Translation: Original published in Finnish on 8/13/2026 at 8:10 am EEST.

Sitowise's Q2 was largely in line with our expectations, though profitability still fell slightly short of our estimates. The Infra business continued its solid performance, while Buildings and Digital Solutions continued to develop weakly as expected. Due to the slightly weaker-than-expected earnings outcome and updated outlook, we have lowered our estimates moderately. We consider the company's valuation to be neutral based on our forecasts for next year, though significant uncertainties remain regarding the earnings turnaround. We reiterate our Reduce recommendation for Sitowise and revise our target price to EUR 2.9 (was EUR 3.1).

Profitability was slightly softer than our expectations

Revenue from Sitowise’s continuing operations increased by one percent year-on-year, virtually exactly matching our forecast of 43 MEUR. However, there was a deviation between business segments relative to our estimates, with Infra growing slightly faster than we expected. Correspondingly, revenue in the Buildings and Digital Solutions businesses decreased by 2% and 3%, respectively, although we had expected them to remain flat.

The company's adjusted EBITA for the quarter was at the level of the comparison period at 3.2 MEUR, falling short of our forecast of 3.5 MEUR. According to the company, profitability in Infra remained above the target, while in Buildings and Digital Solutions, it was still below the target (clearly below in Buildings and below in Digital Solutions). On a positive note, the Buildings business managed to become profitable again after two unprofitable quarters.

The net debt/EBITDA ratio decreased to 4.2x (Q2'25: 4.9x), though it remains high. If the result improves in line with our forecasts, the target level of 3x will be reached in 2027. The company still has plenty of time to deliver an earnings improvement, as the financing package is not due until summer 2028.

Outlook for Digital Solutions was decreased

The company's order book grew due to strong order intake, reaching 145 MEUR by the end of June, which is about 5% higher than the comparison period. Meanwhile, the number of full-time equivalent employees decreased by about 4% year-on-year. Thus, the balance between the number of employees and the workload appears to be improving further. However, the company noted softened demand for municipal infrastructure projects in its outlook. In addition, the market outlook for Digital Solutions was downgraded from stable to weak. The company reiterated its view that the broader construction market is experiencing a slow recovery, the timing of which remains uncertain.

We estimate a stable performance this year

We forecast that the reported revenue will decline by 9% this year and that its adjusted EBITA margin will rise to 7.0% (2025 4.7%). However, this change is largely technical, as both are due to the removal of loss-making Sweden from the figures. On a comparable basis, we expect revenue to grow by approximately 1% and the adjusted EBITA margin to end up at roughly last year’s level of 7.7% (2025: 7.5%). Thus, our forecast does not include significant operational earnings improvement for the current year, and we have slightly lowered our forecasts for the remainder of the year for the Digital Solutions business unit due to updated outlooks. The turning point is expected to reach its peak in 2027, when we anticipate a moderate level adjustment in Digital Solutions alongside an improvement in the profitability of the Buildings business, driven in part by a pickup in renovation projects and support from data center projects.

Pricing remains neutral

Based on our current estimates, the 2026 EV/EBITDA multiple of 10x is elevated, and high financing expenses will erode net income, causing the P/E to rise even higher, above 100x. The earnings growth we forecast will make the multiples more attractive in the coming years, and based on our updated target price, the EV/EBITDA ratio will settle at around 8x next year, which we consider a fairly neutral level for the company.