Results review

Group revenue grew 2.9% YoY ccy and 0.6% in reported currency to CHF 1,017.0 million in 2024, compared to CHF 1,010.9 million in the prior year. In Q4 2024, revenue growth was (5.1)% YoY ccy, driven by a muted budget flush in key markets such as DACH, as well as continued impact from go-to-market-related disruption in NORAM and the UK.

The strengthening of the CHF versus in particular the Euro, US dollar, Turkish lira and Brazilian real led to a negative FX translation impact of 2.3 percentage points on group revenue.

Key figures

1) Earnings before net financial items, taxes, depreciation and amortisation

Mixed performance by region

By region, DACH revenue grew 2.0% YoY ccy to CHF 301.1 million in 2024, compared to CHF 299.4 million in the prior year. Solid performance in other ISVs and services was partially offset by lower results in the Microsoft business. Following a strong Q3 2024 driven by several large customer wins, revenue in Q4 2024 declined 7.3% YoY ccy due to cautious customer behaviour and weak year-end customer spending.

Rest of EMEA was down 1.1% YoY ccy in 2024 to CHF 299.5 million, compared to CHF 310.4 million in the prior year, largely driven by weak results in the UK due to cautious customer spending and go-to-market-related sales execution issues in the second half. Southern Europe grew high single-digit, led by Spain and Italy, supported by the Novis Euforia acquisition. Revenue for Rest of EMEA in Q4 2024 was down 6.3% YoY ccy, driven by weak growth in Benelux and the UK and a large customer transaction in Q4 2023 resulting in a tough comparable base. This was partially offset by solid momentum in services throughout the region, and continued strength in Southern Europe.

Revenue growth in NORAM was broadly flat, down (0.1)% YoY ccy to CHF 145.9 million in 2024, compared to CHF 149.1 million in the prior year, driven by the impact of go-to-market-related sales execution issues in the second half. Revenue in Q4 2024 declined 16.7% YoY ccy driven by Microsoft and other ISVs, while services was up c. 10% YoY ccy, with strong growth in AWS Cloud Services and Application Services.

APAC delivered revenue growth of 15.8% YoY ccy to CHF 163.4 million in 2024, compared to CHF 144.3 million in the prior year, with strong growth in the Microsoft business across the region, as well as continued successful scale-out of the AWS practice. Revenue in Q4 2024 was up 18.8% YoY ccy, driven by particular strength in India, South-East Asia and Japan, while China remained challenging.

Revenue in LATAM increased by 2.7% YoY ccy to CHF 100.3 million in 2024, compared to CHF 99.7 million in the prior year, on the back of stabilisation measures implemented by new leadership and strength in AWS Cloud Services. Revenue declined by 2.4% YoY ccy in Q4 2024, largely driven by Microsoft and continued weakness in Colombia due to the loss of a large public sector managed services contract. Revenue growth in Mexico improved to double-digit in Q4 2024 on the back of actions taken to resolve the go-to-market-related issues.

Continued momentum in Services

Software & Cloud Marketplace

Revenue in Software & Cloud Marketplace declined 0.8% YoY ccy to CHF 532.3 million in 2024, compared to CHF 549.7 million in the prior year, with growth in other ISVs offset by the Microsoft business, as go-to-market-related sales execution issues in the second half impacted the ability to effectively respond to changes in incentives. Revenue declined 14.5% YoY ccy in Q4 2024, primarily as a consequence of muted year-end customer spending across other ISVs and the Microsoft business.

Gross billings in the Microsoft business, including both direct and indirect billings, amounted to CHF 19.3 billion in 2024, up 6.5% YoY ccy compared to 2023. In Q4 2024, billings increased 3.9% YoY ccy to CHF 3.8 billion.¹⁾

SoftwareOne added approximately 67,000 new Copilot users during Q4 2024 to over 787,000 users at 31 December 2024. In addition, there were 250 new services engagements in Q4 2024, totalling to 965 for the year.

Marketplace Platform continued to gain traction with both vendors and customers in 2024. With over 37 thousand active clients and 52 thousand cloud subscriptions, LTM gross sales to 31 December 2024 increased to CHF 859 million, up 70% YoY compared to prior year. Contribution margin was CHF 470.2 million in 2024, up 0.8% YoY ccy, reflecting a margin of 88.3%, compared to CHF 477.8 million in 2023.

Adjusted EBITDA declined by 3.4% YoY ccy to CHF 264.2 million in 2024, compared to CHF 282.4 million in the prior year period. The adjusted EBITDA margin declined to 49.6%, compared to 51.4% in the prior year.

1) Sourced from SoftwareOne (due to changes in Microsoft reporting)

Software & Cloud Services

Software & Cloud Services delivered revenue growth of 7.3% YoY ccy to CHF 484.6 million in 2024, up from CHF 461.2 million in the prior year driven by Cloud Services, in particular AWS with over 30% YoY ccy growth, as well as Software Sourcing & Portfolio Management and SAP Services. Revenue grew 6.9% YoY ccy in Q4 2024 driven by strength in Digital Workplace and Application Services, as well as SAP Services.

Focus on cross-selling continued with 75% of LTM (to 31 December 2024) revenue generated by c. 16.2k clients purchasing both software and services, up from 15.9k a year ago.

Revenue in xSimples²⁾ was up 7% YoY ccy in 2024, driven by clients continuing to transition from enterprise agreements to the CSP model. In Q4 2024, revenue declined by 8% YoY ccy driven by pricing, despite momentum in billings.

2) Total revenue reported under S&C Marketplace and Services for AzureSimple, 365 Simple and AWS

Contribution margin increased to CHF 209.7 million in 2024, with a sector-leading margin of 43.3%, up from 40.2% in the prior year driven by continued optimisation of the delivery network.

Adjusted EBITDA was CHF 30.0 million in 2024, compared to CHF 28.1 million in the prior year period. The margin remained stable at 6.2% compared to 6.1% in the prior year, driven by a strong contribution margin, offset by higher SG&A expenses.

Reported profit impacted by extraordinary costs

Adjusted EBITDA for 2024 was CHF 223.4 million, down 7.6% YoY ccy from CHF 245.2 million in the prior year. The adjusted EBITDA margin was down by 2.3 percentage points YoY, reflecting an improved contribution margin, offset by higher SG&A expenses as a result of go-to-market ramp-up costs and other investments.

Adjusted profit for the period was CHF 73.0 million in 2024, representing a decrease of 33.4% YoY in reported currency, compared to CHF 109.6 million in the prior year.

IFRS reported (loss)/profit for the period was CHF (1.6) million in 2024, compared to CHF 21.4 million in the prior year.

Total revenue and operating expense adjustments amounted to CHF 107.3 million in 2024, compared to CHF 83.5 million in the prior year. Of the total adjustments in 2024, CHF 73.8 million related to the cost reduction, operational excellence/go-to-market and MTWO discontinuation programmes, of which CHF 45.8 million were employee severance payments.

For a reconciliation of IFRS reported profit to adjusted profit for the year, see alternative performance measures.

Driving go-to-market transformation, customer-centricity and cost reductions

In November 2024, SoftwareOne announced measures to (i) restore growth in countries impacted by sales execution issues following the go-to-market implementation, (ii) strengthen and empower the country organisations, with reductions of management layers and corporate overheads and (iii) achieve over CHF 50 million of annualised cost reductions by end of Q2 2025.

The go-to-market transformation was implemented in mid-2024 to better align sales resources to the needs of the company’s different client segments and to drive sales productivity. The accelerated timetable and magnitude of change in certain countries led to temporary sales execution issues, specifically in NORAM, UK and Mexico. Under new CEO leadership, decisive action was taken to drive customer engagement, undertaking leadership changes, onboarding of new employees and strengthening business cadence. By year-end 2024, the impacted countries had successfully adopted key elements of the transformation, including the new customer segmentation with digital sales for SMEs, dedicated resources for new customer acquisition and a focus on services-led sales motions. Early signs also indicate generation of new sales pipeline and improvements in sales productivity. At the same time, the remaining markets – including Rest of EMEA and APAC – are progressing in a phased approach, with a focus on safeguarding customer relationships, while LATAM has completed the transition.

Taking measures to empower the country regions, reduce management layers and corporate overheads to promote a lean corporate structure with an agile frontline were priorities in Q4 2024. To that end, annualised cost savings of CHF 58 million were achieved by year-end 2024, compared to the original target of CHF 50 million by Q2 2025. Savings were derived from the reduction of management layers and corporate overhead costs, with Executive Board costs reduced by half compared to 2024.

As a result, the target for the programme was raised to CHF 70 million, with a further CHF 12 million of annualised cost savings expected by end of Q1 2025.

Investments to support scalable growth

Net working capital (after factoring) increased by CHF 8.2 million to CHF (152.8) million, compared to CHF (160.9) million in the prior year driven by a continued strong focus on working capital management.

Net cash from operating activities was CHF 34.7 million in 2024, compared to CHF 77.3 million in the prior year.

Capital expenditure (excluding capitalised leases) totalled CHF 68.0 million in 2024, including CHF 32.2 million for investments in internal IT and systems, CHF 11.9 million for Marketplace Platform, CHF 12.1 million to support the services delivery platform, compared to CHF 57.2 million in the prior year. The increase was driven by investments in IT systems to drive increased effectiveness and efficiencies under the operational excellence programme, and to support scalable growth.

The net cash position was CHF 9.8 million as at 31 December 2024, compared to CHF 186.3 million as at 31 December 2023.

Outlook for full-year 2025

On a standalone basis, SoftwareOne provides 2025 full-year guidance as follows:

• Revenue growth of 2–4% for the group in constant currency;
• Adjusted EBITDA margin of 24–26% of revenue, with reported EBITDA to more than double compared to prior year;
• Dividend pay-out ratio of 30–50% of adjusted profit for the year.

The company expects a gradually improving trajectory through 2025, as the benefits of the go-to-market transformation come through, with a slight revenue decline expected in Q1 2025. As previously announced and reflected in the 2025 guidance, a negative impact of 2–3% on revenue is expected as a result of the changed Microsoft incentives on enterprise agreements, which will bottom out in 2025.

Total operating expense adjustments, excluding Crayon implementation costs, are expected to be below CHF 30 million in 2025, including approximately CHF 15 million of restructuring costs, CHF 10 million of earn-out payments relating to past acquisitions and CHF 5 million of other non-recurring items.

The 2026 standalone targets are double-digit revenue growth in constant currency with an adjusted EBITDA margin approaching 27%.

Guidance for the combined company will be issued following completion of the Crayon transaction.