Atos posted a 4.4% drop in third-quarter revenue, citing weakened market conditions. The French IT firm’s revenue for the third quarter of 2024 (Q3 2024) fell to €2.3bn from €2.41bn in the same quarter of the prior year. Despite the revenue dip, Atos reported improved order entries, anticipating stronger figures in the final quarter of 2024. Following the release of Q3 2024 revenue, the company’s shares rose by 2%.
Atos’ total revenue decline was driven by a 6.4% organic decrease in its digital, cloud, big data, and security division Eviden, resulting from continued market softness in the Americas and Central Europe and reductions in previously established contract scopes.
Simultaneously its Tech Foundations unit, responsible for the digital workplace, hybrid cloud infrastructure, and technology advisory, recorded a 2.6% organic decline, reflecting a reduced scope of work due to the completion and termination of existing contracts.
A slow recovery for Atos?
Atos reported an order entry of €1.5bn as of 30 September with stronger commercial activity. The Tech Foundations segment responsible for digital workplace, hybrid cloud infrastructure, and technology advisory, recorded a book-to-bill ratio of 60% this quarter, indicating the ratio of new orders compared to services delivered.
The company forecasts this ratio to return closer to its historical average of 98% in Q4 2024 as multi-year contracts renew.
Eviden reported a book-to-bill ratio of 73%, down from 80% in the previous year. Despite this decline, there was strong commercial activity in Atos’ cybersecurity unit BDS with the signing of several high-performance computing contracts.
The group anticipates a mid-single-digit organic revenue decline for the full year 2024, equating to approximately €9.7bn in revenue. It also expects an operating margin of around €238m, excluding additional provisions to be recorded for certain underperforming contracts.
Effective from February 2025, current CEO Jean-Marc Mustier will be succeeded by Philippe Salle, who will become Atos’ sixth CEO within two years.
“With our financial restructuring plan and our new governance in place, Atos can confidently focus on its industrial turnaround and growth under the leadership of Philippe Salle,” said Mustier. “He is the best person to lead our transformation journey and restore confidence in Atos.”
He added: “I have seen a positive change of perception with our clients, who have taken note of our restructuring and are looking to resume a normalised interaction with us. I expect stronger commercial activity in the coming months, with the anticipated return of multi-year strategic contracts with existing customers.”
Atos supplies secure communications systems for the French military and critical IT services to the UK’s National Health Service. However, heavy debt from past acquisitions and multiple profit warnings have severely impacted the company’s financial position, with shares losing approximately 90% of their value since January.
Atos accelerated safeguard plan gets the nod
The Nanterre Commercial Court approved Atos’ accelerated safeguard plan this week. The plan, announced in July, secured the necessary approval from over two-thirds of its shareholders and creditors last month. It includes the conversion of €2.9bn of debt into equity and the issuance of between €1.5bn and €1.67bn of new debt.
The planned transactions are expected to take place between November 2024 and January 2025.
Additionally, the court is reported to decide in the coming months on the proposed sale of BDS to the French government.
Read more: Atos shareholders and creditors approve draft accelerated safeguard plan
