28 Segment reporting

For management purposes, SoftwareOne is organised by geographical areas. The following regional clusters are the group’s operating segments:

EMEA (Europe, including Mauritius and South Africa);
NORAM (USA, Canada);
LATAM (Latin America);
APAC (Asia Pacific, including Dubai and Qatar).

No operating segments have been aggregated to reportable segments.

The CEO is the Chief Operating Decision Maker (CODM). He assesses each of the reported segments separately for the purpose of evaluating performance and allocating resources. Gross profit and EBITDA are the key performance indicators used for internal management and monitoring purposes of the group and are reported as segment results. The group allocates revenue and expenses to regions based on the customer’s headquarter domicile since the region is responsible for the global client relationship. There are no intersegment revenues. Different average exchange rates are used in management reporting than for group consolidation purposes.

The group’s financing (including finance income and finance costs) and income taxes are managed on a group basis and are not allocated to the operating segments.

The segment totals are reconciled to the figures reported in the consolidated income statement (column 'Total') as follows:

The column 'Group' includes the group cost centres and shared services costs. The column 'FX & Consolidation' eliminates the effect of using differing average foreign exchange rates in the segment reporting and consolidation effects. The column 'Other' includes other reconciling items that are not allocated to the segments and group internal reporting. They consist of one-time costs such as share-based payment plans (with the exception of LTIP and ESPP), earn-outs, integration and M&A expenses, transformance costs (for restructuring), one-time expenses related to Ukraine war and the disposal of the Russian subsidiary and an adjustment for the upfront recognition of multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term. Additionally, the column 'Other' includes accounting-related adjustments such as differences in accounting policies of IFRS 16 that are not reflected in the segments, a reclassification of bad debt provisions that are presented in gross profit in internal reporting but in operating expenses in the consolidated income statement and, to a limited extent, minor reconciliation items.

Segment disclosure 2022

in CHF 1,000	EMEA	NORAM	LATAM	APAC	Total segments	Group	FX & Consoli- dation	Other	Total

Total revenue (external)	611,559	158,347	109,261	125,537	1,004,704	4,453	–2,038	–3,012	1,004,107
Third-party service delivery costs	–47,670	–5,844	–10,425	–6,725	–70,664	–3,804	3,028	–72	–71,512

Gross profit 1)	563,889	152,503	98,836	118,812	934,040	649	990	–3,084	932,595
Personnel expenses and other operating expenses/income	–350,618	–95,828	–81,251	–77,905	–605,602	–99,838	–537	–89,704	–795,681

EBITDA 2)	213,271	56,675	17,585	40,907	328,438	–99,189	453	–92,788	136,914

1) Total revenue net of third-party service delivery costs.

2) EBITDA from segment reporting reconciled to earnings before net financial items, taxes, depreciation and amortisation.

The most relevant reconciliation items in the column ‘Other’ were related to one-time costs and accounting related adjustments:

in CHF 1,000	Share-based payment expenses	Earn-out expenses	Integration and M&A expenses	'Trans- formance' expenses	One-time expenses Russia & Ukraine 3)	IFRS 15 upfront revenue recognition	Bad debt provisions	IFRS 16 leases	Remaining	Total Other

Total revenue (external)	–	–	–	–	–3,537	–6,922	10,594	–	–3,147	–3,012
Third-party service delivery costs	–	–	–	–	–	–	–	–	–72	–72

Gross profit 1	–	–	–	–	–3,537	–6,922	10,594	–	–3,219	–3,084
Personnel expenses and other operating expenses/income	–4,888	–35,862	–8,424	–13,142	–31,677	318	–10,594	16,368	–1,803	–89,704

EBITDA 2)	–4,888	–35,862	–8,424	–13,142	–35,214	–6,604	–	16,368	–5,022	–92,788

1) Total revenue net of third-party service delivery costs.

2) EBITDA from segment reporting reconciled to earnings before net financial items, taxes, depreciation and amortisation.

3) One-time expenses Russia & Ukraine include the loss on disposal for the sale of SoftwareOne Russia (TCHF -29,655), additional bad debts in connection with clients in Russia (TCHF -3,537) and further one-time expenses (TCHF -2,022).

Segment disclosure 2021

in CHF 1,000	EMEA	NORAM	LATAM	APAC	Total segments	Group	FX & Consoli- dation	Other	Total

Total revenue (external) 1)	572,525	132,529	97,389	114,112	916,555	–	321	–2,598	914,278
Third-party service delivery costs 1)	–39,022	–5,675	–8,859	–7,666	–61,222	–2,344	1,251	–322	–62,637

Gross profit 1) 2)	533,503	126,854	88,530	106,446	855,333	–2,344	1,572	–2,920	851,641
Personnel expenses and other operating expenses/income 1)	–314,260	–84,131	–71,722	–69,898	–540,011	–107,499	–532	–46,693	–694,735

EBITDA 1) 3)	219,243	42,723	16,808	36,548	315,322	–109,843	1,040	–49,613	156,906

1) Prior-year figures restated, refer to Note 2 Change in accounting policies. In addition, HeleCloud was assigned to the EMEA region for comparison purposes.

2) Total revenue net of third-party service delivery costs.

3) EBITDA from segment reporting reconciled to earnings before net financial items, taxes, depreciation and amortisation.

The most relevant reconciliation items in the column ‘Other’ were related to one-time costs and accounting related adjustments:

in CHF 1,000	Share- based payment expenses	Earn-out expenses	Integration and M&A expenses	'Trans- formance' expenses	IFRS 15 upfront revenue recognition	Bad debt provisions	Centiq	IFRS 16 leases	Remaining	Total Other

Total revenue (external) 1)	–	–	–	–	–3,431	366	1,849	–	–1,382	–2,598
Third-party service delivery costs	–	–	–	–	–	–	–361	–	39	–322

Gross profit 1) 2)	–	–	–	–	–3,431	366	1,488	–	–1,343	–2,920
Personnel expenses and other operating expenses/income 1)	–13,026	–26,888	–9,414	–9,757	158	–366	–1,895	17,522	–3,027	–46,693

EBITDA 1) 3)	–13,026	–26,888	–9,414	–9,757	–3,273	–	–407	17,522	–4,370	–49,613

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

2) Total revenue net of third-party service delivery costs.

3) EBITDA from segment reporting reconciled to earnings before net financial items, taxes, depreciation and amortisation.

Additional information for business lines

Even if the regions continue to be the operating segments, SoftwareOne internally also reports EBITDA by business lines to the CODM.

The business line view presents a breakdown of total revenue, directly attributable external and internal delivery costs, and indirectly attributable other operating costs such as sales and marketing costs as well as general and admin costs. It discloses gross profit, contribution margin and EBITDA by business line 'Software & Cloud Marketplace', 'Software & Cloud Services' and 'Corporate' which includes non-operational group costs.

The column 'FX & Consolidation' eliminates the effect of using differing average foreign exchange rates in the segment reporting and consolidation effects. The column 'Adjustments' includes one-time costs, so-called 'EBITDA adjustments', that enhance the comparability of other operating costs with adjusted EBITDA and an adjustment for the upfront recognition of multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term, refer to section Alternative Performance Measures (unaudited). In contrast to the segment reporting, all accounting related adjustments are allocated to the business line 'Software & Cloud Marketplace' and 'Software & Cloud Services', i.e. the application of IFRS 16.

Business line view 2022

in CHF 1,000	Software & Cloud Marketplace	Software & Cloud Services	Corporate	Total business unit	Adjustments	Total

Total revenue (external)	545,318	465,711	–	1,011,029	–6,922	1,004,107
Delivery costs (external)	–	–71,512	–	–71,512	–	–71,512

Gross profit 1)	545,318	394,199	–	939,517	–6,922	932,595
Delivery costs (internal)	–74,056	–229,055	–	–303,111	–	–303,111

Contribution margin 2)	471,262	165,144	–	636,406	–6,922	629,484
Other operating costs	–182,163	–151,592	–62,217	–395,972	–96,598	–492,570

EBITDA 3)	289,099	13,552	–62,217	240,434	–103,520	136,914

1) Total revenue net of third-party service delivery costs.

2) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

3) EBITDA from additional business line view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

Business line view 2021

in CHF 1,000	Software & Cloud Marketplace	Software & Cloud Services	Corporate	Total business unit	Adjustments	Total

Total revenue (external)	533,629	384,080	–	917,709	–3,431	914,278
Delivery costs (external)	–	–62,637	–	–62,637	–	–62,637

Gross profit 1)	533,629	321,443	–	855,072	–3,431	851,641
Delivery costs (internal)	–72,755	–187,218	–	–259,973	–	–259,973

Contribution margin 2)	460,874	134,225	–	595,099	–3,431	591,668
Other operating costs	–179,491	–140,059	–56,151	–375,701	–59,061	–434,762

EBITDA 3)	281,383	–5,834	–56,151	219,398	–62,492	156,906

1) Total revenue net of third-party service delivery costs.

2) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

3) EBITDA from additional business line view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

Additional geographical information

Switzerland, the US, Germany, and the Netherlands are the main geographical markets for SoftwareOne and represent approximately 50% (prior year: 51%) of total revenue. Revenue is reported based on the customer's headquarter domicile:

2022
in CHF 1,000	Germany	US	Netherlands	Switzerland	Other countries	Total

Revenue (external)	203,169	150,607	71,633	71,680	507,018	1,004,107
Non-current assets	162,253	27,210	101,432	113,833	272,556	677,284

2021
in CHF 1,000	Germany	US	Netherlands	Switzerland	Other countries	Total

Revenue (external) 1)	207,493	125,930	68,459	65,180	447,216	914,278
Non-current assets	183,797	25,586	108,597	95,320	234,525	647,825

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

No transactions with one single external customer exceed 10% of consolidated revenue of the group.

Non-current assets for this purpose consist of tangible, intangible assets, right-of-use assets, and investments in associated companies and are allocated based on the location of the group company.