I pondered this in the sauna, and in my opinion, there’s a communication challenge here stemming from different perspectives, which causes misunderstandings. From the entrepreneur’s/CEO’s perspective, revenue must be generated anew every year, and that requires winning over customers repeatedly. Revenue is like a flowing river that one tries to direct from customers towards the business through operational activities.
Investors usually approach the matter from a different perspective. Annual revenue, in investors’ minds, is like a beautiful piece of cake—something your business owns and can either acquire more of from the market cake or surrender back to it. This approach completely changes the meaning of the message.
When an entrepreneur thinks that this year less has been won, an investor thinks that this year the business’s revenue has been lost. Thus, even if sales to customers might visibly ease in an operational sense, which is reflected in stopping the revenue collapse, the situation is different from an investor’s perspective. Sales are still in a dismal state from an investor’s perspective because there’s still a significant shortfall compared to previous revenue peaks, which doesn’t seem to be closing with small positive growth.
For example, an investor might look at Inderes’ forecasts and conclude that Witted’s sales are still not performing particularly well. It will take until 2026-2027 before sales recover to their previous level of 2023. In this way, even sincere messages from the field about good sales momentum can easily give investors the impression that sales will increase enormously in a short time, and thus the prospects for future revenue development are easily misunderstood.
In my opinion, both of you are speaking sense from your own perspectives, but according to Wiio’s first law: Communication usually fails, except by accident.
Depending on the company, revenue doesn’t have to be generated anew each year or start from zero in January, because companies have order backlogs, long-term multi-year contracts, projects, and so on. Recurring revenue, in particular, is valued with different multiples.
Exactly. “Good sales momentum” and “the toughest commercial team in town” certainly give a completely different impression than the -1% organic revenue Witted achieved in Q3. I wouldn’t react if I hadn’t heard these far too many times.
Otherwise, Witted’s reporting is very pleasant to read and listen to. And perhaps this is a matter of style or comparison. The new CEO has performed exceptionally well.
Franco’s revenue was slightly below expectations (€4.9M vs €5M), but the working-day adjusted organic growth was 4.2%. The number of experts was a bit more below expectations, but this explains it:
" The number of experts increased by almost 50 compared to the reference period and by 35 compared to the previous month. The increase from the previous month is explained by Software Sauna joining Witted. The entire number of Software Sauna’s experts is not reflected in this growth, as some of them were already involved in Witted’s projects and thus visible in previous months’ figures. The growth compared to the reference period is otherwise explained by organic growth."
The following was commented on sales:
“November was the second best month of the year for new sales in both Norwegian and Finnish software consulting”
A question for @markus.huttunen1 about this: how have follow-up sales progressed then?
As a positive aspect regarding profitability, I would also highlight this:
" The growth driver in Software Sauna has been increased joint sales, as we have especially in Finland managed to sell more of Software Sauna’s expertise to Witted’s customers. The revenue growth impact of this joint sales has already been seen in the revenue figures we have reported earlier, but from November onwards, it will also be fully reflected in our results."
A decent overview from Witted then Now just keep an eye on the ball and look towards next year!
Witted announced that November’s revenue grew by 5% from last year to EUR 4.9 million, which was slightly below our EUR 5.0 million forecast. Adjusted for working days, revenue grew by 10%, of which approximately 4.2 percentage points was organic growth. The rest came from the Software Sauna acquisition, which was included in the figures for the first time. The company commented that Software Sauna continued to grow as part of Witted. The company also commented that Norway’s revenue grew significantly, where strong sales months in September now materialized into revenue. In Finland, revenue showed slight growth when adjusted for working days. Positively, the company commented that new sales continued to grow better than revenue, and November was the second-best sales month of the year for software consulting in Norway and Finland. This creates the conditions for the continuation of the positive revenue trend now observed.
You asked about a) sales of continuations and b) business areas other than software development. Here are the answers!
Sales of continuations are still ongoing, and I admit I eagerly ask sales about the situation almost every day. The best current view is that continuations are progressing similarly to last year. I would gladly give a more precise factual answer, but the work is still in progress. I’m not yet ready to shift my gaze to next year - we still have work to do with the continuations.
Regarding the situation picture of other business areas. In Nexec’s change consulting, new sales have been quieter in the past couple of months, whereas August-September, on the other hand, showed strong performance. It’s still difficult to draw a larger conclusion regarding the trend from this.
Frans also specifically asked for more details about the organic development of the number of experts, which remained hidden due to the addition of Software Sauna. The answer is November -2 vs October. This is for the information of all interested parties.
What are currently the main reasons why this company’s share price is just crawling along?
Positive recommendations have been given for years, but it just won’t take off. The company buys back a small amount of shares daily, but that doesn’t seem to have much of an impact either.
Few companies rocket for very long based solely on one analyst’s positive view.
The analyst has certifiably been positive, but for example, you can find risks, explanations, and forecasts there:
Then we can move on to the fact that the share price development hasn’t been a bed of roses for others either. You can go check out how Gofore, Vincit, Solteq, etc., are doing
If we look at the stock market, we have a K-shaped market; US tech and all big companies continue at ATH levels and everything small, risky, and tied to the Finnish economy is dragging at the bottom:
If we consider why Witted’s share price hasn’t performed well, let’s quickly list what comes to mind:
Listing in a hot market with over-optimistic targets and forecasts → bitter and disillusioned investors
Hundreds of billions are invested in AI annually. In a positive scenario, the amount of code increases tremendously and more coders are needed than ever; in a negative scenario, only a small fraction of current coders will be needed in the future, and work will only remain for the best AI-assisted coders, leading to a massive oversupply in the labor market, and these IT consultant intermediaries will be disrupted out of the economy.
The Finnish state’s finances and the ability & desire to invest in anything or software
The lack of public sector demand brings price competition to public sector contracts and also causes price competition in the private sector, as everyone needs high utilization rates
Witted is cheap on a revenue basis. This offers good potential IF profitability can be brought to a reasonable level. Unfortunately, a shareholder cannot eat revenue; we need profit and cash flow. According to forecasts, Witted’s result will improve and the company is cheap on multiples, but in reality, Witted has never really made a profit; the whole investment is based on the ASSUMPTION and HOPE that the company could generate positive cash flow in the future.
Here are Frans’s comments as Teemu Tiilikainen makes a comeback as CFO.
On Monday, Witted appointed Teemu Tiilikainen as the company’s new CFO, who is making a comeback to the role from his position as the company’s Head of Finnish Operations. At the same time, the company is streamlining its management model by leaving the position of Country Manager for Finland unfilled. In addition, Jouni Jaakkola, the long-term Development Director at the company, joins the management team. The changes are in line with the operational efficiency improvements we previously anticipated.
Now just keep an eye on the ball and look towards next year!
