global delivery capabilities. This is one of the shifts that we do. This means also that we have to then be much more selective on strategic accounts, key account management.

We are looking also now at a competent shift in terms of turning from much, I would say, too high content of time and material and CV sales into a much more, I would say, narrow angling through selection of strategic software partners, which I think is the key driver in the market, also looking at what happens with public cloud, also looking at what happens with AI, also looking at the interface between public cloud deliveries and the client, which is close to what we call Infrastructure as a Service, which is a growth market going forward. So that is the transition that we are looking at currently for Create. But we will come back to this, of course, in more detail when we come to Capital Markets Day, hopefully, at that point in time, also with some very concrete examples in terms of strategic partnerships.

The next question comes from Felix Henriksson from Nordea.

Two for me. First, a quick one. I think you sort of beat your own segment margin guidance for Q2 in Create and Care. So could you just provide a bit more color on what sort of drove the better-than-expected performance there on the margin front? And then secondly, I guess, a bit more strategic question. I've seen some of your peers for Create international peers sort of talking about potentially exploring more fixed or outcome-based pricing model for IT consulting given the sort of efficiency gains that you might experience from AI as opposed to the sort of traditional hourly billing model. Is this something that you're considering at the moment in Create as well?

Let's start with beating the guidance on Create and Care. So it's quite evident that -- let's start off with Create. It's quite evident that we have taken down the cost structure significantly within Create, talking about a substantial number of people within SG&A, but also then from a cost point of view. So we immediately now see the effect of that. Part of this was taken in Q2. Part of this has been then taken in Q3, and that's why we see primarily the margin expansion in Create.

Care is not the magnitude of cost takedown, but we also have taken a cost takedown in Care, which is again mainly the effect seen coming through a bit quicker than anticipated when we announced the cost reduction program or cost optimization program in connection with the Q2 interim report. On the fixed outcome results rates, we have not been considering that for the time being. We are going through in Create a significant shift and focus towards more industry standard software. Then you can say that some of these players in that software market, they have AI embedded.

So let's see what is the impact of turning the business towards now software. Standard software infrastructure players and the partnership with those moving away from, I would say, too high content of time and material and CV sales. But it's a bit premature to say what will be the kind of future pricing strategy in Create that we will come back to also in connection with the Capital Markets Day.

[Operator Instructions] The next question comes from Jaakko Tyrvainen from SEB.

I'm from SEB. A couple of questions still on my side. The headcount in Create is still down by 13% year-over-year. Is this just adapting to the lower volumes? Or is it implying the efficiencies and productivity gains found through AI-powered software development? And then in general, you are noting that there is some AI-related demand among the customers, but are you seeing AI impacting negatively in Create, for example, in the maintenance type of contracts? And the second question goes to net debt to EBITDA, which is still well above 2x. What are the key measures going forward to take that to a more moderate level?

Yes. I can take or start with the net debt to EBITDA. So naturally, as I went through the numbers with you, the improvement in this metric comes from profit improvement. And there, I mean the reported profit improvement. So this year, we have had quite significant onetime items, which are taking the reported profits down and that we are aiming to improve then in going forward, which will automatically, of course, then have an impact on the reported profits and the EBITDA and then improve the metric. That's, of course, the primary aim that we are doing. Then on the AI, Endre, maybe you want to answer.

Yes. Two questions actually related to Create. One was related to the kind of headcount reductions. And I would say that, that when we look at the initiatives taken in Q2 and Q3, and we look now at the margin expansion in Create, that's basically driven by those initiatives, not AI-driven productivity improvement. Then, of course, we have many different kind of client projects working on AI, which will drive productivity improvement in the future. But again, when you look at the trends, when you look at what's happening in the market, it's still a bit premature to say that all of this is going to be realized. All of this is coming through.

But again, I think it's quite important for us that we are capturing now the growth pockets and the growth opportunities in the market. That is why we are partnering up with strategic software partners. That is why we're shifting from, like I've said, much more time and material and CV sales, much more to kind of industry standard software and then having AI as enablement for kind of quick and rapid implementation of that.

Thank you, Endre and Tomi, and thank you, everyone, for the questions, and thanks for watching as well. As mentioned earlier, our Capital Markets Day will be hosted on 25th of November in London. See you then.