As I wrote above, it is one thing to bring up AI in every context and brand yourself as an AI house. Indeed, almost all IT consulting firms both here and globally have done this, to put it bluntly, starting from 2024 at the latest.
Then it is a completely different matter to truly be an AI company. And at least in my books, none of the Finnish publicly listed companies pass my screening for AI company classification—despite the energetic branding—at least not yet.
There are AI houses in Finland that pass my screening. Silo is the most obvious one, but there are also many emerging smaller ones like Agion, Brillian, Rework, etc., which have built their entire business to be AI-native.
In my day job, I am exposed to these AI promises from IT consulting firms, and in my opinion, there is invariably a huge gap between the branding and the actual operations. That is why I am also somewhat skeptical of Reaktor, although I admit it has remained more distant to me compared to many other industry peers.
Now we need to be able to distinguish between two different things: what the company is saying and what the media (as skillfully constructed by the company) is saying.
Reaktor is not an AI company. I haven’t had time to read all the material yet, but this wasn’t written in the initial opening at least. If a reader replaces Reaktor with the names Siili, Vincit, or Gofore, they wouldn’t be able to tell which company is which based on the content.
Instead, Reaktor has always been exceptionally good with the media, so it’s likely no coincidence that we are seeing nothing but “AI company” labels and completely absurd comparisons. However, I am of the opinion that if the company and its board do not correct these fairytales, the whole crew should be held accountable for a future, potentially successful, cash-out.
That Q1 growth also needs a bit of scrutiny to see if it stands up to closer inspection.
Here is Pekka’s interview regarding the IPO. These are filmed before any official materials are published, so my knowledge is practically based on the companies’ websites and things I’ve heard from friends. I tried to pry a bit into the development of the software business; perhaps these will shed some light on the matter.
It’s great to see new companies joining the Helsinki Stock Exchange!
Looking at the company’s 2030 growth targets, the majority of Reaktor’s future value would come from software business.
This is a very significant shift for a traditional consulting firm. Many companies haven’t been able to make that transition or even sensibly combine consulting and product business. Digia and Tieto are probably examples of Finnish firms that have a strong presence in both. It would be great if Reaktor could pull this off.
In my opinion, a qualified analyst should conduct further analysis on the following points:
a) Q1/2026 revenue and operating profit seem to have jumped up abnormally high, especially since the Q1/2025 pace appeared normal relative to the full-year 2025 revenue. Typically, such development is not seen in long-term consulting projects, which I understand make up the majority of Reaktor’s revenue.
b) Development of the product business over the recent quarters: If I understood correctly, Reaktor is now reporting product business revenue separately for the first time. Is it possible to get visibility into the growth of that revenue item for the past few quarters? If the largest part of the company’s future operating profit is to come from the product business, it would be good to have a proper time series of its development, not just a snapshot of a single quarter.
Reaktor has signed a licensing agreement with yet another NATO country. With this, Reaktor’s software products now serve four member states of the alliance.
“Reaktor’s product solutions are built on real-life use cases and are tested in close cooperation with end-users. We offer secure, interoperable, and EU-sovereign software products for defense and security organizations operating in national and NATO environments,” says Simo Mäkipaja, Sales Director at Reaktor Defence & Security Solutions.
Reaktor’s Intelligence Software Suite combines data-assisted decision support, controlled information sharing between systems of different security classifications, and a secure AI platform for processing large volumes of data.
The suite, consisting of three modular products, is user-centrically designed and NATO STANAG compliant. The products are available as independent solutions or as part of an integrated package. Together, they enable a shared situational awareness, interoperability between different operating environments, and faster decision-making.
I don’t see any significant reason for this company to command a premium in valuation multiples compared to its Finnish peers.
The IPO is being sold with a defense and AI angle. I’ve had the chance to observe their AI side very closely, and there is no competitive advantage whatsoever over other consultants. Personally, I feel their AI expertise is mediocre at best, with a few developers who are more skilled than average. There are smaller, but far more capable players in the industry.
I will not be participating in this round. Reaktor was at its peak last decade. This overdue IPO finally offers those who have stayed too long a chance to exit.
My belief is that the valuation will normalize to the level of its peers, and then one can consider whether or not to be involved in a basic IT consulting business.
Technology company Reaktor Group will begin its initial public offering (IPO) on Monday at 10:00 AM. The public offering is estimated to end on Friday, June 12th at 4:00 PM.
The subscription price for the public offering is 8.25 euros. Taking into account the capital to be raised in the IPO, the market capitalization is expected to be approximately 210 million euros.
Yep. Overpriced, a massive amount of selling pressure from current shareholders, no competitive advantage, the share price will drop significantly after the IPO, and the company has lost its former glory. AI is the same for all consulting firms.
If they were to report April and May, they would very likely be back at normal levels, meaning Q1 has been pumped.
Btw, noticed on LinkedIn that the CFO is leaving for Veikkaus.
Spotted in the ongoing webcast. It looks like revenue growth already turned positive in Q3/24, so even though there is license business involved in Q1, there has been growth for a longer period already. The lousy first half of 2024 is weighing down last year’s figures. A rolling 12-month analysis might give a better picture, as someone mentioned earlier.
An IPO case built on the back of just one good quarter is a major red flag. Let’s see how the business performs over the next few quarters. There will be time to buy later, and in all likelihood, at a price lower than the IPO price.
I do not intend to participate in the offering myself in light of the reasons already presented—the oversized valuation based on Q1 revenue and the rebranding of IT consulting into an AI story do not sound credible in this market environment, nor does a product business built organically by a consulting firm without significant growth funding from the offering.
However, the prospectus reveals an even bigger red flag than the narrative: the likely desire of the employees, who own the majority of the company, to sell their shares after the offering:
Employees other than the main owners own about 50% of the company. Very likely, the IPO is a long-awaited exit for them.
As part of the offering, “only” just over 4 million shares have been sold, of which only about 2 million were sold by parties other than the main owners (APPENDIX A – SELLING SHAREHOLDERS**)**. By a quick calculation, the employees are left with approximately 9.5 million shares, which I understand to be about 40% of the share capital after the offering. It is likely that the employees would have wanted to sell a larger portion of their holdings.
The employees were presumably offered the opportunity to sell only a fraction of their holdings in the offering. Based on the “Lock-up arrangements” section, by selling part of their shares in the offering, the employee has committed to a 180-day lock-up.
It would appear that only those employees who have chosen to sell part of their shares as part of the offering, or who have participated in the personnel offering, are subject to the lock-up.
If I were an employee, I would at least seriously consider selling my shares as soon as trading begins, rather than selling a small portion in the offering and the rest after 180 days. It is possible that immediately after trading starts, some employees will be able to sell their holdings.
AI was not able to find a very comprehensive list of key employees, but through a quick comparison, only some have chosen to sell part of their holdings. One might have expected everyone to sell a portion, following the example of senior management and the main owners. Those who did not sell in the offering perhaps believe strongly in a share price increase, but I would bet that if there is an opportunity to sell without a lock-up, it will attract those who have been waiting a long time for an exit.
Thus, it seems that the share could easily have more supply than demand right from the start. At the latest, the remaining part of the 40% of shares left with employees after the offering will be released at the 180-day mark.
It is difficult to believe there would be sufficient interest on the buy side.
That seems to be the case. Additionally, since Q1 has likely been “pumped up” with license sales, Q2 and Q3 will probably be weaker. Consequently, the share price will drop for two reasons: owners selling and earnings weakening compared to Q1.
As a third reason, it’s very hard to believe that a consulting firm would suddenly succeed in productizing every part of its business, even though there are currently deals happening on the security side.
I tried to calculate the Rule of 20 for the IT services sector on a rolling 12-month basis (Q2’25–Q1’26) so that Reaktor is on a level playing field with its Finnish peers. I used the quarterly organic growth rates and adj. EBITA-% from Inderes’ sector report, and for Reaktor, the actual figures from the prospectus + marketing brochure (growth is entirely organic, no acquisitions → adj. EBIT = EBITA).
If my math is correct, it looks quite good. The LTM (Last Twelve Months) is, of course, still being boosted by a strong Q1’26, meaning one quarter accounts for a large part of the increase. It remains to be seen how sustainable this level is. On the other hand, after the next quarter, the poor Q2’25 (-6% organic growth) will roll off, so it’s not an impossible feat.
There is also an exit of at least €2.2M coming from the ecosystem for Q2’26. Prospectus page 68:
I tried to calculate that EV/EBITA on a trailing 12-month (LTM) basis using Claude and Inderes’s MCP. If the math is correct, the valuation doesn’t look bad at all. I think EV/S is misleading in this sector because subcontracting varies between peers, and profitability is what matters more than revenue in this bifurcated market.
Kauppalehti’s own analyst has evaluated the figures from the last financial year:
The enterprise value stands at approximately 208 million euros, taking into account the negative net debt from the beginning of the year. According to the Kauppalehti analyst, based on last year’s adjusted operating profit, the EV/EBIT would be 19.6, which is higher than its peers, whose average figure is 15.
And then, if we consider the current trend more closely:
If the development seen in the first quarter continues throughout the year, according to Saarelainen, both the company’s valuation based on net income and the EV/EBIT ratio are at an affordable level.
When you wipe the lipstick off the pig and realize it’s just a traditional IT consultant, one issue remains unresolved for them.
The consulting business sells hours, but agentic development no longer requires that five-person team. In fact, it’s actually a hindrance because there isn’t enough work for everyone, or people just end up stepping on each other’s toes. Two people are perfectly sufficient, but then the billing is halved. That’s bad news if you’re planning to go public. It’s some small comfort that every consulting firm is facing the same problem.
With an IPO price of 8.25 euros and a forecasted 2026 EPS of 0.72 euros, the stock’s P/E ratio stands at 11.4. We consider this pricing to be quite reasonable relative to its peers.
