Digital Workforce Q2’25 earnings preview: We expect growth to continue at a good level, although short-term uncertainty is elevated

Translation: Original published in Finnish on 07/11/2025 at 07:39 am EEST

Digital Workforce, the software robotics automation expert, will publish its half-year report on Friday morning. We expect revenue growth to have continued well in Q2, although uncertainty regarding the timing of customer demand and the start of new contracts is elevated. We estimate profitability to be at the comparison period level, as investments limit the scaling of growth and the impact of cost savings on profitability. In addition, we look for comments on customer demand and project starts. In the big picture, we expect Q2 to be subdued relative to the company’s level, and performance to improve in H2.

Source: Inderes

We estimate growth to have continued outperforming the sector in Q2, but short-term uncertainty is elevated

We forecast Digital Workforce's revenue to increase by 7% to 7.5 MEUR in Q2. Growth is clearly better than the IT services sector (Q1 -3%), but slower than last year and the big picture potential. By business segment, we estimate the revenue of ”higher-value” recurring revenue services to have grown by 15% to 5.0 MEUR and professional services to have decreased by 5% to 2.5 MEUR. The company's Q1 was very weak for professional services (-27%), but project starts should support recovery. However, there is uncertainty about the trajectory of the Q2 recovery. Geographically, we look for comments on the development in the growth markets (US, UK and Ireland) and how the good sales pipeline in healthcare in Finland has been and will be launched.

In our understanding, the tariffs imposed by the US should not have a direct impact on Digital Workforce, as much of the work is done locally. However, indirect effects are very likely regardless of geographical location. The scale of the indirect impact is still difficult to estimate, though, as the magnitude of the impact of the tariffs is still uncertain.

We expet Q2 profitability to be flat year-on-year

We expect EBITDA to be at the level of the comparison period at 0.2 MEUR, or 3.1% of revenue in Q2 (adjusted EBITDA Q1 -5%). Thus, growth does not now scale to profitability in our forecasts. Profitability is still constrained by investments in line with the strategy and low billing rates in expert services. On the other hand, already implemented cost-saving measures will partly support profitability in Q2. However, the question mark in Q2 continues to be how much these efficiency measures support and investments limit. We don't expect any surprises on the other earnings lines. Thus, we expect EPS to have increased by one cent to EUR 0.02 in Q2.

We expect revenue to grow relatively nicely and partly scale to profitability in 2025

Digital Workforce expects higher revenue and improved adjusted EBITDA year-on-year in 2025. After a weaker-than-expected Q1, the turnaround in profitability must occur to some extent already in Q2 and more clearly in H2'25. This is, however, supported by the efficiency measures and good order book mentioned above. We expect the company's revenue to grow by 7% and adjusted EBITDA to increase to 1.5 MEUR year-on-year, i.e. to 5% of revenue in 2025 (2024: 1.0 MEUR).