CEO's review

Half-year Financial Report January-June 2024, 9.8.2024

In the second quarter of 2024, we continued to implement Digia’s strategy of long-term profitable growth. Both our net sales and operating profit grew from the comparison period, and at the same time we continued to invest in our business renewal and offering development. I am especially pleased that all of Digia’s service areas increased their net sales in spite of the challenging market situation.

Our net sales grew by 8.8 per cent to EUR 52.1 (47.8) million during the second quarter. Organic growth accounted for 2.9 per cent of net sales. In April-June, operating profit (EBITA) grew by 24.5 per cent to EUR 4.2 (3.4) million. EBITA margin amounted to 8.1 (7.1) per cent. The second-quarter result includes EUR 0.3 million in non-recurring restructuring costs.

In January-June, our net sales grew by 8.0 per cent to EUR 105.7 (97.9) million. Organic growth in net sales amounted to 2.2 per cent. Operating profit (EBITA) grew by 18.0 per cent and the EBITA margin was 9.2 (8.4) per cent. Cash flow from operations was strong. International operations accounted for 12.1 (7.3) per cent of net sales in January-June.

In the second quarter, customers remained cautious, rescheduling project start-ups and delaying their decision-making. At the same time, we see a trend in demand in which customers are centralising their procurements, relying on providers with broader offerings. This trend supports Digia’s growth.

In the Digital Solutions service area, growth was boosted by the development of digital services and CRM solutions. Growth in the Business Platforms service area was driven by Microsoft technology-based ERP solutions and Digia’s logistics product solution. In the Managed Solutions service area, growth was generated by solutions that support higher efficiency in customers’ operations and data utilisation. This demand was evident as growth in Digia’s automation and AI platform, integrations, and our subsidiary Productivity Leap.

Major customer contracts signed during the review period included a two-million-euro development partnership with a Finnish logistics company in core system development and a one million euro contract for Power Platform development with a financial sector organisation. Thanks to Digia’s robust expertise in AI and automation, we won a notable competitive bidding process in the public sector for the selection of a partner to establish a centre of expertise in AI, robotics and automation services. This centre of expertise will develop and produce comprehensive services related to AI, robotics and automation, and handle the overall management and maintenance of solutions.

One of the key themes in the development of our offering during the review period was harnessing automation and AI and their integration into Digia’s offering. Digia’s automation and AI platform provides our customers with a rapid and cost-effective means to boost their business efficiency. As a result of the development work, the smart platform can be integrated into Digia’s customer solutions. Woikoski for example uses the automation and AI platform to automate critical sales orders as part of their Microsoft ERP system. We have also utilised the platform with Digia’s own products, such as the Digia Envision and Digia Logistics systems. During the review period, we started deliveries of the new version of the Digia Envision ERP system, which also features climate impact assessment (CO₂ functionality).

Technology vendor Microsoft once again recognised Digia’s strong expertise. For the fourth year in a row, Microsoft recognised Digia as Partner of the Year, this time in the Business Applications category.

Quality and information security are an integral part of Digia’s reliable operations. During the review period, we completed the recertification of our ISO 9001 quality certificate without any deviations. In addition, we conducted a follow-up assessment of ISO 27001 information security certification covering previously certified business areas without any deviations.

Digia will start reporting in accordance with the EU Sustainability Reporting Directive as from the 2024 financial statements. During the review period, we submitted our commitment to the Science Based Targets initiative, whereby we will define our science-based climate targets. In recognition of our good sustainability efforts, we achieved a silver rating in our annual EcoVadis sustainability assessment for the fourth year running.