Digital Workforce Q1’25 earnings preview: We expect growth to be partially scaled to profitability

Translation: Original published in Finnish on 4/17/2025 at 7:30 am EEST.

Digital Workforce, the software robotics automation expert, will publish its Q1 business review on Friday morning. We expect the strong revenue development of last year to have continued in Q1. We anticipate growth to scale up to profitability, but at the same time investments to limit the improvement. In addition to the operational developments, the focus is on the company's comments on Finland and the growth markets, especially the US. 

We expect growth to have continued well above the sector in Q1 too

We forecast that Digital Workforce's revenue growth continued to clearly outperform the sector and amounted to 12% or 7.5 MEUR in Q1 (Q4'24 sector -5%). By business area, we forecast Q1 revenue of 4.8 MEUR (+20%) for Continuous Services and 2.7 MEUR (0%) for Professional Services. In line with the industry focus, we expect the healthcare market in Finland and the geographically growth-oriented North American market to have driven Q1 growth, as was the case last year. We will also continue to look for comments on the development in the growth markets (US, UK and Ireland) and on 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 estimate that growth has scaled to profitability, but scale is a small question mark

We expect an EBITDA margin of 0.5 MEUR or 6.3% of revenue in Q1. The improvement in profitability year-on-year is driven by the restructuring measures implemented at the end of last year and the scaling up of revenue growth to profitability. The result will continue to be constrained by investments in line with the strategy and a change to a more costly personnel profile. However, there is a small question mark over the extent of support from these efficiency measures and the constraints imposed by investments. We don't expect any surprises on the other earnings lines. Consequently, we expect Q1 EPS to have increased to EUR 0.05 (Q1’24 EUR 0.02).

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

Digital Workforce expects higher revenue and improved adjusted EBITDA year-on-year in 2025. In our view, the guidance is easily achievable. The company commented in the context of the Q4 report that the sales pipeline remains good and its quality has improved. Ahead of the Q1 business review, we now forecast the company's revenue to grow by 14% and adjusted EBITDA to increase to 2.3 MEUR year-on-year, or to 7% of revenue in 2025 (2024: 1.0 MEUR).