January-June net sales up 16.9 per cent, operating profit (EBITA) for April-June sees year-on-year improvement
April-June 2023
Net sales: EUR 47.8 (41.2) million, up 16.0 per cent
Operating profit (EBITA): EUR 3.4 (2.1) million, up 58.2 per cent; EBITA margin: 7.1 (5.2) per cent of net sales
Operating profit (EBIT): EUR 2.7 (1.5) million, up 73 per cent; EBIT margin: 5.6 (3.7) per cent of net sales
Earnings per share: EUR 0.07 (0.06)
January-June 2023
Net sales: EUR 97.9 (83.7) million, up 16.9 per cent
Operating profit (EBITA): EUR 8.3 (7.3) million, up 13.5 per cent; EBITA margin: 8.4 (8.7) per cent of net sales
Operating profit (EBIT): EUR 6.8 (6.1) million, up 11.7 per cent; EBIT margin: 6.9 (7.3) per cent of net sales
Earnings per share: EUR 0.18 (0.19)
Return on investment: 13.6 (12.6) per cent
Equity ratio: 45.1 (44.2) per cent
Unless otherwise stated, the comparison figures provided in parentheses refer to the corresponding period of the previous year.
Group key figures
+----------------+------+------+---------+-------+-------+---------+---------+
|EUR 1,000       |  4-6/|  4-6/|Change, %|   1-6/|   1-6/|Change, %|1-12/2022|
|                |  2023|  2022|         |   2023|   2022|         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Net sales       |47,847|41,240|    16.0%| 97,881| 83,701|    16.9%|  170,754|
+----------------+------+------+---------+-------+-------+---------+---------+
|Operating profit| 3,390| 2,143|    58.2%|  8,259|  7,276|    13.5%|   15,733|
|(EBITA)         |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|- as a % of net |  7.1%|  5.2%|         |   8.4%|   8.7%|         |     9.2%|
|sales           |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Operating profit| 2,664| 1,540|    73.0%|  6,801|  6,087|    11.7%|   12,727|
|(EBIT)          |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|- as a % of net |  5.6%|  3.7%|         |   6.9%|   7.3%|         |     7.5%|
|sales           |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Result for the  | 1,859| 1,474|    26.1%|  4,880|  5,132|    -4.9%|    9,571|
|period          |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|- as a % of net |  3.9%|  3.6%|         |   5.0%|   6.1%|         |     5.6%|
|sales           |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|                |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Return on       |      |      |         |  14.0%|  15.3%|         |    13.8%|
|equity, %       |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Return on       |      |      |         |  13.6%|  12.6%|         |    12.9%|
|investment, %   |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Cash flow from  |      |      |         |  7,535|  8,799|   -14.4%|   14,252|
|operations      |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Interest-bearing|      |      |         | 21,901| 15,681|    39.7%|   17,608|
|net liabilities |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Net gearing, %  |      |      |         |  31.8%|  23.6%|         |    24.8%|
+----------------+------+------+---------+-------+-------+---------+---------+
|Equity ratio, % |      |      |         |  45.1%|  44.2%|         |    45.0%|
+----------------+------+------+---------+-------+-------+---------+---------+
|                |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Number of       |      |      |         |  1,437|  1,397|     2.9%|    1,426|
|personnel at    |      |      |         |       |       |         |         |
|period-end      |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Average number  | 1,443| 1,386|     4.1%|  1,442|  1,368|     5.4%|    1,399|
|of personnel    |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Shareholders'   |      |      |         | 68,768| 66,353|     3.6%|   71,087|
|equity          |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Balance sheet   |      |      |         |157,510|154,590|     1.9%|  160,116|
|total           |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Earnings per    |  0.07|  0.06|    25.1%|   0.18|   0.19|    -5.5%|     0.36|
|share, EUR      |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
|Earnings per    |  0.07|  0.06|    25.0%|   0.18|   0.19|    -5.5%|     0.36|
|share (diluted),|      |      |         |       |       |         |         |
|EUR             |      |      |         |       |       |         |         |
+----------------+------+------+---------+-------+-------+---------+---------+
CEO's Review:
"Digia's net sales were up 16.9 per cent in January-June and amounted to EUR 97.9 (83.7) million. Operating profit (EBITA) grew by 13.5 per cent and the EBITA margin was 8.4 (8.7) per cent.
Net sales growth remained strong in the second quarter. Our net sales were up 16.0 per cent in April-June and amounted to EUR 47.8 (41.2) million. Organic growth accounted for 9.3 per cent of net sales. Second-quarter operating profit (EBITA) saw a year-on-year improvement and amounted to EUR 3.4 (2.1) million. Operating profit (EBITA) grew by 58.2 per cent and the EBITA margin was 7.1 (5.2) per cent.
Digia's business consists of service areas that provide specialised IT solutions: Digital Solutions, Business Platforms, Financial Platforms and Managed Solutions. I'm pleased that our net sales grew in all our service areas in April-May.
In the Digital Solutions service area, data utilisation solutions and CRM solutions saw strong growth in Microsoft Power Platform solutions, for instance. Our Digia Hub expert subcontracting network also grew strongly.  On the other hand, the pace of growth slowed down in tailored software development.
Net sales grew slightly in our Business Platforms service area, which focuses on ERP, with the strongest growth being achieved in NetSuite ERP solutions. New sales of Microsoft solutions remained strong in the review period: for example, our cooperation with Kuntien Tiera Oy expanded with respect to the Microsoft Dynamics 365 ERP system, and Digia also assumed responsibility for Alko Oy's Microsoft Dynamics 365 ERP system.
Our service area that saw the strongest growth was Managed Solutions, whose core offering focuses on enhancing the business efficiency of customers in long-term customer relationships. One of the agreements we made during the review period was with a Finnish listed industrial company, involving integration environment takeover, further development and continuous services. Particularly strong growth was seen in Digia's smart automation platform - comparable net sales doubled compared to the corresponding quarter of the previous year. This is Digia's own product solution. 
Growth in the Financial Platforms service area, which focuses on the financial sector, was supported by strategic change projects among our key customers.
Continuous service and maintenance business plays a significant role in Digia's business model and it partly balances out the effects of any market fluctuations in our operations. In the second quarter, the service and maintenance business grew by 9.7 per cent and accounted for 56.9 (60.2) per cent of net sales. The project business grew by 25.6 per cent and accounted for 43.1 (39.8) per cent of net sales.
In the second quarter, growth in operating profit (EBITA) was slowed down by tighter price competition, especially in the market for tailored software development, the pay settlement negotiated in the spring, and the general trend in inflation. We will continue to invest in enhancing the efficiency of our own operations to improve our profitability. In addition to traditional organisational development, we see new opportunities for productivity improvement through the use of automation and artificial intelligence.
Digia's exceptional Microsoft expertise was widely recognised by the principal, too. In July, after the end of the review period, Microsoft announced that it had selected Digia for its global Business Applications 2023/2024 Inner Circle partner network for the third time in a row. Only about one per cent of Microsoft's strategic partners around the world are selected for this network. In addition, Microsoft chose Digia as a Power Platform Partner of the Year.
During the review period, we conducted our annual NPS customer satisfaction survey. According to the survey, satisfaction is excellent, particularly among our key customers. One of our goals for the strategy period is to improve our NPS score by 25 per cent compared to the 2022 baseline.
Digia's own collective agreement entered into force at the beginning of May. It enables investments and flexibility that take Digia's culture into account better than a general agreement. The collective agreement introduced new elements, such as to the pay settlement, in which salary adjustments are partly tied to the development of our profitability. Its primary aim is to ensure that the company's success benefits all Digia employees.
Market demand currently shows a significant need for solutions to enhance business efficiency. Our customers' goal is to step up the efficiency of their existing operations, which calls for investments in continuous digitalisation and, above all, artificial intelligence. Digia also seeks to improve the efficiency of its operations during the rest of the year."
Profit guidance for 2023 remains unchanged                   
Digia's profit guidance for 2023 remains unchanged: Digia's net sales (EUR 170.8 million in 2022) and operating profit (EBITA) (EUR 15.7 million in 2022) will increase compared to 2022.
Events after the review period
There have been no major events since the report period.
Briefing invitation
A briefing for analysts will be held at 4:00 pm EEST on Thursday, 10 August 2023 as a Teams meeting. Attendance instructions have been emailed to participants.
The material and presentation for the event will be available from 4:00 pm EEST on 10 August 2023 on the company's website:  digia.com/en/investors/reports-and-presentations (https://digia.com/sijoittajat/raportit-ja-presentaatiot/).
Financial reporting
Digia will publish its business review for January-September 2023 at 3:00 pm EEST on Friday 27 October 2023.
For further information, please contact:
Timo Levoranta, President & CEO
Switchboard +358 (0)10 313 3000
Distribution
Nasdaq Helsinki
Key media
digia.com