We reiterate our Accumulate recommendation and EUR 8.3 target price for Reaktor. Although Reaktor's Q3 revenue fell slightly short of our expectations, operational efficiency pushed adjusted EBIT well above our forecast. We made only marginal changes to our forecasts. We expect solid performance in the sector context during the strategy period, but our estimates are still below the company's targets. In our view, the stock’s valuation (2026e P/E of 11x) is attractive, to say the least, and the Software Product business will need to continue showing strong progress for the undervaluation to be resolved. Our recently published extensive initiation of coverage report on Reaktor remains highly relevant and can be read here.

Revenue grew more slowly than expected in Q3

Organic revenue grew by 3% to 28 MEUR and was slightly below our estimate of 29 MEUR, but the growth outperformed the sector (Q2’26: -3%). At the segment level, the shortfall was driven by the Technology Solutions business, as well as a slower-than-expected development in revenue per employee, according to our calculations. Geographically, growth in Q3 came almost entirely from the United States. In the big picture, revenue development was moderate but not at the targeted level, reflecting, in our view, the still-demanding demand environment in the IT services market and the lack of license sales.

Operational efficiency still drove earnings above expectations

Adjusted EBIT was 2.5 MEUR (8.9% of revenue) and clearly exceeded our expectation of 2.0 MEUR, although it fell short of the strong comparison period. Without the non-recurring Business Finland item that we adjusted, adjusted EBIT would have been 3.2 MEUR (11.3%). At the segment level, stronger-than-expected operational efficiency in terms of costs in the Technology Solutions business drove the result above our expectations. As expected, meanwhile, the Software Product business was in an investment phase, which limited its profitability growth. Lower down, earnings from Reaktor Ecosystem associate companies fell slightly short of expectations, and finance expenses were slightly higher than we estimated. Thus, adjusted EPS were EUR 0.08, missing our forecast by one cent.

We forecast excellent performance in a sector context

Reaktor's Q3 was largely in line with our expectations (soft revenue and better earnings), and we made only minor estimate revisions. We estimate Reaktor to grow very strongly this year (13%) and its profitability to be among the top tier in the sector (adj. EBIT-% 13%). In the coming years, we expect growth to slow down slightly and profitability to remain strong. Thus, we expect the company to be at an excellent level of 20 in the sector context during the strategy period, as measured by our Rule of 20 (organic growth % + EBITA %). Following the IPO, the company raised funds, which combined with strong cash flow and debt leverage, enables "organic" investments and/or acquisitions representing a revenue level of over 100 MEUR during the strategy period. Reaktor's key risks are related to the dilution of its exceptional expertise and employer brand in one way or another, as well as the AI disruption risk.

We find the stock's valuation attractive at the least

In terms of its investment profile, Reaktor is an earnings grower. Based on the valuation methods we apply (2026e valuation multiples P/E 11x and EV/EBIT 7x, relative valuation ~30% below peers, sum of the parts EUR 8.9, DCF model EUR 9.4, and return expectation for the share ~15%), the fair value range for the share is EUR 8-9.5. Due to the large earnings impact of the Software Product business and still thin evidence of competitiveness, we apply the lower end of the range. In our view, the market is currently primarily pricing the largely stable and predictable Technology Solutions business and Ecosystem business, whereas the potential earnings of the Software Product business come at less than half the price of our base-case scenario at the current share price. Thus, according to our assessment, continued evidence of development in the Software Product business will help reverse this clear undervaluation, which should be sufficient with the continuation of the 2026e earnings level alone.