Solwers Q3'25 preview: Market sentiment remains cautious

Translation: Original published in Finnish on 11/18/2025 at 7:30 am EET.

Source: Inderes

Solwers will publish its Q3 business review on Friday. In Q3, which is characterized by the holiday season, the revenue level is seasonally lower than in other quarters, but profitability is supported by the release of holiday pay provisions. We forecast revenue to have grown slightly overall. At the same time, profitability is pressured by continued fierce price competition, and the initiated cost-saving program is not enough to fully tackle this development in our forecast. The recovery of the cycle has been continuously pushed forward, and thus market comments and information on order book development are again in focus.

We expect slight revenue growth

We expect Solwers' Q3 revenue to have grown by 1% to 16.8 MEUR. Revenue growth is supported by the tail effects of the Spectre acquisition, and our organic growth forecast is at zero. We expect billable utilization to have remained at a good level, i.e., above 80%, but the company has had to compromise on pricing, which is weighing on margins. In our forecasts, the number of employees decreases slightly from the previous quarter (Q2'25: 703). We expect the number to have decreased in subsidiaries that have suffered from the current market situation, but recruitments have also been made in well-performing companies. The number of working days is the same as in the comparison period, so it does not affect comparability now.

The company aims to defend its profitability against falling prices

We estimate Q3 EBITA to have decreased to 1.0 MEUR (Q3’24: 1.2 MEUR). Profitability is weighed down by increased personnel costs relative to revenue in a tight pricing environment. However, the decline is softened by the company's initiated savings program, but we believe it is not yet enough to turn EBITA to growth, and more traction from the market would be needed.

The outlook is of particular interest

Solwers has not provided a numerical guidance for the current year, which is in line with the company's guidance practice in recent years. The company has also stated that it expects a further improvement in the business environment toward the end of the year due to a general market pick-up. In our view, the realized interest rate cuts have not yet had a material impact on market activity, and we expect the sluggish market conditions to continue to translate into price-driven competition. Against this backdrop, we do not expect the project portfolio to have strengthened significantly. Before new orders clearly pick up in the market, we do not expect prices to start rising either. Thus, the Q3 report's outlook should contain positive wording to make the strong earnings growth we forecast for next year realistic.

Returning to earnings growth is critical for Solwers' investment story. The share looks very expensive based on current year multiples, but if earnings growth starts to materialize, the multiples will quickly fall to attractive levels. Also, a reduction in the elevated net debt/EBITDA (LTM) ratio (Q2'25: ~5x) through earnings improvement towards the company's normal covenant levels (below 3.5x) would lower financing costs, and the company could then become active again in the M&A market.