Capital Market Day 2018 Realizing the data-driven world Customers’ first choice realizing the data-driven world Kimmo Alkio Attracting and retaining talent Katariina Kravi Leading the transformation in our industry Christian Segersven Shaping a smarter society Cristina Petrescu Taking Nordic industries to a data-driven digital world Satu Kiiskinen Strong position in traditional consulting – step-change growth in digital services Ari Järvelä Efficiency and speed through modernization and transformation Håkan Dahlström Solid performance – ready to expand Tom Leskinen Well positioned to consistently increase shareholder value Janne Salminen Speakers IR contacts Customers’ first choice in realizing the data-driven world Kimmo Alkio, President and CEO Our team and presenters Financial Services Public, Healthcare Industrial and and Welfare Consumer Services Data-driven Kimmo Alkio businesses President and CEO Christian Segersven Cristina Petrescu Satu Kiiskinen Industry solutions Business Consulting and Implementation Ari Järvelä Technology Services and Modernization Håkan Dahlström Product Development Services Tom Leskinen Support Functions Katariina Kravi Janne Salminen HR acting CFO Markus Suomi CTO 2 © Tieto Corporation Realizing the data-driven world Cyber security Autonomous Unlimited capacity Digital supply chains Virtual reality Artificial intelligence Blockchain Machine learning, robotics Natural language processing Personalized for every individual Available on-demand Accelerates businesses and society © Tieto Corporation Active transition to the data-driven world New experiences and business models Omnichannel Industry 4.0 Predictive TOTAL IT SERVICES AVERAGE MARKET GROWTH Servitization EXPECTED TO BE IN THE RANGE OF 2-3% healthcare Realtime Smart cities VALUE TODAY payments CREATION Make my product / Designed service better, faster experiences and Industry and cheaper data-driven services Sustainability clouds Definite products, Agile business Digital processes and models, services IoT citizen technologies and ways of working services Connected vehicles Connected consumer products TIME Business-led renewal involves redefining enterprise architectures and applications, deriving value from data CURRENT FUTURE Identify and build data assets Mature business models Design Renew Agile business models experiences Agile ways enterprise and business architecture Solid processes models of working (e.g. microservices, Personalized experiences insights) Business intelligence Data-driven insights Monolithic applications Heterogeneous applications and integrations Renew/Refactor /Rewrite Legacy infrastructure applications Hybrid infrastructure Data-driven world Manage Hybrid Infrastructure Actively renewing portfolio and capabilities Value to all stakeholders Identify and Consulting Co-innovation, build data 15-20% of data-platform, assets capacity, Security, competence base use-cases renewed annually and skills SIAM, cloud Design Renew Investments into new experiences Agile ways enterprise and business architecture services and models of working (e.g. microservices, insights) technologies grown by 85% during 2013–2018 Investments into Architectural renewal in SW CEM, active M&A Renew/Refactor businesses /Rewrite applications Application modernization Manage Hybrid Infrastructure Renew for a digital future New skills and continuous learning Strategies and leadership Smart Consumer use of data @ the core Accelerating global Re-defining real-time payments data-rich Nordic retail Advanced Realizing openEHR Hybrid infrastructure healthcare analytics Renewing Nordic and innovation support across public, for preventive care pension insurance processes through ecosystems private and on-premise technologies OEM software for Digitalizing public autonomous traffic sector with Intelligent case management transportation Succeeding with customers - across all industries utilizing full Tieto services and competencies © Tieto Corporation Proactive execution anticipating the industry shift Market development as envisaged TIETO'S GROWTH AMBITION FOR IT SERVICES GROWTH DRIVERS AND CAPABILITIES FASTER THAN THE MARKET** (CAGR 2015-2020) Customer Data-driven Experience RPA businesses Industry platforms and Management software Enterprise Cloud Cloud and modernization Security Software R&D services borne applications Up by services ~ 50% 10%-20% Data-driven services Integration Application Payments Digital consulting and services modernization integration services ~ 50% Down by Case Hydrocarbon Traditional infrastructure ONE Cloud 5%-10% and application services Management management 2015 2020 Credit Production SmartUtilities Lifecare solutions Excellence Emerging services - software & digital* Traditional services *Includes current high-growth businesses and internal start-ups which represented ~20% of IT services sales in 2015 **Market growth expectation (CAGR) for the Nordics at 1.5–3% 9 Strategy progress – accelerating innovation and growth • Above market growth as of 2016 BUSINESSES • 1-9/2018 growth in local currencies 7% Acceleration in growth AND GROWTH • PDS expansion INNOVATION • Software technology renewal Proven and important AND • Data science and engineering since 2016 INVESTMENTS • Automation investments for future CULTURE • CX! Significant cultural AND • OpenSource! renewal and TALENT • Sustainability talent acquisition 10 Strategy Progress Accelerating innovation and growth 2016 2018 2020 • Industry Solutions Progress slightly behind ambition, investments in place • TSM Solid biz progress, AM and Cloud as strong drivers • DDB Important innovation engine – opportunity to accelerate BUSINESSES Design and CEM led innovation, active M&A AND GROWTH • BCI • PDS Strong turnaround with new growth opportunities • Sweden Good growth path including M&A 2016 2018 2020 • Software renewal Major investment, necessary technology upgrades INNOVATION • M&A Strong progress with 7 transactions completed AND • Data science/AI Rapid capability acceleration INVESTMENTS • Cloud Private Cloud with good progress, Public accelerated • Automation/RPA Important activities initiated – to be scaled 2016 2018 2020 • Employee engagement Solid and sustainable progress CULTURE • Learning as a Lifestyle New innovative skill development program – good success AND High recruitment pace and talent acquisition TALENT • New talent • Leadership as a Service Attention both to culture for caring and performance 11 Accelerating value to all stakeholders CUSTOMER EXPERIENCE / NPS EMPLOYEE ENGAGEMENT SCORE 2015 2016 2017 2018 2015 2016 2017 2018 REVENUE GROWTH, % OPERATING MARGIN, % 2014 2015 2016 2017 1–9/2018 2014 2015 2016 2017 1–9/2018* *rolling 12 months 12 Reiterating financial objectives, while performance drivers adapting to the market and customer Ambition 2020 Focus on new businesses, consulting led services, product IT services revenue growth development services along with Industry solutions above the market (CAGR) expansion – increased investments and reprioritization Organic growth at least at market rate 10% reported operating Adjusted*) margin sustainably above 10% margin (EBIT) Offering development below 5% of sales (OPEX) Consistent performance and progress Aim is to increase towards ambition base dividends annually Strong cash-flow driving attractive dividend profile in absolute terms Net debt / EBITDA 1.5 as Investment capacity for organic and inorganic growth an upper limit in the long run CAPEX expected to remain below 4% of sales 13 *) Adjusted for restructuring costs, capital gains/losses, impairment charges and other one-off items Ambitions by Service Line Growth Profitability Technology 2015 2020 2015 2020 Services and Modernization 2017 2017 2015 2020 2017 2020 Industry Solutions 2017 2015 Business 2020 2017 2017 2020 Consulting and Implementation Product 2015 2017 2020 2017 2015 Development Services 2020 Average market growth Target profitability for Tieto (Tieto’s addressable market) 14 Industry solutions continue to drive our competitiveness Ongoing technology renewal in multiple businesses KEY SOFTWARE BUSINESSES CAPITAL MARKETS • Competitive differentiation CREDIT PAYMENTS • Customer base: strong and expanding SOLUTIONS • Growth and expansion opportunity EDUCATION • Selective investments for technology renewal ⎯ Lifecare - Healthcare LIFECARE PUBLIC SECTOR CASE ⎯ Tieto SmartUtilities MANAGEMENT ⎯ Payments (concluded during 2018) HYDROCARBON • Investment level stabilizing during 2019 MANAGEMENT TIETO SMART PRODUCTION UTILITIES EXCELLENCE © Tieto Corporation Healthy growth potential, Growth >10% Investment supported by investments proportion 70% Customer Experience Management Growth 3-5% Payments Investment proportion 20% Lifecare Growth 0-1% Tieto Investment SmartUtilities proportion 10% Industry solutions Public cloud and and software microservices Application Cloud borne modernization applications Product development Infrastructure services Data-driven services businesses Legacy software Enterprise products applications Security Traditional application B2B integration services services Multicloud 16 Our renewal continues with a higher management ambition in becoming customers’ first choice in business renewal TIETO 2020 MANAGEMENT AMBITION (STRATEGY 2016–2020) Customers’ 40% OF 100M+ FROM 80% SHARED 1–2% INCREASE first choice! SW AND SOLUTIONS DATA-DRIVEN BUSINESSES MANAGED SERVICES IN NORDIC MARKET SHARE • Accelerated investments, incl. • Promising innovation pipeline • Consistent growth of • Consistent growth and acquisitions industrialized Application