Translation: Original published in Finnish on 8/7/2026 at 8:50 am EEST.

We lower our target price for Digia to EUR 6.8 (was EUR 7.5) reflecting estimate changes and simultaneously lower our recommendation to Accumulate (was Buy). Digia's Q2 was again slightly softer than our estimates, as performance in Finland was weak. International business is performing well. However, in our view, there is no major drama, and the big picture remains unchanged. We still expect the company to be one of the sector's winners and a long-term earnings grower. The stock's valuation (2026e P/E 10x and EV/EBIT 8x) is at least attractive, but the risk of an earnings warning limits the strongest buying interest.

Revenue declined organically, burdened by Finland; strong international growth organically

Digia's Q2 revenue increased by 1% to 54.3 MEUR, which was below our expectations. Organically, revenue declined by 3%. The challenges were particularly evident in ERP projects and in the Digital Solutions service area, where the company initiated measures to rectify the situation. Geographically, we calculate that international revenue grew strongly by 10% organically, while Finnish revenue decreased by as much as 7% in Q2. However, the company commented that sales were good in June, accounting for 30% of total H1 sales. On the other hand, we understand that sales also included larger ERP projects. In addition, the company's own financial sector solution family has a good order book. Overall, the IT services market, like the general economy, is showing some positive momentum in places, which we expect to also benefit Digia, given its broad and competitive offering.

Profitability missed expectations

Digia's adjusted EBITA clearly declined to 3.3 MEUR, falling short of our 5.0 MEUR estimate. TQ2 earnings included 0.2 MEUR in non-recurring costs related to the restructuring of operations. In addition, EBITA was burdened by 0.4 MEUR in customer project cost provisions, which we do not adjust from the result (adjusted for this, profitability would have been 6.9%). Earnings were depressed by higher-than-expected IFRS 16 depreciation (0.2 MEUR) and strategic growth investments in productization, AI utilization, international growth, and competence development. Additionally, we estimate that profitability was weighed down by low billing rates due to declining revenue.

We expect the company to lower its earnings guidance

Digia reiterated its guidance despite a soft H1 and guides for revenue growth and EBITA at the comparison period's level or growing for 2026. The changes to this year’s forecast are mainly due to a weaker-than-expected Q2. We expect revenue to grow by 1% to 219 MEUR and reported EBITA to be 19.4 MEUR (2025: 21.3 MEUR). In our view, H1 left too much to catch up on, and we therefore expect the company to issue a profit warning, at least regarding earnings. However, in our view, a potential mild profit warning would not cause any major drama for the investment story. Digia has historically been very active on the M&A front, and we expect the company to continue its largely successful inorganic growth in the future, once a suitable acquisition target is found.

Despite slight softness, valuation is attractive

Digia has strengthened its profile as an earnings growth company in recent years and has risen to become one of the sector's top performers, which supports the share valuation. Based on the valuation methods we use, the stock is at least attractively priced from all perspectives (2026e P/E 10x, EV/EBIT 8x, and an expected return of ~15%). Considering our DCF calculation (EUR 8.2) and the relative valuation level (~20% below peers), the share is very attractively priced. However, the clear risk of a profit warning for the rest of the year curbs the strongest buying interest. In the big picture, the company's risk profile is among the lowest in the sector. In summary, we see the fair value of the share in the range of EUR 6.8-8.2 per share.