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CEO's review

Financial Statement Bulletin 2023, 9.2.2024

I’m pleased that Digia’s long-term profitable growth trend has continued. 2023 was Digia’s eighth consecutive year of profitable growth. Our full-year net sales grew by 12.5 per cent to EUR 192.1 (170.8) million. Of this, full-year organic growth was strong at 8.8 per cent. Our net sales increased by 9.1 per cent to EUR 53.2 (48.7) million during the fourth quarter. Organic growth accounted for 2.6 per cent of net sales in the fourth quarter.

Our full-year operating profit (EBITA) totalled EUR 16.7 (15.7) million, with an EBITA margin of 8.7 (9.2) per cent. The business environment for IT services became somewhat more challenging towards the end of the year, and our fourth-quarter operating profit (EBITA) amounted to EUR 5.1 (5.1) million with an EBITA margin of 9.6 (10.5) per cent. Profitability in the fourth quarter was impacted by slightly lower-than-expected net sales and EUR 0.3 million in non-recurring costs related to internationalisation and the development of sustainability reporting. That said, our order book developed well at the end of 2023, thanks to which we are well poised going into 2024.

Digia’s well-rounded business consists of four service areas, of which three increased their net sales during the fourth quarter. Strong growth areas included CRM and ERP solutions based on Microsoft technologies, Digia’s AI and automation platform, and knowledge management solutions. In addition, the Swedish company Top of Minds – which became part of Digia at the beginning of the review period – grew in line with plans. Profound skills in analytics, data, and data-related integrations are at the core of Top of Minds’ expertise. All of these are Digia’s core strengths.

In Microsoft solutions, growth was driven by stronger demand that improved the invoicing rate. Another positive turn in the fourth quarter was that customers put aside their caution in decision-making, and previously postponed Microsoft Dynamics 365 projects could be started up. During the review period, we won Microsoft Dynamics 365 agreements valued at EUR 10.1 million. We made new agreements with Hankkija Oy, financial sector companies, wellbeing service counties, and actors in the municipal and urban sector. During the review period, we also completed international deliveries: Walki deployed the Microsoft Dynamics 365 ERP system we had delivered in Poland and earlier this year in Belgium. Digia is one of Finland’s leading providers of Microsoft solutions and is a member of Microsoft’s global Business Applications Inner Circle partner network. Only about one per cent of Microsoft’s global strategic partners are selected for this network.

Customers’ need to boost their operational efficiency and utilise AI was also evident in the fourth quarter as strong growth in Digia’s automation and AI platform. Its net sales saw year-on-year growth of 142 per cent. The platform streamlines and refines customers’ business processes. Digia’s smart platform is used by organisations such as DigiFinland in the social welfare and healthcare sector, Valio in boosting process efficiency and the Unemployment Fund of Service Union United in the automated processing of earnings-related allowance applications. We see strong growth potential in Digia’s automation and AI platform and are investing in its development. The platform is ISO 27001 certified.

At the end of the review period, we carried out an extensive assessment of how companies and public-sector actors utilise AI. It indicated that 66 per cent of organisations only have preliminary plans for the utilisation of AI and data. Among the responding organizations, 52 per cent have utilized the outputs of data analysis and artificial intelligence to some extent in decision-making and actions. Our well-rounded service portfolio from AI strategy to concrete implementations meets this customer need. In connection with this assessment, we held a competition – the winners, the construction company YIT and the Finnish Olympic Committee, received an AI Roadmap valued at EUR 10,000. Roadmap drafting is part of Digia’s service range.

2023 was the first year in our three-year strategy period. One of our objectives is to increase the share of Digia’s total net sales accounted for by international operations to 15 per cent by the end of 2025. Top of Minds, which became part of Digia in the review period, is a step towards achieving this objective. International operations represented 8.7 per cent of net sales in 2023.

Our responsible way of working is the foundation of our strategy. We continued our sustainability efforts in preparation for the EU’s Corporate Sustainability Reporting Directive, which will apply to our reporting in 2024. Sustainability goals are included in Digia’s objectives for the 2023-2025 strategy period and the incentive scheme. Our goal is to reduce our carbon footprint, and to be a good and attractive employer and a trusted partner to our customers. Our carbon footprint decreased by 37 per cent from the comparable level in 2019. Our customer and personnel satisfaction were at a good level and improved further in 2023. Compared to the previous year, Digia’s Customer Net Promoter Score (NPS) improved by 23 per cent and its Employee Net Promoter Score (eNPS) by 25 per cent. We achieved a Silver rating from Ecovadis – an international assessment of sustainability – for the third time in a row.

Digia is also a responsible partner to its customers when it comes to data security. Towards the end of 2023, we expanded our ISO 27001 data security certification in connection with the annual audit to cover new business functions in Managed Solutions and Financial Platforms as well as our offices in Turku and Oulu.

In 2023, we operated in an uncertain market, but in our view the IT service market will see further good growth in the long term. We have proven our ability to achieve long-term profitable growth and we believe that the trend in the long-term demand for smart digital solutions is strong. This development is supported by new opportunities opened up by automation and AI in data utilisation. A state-of-the-art business platform and the secure utilisation of smart solutions comprise an increasingly essential success factor for all organisations.

I would like to thank all of Digia’s personnel, customers, shareholders and other partners for 2023, a year of sustainable growth!

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Timo Levoranta, President and CEO