Digital Workforce Services Plc: Half Year Financial report, January 1 - June 30, 2024: Revenue grew and profitability improved, new sales accelerated growth in Continuous Services and Healthcare business area

Digital Workforce Services Plc

Company announcement 23 August 2024 at 9.00 EEST

Half Year Financial report, January 1 - June 30, 2024 (unaudited)

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

REVENUE GREW AND PROFITABILITY IMPROVED, NEW SALES ACCELERATED GROWTH IN CONTINUOUS SERVICES AND HEALTHCARE BUSINESS AREA

Continuous Service revenue from strategically important Outsmart hyperautomation services grew by 16.5% in the second quarter and 9.3% in the first half of the year. Both EBITDA and operating profit were positive in the reporting period, reflecting the successful implementation of the company's profitable growth strategy. 

April-June 2024:

• Revenue was EUR 7.0 (6.1) million and increased by 14.4%.
• EBITDA was EUR 0.2 (-0.1) million and adjusted EBITDA EUR 0.2 (0.1) million.
• Operating profit was EUR 0.1 (-0.2) million.
• Revenue from Continuous Services was EUR 4.3 (3.7) million and increased by 16.5%. The percentage of revenue increased to 62.2% (61.0%).
• Revenue from Professional Services was EUR 2.6 (2.4) million and increased by
  11.2%. The percentage of revenue was 37.8% (39.0%).

January-June 2024:

• Revenue was EUR 13.7 (12.6) million and increased by 8.5%.
• EBITDA was EUR 0.5 (0.1) million and adjusted EBITDA EUR 0.5 (0.3) million.

• Operating profit was EUR 0.3 (0.0) million.
• Revenue from Continuous Services was EUR 8.3 (7.6) million and increased by 9.3%. The percentage of revenue increased to 60.9% (60.5%).
• Revenue from Professional Services was EUR 5.3 (5.0) million and increased by 7.4%. The percentage of revenue was 39.1% (39.5%).
• Earnings per share (EPS) amounted to EUR 0.03 (0.02).
• At the end of the reporting period, cash and bank receivables and other liquid assets were at EUR 11.5 (14.3) million.
• The number of employees at the end of the reporting period was 176 (179) and the average number of employees was 177 (189).

 

Other events during the period

• On January 8, 2024, the company announced that Leon Stafford will leave his role as Head of Sales UK & Ireland on January 12, 2024 to pursue a career outside Digital Workforce.
• On January 15, 2024, the company signed a 3-year contract with a well-known global engineering company. The contract is estimated to be worth a minimum of EUR 0.8-1.2 million over the contract period.
• On February 8, 2024 the company appointed Karli Kalpala as Head of Region UK & Ireland and Head of Strategy Transformation.
• On February 9, 2024 Digital Workforce was selected to implement two major data migration projects for the Central Uusimaa Wellbeing Services County (Keusote). The projects have a combined value of EUR 0.6 million and an estimated duration of 12 months.
• The company completed the acquisition of the company's own shares on March 20, 2024. Digital Workforce acquired 75 358 own shares with a total value of EUR 249 980.15 and an average price of EUR 3.3172.
• On April 3, 2024, the company announced the appointment of Juha Nieminen (Master of Science – MS, Industrial Engineering and Management) as Head of Sales Finland & Group Sales Operations and a member of the Management Team starting 8 April 2024. 
• On April 23, 2024, the company announced receiving a significant order from an existing client for professional services in the United States worth approximately EUR 2.7 million for the next 12 months. 
• On May 7, 2024, the company announced that based on the authorization given by the Annual General Meeting on 11 April 2024, the Board of Directors of Digital Workforce Services Plc has decided to start the acquisition of the company’s own shares. The maximum number of shares to be acquired is 110 000 which corresponds to approximately 1 per cent of the company’s shares. However, the amount used for acquiring shares will be at most EUR 200 000.
• On May 13, 2024, the company announced that Juha Järvi (MSc (Econ)) will leave his position as Global Head of Healthcare and his seat as a member of the Management Team as of 2 August 2024 to pursue his career outside Digital Workforce Services. 
• On June 28, 2024, the company received a contract worth EUR 1.4 million from the Pirkanmaa Wellbeing Services County for the transfer of active social care customer data.

Outlook for 2024 (unchanged)

Digital Workforce's full-year 2024 revenue is expected to be higher than in 2023 and adjusted EBITDA is projected to be positive and improve compared to 2023.

Key figures  

1 000 euros	4-6/2024	4-6/2023	Change %	1-6/2024	1-6/2023	Change %	1-12/2023
Net sales	6 954	6 077	14.4%	13 663	12 590	8.5%	24 919
Professional Services net sales	2 632	2 368	11.2%	5 343	4 976	7.4%	9 693
Continuous Services net sales	4 322	3 710	16.5%	8 320	7 615	9.3%	15 226
Continuous Services' share of net sales	62.2 %	61.0 %		60.9 %	60.5 %		61.1 %
Gross profit	2 641	1 980	33.4%	5 056	4 312	17.3%	8 226
% of net sales	38.0 %	32.6 %		37.0 %	34.2 %		33.0 %
EBITDA	207	-114	-282.3%	492	140	251.7%	-649
% of net sales	3.0 %	-1.9 %		3.6 %	1.1 %		-2.6 %
EBITDA adj. *	207	55	279.6%	492	308	59.8%	155
% of net sales	3.0 %	0.9 %		3.6 %	2.4 %		0.6 %
EBIT	113	-174	-164.7%	305	37	734.4%	-844
% of net sales	1.6 %	-2.9 %		2.2 %	0.3 %		-3.4 %
Net income	141	98	43.9%	323	188	71.3%	-697
EPS, eur	0.01	0.01		0.03	0.02		-0.06
Capital expenditure				-172	-529		-809
Operating cash flow				-1 192	-2 595		-3 649
Net debt	-10 718	-13 308		-10 718	-13 308		-12 247
Net debt ratio, %	-72.8 %	-85.3 %		-72.8 %	-85.3 %		-83.1 %
Equity ratio, %	73.6 %	74.8 %		73.6 %	74.8 %		70.8 %
Personnel at the end of the period	176	179		176	179		177
Average number of personnel	177	186		177	189		186

* The EBITDA adjustment consists of restructuring costs in 2023.

CEO Jussi Vasama:

"Overall, we succeeded in the second quarter, achieving a 14% increase in revenue and a clear improvement in profitability compared to the comparative period. For the first half of the year, growth was 9% and EBITDA was 4% of revenue.

The company has made systematic and successful progress in implementing its strategy for profitable growth. I am particularly pleased with the sales successes with both new and existing customers in the automation solutions for the healthcare business area in all key markets, where demand for our services far exceeded the previous year's level. The flexible and customer-centric deployment model of the company's Outsmart service offering, coupled with usage-based pricing, creates value for our customers without the need for massive IT development projects. At the same time, Outsmart services are more repeatable and scalable, enabling the company's strategically important growth in continuous service billing.

We have gradually increased our focus on the use of generative AI-based and AI-enabled solutions as part of our service offering. Towards the end of the reporting period, we announced a strategic partnership with AI agent pioneer Sema4.ai to bring AI agents into the Outsmart hyperautomation platform. This is a major step forward in holistic Business Process Automation (BPA), which also integrates AI-based Large Language Models (LLM). AI agents enable fast and efficient automation of demanding knowledge work tasks that typically require complex and laborious manual processes. Digital Workforce is committed to leading this evolution by providing customers with the best combination of tools and technologies to automate demanding business processes.

We continued our successful investments, particularly in the growth markets of the US and the UK, as well as in the healthcare sector, and made good progress in the banking and insurance sectors. I believe we are well placed to continue on a strong trajectory in the second half of the year.”

This is a summary of Digital Workforce Services Plc’s Half Year Financial Report 2024. The complete report is attached to this release and available at: https://digitalworkforce.com/investors/releases/

Helsinki August 22, 2024

Digital Workforce Services Plc
Board of Directors

For further information, please contact:

Jussi Vasama, CEO, Digital Workforce Services Plc, Tel. +358 50 380 9893

Certified advisor 

Aktia Alexander Corporate Finance Oy, Tel. +358 50 520 4098