Future Prospects

Future Prospects

In 2016, Digia will invest in building better growth opportunities for both business segments. Besides pursuing organic growth, Digia will actively seek potential acquisitions to support its strategy and to accelerate domestic business growth.

Digia believes digitalisation, the growing popularity of multi-channel services and the revolution in business models involve major business opportunities. To fully tap into these opportunities, Digia will make determined investments in personnel recruitment and training, and in improving its offering. Overall, Digia expects to hire approximately 150 new employees, most of them in the domestic business.

Digia expects overall demand to remain moderate in the domestic segment and anticipates continued net sales growth in 2016. The outlook is considered particularly positive in the first half. Profit performance in domestic operations in 2016 is anticipated to remain on more or less the same level as last year.

Considering the time of year and general market situation, demand for the Qt segment's services is at a moderate level, and the long-term business outlook is promising. The company will continue to introduce changes to open source code licensing in forthcoming versions of its Qt software. These changes are aimed at promoting licence sales to commercial players.

Qt business development efforts will particularly focus on embedded systems in the automotive sector, digital TV and industrial automation. Areas targeted in product development include value-added features and tools required for building embedded systems.

The sales growth associated with embedded systems will also reflect on the earnings logic. Licence revenue from these sales accumulates over the long term, as opposed to one-off licence payments. Consequently, Digia anticipates no major impact from embedded systems sales growth on Qt's net sales in 2016.

Digia expects to see Qt's net sales growth in 2016 be at least in line with the general systems software development market growth rate, but growth is likely to slow down from the extremely strong figures recorded last year. In 2016, the exceptional licence deal agreed with Nokia Corporation in connection with the acquisition of the Qt business in 2012 will no longer generate any net sales for Digia, unlike in 2015 when approximately EUR 1.4 million was recorded in net sales.

Exchange rate fluctuations, particularly between the US dollar and euro, may have a large impact on Qt's net sales development in the future, but Digia estimates that this effect will be less significant in 2016 than a year earlier. Another factor contributing to considerable fluctuation in quarterly net sales and profitability in particular is contract turnaround times which, in the major customer segment, are very long at up to 18 months.

Digia's planned demerger and the resulting establishment of Qt as an independent, public listed company involves considerable expenses, some non-recurring and others continuing. If the demerger goes ahead, these will tax the profitability of the Qt business in the future. Digia estimates that, following the demerger, Qt will record a loss in 2016, but will gradually improve its performance, driven by positive net sales development. However, investments in sales work and thereby in better growth opportunities will continue to affect profit performance in the future.