Sopra Steria Group SA: Results up in 2024 despite a wait-and-see market

Regulatory News:

At its meeting on 26 February 2025 chaired by Pierre Pasquier, Sopra Steria Group SA’s (Paris:SOP) Board of Directors approved the financial statements for the financial year ended 31 December 2024.²

Cyril Malargé, Chief Executive Officer of Sopra Steria Group, commented:

“Sopra Steria proved resilient in 2024 even as market conditions deteriorated, particularly in the fourth quarter. Group revenue held up well thanks to our business strategy focused on our top 100 strategic clients, which enabled us to renew a significant number of major contracts and extend some of our positions.

Against this backdrop, we delivered robust operating performance. We achieved the target we set three years ago of delivering an operating margin on business activity of around 10%, free cash flow exceeded 7% of revenue and the return on capital employed before tax rose to 21.5%.

We also reaffirmed our strategy over the course of the year. Sopra Steria is keen to establish itself as a European leader in consulting and digital services and position itself as a trusted, credible European alternative to global operators. This positioning is aimed at harnessing technology and artificial intelligence to help major public and private sector organisations navigate transformation.

The company’s transformation in support of this goal is already underway. It encompasses our offerings, our operating model, human resources and industrialisation and includes an external growth component. In 2024, the shift from a service-based approach to high value-added offers translated in particular into the creation of two cross-functional service lines: Digital Platform Services, representing revenue of over €600 million, and Cybersecurity, representing revenue of over €200 million. A Group Chief Operating Officer was appointed to accelerate the evolution of our operating model. In human resources, we increased our experts’ technology certifications by 32% and trained all our employees in artificial intelligence. Lastly, all the Group’s developers now have access to development platforms augmented by generative AI agents.

Faced with an uncertain environment in this early part of 2025, we are determined to drive the Group’s transformation to generate more value for our clients, more opportunities for our employees and improved performance for our shareholders.”

Detailed breakdown of operating performance in 2024

Consolidated revenue totalled €5,776.8 million, down a modest 0.5% compared with the reported 2023 figure. Changes in scope had a €15.7 million negative impact. Acquisitions added €320.6 million of revenue (CS Group, Tobania, and Ordina after adjusting to exclude “agent” revenue totalling -€82 million over 12 months³). The sale of the Sopra Banking Software business reduced revenue by €336.3 million. Currency fluctuations had a positive impact of €18.1 million. At constant scope and exchange rates, revenue growth was -0.5%.

Operating profit on business activity came to €564.7 million, up 3.0% relative to 2023. This gives an operating margin on business activity of 9.8%, up 0.4 percentage points, thus achieving the target set three years ago (target for 2024 set in 2022: “Operating margin on business activity of around 10%”).

In France (42% of the Group total), revenue came in at €2,437.9 million, equating to negative organic growth of 1.6%. Revenue declined 2.0% in the fourth quarter, hit by a sharp slowdown in the aeronautics sector, where quarterly volumes are thought to have reached a low point. Excluding aeronautics, the reporting unit’s revenue held more or less steady in the fourth quarter (up 0.5%). Over the full year, sector trends were positive in defence and the public sector. Other sectors lost ground. The reporting unit’s operating margin on business activity came out at 9.0% (9.6% in 2023), mainly as a result of the decline in activity in the aeronautics sector. Meanwhile, CS Group confirmed a 1.9-point uplift in its profitability compared with 2023.

Revenue for the United Kingdom (17% of the Group total) was €962.1 million, down 0.5%. Revenue was down 9.4% in the fourth quarter, mainly as a result of a particularly high basis of comparison for the SSCL platform (up 25.2% in the fourth quarter of 2023). It also reflects the expiration of a major contract, while another major contract, originally scheduled for the fourth quarter, was pushed back to the beginning of the second quarter of 2025. Overall, across the full year, the public sector contracted while the private sector posted strong growth. The reporting unit’s operating margin on business activity improved by 1.1 points to 12.1%.

In Europe (35% of the Group total), revenue grew 0.5% on an organic basis to €2,049.0 million. The most buoyant growth was in Scandinavia, Spain and Italy, where revenue grew by between 8% and 10%. Other countries saw revenue decline by between 3% and 5%. The reporting unit’s operating margin on business activity was 9.1%, up 0.4 points from 2023.

The Solutions reporting unit (6% of the Group total) posted revenue of €327.8 million, representing organic growth of 1.1%. Human Resources Solutions posted growth of 3.6%. Property Management Solutions contracted by 1.7%. Excluding the impact of changes in scope (reallocation of business previously within the scope of SBS following its disposal), the reporting unit’s operating margin on business activity improved by 1.6 points compared with 2023.

Comments on the components of net profit attributable to the Group in 2024

Profit from recurring operations came in at €514.9 million, equating to growth of 10.2%. It included a €17.3 million share-based payment expense (versus €43.0 million in 2023) and a €32.5 million amortisation expense on allocated intangible assets (versus €38.0 million in 2023).

Operating profit came in at €460.3 million, up 39.5%, after a net expense of €54.7 million for Other operating income and expenses (compared with a net expense of €137.4 million in 2023), which included a capital gain of €11.1 million, not allocated to any reporting unit, in connection with the disposal of 74Software shares.⁴

Net interest expense was €38.6 million (versus €35.9 million in 2023).

The tax expense totalled €96.8 million, for an effective tax rate of 23.0%. Restated for non-recurring items, the normative tax rate was 26%.

Net profit/loss from associates amounted to a loss of €6.7 million (compared with profit of €6.7 million in 2023).

Minority interests totalled €9.0 million.

Net profit attributable to the Group from continuing operations came in at €309.3 million, up 68.4%, giving a margin of 5.4%.

Net profit/(loss) from discontinued operations came in at a loss of €58.3 million.

Consolidated net profit came in at €259.9 million, up 37.5%, and net profit attributable to the Group came to €251.0 million, up 36.6%, after deducting €9.0 million attributable to non-controlling interests.

Basic earnings per share came to €12.46, compared with €9.08 in 2023 (up 37.2%).

Workforce

At end-December 2024, the Group’s net headcount came to 50,988⁵ employees, compared with 51,768 employees at year-end 2023. Around 7,900 staff were employed at international service centres, unchanged at constant scope from 2023. The workforce attrition rate⁶ was 14.1%, compared with 15.7% in the previous year.

Proposed dividend in respect of financial year 2024

At the next General Meeting of Shareholders, to be held on Wednesday, 21 May 2025, Sopra Steria will propose the payment of a dividend of €4.65 per share (vs €4.65 per share in respect of financial year 2023). The ex-dividend date will be 3 June 2025. The dividend will be paid as of 5 June 2025.

Financial position and return on capital employed

Free cash flow was very strong, at €432.1 million (compared with €390.2 million in 2023). This reflects a 3.6% increase in EBITDA and includes exceptional cash flow of around €45 million linked to the scheduled conclusion of a major migration programme in Germany.

Net financial debt totalled €382.2 million, down 59.6% from its level at 31 December 2023. At that date, it was equal to 19.3% of equity and 0.61x pro forma EBITDA for 2024 before the impact of IFRS 16 (with the financial covenant stipulating a maximum of 3x).

Return on capital employed (RoCE) before tax came out at 21.5%, compared with 16.5% in 2023.

Change in scope

The sale of Sopra Banking Software, announced on 21 February 2024 as part of Sopra Steria’s process of refocusing its activities on digital services and solutions, was finalised on 2 September 2024. The activities sold were recognised in discontinued operations (in accordance with IFRS 5) with effect from the financial statements for the first half of 2024.

The total amount received by Sopra Steria in 2024 in connection with the refocusing of its activities (sale of SBS, sale of 16.7% of 74Software and sale of 74Software subscription rights in connection with the latter’s capital increase) was €410.6 million. Sopra Steria retains an 11.1% stake in 74Software’s share capital.

On 30 January 2025, Sopra Steria announced its intention to acquire management consulting firm Aurexia, which specialises in financial services. This project would expand Sopra Steria Next’s capacity and expertise as well as its positioning and ability to serve France’s leading financial institutions. With 140 consulting professionals, Aurexia’s forecast revenue for 2024 is around €20 million, with 80% of this total generated in France. The proposed acquisition is expected to be completed in the second quarter of 2025.

Share buyback programme

The €150 million share buyback programme launched on 2 October 2024 concluded on 28 January 2025. During the share buyback period, which ran from 2 October 2024 to 28 January 2025, Sopra Steria bought back 858,163 shares (4.2% of capital) at an average price of €174.79 per share, for a total amount of €150 million. The shares bought back under this programme will be retired in 2025.

Strategy

Sopra Steria is keen to establish itself as a European leader in consulting and digital services and position itself as a trusted, credible European alternative to global operators. The Group is prioritising its foothold in four strategic markets (Public Sector, Financial Services, Defence & Security, Aeronautics & Space), where stakes relating to sovereignty and responsible digital technology are becoming increasingly critical in Europe. To this end, it focuses on delivering high value-added offerings and an industrial and sustainable approach to implementing technology. The Group aims to act and innovate in such a way as to be able to influence how society makes use of technology.

Social and environmental footprint

Sopra Steria sees its contribution to society as sustainable, human-focused and purposeful, guided by the firm belief that making digital solutions work for people is a source of opportunity and progress.

With regard to the environment, CDP⁷ confirmed in February 2025 that Sopra Steria had made its A List – recognising the world’s most transparent and most proactive companies in climate action – for the 8^th year in a row.

This recognition notably reflects the Group’s Net-Zero target⁸ of achieving a 54% reduction in its greenhouse gas emissions from Scopes 1 & 2 and a 37.5% reduction for Scope 3 by 2030. At end-December 2024, the Group had achieved a 52.7% reduction in Scope 1 & 2 emissions and a 23.9% reduction in Scope 3 emissions.

In the social arena, the proportion of women in the 3% most senior positions increased 1.3 points in 2024 to 21.4%, while the proportion in the 10% most senior positions increased 0.8 points to 22.3%.

Medium-term financial targets

Over the period 2026-2028, Sopra Steria aims to achieve the following:

• Annual organic revenue growth of between 2% and 5%
• Operating margin on business activity of between 10% and 11%
• Free cash flow of between 5% and 7% of revenue
• Return on capital employed (RoCE) before tax of around 20%

Financial targets for 2025

The European market is expected to remain unfavourable in the first half of the year as a result of a still uncertain climate, particularly in France.

Against this backdrop, Sopra Steria has set itself the following targets:

• Organic revenue growth of between -2.5% and +0.5% (with the first quarter expected to be the lowest point in the year, with revenue to come in between -5% and -6%)
• Operating margin on business activity of between 9.3% and 9.8%, including a dilutive effect of around 0.3 points arising from increases in employers’ payroll contributions enacted by the UK and French governments for 2025
• Free cash flow of between 5% and 7% of revenue

Meeting to report 2024 full-year results

The 2024 full-year results will be presented to financial analysts and investors in a French/English webcast on Thursday, 27 February 2025 at 8:30 a.m. CET.

• Register for the French-language webcast here
• Register for the English-language webcast here

Or by phone:

• French-language phone number: +33 (0)1 70 37 71 66
• English-language phone number: +44 (0)33 0551 0200

Practical information about the presentation and webcast can be found in the ‘Investors’ section of the Group’s website: https://www.soprasteria.com/investors

Upcoming financial releases

Wednesday, 30 April 2025 (8:30 a.m.): Meeting to report Q1 2025 revenue

Wednesday, 21 May 2025 (2:30 p.m.): General Meeting of Shareholders

Friday, 25 July 2025 (8:30 a.m.): Meeting to report H1 2025 results

Wednesday, 29 October 2025 (8:30 a.m.): Meeting to report Q3 2025 revenue

Glossary

- Restated revenue: Revenue for the prior year, expressed on the basis of the scope and exchange rates for the current year.

- Organic revenue growth: Increase in revenue between the period under review and restated revenue for the same period in the prior financial year.

- EBITDA: This measure, as defined in the Universal Registration Document, is equal to consolidated operating profit on business activity after adding back depreciation, amortisation and provisions included in operating profit on business activity.

- Free cash flow: Free cash flow is defined as net cash from operations; less investments (net of disposals) in property, plant and equipment, and intangible assets; less lease payments; less net interest paid; and less additional contributions to address any deficits in defined-benefit pension plans.

- Operating profit on business activity: This measure, as defined in the Universal Registration Document, is equal to profit from recurring operations adjusted to exclude the share-based payment expense for stock options and free shares and charges to amortisation of allocated intangible assets.

- Profit from recurring operations: This measure is equal to operating profit before other operating income and expenses, which includes any particularly significant items of operating income and expense that are unusual, abnormal, infrequent or not foreseeable, presented separately in order to give a clearer picture of performance based on ordinary activities.

- Basic recurring earnings per share: This measure is equal to basic earnings per share before other operating income and expenses net of tax.

- Return on capital employed (RoCE): (Profit from recurring operations before tax + Profit from equity-accounted companies) / (Equity + Net financial debt)

- Downtime: Number of days between two contracts (excluding training, sick leave, other leave and pre-sales) divided by the total number of business days.

Disclaimer

This document contains forward-looking information subject to certain risks and uncertainties that may affect the Group’s future growth and financial results. Readers are reminded that licence agreements, which often represent investments for clients, are signed in greater numbers in the second half of the year, with varying impacts on end-of-year performance. Actual outcomes and results may differ from those described in this document due to operational risks and uncertainties. More detailed information on the potential risks that may affect the Group’s financial results can be found in the 2023 Universal Registration Document filed with the Autorité des Marchés Financiers (AMF) on 15 March 2024 (see pages 40 to 46 in particular). Sopra Steria does not undertake any obligation to update the forward-looking information contained in this document beyond what is required by current laws and regulations. The distribution of this document in certain countries may be subject to the laws and regulations in force. Persons physically present in countries where this document is released, published or distributed should enquire as to any applicable restrictions and should comply with those restrictions.

About Sopra Steria

Sopra Steria, a major tech player in Europe with 51,000 employees in nearly 30 countries, is recognised for its consulting, digital services and solutions. It helps its clients drive their digital transformation and obtain tangible and sustainable benefits. The Group provides end-to-end solutions to make large companies and organisations more competitive by combining in-depth knowledge of a wide range of business sectors and technologies with a collaborative approach. Sopra Steria places people at the heart of everything it does and is committed to putting digital to work for its clients in order to build a positive future for all. In 2024, the Group generated revenue of €5.8 billion.

The world is how we shape it

Sopra Steria (SOP) is listed on Euronext Paris (Compartment A) – ISIN: FR0000050809

For more information, visit us at www.soprasteria.com

*** Copyright © 2025 Sopra Steria. All rights reserved. Sopra Steria and its logo are registered trademarks of Sopra Steria.

Annexes

¹ Alternative performance measures are defined at the end of this document.
² Audit procedures have been carried out and the audit report is being issued.
³ Recognition of revenue generated by Ordina through the sale of external expertise was harmonised with effect from 1 January 2024. This revenue is recognised on a net basis where it meets the IFRS 15 definition of revenue generated by an agent.
⁴ Formerly “Axway”.
⁵ Workforce excluding interns, in accordance with the requirements of the CSRD. Including interns, the workforce totalled 51,237 at 31 December 2024 and 52,041 at 31 December 2023.
⁶ Attrition rate including employees who left within 6 months of hiring, in accordance with the requirements of the CSRD.
⁷ Every year, more than 24,800 companies and organisations around the world provide details on their environmental performance to CDP for independent assessment against its scoring methodology for the benefit of investors, purchasers and other stakeholders.
⁸ Target approved by the Science Based Targets initiative (SBTi) on 16 June 2023 and aligned with the aim of limiting the increase in the average global temperature to 1.5°C (reduction targets baseline: 2019).

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