11 Segment reporting

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

EMEA (Europe and South Africa)
NORAM (US, Canada)
LATAM (Latin America)
APAC (Asia Pacific, including India and Dubai)

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 interim condensed consolidated income statement (column 'Total') as follows:

The column 'Group' includes the group cost centers 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 in 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 a reclassification of bad debt provisions that are presented in gross profit in internal reporting but in operating expenses in the interim condensed consolidated income statement. Additionally, the column 'Other' includes accounting related adjustments such as differences in accounting policies of IFRS 16 that are not reflected in the segments and, to a limited extent, minor reconciliation items.

For the six months ended 30 June 2022

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

Total revenue (external)	313,011	78,416	56,151	64,142	511,720	2,578	543	–196	514,645
Third-party service delivery costs	–27,956	–5,457	–5,594	–5,013	–44,020	–1,699	757	244	–44,718

Gross profit 1)	285,055	72,959	50,557	59,129	467,700	879	1,300	48	469,927
Personnel expenses and other operating expenses/income	–180,464	–48,313	–40,957	–39,591	–309,325	–46,857	–1,546	–66,353	–424,081

EBITDA 2)	104,591	24,646	9,600	19,538	158,375	–45,978	–246	–66,305	45,846

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 amortization.

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	'Transformance' expenses	One-time expenses Russia	Bad debt provisions	IFRS 16 leases	Remaining	Total Other

Total revenue (external)	–	–	–	–	–4,540	4,658	–	–314	–196
Third-party service delivery costs	–	–	–	–	–	–	–	244	244

Gross profit 1)	–	–	–	–	–4,540	4,658	–	–70	48
Personnel expenses and other operating expenses/income	–3,784	–18,697	–5,674	–8,438	–31,252	–4,658	8,154	–2,004	–66,353

EBITDA 2)	–3,784	–18,697	–5,674	–8,438	–35,792	–	8,154	–2,074	–66,305

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 amortization.

For the six months ended 30 June 2021

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

Total revenue (external)	289,375	63,322	48,965	54,138	455,800	67	406	–107	456,166
Third-party service delivery costs	–27,338	–3,668	–5,284	–3,266	–39,556	–1,486	–724	–43	–41,809

Gross profit 1)	262,037	59,654	43,681	50,872	416,244	–1,419	–318	–150	414,357
Personnel expenses and other operating expenses/income	–154,888	–38,902	–35,346	–34,227	–263,363	–49,665	185	–8,971	–321,814

EBITDA 2)	107,149	20,752	8,335	16,645	152,881	–51,084	–133	–9,121	92,543

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 amortization.

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 expenses	Bad debt provisions	IFRS 16 leases	Remaining	Total Other

Total revenue (external)	–	–	–	746	–	–853	–107
Third-party service delivery costs	–	–	–	–	–	–43	–43

Gross profit 1)	–	–	–	746	–	–896	–150
Personnel expenses and other operating expenses/income	–7,519	–5,817	–2,624	–746	8,748	–1,013	–8,971

EBITDA 2)	–7,519	–5,817	–2,624	–	8,748	–1,909	–9,121

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 amortization.

Additional information for business lines

The regions continue to be the operating segments. However, 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', 'Solutions & 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, refer to section Alternative Performance Measures of this report. In contrast to the segment reporting, all accounting related adjustments are allocated to the business line 'Software & Cloud' and 'Solutions & Services', ie, the application of IFRS 16.

For the six months ended 30 June 2022

in CHF 1,000	Software & Cloud	Solutions & Services	Corporate	Total business unit	FX & Consolidation	Adjustments	Total

Total revenue (external)	273,949	240,153	–	514,102	543	–	514,645
Delivery costs (external)	–	–44,718	–	–44,718	–	–	–44,718

Gross profit 1)	273,949	195,435	–	469,384	543	–	469,927
Delivery costs (internal)	–37,464	–113,078	–	–150,542	757	–	–149,785

Contribution margin 2)	236,485	82,357	–	318,842	1,300	–	320,142
Other operating costs	–92,204	–79,471	–29,019	–200,694	–1,546	–72,056	–274,296

EBITDA 3)	144,281	2,886	–29,019	118,148	–246	–72,056	45,846

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 lines view reconciled to earnings before net financial items, taxes, depreciation and amortization.

For the six months ended 30 June 2021

in CHF 1,000	Software & Cloud	Solutions & Services	Corporate	Total business unit	FX & Consolidation	Adjustments	Total

Total revenue (external)	267,749	188,011	–	455,760	406	–	456,166
Delivery costs (external)	–	–41,809	–	–41,809	–	–	–41,809

Gross profit 1)	267,749	146,202	–	413,951	406	–	414,357
Delivery costs (internal)	–36,849	–84,337	–	–121,186	–723	–	–121,909

Contribution margin 2)	230,900	61,865	–	292,765	–317	–	292,448
Other operating costs	–89,645	–68,362	–25,519	–183,526	184	–16,563	–199,905

EBITDA 3)	141,255	–6,497	–25,519	109,239	–133	–16,563	92,543

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 lines view reconciled to earnings before net financial items, taxes, depreciation and amortization.

Additional geographical information

Switzerland, the US, Germany and the Netherlands are the main geographical markets for SoftwareONE and represent approximately 49% (comparative period: 51%) of total revenue. Revenue is reported based on the customers' headquarter domicile:

in CHF 1,000	Germany	US	Switzerland	Netherlands	Other countries	Total
Revenue (external) for the six months ended 30 June 2022	101,809	73,774	38,062	36,388	264,612	514,645
Revenue (external) for the six months ended 30 June 2021 1)	103,024	59,155	35,619	36,375	221,993	456,166

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.