Investments in offer development, sales, or processes that will enable future growth in existing customers or new markets?
It likely doesn’t require significant sums, and those tasks are always handled by several people + unassigned consultants.
Revenue grew by 2%, of course, when taking into account the number of working days in Q1/24 vs Q1/25. 2% is not a blast, of course, but in this economic climate, it’s quite okay.
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Here are Joni’s comments on Digia’s change negotiations. 
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Digia acquires Polish Savangard – a new Northern European “Integration Powerhouse” is born
The foundation of artificial intelligence is data and integrations. Together with Savangard, Digia creates a significant Northern European provider of integration and API services. The company seeks new growth from Poland and wider Europe, and strengthens its offering and cost competitiveness in the Finnish and Swedish markets.
Digia Oyj and the owners of Savangard Sp. z o. o. have signed an agreement under which Digia Oyj will acquire the entire share capital of Savangard Sp. z o. o. The planned closing date for the transaction is June 2, 2025.
The Savangard Group includes Savangard Sp. z o. o. and its wholly-owned subsidiaries Peoplevibe Sp. z o. o. and Finnovative Solutions UAB (“Savangard”).
Savangard is a profitably growing Polish group, founded in 2002, that provides high-quality integration, API, and software development services to its customers. Savangard’s customers include players in the financial, energy, industrial, and public sectors.
Peoplevibe Sp. z o. o. is an expert network focused on providing high-quality and cost-effective expertise. Peoplevibe will expand the offering of the Digia Hub expert network.
Savangard Sp. z o. o. will continue as a wholly-owned subsidiary of Digia and is one of Digia Oyj’s subsidiaries. Janusz Konik will continue to lead the company.
Savangard’s revenue according to Polish GAAP for the financial year ended December 2024 was approximately EUR 16.4 million (EUR 15.8 million in 2023), and its operating profit adjusted for normalization items was approximately EUR 2.2 million (EUR 1.7 million) (approximately 13.4% of revenue in 2024), excluding the figures for Finnovative Solutions UAB, as its pending sale process is intended to be completed after the closing of the transaction. The group employs over 150 people in Warsaw and Czestochowa. All Savangard employees will become part of Digia’s Managed Solutions business unit, and the acquisition will have no impact on personnel. Savangard’s figures will be consolidated into the Digia Group from the closing date of the transaction.
The total purchase price consists of a fixed debt-free and cash-free purchase price of EUR 11.62 million, plus a conditional additional purchase price tied to operating profit and revenue targets, totaling a maximum of EUR 4.98 million. The fixed purchase price will be adjusted based on the net cash at the balance sheet date of 12/2024 and a working capital adjustment item. The transaction will be financed with a bank loan.
The total purchase price consists of a fixed debt-free and cash-free purchase price of EUR 11.62 million, plus a conditional additional purchase price tied to operating profit and revenue targets, totaling a maximum of EUR 4.98 million. The fixed purchase price will be adjusted based on the net cash at the balance sheet date of 12/2024 and a working capital adjustment item. The transaction will be financed with a bank loan.
EDIT
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I got good “vibes” from this deal at first glance as a layman:
- quite a good size when looking at the internationalization goals for the strategy period and, on the other hand, the estimated “payback period”
- probably a geographically quite optimal target to complement the current portfolio
- 30% of revenue from outside Poland and many interesting companies on the reference list
- the fact that the so-called “northern dimension” was emphasized, however, means that there are other goals as well. Was it, for example, that another company’s acquisition will receive approval sometime in Q3, perhaps.
- said and done. From the beginning of next month already part of Digia, and already now, for example, a new “Digia group company” appears on the websites
- Digia Hub and Peoplevibe synergies
- a large earn-out portion in the purchase price certainly helps with commitment. The management team looks very balanced and a bit like Digia’s own, at least in the picture gallery – except they are perhaps about 10 years younger
- quite clear figures on what was bought, meaning consultants have certainly done a solid job too. Also a nice buying opportunity in that there was still growth, but profitability 24 < 23
- the preparation of this was probably one of those Q1 investment targets, thus partly explaining these figures as well
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Joni has prepared a new company report after the recent acquisition.
Yesterday, Digia announced its acquisition of a Polish integration specialist. In our view, the deal is interesting because it allows the company to expand into new market areas, strengthen its already robust integration expertise, and improve Digia’s price competitiveness. The acquisition is well aligned with the company’s growth and internationalization strategy. Furthermore, the valuation of the deal is moderate. We reiterate our buy recommendation for the stock and raise the target price to 8.3 euros (previously 7.8 €), reflecting forecast changes and the moderate valuation of the acquisition.
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Digia and Traficom have signed a significant agreement on the creation of a governance model for Traficom’s new AI experimentation office. The agreement also includes an option for the experimentation office’s further development and support services related to, among other things, the planning and implementation of AI experiments. The value of the agreement, including options, is 2 million euros, and it is for four years. 16 bids were received for the tender, of which Digia was selected as the winner.
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Hi,
For some reason I can’t access this, aren’t extensive reports also for Free users?
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It should open now
Summer greetings,
Joni
(apparently need more characters here to post 
)
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Sara interviewed Joni regarding Digia’s recent comprehensive report.
Digia has solidified its profile as an earnings growth company and has risen to be among the sector’s top performers. Currently, the focus is on internationalization, which was further strengthened by an interesting Polish acquisition. Analyst Joni Grönqvist discusses the company in light of the recent comprehensive report.
Topics:
00:00 Introduction
00:37 What does Digia look like currently?
02:38 Among the best in the sector
03:39 IT service market development and outlook
07:09 Digia’s positioning relative to competitors
07:53 Effects of the Polish acquisition
11:53 Growth drivers
14:07 Key risks
17:06 Forecasts
18:33 Attractive valuation
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Juho Toratti has written an article about Digia.
Continuous investment is made in growth, and Digia’s business is supported by megatrends. Analysts are confident that the growth strategy will continue to bear fruit. Digia’s growth and quality scores are supported by the company’s healthy balance sheet and very stable profitability development.
Currently, Digia receives the lowest factor points for its low-risk profile. The stock tool scores the stock’s overall risk as a combination of market and business risk. The lower the business and market risk, the higher the score.
Note.
IR-ikkuna is a channel for SalkunRakentaja and Sijoittaja.fi’s corporate partners for background and analytical articles, as well as other interesting investor information. The article is part of a commercial collaboration with the company. The article does not contain investment recommendations.
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Digia will provide experts to Helsinki Region Transport (HSL) for the HSL application’s development team, focusing on the development of ticketing and payment functionalities. The new agreement also enables cooperation in the future development of new ticketing backend systems. The value of the agreement is four million euros, and it further deepens the close cooperation between Digia and HSL.
70 percent of public transport ticket sales in the Helsinki metropolitan area occur through the mobile application. With daily purchases of approximately one million euros, the HSL application is one of Finland’s largest online stores.
With the new agreement, HSL will continue to purchase experts from Digia for the HSL application’s backend system development team. The backend system manages, among other things, various tickets and payment traffic.
Digia has long been HSL’s partner in the development and maintenance of the HSL application. Recently, Digia and HSL also expanded their cooperation in data transfer and information exchange with the development of API interfaces.
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My impression of Digia has always been that the company genuinely plays the long game, and I think their communication, at least externally, is quite realistic, without any fluff. Digia might somehow be perceived as perhaps grey and not as “sexy” as some other companies, and while I personally appreciate or like their communication style, a more marketing-oriented approach might appeal better to some investors. On the other hand, let the results speak for themselves.
About the Numbers
Digia’s valuation feels affordable, especially when comparing it to the company’s current performance relative to competitors and considering the growth achieved. Viewed from different angles, the company looks interesting:
(Inderes)
Digia’s goals:
- over 10 percent growth (incl. organic and inorganic)
- EBITA over 12 percent (at the end of the strategy period, period: 2023-2025)
Considering surprises and other factors, the performance can be considered good.
(Inderes, comprehensive report)
General
Considering the challenges and difficulties of the times, and especially the industry’s slowdown, Digia has performed excellently in my opinion. The company is not in trouble in any way; of course, there might be difficulties on the international side, but there is also potential in that area, and the recent acquisition in Poland could be a step in the right direction. Joni’s comments on the Polish acquisition:
Yesterday, Digia announced it is acquiring a Polish integration expert. In our view, the acquisition is interesting because it expands the company into new market areas, strengthens its already robust integration expertise, and improves Digia’s price competitiveness. The acquisition is well aligned with the company’s growth and internationalization strategy. Furthermore, the valuation of the acquisition is moderate.
Savangard’s revenue according to Polish GAAP, in 2024 16.4 MEUR
Operating profit adjusted for normalization items 2.2 MEUR (approx. 13.4% of revenue)
(Inderes)
Above, there was indeed talk about additional opportunities on the international side (I only took Poland as a single good example), but in the big picture, what fascinates me most about Digia so far is how well it has performed during difficult times compared to other companies in the sector. When you combine this with the generally good long-term outlook for the industry, and the fact that Digia seems to be correctly positioned and its areas of expertise appear to be supported by tailwinds, unlike, for example, Siili.
Also, the company’s growth, growth potential combined with Digia’s long-term play and diversification (public and private sectors, different industries, etc.) is interesting, offering a kind of security and growth in the same package. The harmonization of the company’s services and operations is still ongoing, and the comprehensive report discussed how the benefits will materialize and how widespread their realization will be – there is uncertainty here too, but also unrealized potential, isn’t there?
Digia is also capable of serving its customers broadly, and the company aims to grow its own services and offerings, but these also carry risks, such as with the company’s project businesses. On the other hand, one could imagine the project side generally awakening as the economy and industry roll along better later.
Organic growth is quite good considering various factors, and given the company’s commendably secure performance, e.g., in terms of cash flows, one can assume that the company has played its cards right, and perhaps when better times arrive for both the industry and the general economy, the company will be best positioned to capitalize on upturns.
Digia’s stock sometimes reacts strangely, well, so do other stocks, so I might grab onto this, especially if the company’s stock offers what I consider unwarranted dips. Why not buy it even at these prices.
This was my Saturday rambling.
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Digia is the only Finnish IT service company I have in my portfolio. Previously, I also had TietoEvry and Siili.
I was at Digia’s annual general meeting in the spring, and I thought the atmosphere there was good. The CEO came to chat with us ordinary investors before the meeting, and the refreshments were OK too.
Generally, the situation in the sector looks quite bad, and Digia also suffers from it to some extent.
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Here are Joni’s preview comments as Digia publishes its results on Thursday.
We estimate Digia’s revenue grew slightly organically, which is better than the sector. In addition, we expect adjusted profitability to have improved slightly. In Q2, the company carried out an interesting Polish acquisition and change negotiations, which will support revenue growth and efficiency going forward. In the big picture, no major changes have occurred in the IT services market during Q2; instead, the market situation has remained challenging. Our comprehensive report on Digia, prepared in June, is still very relevant and can be read here.
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Here’s an interview with CEO Timo Levoranta for evening listening, where he goes through the highlights of Q2 and the outlook for the rest of the year with Joni.
Topics:
00:00 Introduction
00:10 Q2 main points
01:31 Business areas
03:23 Profitability
05:00 Savangard acquisition
07:09 Acquisition structures in the IT services sector
08:23 Market situation
10:10 H2 targets
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Good interview once again. I really like Levoranta, who “speaks Finnish” in such a way that even a layman who understands nothing about “IT” matters can follow along. Practical, clear, and straightforward. Time after time. Bravo! Me like.
On the surface and beneath the surface, several positive drivers, this was a good place to add.
Trust is unwavering. Good company.
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