Results review
Group revenue grew 8.0% YoY and 2.9% YoY in constant (ccy) and reported currency, respectively, to CHF 1,010.9 million in 2023, compared to CHF 982.8 million in the prior year period.
The strengthening of the CHF versus several major currencies, including the EUR, USD and GBP led to a negative FX translation impact of over five percentage points on revenue.
Key figures
|
in CHF million |
FY 2023 |
FY 2022 |
% Δ Rep |
% Δ at CCY |
Q4 2023 |
Q4 2022 |
% Δ Rep |
% Δ at CCY |
|
Software & Cloud Marketplace |
549.7 |
545.3 |
0.8 % |
5.6 % |
152.2 |
151.2 |
0.6 % |
5.6 % |
|
Software & Cloud Services 1) |
461.2 |
437.4 |
5.4 % |
11.0 % |
118.5 |
114.6 |
3.4 % |
7.9 % |
|
Revenue total |
1,010.9 |
982.8 |
2.9 % |
8.0 % |
270.7 |
265.8 |
1.8 % |
6.6 % |
|
Delivery costs |
–347.6 |
–346.3 |
0.4 % |
5.3 % |
–84.0 |
–86.5 |
–2.9 % |
0.3 % |
|
Contribution margin |
663.3 |
636.4 |
4.2 % |
9.4 % |
186.7 |
179.3 |
4.1 % |
9.6 % |
|
SG&A |
–418.1 |
–396.0 |
5.6 % |
11.2 % |
–101.1 |
–101.6 |
–0.5 % |
5.9 % |
|
Adj. EBITDA |
245.2 |
240.4 |
2.0 % |
6.5 % |
85.6 |
77.7 |
10.2 % |
14.4 % |
|
Adj. EBITDA margin (% gross revenue) |
24.3 % |
24.5 % |
(0.2)pp |
– |
31.6 % |
29.2 % |
2.4pp |
– |
|
Adj. EPS (diluted) |
0.70 |
0.74 |
–4.9 % |
– |
– |
– |
– |
– |
|
|
|
|
|
|
|
|
|
|
|
IFRS reported |
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
77.3 |
91.1 |
–15.1 % |
– |
– |
– |
– |
– |
|
Net debt / (cash) |
–186.3 |
–317.5 |
– |
– |
– |
– |
– |
– |
|
Net working capital (after factoring) |
–160.9 |
–158.3 |
– |
– |
– |
– |
– |
– |
|
|
|
|
|
|
|
|
|
|
|
Headcount (in FTEs at year-end) |
9,287 |
9,060 |
2.5 % |
– |
– |
– |
– |
– |
1) FY 2022 revenue for Software & Cloud Services restated as a result of implementation of the IFRS IC agenda decision on IFRS 15, with further contracts identified which should have been accounted for on an agent basis
Solid growth in key markets
By region, EMEA delivered a solid year, with revenue up 7.6% YoY ccy to CHF 609.8 million, driven by a robust performance in DACH. In Q4 2023, the UK and Southern Europe continued to show strong momentum.
Revenue in NORAM was CHF 149.1 million in 2023, with constant currency growth broadly flat on the back of more cautious spending by clients.
APAC sustained strong revenue growth, up 24.6% YoY ccy to CHF 144.3 million in 2023, on the back of excellent results across the region. Revenue in Q4 2023 was up 32.8% YoY ccy, driven by over 50% YoY ccy revenue growth in Software & Cloud Services as a result of new contract wins.
Revenue in LATAM was CHF 99.7 million, up 0.2% YoY ccy in 2023 due to muted performance across key markets. Performance stabilised in Q4 2023 with revenue growth of 4.4% YoY ccy, on the back of new leadership appointed for the region, Mexico and Colombia during Q4 2023.
Continued growth momentum across business lines
Software & Cloud Marketplace
Revenue in Software & Cloud Marketplace grew 5.6% YoY ccy to CHF 549.7 million in 2023, compared to CHF 545.3 million in the prior year.
Gross billings in the Microsoft business amounted to USD 18.3 billion in 2023, up 9% compared to 2022. In Q4 2023, billings were USD 3.4 billion, up 7% YoY.
Revenue growth in the Microsoft business continued to accelerate in Q4 2023, offsetting lower growth in other ISVs.
Contribution margin grew to CHF 477.8 million in 2023, with the margin increasing to 86.9% of revenue.
Adjusted EBITDA was CHF 282.4 million in 2023, up 2.2% YoY ccy compared to CHF 289.1 million in the prior year.
Software & Cloud Services
Software & Cloud Services delivered revenue growth of 11.0% YoY ccy to CHF 461.2 million in 2023, up from CHF 437.4 million in the prior year, driven by Cloud Services, Digital Workplace and Software Sourcing & Portfolio Management, partially offset by the phasing out of legacy services.
Focus on cross-selling continued with 73% of LTM (to 31 December 2023) revenue generated by c. 15.9k clients purchasing both software and services, up from 15.1k a year ago.
Revenue in xSimples (including AzureSimple, 365 Simple and AWS) was up 12.2% and 14.6% YoY ccy in Q4 and 2023, respectively.
Contribution margin increased to CHF 185.6 million in 2023, driving the margin to 40.2% of revenue, up from 37.8% in the prior year as a result of strong progress in optimising the delivery network.
Adjusted EBITDA was CHF 28.1 million in 2023, compared to CHF 13.6 million in the prior year period. The margin improved to 6.1% compared to 3.1% in the prior year, driven by a strong contribution margin and operating leverage as the business continues to scale.
Focus on profitable growth
Group adjusted EBITDA was CHF 245.2 million in 2023, up 6.5% YoY ccy. Adjusted EBITDA margin was 24.3%, down by 0.2pp YoY, with the normalisation of marketing and travel costs post-Covid and co-marketing investments in the prior year period offsetting an improved contribution margin.
Adjusted profit for the period was CHF 109.6 million in 2023, representing a decrease of (4.7)% YoY in reported currency, compared to CHF 115.0 million in the prior year.
IFRS reported profit for the period increased to CHF 21.4 million in 2023, compared to CHF (58.3) million in the prior year period. The improvement was primarily driven by lower expenses relating to integration and M&A, as well as the impact from the exit from Russia and the financial loss relating to the company’s shareholding in Crayon, both of which impacted the prior year period.
For a reconciliation of IFRS reported profit to adjusted profit for the year, see alternative performance measures.
Driving operational excellence
In 2023, the company achieved CHF 47 million of cost savings through its operational excellence programme against a target of CHF 15 million, driven by re-balancing of sales resources and AI-driven cross-selling initiatives, optimisation of the services delivery network and transitioning resources to shared service centres. On an annualised basis, the cost savings in 2023 corresponded to CHF 63 million.
With the programme delivering ahead of plan, the annualised cost savings target has been updated to CHF 70 million in 2024, compared to the original target of CHF 50 million.
The restructuring expenses relating to the programme were CHF 39.3 million in 2023, exceeding the expected CHF 25 million due to the increased scope of implementation. An additional CHF 10 million of restructuring expenses are expected in 2024.
Strong liquidity and unlevered balance sheet
Net working capital (after factoring) decreased to CHF (160.9) million, compared to CHF (158.3) million in the prior year. Net cash from operating activities was CHF 77.3 million in 2023, broadly in line with the prior year period.
Capital expenditure totalled CHF 57.2 million, including investments in the SoftwareOne Client Portal, compared to CHF 47.3 million in the prior year period.
The net debt/(cash)1) position was CHF (186.3) million as of 31 December 2023, compared to CHF (317.5) million as of 31 December 2022.
1) Based on new net debt/(cash) definition introduced at H1 2023, equal to bank overdrafts plus other current and non-current financial liabilities less cash and cash equivalents and financial assets
New financial targets
With Vision 2026, SoftwareOne sets new financial targets reflecting a transitional period in 2024, followed by an acceleration of growth and margin expansion by 2026.
