I havenât had time to read it yet, but now I have some bedtime reading. @Joni_Gronqvist has prepared a new comprehensive report on Gofore, and like other comprehensive reports, itâs available for everyone to read.
Goforeâs track record of highly profitable growth in the public sector is undeniable, despite market headwinds. Last year, however, growth slowed due to a challenging market and weakness in the private sector. Profitability has always been strong, and now it is important to return to a growth trajectory driven by the strategyâs new growth sectors in Finland and the DACH region. We expect the company to continue stronger and more profitable growth than the sector during the strategy period, but to fall slightly short of its own targets. Additionally, new acquisitions remain a key value driver for the stock. The valuation (2025e EV/EBIT 11x and expected return >15%) is attractive from several perspectives. We reiterate our âaddâ recommendation for the stock, but lower the target price to EUR 23.0 (previously 24.0) reflecting forecast changes.
Gofore has been black best in terms of employee satisfaction and employer reputation, and also precisely because there have been no change negotiations.
I donât blame anyone for the change negotiations; the company, management, and least of all the employees. And I wonât comment on whether the decision is right or wrong. Change negotiations are always miserable, and one always considers the employees from a human perspective.
Iâll return to my main point; what Iâve liked about Gofore is precisely what itâs like to be an employee there. Inevitably, change negotiations will surely affect employee satisfaction very strongly, and it will certainly take a long time to recover to the previous state in this regard.
I havenât had the impression that salaries at Gofore are bad, but Iâve been told that theyâre not the best either, and many have wanted to work there because itâs such a good employer, even if the salary has only been sufficient or something. Now thereâs been a blow to the companyâs image as an employer, and I donât know how it will affect even those who stay to work there â hardly positively. Quite often, if an employer doesnât feel so pleasant and safe and doesnât pay the best salary, etc., then top talent leaves even after change negotiations or even voluntarily before them.
And this is not criticism of anyone, Iâm just pondering this from a certain perspective â unilaterally from one point of view. Gofore was probably in some degree of a forced situation when it made this decision, knowing how it would affect the employer image, etc. So I intentionally left out pondering other negative aspects or/and signals, as well as the good aspects from the investorsâ perspective that are present here (the issues are clearly expressed in the announcement). I also intentionally wrote quite black and white, so that my points might come across better, and I donât mean that I donât understand the solutions made.
I, for one, am definitely out as soon as a suitable job opens up elsewhere. Even the last employment benefit (continuity of employment) has now been lost. The neighboring company (S-initial competitor) seems to be hiring, at least for my skill set. Having seen the YT-negotiation circus, Iâm not staying to watch this show.
From what Iâve observed following my friend, Iâve noted that Gofore has good benefits, at least as of February. Is there now a so-called Lapinlisa in the post?
Very few companies are immune to this market. When you Google âchange negotiationsâ alongside at least two major companies from the sector, it becomes clear that Gofore is not the only one.
Quite often, the salary model in these companies is flexible, meaning the bench is likely full of people. During the growth euphoria, hasty recruitments were probably made, and a cleanup must be done before the next upturn.
Arenât Goforeâs problems just beginning? Itâs a bit puzzling why this is valued with such a premium compared to others and why people believe things will continue as they are. Refueling the model portfolio. The good old contracts are ending, and theyâre being replaced by these mandatory acquisitions at âŹ60 hourly rates. The next 3 years of public sector contracts wonât attract anything⊠will they even get âŹ60 deals? Now that the problems are materializing, people will start leaving, and the snowball is ready, with no turning back.
Itâs hard to see the stock above âŹ10 within a couple of years.
Iâll contradict you. This year is still lean, but by the end of the year, work will start to pick up, accelerating during 2026 and turning into a full-blown boom.
I believe that contract prices will also start to rise. If not, some kind of consolidation should be seen in the market. What position is Gofore in regarding that? I assume a very good one.
The discussion around Gofore seems to have taken a strange turn, as the company has performed exceptionally well compared to its competitors in a challenging market. Now, with the first change negotiations ever, all sorts of things are immediately being predicted in investment circles. The world or the company wonât change that much, after all.
Change negotiations increase stress on the employee side, but itâs unlikely there will be any big surprises for anyone. Most experienced employees working at full capacity know that the grass isnât greener on the other side. While these were Goforeâs first negotiations, many other companies have had them constantly.
A couple of weeks ago, I happened to discuss with a person who had a very good understanding of Goforeâs situation. Without going into details, the change negotiations are largely about maintaining competitiveness. Many acquisitions have created a situation where a persistent group of âbench-sittersâ has formed within the company â somewhat like long-term unemployed individuals on the companyâs payroll.
In my opinion, change negotiations are a sensible way to act in this situation.
Here are good points, which are certainly partly true. So we can cut down on the accumulated âfluffâ.
I, on the other hand, think that bad news tends to continue. In the basic scenario, I assume that there will still be more bad news that has not been priced in, but it is entirely possible that things will improve quickly and organic revenue and profitability will return to a growth path.
Here are Joniâs preview comments as Gofore publishes its Q1 report on Tuesday.
Goforeâs revenue for January and February is known, and we estimate it continued the same downward trend throughout the first quarter. We also estimate that profitability was under pressure, although at a strong level in the sectorâs context. The company announced relatively extensive change negotiations at the beginning of April, and thus short-term customer demand involves more uncertainty than before. Therefore, we will be following Goforeâs comments on the outlook with particular interest.
Revenue decreased by -5.7%, and profitability weakened, adjusted EBITA 8.0% (13.8%). The weakening of profitability was due to both high free capacity and individual delivery challenges.
The change in customer prices in January-March was -2.4%; excluding projects that exceeded the work estimate, the price change would have been +0.3%.
Average salary change +0.1% (+3.6%).
The number of personnel increased to a total of 1,469 (1,456) people.
Total capacity was 1,527 (1,531), and Gofore continued cautious recruitment until the end of the review period.
Gofore initiated change negotiations in Finland on April 14, 2025.
