Solwers Q1'25 preview: Looking for signs of market pick-up

Translation: Original published in Finnish on 5/23/2025 at 7:35 am EEST.

Solwers will publish its Q1 report next Wednesday. We expect the company's revenue to have grown inorganically, which we also expect to have strengthened EBIT relative to the comparison period. The company does not have numerical guidance, so in connection with the reporting, our attention will be focused on recent market comments in addition to financial development.

Acquisitions have boosted growth

We forecast Solwers' revenue to have grown by around 4% year-on-year in Q1'25 and to have amounted to 20 MEUR. In our forecasts, revenue growth is driven by acquisitions, as the Spectra and Siren Arkkitehdit acquisitions are still reflected in revenue during the review period.  In our view, the design and consulting market has remained sluggish, reflecting low investment levels and tight price competition. On the other hand, based on the company's comments, its order book was higher at the turn of the year than in the comparison period, and the mild winter has likely supported the progress of projects compared to a typical start to the year. Reflecting these factors, we expect organic revenue growth in the beginning of the year to be stable relative to the comparison period, which was characterized by a muted market situation.

We forecast a slight improvement in profitability

Our forecast for Solwers' Q1 EBITA is 1.7 MEUR, which also reflects a slight improvement year-on-year. Thus, we also anticipate that the Q1 EBITA margin has risen slightly to 8.6% from the subdued level of the comparison period. The improvement in profitability is driven by stronger billing rates boosted by the increase in revenue, although we generally estimate that the workload has been satisfactory at best and that the company is still relying on layoffs in certain business operations. Solwers has stated that it is reviewing its cost structure this year, but in our view, the company has not yet fully eliminated the "extra" costs associated with the main market listing project, as the project is still ongoing.

Waiting for indications of a better market situation

In line with its guidance policy, Solwers has not typically provided numerical guidance, and no such guidance has been given for this year either. Based on the comments given in connection with the financial statement, Solwers estimates that its target markets will pick up towards the end of the current year. Against this background and echoing the comments on the order book in connection with the financial statements, we forecast revenue for the current year to grow by just over 3% to 81 MEUR and EBITDA to increase to 6.3 MEUR (2024: 5.5 MEUR). In connection with the Q1 report, in addition to the development of the figures, we will be looking for support from the company's comments for our forecasts expecting slight organic growth and improved profitability.