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June 7, 2023

Atos targets 2026 return to growth for Tech Foundations infrastructure unit

The French ITSP says its recovery is going better than expected, leading to upgraded growth forecasts.

By Matthew Gooding

Atos expects its Tech Foundations infrastructure business unit to return to growth in 2026 with revenue set to bottom out next year. The struggling IT services provider sounded a positive note in an update to shareholders this morning, saying the success of restructuring measures has led it to revise its forecasts.

Atos says its recovery is going better than expected. (Photo by monticello/Shutterstock)

The company, which is holding its investor day today, expects its Tech Foundations revenue to be about €5bn in 2024 as it continues to “redefine its portfolio” around core activities while “pivoting in industry-leading offerings with focus on higher-growth segments and new go-to-market strategy”.

It says its cumulative cash flow over the next four years will be €300m higher than in its original recovery blueprint, presented this time last year, adding that it is “upgrading mid-term ambitions to reflect strong delivery and faster transformation,” with revenue growth in 2026.

Atos focuses on four core areas for Tech Foundations

Tech Foundations was created last year when Atos split its business in two. Tech Foundations was formed to manage infrastructure and traditional IT services, while the company also set up Evidian, a separate business unit with a focus on cybersecurity.

The company says it is focusing Tech Foundations on four core business areas which generated €4.5bn in 2022; hybrid and cloud infrastructure, digital workplace, technology advisory and customised services, and digital business platforms. The latter encompasses high-growth solutions such as generative AI and green IT, and is a new offering for Atos which brought in €300,000 in revenue last year.

Atos believes these four areas present a total addressable market of €705bn.

Nourdine Bihmane, Atos Group CEO and co-CEO in charge of Tech Foundations, said: “Over the past 12 months, the teams across Tech Foundations have been fully mobilised and dedicated to implementing a comprehensive plan to renew with a path to success. In just a short amount of time, we have managed to deliver better-than-expected results and have received overwhelmingly positive feedback from our stakeholders.”

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Bihmane said he believes Tech Foundations can become “a leader focused on its core businesses, an innovative actor able to seize new opportunities in growing markets and a pillar of tomorrow’s IT”. He added: “While our achievements to date are just the beginning, they allow us to continue with confidence and upgrade our mid-term ambitions.”

Light at the end of the tunnel for Atos?

Atos shareholders will be hoping today’s bullish update is the start of better times for the company. It is one of France’s biggest technology businesses, holding major government contracts domestically and across Europe, including in the UK

But like many ITSPs, it has struggled with the transition to the cloud, and revenue from its traditional IT infrastructure services dropping as businesses shift more workloads away from on-premise solutions.

Atos has so far been unable to grow cloud revenue sufficiently to cover this decline, leading to a reorganisation of the company last year and the formation of Tech Foundations and Evidian. In February it announced it was in talks with Airbus to sell 30% of Evidian to the aerospace giant, but these talks were shelved a month later.

Read more: Generative AI providers must generate ‘enterprise friendly’ solutions

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