Digital Workforce Q2’24 earnings preview: We expect growth to have accelerated slightly and profitability to have improved

Translation: Original comment published in Finnish on 8/20/2024 at 7:16 am EEST.

Digital Workforce, the software robotics automation pioneer, will publish its half-year results on Friday morning. We expect the positive revenue and profitability trends seen at the beginning of the year to have continued in the second quarter. In addition to operational developments, the focus is on the company's comments on Finland and growth markets. 

We forecast a slight acceleration in growth in Q2

In the spring, Digital Workforce announced a number of significant contracts to support this year's developments. We expect revenue growth to slightly accelerate to 7% or 5.8 MEUR in the second quarter (Q1'24: 3%). By business area, we forecast Q2 revenue of 2.5 MEUR (+6%) for Continuous Services and 4.0 MEUR (+8%) for Professional Services. In line with the industry focus, we expect healthcare and the geographically growth-oriented North American market to have driven growth in the second quarter, as in the first quarter. We will also be looking for comments on the developments in the growth markets (US, UK and Ireland) and how good the sales pipeline customer projects in healthcare have been and are being launched in Finland.

We expect profitability to have improved, supported by cost savings

We forecast an EBITDA margin of 0.3 MEUR or 4.6% of revenue in Q2. Profitability improvement from the weak comparison period is thanks to the closure of the Danish and Norwegian offices at the end of last year, administrative efficiency measures and an increase in revenue (EBITDA % Q2'23: -2 % and Q1’24: 4%). The result will continue to be constrained by strategic investments, particularly in sales and marketing activities in the US, and by general cost increases. We don't expect any surprises on the other earnings lines. Financial returns should improve earnings. As a result, we expect Q2 EPS to land at EUR 0.02.

We expect moderate revenue and earnings growth in 2024

The company estimates that full-year revenue in 2024 will be higher and adjusted EBITDA will be positive and improve compared to 2023. Based on the Q1 report and comments, the turnaround seems to be progressing well. Prior to the Q2 report, we expect that the company’s revenue will grow by 7% and EBITDA will be 1.4 MEUR or 5% of revenue in 2024 (2023 adj. EBITDA 0.2 MEUR).