Atos revenue stagnates in Q3 as business split inches forward

French group delivers underwhelming results amid leadership changes

French digital transformation giant, Atos, has reported another drop in revenue as negotiations for the split and sale of part of the business go forward.

In Q3 2023, Atos reported group revenue of €2.6bn (£2.26bn), representing a three per cent decline on an organic basis compared to the previous year.

Despite the dip in overall revenue, the company showcased promising growth in some key segments.

Eviden, Atos's digital, cloud and big data & security business, demonstrated resilience with 2.3 per cent organic revenue growth during the third quarter.

This growth was attributed to robust performances in digital security and big data, including generative AI. Digital security maintained its upward trajectory, driven by next-generation products and services.

Although there was high single-digit digital growth in Europe, Atos faced some challenges in the US market, where clients took longer to decide on new business awards.

Tech Foundations, on the other hand, encountered a 7.2 per cent drop in organic revenue, primarily driven by the ongoing transformation plan.

At the core of Tech Foundations, revenues dropped by 4.9 per cent, attributed to portfolio rationalisation, which includes activities like infrastructure, private cloud & platforms, digital workplace, and professional services.

Atos is actively reducing activities in non-core areas, such as hardware and software resale and BPO, in line with its transformation objectives. Notably, the company recently divested its UCC business, which was considered a declining non-core asset.

In a noteworthy development, Atos reported an order entry of €2.2bn in Q3 2023, marking a significant increase of 10 per cent compared to the prior year.

Eviden up, Tech Foundations down over nine months

Over the first nine months of 2023, Atos generated group revenue of €8.1bn, showing modest organic growth of 0.6 per cent.

Eviden was a persistent bright spot with 5.5 per cent organic growth during this period, largely powered by big data and digital security. Meanwhile, Tech Foundations faced challenges with a 3.5 per cent organic decline.

Yves Bernaert, the newly installed CEO of Atos, expressed appreciation for the company's employees' dedication and commitment to serving clients and delivering innovative solutions to address their business needs.

Atos split and sale to EPEI progresses

This Q3 report follows Atos's earlier announcement of the intended company split, with negotiations underway for the sale of its Tech Foundations (TFCo) business to EP Equity Investment (EPEI).

The aim is to strengthen the group's capital structure and focus on the growth prospects of Eviden.

Atos continues its strategic realignment under the leadership of Bernaert, the former CEO of Accenture , who was appointed as CEO in early October - Atos's third pick for the role in two years.

His initial remit includes guiding the company through its internal operational separation into two distinct entities and accelerating the turnaround of its activities.

Later this month, the group's chairman, Bertrand Meunier, also stepped down and was replaced by Jean Pierre Mustier.

These developments take place against a backdrop of discussions around the nationalisation of the tech giant raised by a group of French opposition lawmakers.