Atos Q3 Results Overview

Shares of Atos (EPA:ATOS) rose on Thursday following the company’s third-quarter results, which were broadly in line with market expectations.

At 8:47 am (1247 GMT), Atos was trading 1.7% higher.

Financial Performance

Atos's revenue for the quarter amounted to €2,305 million, slightly falling short of Morgan Stanley’s estimates but exceeding consensus predictions by 1%. This marked a reported organic growth decline of 4.4% year-over-year.

Segment Breakdown

• Eviden (Digital Services): Revenue of €1,093 million, reflecting a steeper organic decline of 6.4% due to challenges in the Americas and Central Europe, alongside reductions in contract scopes.
• Tech Foundations: Revenue of €1,212 million, down 2.6% organically, indicating more stable performance.

Outlook for 2024

Despite the declines, Atos reaffirmed its financial outlook for fiscal year 2024, expecting organic revenue decrease in the mid-single-digit percentage range, translating to expected revenues of €9.7 billion for the year.

Operating margins are projected at about €238 million, excluding further provisions related to underperforming contracts.

Debt and Order Entry

Atos reported a net debt of €4.6 billion at the end of the third quarter, with a reduction of €1.6 billion in working capital since December 2023.

Order entry stood at €1.5 billion for the quarter, resulting in a book-to-bill ratio of 0.66, down from 0.84 in the previous year, reflecting a cautious market environment.

Strategic Restructuring

Atos is awaiting a court decision regarding its pre-arranged financial restructuring plan, expected to conclude by late December 2024 or early January 2025.

Morgan Stanley analysts see potential upside risks due to the rapid restructuring of Tech Foundations and quicker business turnaround. However, concerns persist about high uncertainty regarding free cash flow and company liabilities that could affect financial health, even post-debt-to-equity swap.