In its Capital Markets Day last week, Atos CEO Philippe Salle unveiled a four-year plan for the company. The ‘Genesis’ plan has the following financial targets for FY 2028:

• €9-10bn in revenue
• A 10% operating margin
• ‘Towards an investment grade credit rating profile’.

The last of these provides an indication of some of the challenges facing the company, which last year suspended financial forecasts as it was restructuring. Now that a restructuring agreement with its creditors has been agreed, Atos can look to the future with less uncertainty hanging over it.

Key components in the Genesis plan include a significant simplification of the business structure, fewer brands, exiting non-core countries, trimming costs, and investments in AI. All of these would be expected in a turnaround strategy.

The stated ambition is for Atos, once a European powerhouse, to be recognized as ‘a global AI-powered technology partner shaping secure end-to-end digital journeys’ and become one of the preferred vendors for global clients.

So, let’s unpick some elements of the plan, the name of which is conveniently an anadrome of Atos – SOTA (Simplify, Orchestrate, Trim, AI-Enable).  

Simplify

The Simplify initiatives cover:

• The brands and org structure. The decision to reorganize the former separate ‘Tech Foundations’ and Eviden businesses back to a unified group is welcome. Atos Group now consists of:
  • A services business, Atos. This has 6 business lines, including a new business line for data and AI (see below)
  • A products business, Eviden. This includes the Advanced Computing business currently being divested (to the French state for €500m, up to €625m including earn-outs; this activity is deemed of critical importance for national security). The other units are Cybersecurity, Mission-Critical Systems (the sale of these two products businesses to the French government having been put on hold), and Vision AI
  • Geographies. There has been another slight reorganization of the former Regional Bus, not long after a change in composition in Q4 2024. Notably France now becomes a discrete RBU: this makes total sense for Atos. The rest of the former Southern Europe is now folded into International Markets which also includes the former Growth Markets RBU. The intention is to exit from several smaller, non-core countries in this BU, a not unexpected decision in this turnaround strategy
• Governance. Again, none of the initiatives that were outlined to simplify P&L, group and portfolio governance are unexpected. P&L remains with the RBUs, with the business lines having accountability for portfolio and R&D investment
• Offerings, with around 20 prioritized offerings.

Orchestrate

This covers:

• Organization. We note the refreshed leadership team is lacking women running any RBU or business line, a shame given the target to have 40% of the new hires being women this year
• Operating model, with a common, simplified commercial model across the group. As would be expected, the aims are to increase the level of cross-selling within the geos, expand the global large deals team, and to push the high potential growth offerings (where Atos is rapidly expanding its sales specialists).

Trim

Again, there are no surprises in the various initiatives to reduce the cost base. In terms of delivery, Atos plans to:

• Reach 60% offshore delivery by 2028, primarily from scaling global delivery centers in India
• Further industrialize delivery
• Improve bench management, with an 85% billability target by 2028.

We feel Atos has ground to catch up in each of these areas.

And, of course, there will be a streamlining in G&A: the target is to have G&A expenses down to 5% of revenues by 2028. There will be a headcount cut of around 1k.

AI-Enable

Like its peers, Atos is working at speed on bringing AI and GenAI both to its offerings and to its own delivery of IT services.

Atos has created a new business line dedicated to data and AI, which it plans will be a key growth driver for the group, growing fivefold from 2k to 10k employees by 2028. The offerings will span advisory, solution development focusing on GenAI and Agentic AI, data services and pre-packaged industry AI solutions.

The planned investments include up to €500m in R&D, and €100m in start-ups.

Key takeaway 1: Atos can now look to the future

Atos has been through a very turbulent period and this has not been helped by a very rapid succession of CEOs (Salle is Atos’ seventh CEO since Thierry Breton left to join the European Commission, and the company’s sixth in the last two years). New CEOs (ones that are not internal hires) can be open when starting in role about challenges related to historic company weaknesses. And Salle listed some of the key factors contributing to the company having lagged the market since 2022, notably loss of market confidence around the financial restructuring, instability in leadership and strategy, and limited exposure to rapidly growing segments of data & AI and cloud.

The company now has stronger liquidity and has no debts expiring before end 2029. This means it now has the time and flexibility to execute its strategy.

The Genesis transformation plan looks realistic; the extent to which it is working will of course not become apparent before 2027. If executed well, it looks as if Atos can regain its status as a major player, at least in Europe – and Europe was the focus of the Capital Markets Day.

In the short term, 2025 targets include revenues of €8.5bn (down 10.9%, citing voluntary contract reviews and low business traction prior to the completion of its rescue plan) with a slight improvement in operating margin to 4%. With proforma adjustments for the divestment of Advanced Computing (around €0.8bn) and planned exits from non-core countries (around €0.3bn), total 2025 revenues could be closer to €7.5bn.

Looking to 2028, the revenue target of €9bn or €10bn includes inorganic growth. The organic growth target is €8.5bn to €9bn, a 2025-2028 CAGR of 5% to 7% – which could well turn out to be in line with overall market growth across this period (the general expectation currently is no real market recovery before 2026). The success of any M&A activity, which will not be resumed before 2026, is critical to Atos’ future health. Atos needs to be better disciplined in both selecting acquisitions/new capabilities and in subsequently integrating these than it has done historically.

Similarly, decisions on investments in R&D, in partnerships and in start-ups will be critical as Atos will be somewhat late to the GenAI/agentic AI party.

Key takeaway 2: Cross-domain integration is key

Historically, Atos has not been particularly effective in cross- and up-selling to its large enterprise clients. The company does indeed have IT lifecycle capabilities spanning IT strategy & consulting, design, implementation, and ongoing support. And it is expanding its large deals team.

Looking ahead, it will, naturally, endeavor to cross-sell higher growth areas of cyber, and data & AI to its IT infrastructure, workplace and digital division client base.

But there is a big difference between having a focus on ‘cross-selling’ and going to market with integrated services offerings with business-value-based propositions. We look to see some evident progress by Atos in developing integrated services offerings that clearly address clients’ business priorities, not just their technology challenges, in parallel to strengthening its stakeholder engagement with more large enterprise clients.

Similarly, we also look forward to the tailored industry offerings.

P.S. In the week since the Capital Markets Day we have been looking at market and client response: we would broadly term the former as cautious and the latter as warmer. Clients that have stayed with Atos in recent years have welcomed the increased clarity this year.