Translation: Original published in Finnish on 07/20/2026 at 08:10 am EEST

We reiterate the EUR 3.3 target price and Buy recommendation for the stock. Digital Workforce's Q2 figures were in line with our estimates. In addition, comments on successful new sales and the sales pipeline were positive. Our uncertainty is mainly related to the rate of scalability, as the company is also continuously investing in growth. On the other hand, investments are likely to be productive in the long term, considering the demand outlook. Otherwise, the company has provided much-needed evidence of sales and growth, which increases confidence in the strategy's effectiveness. The stock's valuation (2027e EV/EBIT 12x, P/E 12x) is attractive due to partially scaled estimates.

Good momentum continued in Q2

Digital Workforce's revenue grew by 31% to 7.8 MEUR in Q2 and was fully in line with our estimate. Growth was driven by the e18 acquisition. We estimate organic growth to be 11%, which is a very good level in the current market. The company’s NPS score was 72 in the spring, which is very good and indicates that customers are highly satisfied with Digital Workforce, reinforcing confidence in its competitiveness. The company also stated that new orders had developed favorably, particularly in Q2, and had exceeded the company's targets. Adjusted for non-recurring items, the Q2 earnings level was in line with our estimates. The gross margin was 39%, at the same level as Q1, but decreased from 45% in Q2'25.

The growth outlook is good, but there is uncertainty about its scaling to profitability

In H1, the company invested in initiating large customer contracts and used more subcontracting than desired, which we understand has limited the scaling of growth to profitability more strongly. In line with its strategy, the company will continue to recruit new employees in H2, reducing the need for subcontracting. Recruitments are focused on growing the healthcare business in the UK and the US, and on supporting the agent-based AI business internationally. The company's investments limit the scaling of growth to profitability, but there is uncertainty about the magnitude.

The raised growth guidance is in line with our estimates

Digital Workforce raised its guidance and now expects the Group's revenue to grow by 27-37% compared to 2025 (was at least 15%). The company still expects adjusted EBITDA to be 7–13% of revenue. Following the Q2 report, we slightly lowered our profitability estimates, as the company is expected to continue investing relatively heavily in growth, which limits the scaling of realized growth to profitability We expect revenue to grow by 31% (11% organically) to 32 MEUR and the adjusted EBITDA margin to be 8.5% in 2026 (previously 9.4%). In the coming years, we expect growth to slow down slightly and partially scale into profitability. When comparing profitabxility to the IT services sector, we prefer the adjusted EBIT%, as it includes adjustments and goodwill amortization, but not depreciation of capitalized R&D investments (just over 2% of revenue). When examining this metric, profitability expectations remain relatively moderate compared to the potential, while also considering the company's targeted gross margin level of ~45% (derived from the targeted profitability of the businesses).

Valuation picture is very attractive

Digital Workforce's investment profile is still partly that of a turnaround company and now requires proof of growth scalability. Strong organic growth in H1 (16%), good contract wins in early 2026, the sales pipeline, and improved economic outlook now support continued strong demand. The strategic positioning has also removed the disruption risk created by AI, which is evidenced by contract wins and strong growth. With only partially scaled profitability estimates for 2026 (EBITDA: 8.5%), the valuation picture (2026e EV/EBIT 18x, P/E 17x) is attractive. Corresponding 2027 multiples, which consider the entire acquisition, are 12x and very attractive. Based on the valuation multiples, the sum of the parts (EUR 3.6), and the DCF calculation (EUR 3.4), we estimate the fair value range of the stock to be EUR 3.1-3.6.Tthe upper end requires continuous evidence of a continued organic earnings turnaround, where the key issue is the scalability of growth to profitability.