Digia Oyj

Earnings Release • Oct 28, 2022

Digia Plc´s Business Review January-September 2022

Digia Plc´s Business Review January-September 2022

Digia Plc, Stock Exchange Release
28 October 2022 at 8:00 am

Net sales grew by 15.4 per cent in the third quarter, and the EBITA margin was
8.8 per cent. The end of the quarter was strong.

July-September 2022

· Net sales: EUR 38.3 (33.2) million, up 15.4 per cent
· Operating profit (EBITA): EUR 3.4 (4.0) million, down 16.9 per cent;
EBITA margin: 8.8 (12.2) per cent of net sales
· Operating profit (EBIT): EUR 2.4 (3.3) million,
operating margin (EBIT): 6.3 (9.9) per cent of net sales
· Earnings per share: EUR 0.08 (0.10)
· 1 July 2022: acquisition of Productivity Leap Oy
· 20 September 2022: agreement on the acquisition of the entire share capital
of Avalon Oy

January-September 2022

· Net sales: EUR 122.0 (111.2) million, up 9.7 per cent
· Operating profit (EBITA): EUR 10.6 (12.8) million, down 16.8 per cent;
EBITA margin: 8.7 (11.5) per cent of net sales
· Operating profit (EBIT): EUR 8.5 (10.5) million, down 18.7 per cent;
EBIT margin: 7.0 (9.4) per cent of net sales
· Earnings per share: EUR 0.27 (0.31)
· Return on investment: 11.6 (15.6) per cent
· Equity ratio: 45.6 (48.5) per cent
· Acquisition of MOST Digital Oy and Productivity Leap Oy
· Digia Business Engine management system successfully deployed
· Profit guidance remains unchanged: Digia's net sales will grow year-on-year
and its EBITA margin will be over 10 per cent of net sales.

Unless otherwise stated, the comparison figures provided in parentheses refer to
the corresponding period of the previous year.

Group key figures

EUR 1,000 7-9/ 7-9/ Change, 1-9/ 1-9/ Change,
2021
2022 2021 % 2022 2021 %
Net sales 38,318 33,194 15.4% 122,019 111,189 9.7%
155,939
Operating profit 3,354 4,035 -16.9% 10,630 12,772 -16.8%
17,739
(EBITA)
- as a % of net 8.8% 12.2% -27.9% 8.7% 11.5% -24.3%
11.4%
sales
Operating profit 2,418 3,299 -26.7% 8,505 10,466 -18.7%
14,680
(EBIT)
- as a % of net 6.3% 9.9%       7.0% 9.4%  -25.5
9.4%
sales -36.4% %
Result for the 2,126 2,749 -22.7% 7,258 8,296 -12.5%
11,772
period
- as a % of net 5.5% 8.3% 5.9% 7.5%
7.5%
sales

Return on 14.1% 17.6%
18.3%
equity, %
Return on 11.6% 15.6%
16.3%
investment, %
Cash flow from
16,648
operations
Interest-bearing 22,316 19,017
10,663
net liabilities
Net gearing, % 32.2% 29.3%
15.7%
Equity ratio, % 45.6% 48.5%
48.0%

Number of 1,421 1,343 5.8%
1,339
personnel at
period-end
Average number 1,427 1,334 7.0% 1,387 1,329 4.4%
1,334
of personnel
Shareholders' 69,328 64,896 6.8%
68,072
equity
Balance sheet 155,079 135,358 14.6%
143,040
total
Earnings per 0.08 0.10 -22.2% 0.27 0.31 -13.5%
0.44
share, EUR
Earnings per 0.08 0.10 -22.2% 0.27 0.31 -11.8%
0.44
share (diluted),
EUR

CEO's Review:

“2022 has been a year of renewal for Digia. Our most significant innovation has
been the introduction of the Digia Business Engine (DBE). Harnessing this
platform - coupled with new operating models - will support our future growth
and competitiveness. Its concrete benefits will gradually reach their full
potential over the coming years.

During the third quarter, we continued to implement our long-term profitable
growth strategy, even though customers in some service areas postponed their
procurement decisions and projects started up more slowly than expected. In
spite of these delays, we picked up speed considerably towards the end of the
review period: September was very strong in terms of both net sales and
profitability. Our net sales increased by 15.4 per cent to EUR 38.3 (33.2)
million during the third quarter. Our operating profit (EBITA) stood at EUR 3.4
(4.0) million, with an EBITA margin of 8.8 (12.2) per cent. Profitability was
impacted by a slower post-vacation startup to our business than in previous
years.

In the third quarter, net sales grew strongly in data analytics, the Digia Hub
subcontracting network, and Microsoft Business Central and Oracle NetSuite ERP
solutions. Net sales in these areas increased by more than 30 per cent in
relation to the comparison period. Good growth trends also continued in Digia's
strong Integration and API business. Our service and maintenance business
generated about 62 per cent of net sales, and the project business about 38 per
cent.

The third quarter was also strong in terms of sales, and we recorded 27 per cent
more sales in July-September than in the corresponding period of the previous
year. Sales were weighted towards the end of the quarter: 76 per cent of third
-quarter sales were recorded in September. In terms of contract value, September
was one of the best months for sales in Digia's history.

During the review period, CSC - IT Center for Science chose Digia as its
supplier for the Digivisio 2030 project. This project will run from 2022-2026
and has a total value of about EUR 30-35 million, of which Digia's share is
around EUR 10.5-12.5 million. We also signed agreements with the City of
Helsinki and DigiFinland. The agreement with the City of Helsinki covers expert
services for customer relationship management systems, including a Microsoft
Dynamics 365 solution and associated technologies. It is a four-year framework
agreement, and the total value of the procurement is estimated at EUR 12
million. The contract signed with DigiFinland covers a solution that will enable
the archiving of customer and patient data from social welfare and healthcare
providers' old, disused systems and the importing of data from the new wellbeing
services counties' systems into the Kanta service. The estimated value of this
four-year tendered contract is EUR 2.85 million.

The Digia Hub subcontracting network proved its strength during the review
period. Although resourcing projects through Digia Hub increases subcontracting
costs, from a strategic standpoint it provides a flexible channel for resourcing
projects when a particular type of expertise is required or when there is an
urgent need for resources. At the end of the review period, a total of 411
subcontractors were working in our customer projects (212 subcontractors on 31
December 2021). We had 1,421 (1,334) employees at period-end.

In January-September, our net sales grew by 9.7 per cent to EUR 122.0 (111.2)
million. Operating profit (EBITA) was EUR 10.6 (12.8) million with an EBITA
margin of 8.7 (11.5) per cent. Profitability in January-September was
significantly impacted by the introduction of the Digia Business Engine
platform, which has required Digia employees to put a great deal of time and
effort into learning new things. In January-June, the project had a cost impact
of EUR -2.2 million. We believe that our productivity and efficiency will
increase in the medium term as we put this business platform to full use.

I am particularly pleased that we have been able to scale up our business growth
with the companies we have acquired. In spring 2022, we acquired a SaaS robotics
platform based on Most Digital Oy's open-source code. Demand for this platform
has been strong, as the service is sold together with other Digia expertise. The
value of the new contracts signed in the third quarter exceeded Most Digital
Oy's full-year net sales for 2021. Productivity Leap's business has also
developed well. These acquisitions have strengthened our position as a supplier
to the wellbeing service counties that will start up on 1 January 2023.

Digia's strategy is to generate sustainable growth. This means lifelong
learning, continuous dialogue with customers, and renewing our business and
service offering. During the review period, we completed the renewal of our
Intelligent Solutions service area, which means we can now offer a comprehensive
range of data-driven services.  In September, we joined forces with Avalon, a
company that has been focusing on customer experience development and digital
marketing. The acquisition was completed on 1 October 2022, after the end of the
review period, and will flesh out Digia's offering in the Intelligent Solutions
service area.

Digia is perfectly placed to continue its sustainable growth, even though the
global economic situation is bringing uncertainty to the market. We believe that
the strong underlying demand for digital solutions will continue, and that our
offering will meet our customers' needs. We are also seeing indications in the
market that customers are reducing the number of suppliers they use, and are
consolidating their procurements on the strongest players. We believe that this
will open up new opportunities for Digia as well.

I would like to warmly thank all of our customers, Digia's own professionals and
our partners for their good cooperation in this challenging global situation.
The smart solutions of the future will be built together.”

Events after the review period

On 20 September, we announced that we would acquire the entire share capital of
Avalon Oy. The acquisition was carried out on 1 October 2022. Avalon offers its
customers comprehensive digital marketing and customer experience development
services based on the utilisation of data and analytics. This acquisition will
further strengthen Digia's market position as a leading comprehensive
digitalisation partner.

Briefing invitation

A briefing for analysts will be held at 9:00 am on 28 October 2022 as a Teams
meeting. Attendance instructions have been emailed to participants.

The material and presentation for the event will be available from 9:00 am on 28
October 2022 on the company's website: digia.com/en/investors/reports-and
-presentations.

Financial reporting in 2023

Digia will publish its 2022 Financial Statement Bulletin on Friday 10 February
2023 at 3:00 pm. The 2022 Annual Report will be published on 1 March 2023. The
Annual General Meeting is scheduled for Thursday 23 March 2023 at 10:00 am.

· The 1-3/2023 Business Review will be published on Thursday 4 May 2023 at
3:00 pm.
· The 1-6/2023 Half-year Report will be published on Thursday 10 August 2023
at 3:00 pm.
· The 1-9/2023 Business Review will be published on Friday 27 October 2023 at
3:00 pm.

For further information, please contact:

President & CEO Timo Levoranta, tel. (exchange) +358 (0)10 313 3000

Distribution

Nasdaq Helsinki
Key media
digia.com

Digia is a software and service company that helps its customers renew
themselves in the networked world. There are more than 1,300 of us working at
Digia. Our roots are in Finland and we operate both in Finland and abroad. We
are building a world in which digitalisation makes a difference - together with
our customers and partners. Digia's net sales totalled EUR 156 million in 2021.
The company is listed on Nasdaq Helsinki (DIGIA). digia.com

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