27 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. Total revenue, contribution margin 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 segment reporting presents a breakdown of total revenue, directly attributable delivery costs, and indirectly attributable other operating costs such as sales and marketing costs as well as general and admin costs. 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 costs affecting comparability in operating expenses such as integration expenses, M&A and earn-out expenses, restructuring expenses for the operational excellence programme and the MTWO business, one-time expenses for the strategic review 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 an adjustment for differences in accounting policies of IFRS 16 that are not reflected in the segments, an allocation of internal delivery costs to transition from the internal to the external reporting structure and, to a limited extent minor reconciliation items.

In 2023, the group made a change in presentation for bad debts provisions to align the internal and external reporting structure. In the prior year, bad debt provisions were presented in total revenue in internal reporting but in operating expenses in the consolidated income statement. The comparative period was restated.

Segment disclosure 2023

in CHF 1,000	EMEA	NORAM	LATAM	APAC	Total segments	Group	FX & Consoli- dation	Other incl. allocation of delivery costs	Total

Total revenue	609,786	149,120	99,692	144,317	1,002,915	5,275	1,428	1,671	1,011,289
Delivery costs	–201,492	–46,582	–49,406	–49,447	–346,927	14	–28	346,941	n/a

Contribution margin 1)	408,294	102,538	50,286	94,870	655,988	5,289	1,400	348,612	n/a
Other operating costs	–176,655	–55,946	–42,156	–45,666	–320,423	–108,599	–1,031	–419,512	–849,565

EBITDA 2)	231,639	46,592	8,130	49,204	335,565	–103,310	369	–70,900	161,724

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

2) EBITDA from additional business lines view 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	Integration, M&A and earn-out expenses	Restruc- turing expenses	One-time expenses strategic review	Restruc- turing MTWO business	IFRS 15 upfront revenue recognition	IFRS 16 leases	Allocation of delivery costs	Remaining	Total Other

Total revenue	–	–	–	–	236	–	–	1,435	1,671
Delivery costs	–	–	–	–	–	–	347,612	–671	346,941

Contribution margin 1)	–	–	–	–	236	–	347,612	764	348,612
Other operating costs	–23,051	–39,333	–15,874	–5,724	–10	17,024	–347,612	–4,932	–419,512

EBITDA 2)	–23,051	–39,333	–15,874	–5,724	226	17,024	–	–4,168	–70,900

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

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

Segment disclosure 2022

in CHF 1,000	EMEA	NORAM	LATAM	APAC	Total segments	Group	FX & Consoli- dation	Other incl. allocation of delivery costs	Total

Total revenue 1)	590,174	159,034	104,757	126,424	980,389	4,491	–2,181	–6,868	975,831
Delivery costs 1)	–202,063	–47,557	–51,570	–41,805	–342,995	–6,451	3,171	346,275	n/a

Contribution margin 2)	388,111	111,477	53,187	84,619	637,394	–1,960	990	339,407	n/a
Other operating costs	–174,840	–54,802	–35,602	–43,712	–308,956	–97,229	–537	–432,195	–838,917

EBITDA 3)	213,271	56,675	17,585	40,907	328,438	–99,189	453	–92,788	136,914

1) Prior-year figures restated, refer to Note 2 Correction of errors.

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

3) EBITDA from additional business lines view 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	Integration, M&A and earn-out expenses	Restruc- turing expenses	Share- based payment expenses	One-time expenses Russia & Ukraine 3)	IFRS 15 upfront revenue recognition	IFRS 16 leases	Allocation of delivery costs	Remaining	Total Other

Total revenue	–	–	–	–	–6,922	–	–	54	–6,868
Delivery costs	–	–	–	–	–	–	346,346	–71	346,275

Contribution margin 1)	–	–	–	–	–6,922	–	346,346	–17	339,407
Other operating costs	–44,287	–13,142	–4,888	–35,214	318	16,368	–346,346	–5,004	–432,195

EBITDA 2)	–44,287	–13,142	–4,888	–35,214	–6,604	16,368	–	–5,021	–92,788

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

2) EBITDA from additional business lines view 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).

Additional information for business lines

Even if the regions are the operating segments, SoftwareOne internally also reports total revenue, contribution margin and EBITDA by business lines 'Software & Cloud Marketplace', 'Software & Cloud Services' and 'Corporate', which includes non-operational group costs, to the CODM.

The business line view presents a breakdown of total revenue, directly attributable delivery costs, and indirectly attributable other operating costs such as sales and marketing costs as well as general and admin costs.

The column 'Adjustments' includes costs affecting comparability in operating expenses and are therefore adjusted in internal reporting 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. In contrast to the segment reporting, the IFRS 16 adjustment and minor reconciliation items are allocated to the business lines 'Software & Cloud Marketplace' and 'Software & Cloud Services'.

Business line view 2023

in CHF 1,000	Software & Cloud Marketplace	Software & Cloud Services	Corporate	Total business unit	Adjustments	Allocation of delivery costs	Total

Total revenue	549,750	461,154	–	1,010,904	385	–	1,011,289
Delivery costs	–71,994	–275,573	–	–347,567	–	347,567	n/a

Contribution margin 1)	477,756	185,581	–	663,337	385	347,567	n/a
Other operating costs	–195,396	–157,525	–65,214	–418,135	–83,863	–347,567	–849,565

EBITDA 2)	282,360	28,056	–65,214	245,202	–83,478	–	161,724

1) Total revenue net of directly attributable external and internal delivery costs.

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

Business line view 2022

in CHF 1,000	Software & Cloud Marketplace	Software & Cloud Services	Corporate	Total business unit	Adjustments	Allocation of delivery costs	Total

Total revenue 1)	545,318	437,435	–	982,753	–6,922	–	975,831
Delivery costs 1)	–74,056	–272,291	–	–346,347	–	346,347	n/a

Contribution margin 2)	471,262	165,144	–	636,406	–6,922	346,347	n/a
Other operating costs	–182,163	–151,592	–62,217	–395,972	–96,598	–346,347	–838,917

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

1) Prior-year figures restated, refer to Note 2 Correction of errors.

2) Total revenue net of directly attributable external and internal delivery costs.

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

Additional geographical information

Germany, the US, Switzerland and the Netherlands are the main geographical markets for SoftwareOne and represent approximately 49% (prior year: 50%) of total revenue. Revenue is reported based on the customer's headquarter domicile:

2023
in CHF 1,000	Germany	US	Switzerland	Netherlands	Other countries	Total

Revenue (external)	198,938	139,996	82,199	69,824	520,332	1,011,289
Non-current assets	149,333	23,192	135,914	96,032	284,819	689,290

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

Revenue (external) 1)	194,819	151,301	71,332	71,849	486,529	975,831
Non-current assets	162,253	27,210	113,833	101,432	272,556	677,284

1) Prior-year figures restated, refer to Note 2 Correction of errors.

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.