10 Segment reporting

For management purposes, the group is organised by geographical areas. After the separation of the operating segment EMEA into DACH and rEMEA, the following regional clusters are the group’s operating segments:

DACH (Germany, Austria and Switzerland)
rEMEA (Rest of 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 interim condensed 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 in 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 commercial and operational excellence programme and the discontinuance of the MTWO business, one-time expenses for the strategic review, extraordinary bad debt expenses 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.

For the six months ended 30 June 2024

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

Total revenue	156,630	154,358	85,140	53,553	76,459	526,140	3,919	–74	–770	529,215
Delivery costs	–48,350	–50,275	–24,667	–24,741	–22,719	–170,752	–106	105	170,753	n/a

Contribution margin 1)	108,280	104,083	60,473	28,812	53,740	355,388	3,813	31	169,983	n/a
Other operating costs	–39,029	–58,160	–32,368	–20,018	–26,680	–176,255	–66,020	–371	–204,398	–447,044

EBITDA 2)	69,251	45,923	28,105	8,794	27,060	179,133	–62,207	–340	–34,415	82,171

1) Total revenue net of third-party service delivery costs and directly attributable internal 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' break down as follows:

in CHF 1,000	Integration, M&A and earn-out expenses	Restruc- turing expenses 3)	Restruc- turing MTWO business	One-time expenses strategic review	Extra- ordinary bad debt expenses	IFRS 15 upfront revenue recognition	IFRS 16 leases	Allocation of delivery costs	Remaining	Total Other

Total revenue	–	–	–747	–	–	80	–	–	–103	–770
Delivery costs	–	–	–	–	–	–	–	170,654	99	170,753

Contribution margin 1)	–	–	–747	–	–	80	–	170,654	–4	169,983
Other operating costs	–5,205	–23,630	–3,452	–707	–6,000	–4	8,305	–170,654	–3,051	–204,398

EBITDA 2)	–5,205	–23,630	–4,199	–707	–6,000	76	8,305	–	–3,055	–34,415

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

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

3) Restructuring expenses include expenses of the commercial excellence programme (TCHF 14,249) and the operational excellence programme (TCHF 9,381).

For the six months ended 30 June 2023

in CHF 1,000	DACH 3)	rEMEA 3)	NORAM	LATAM	APAC	Total segments	Group	FX & Consoli- dation	Other incl. allocation of delivery costs	Total

Total revenue	154,277	152,853	75,806	47,718	72,280	502,934	3,843	274	–688	506,363
Delivery costs	–54,491	–50,117	–22,580	–24,406	–26,647	–178,241	–220	77	178,384	n/a

Contribution margin 1)	99,786	102,736	53,226	23,312	45,633	324,693	3,623	351	177,696	n/a
Other operating costs	–34,676	–57,639	–29,680	–20,703	–24,099	–166,797	–55,755	–1,061	–191,386	–414,999

EBITDA 2)	65,110	45,097	23,546	2,609	21,534	157,896	–52,132	–710	–13,690	91,364

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

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

3) The comparative period was restated, refer to Note 2 Separation of the reporting segment EMEA into DACH and rEMEA.

The most relevant reconciliation items in the column 'Other' break down as follows:

in CHF 1,000	Integration, M&A and earn-out expenses	Restruc- turing expenses	IFRS 15 upfront revenue recognition	IFRS 16 leases	Allocation of delivery costs	Remaining	Total Other

Total revenue	–	–	–447	–	–	–241	–688
Delivery costs	–	–	–	–	178,182	202	178,384

Contribution margin 1)	–	–	–447	–	178,182	–39	177,696
Other operating costs	–7,814	–12,471	21	7,914	–178,182	–854	–191,386

EBITDA 2)	–7,814	–12,471	–426	7,914	–	–893	–13,690

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

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

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 external and internal 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'.

For the six months ended 30 June 2024

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

Total revenue	285,754	244,155	–	529,909	–694	–	529,215
Delivery costs	–33,255	–137,395	–	–170,650	–	170,650	n/a

Contribution margin 1)	252,499	106,760	–	359,259	–694	170,650	n/a
Other operating costs	–109,949	–89,006	–38,442	–237,397	–38,997	–170,650	–447,044

EBITDA 2)	142,550	17,754	–38,442	121,862	–39,691	–	82,171

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

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

For the six months ended 30 June 2023

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

Total revenue	276,562	230,248	–	506,810	–447	–	506,363
Delivery costs	–37,652	–140,530	–	–178,182	–	178,182	n/a

Contribution margin 1)	238,910	89,718	–	328,628	–447	178,182	n/a
Other operating costs	–111,439	–82,611	–22,871	–216,921	–19,896	–178,182	–414,999

EBITDA 2)	127,471	7,107	–22,871	111,707	–20,343	–	91,364

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

2) EBITDA from additional business line 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 48% (comparative period: 49%) of total revenue. Revenue is reported based on the customer's headquarter domicile:

in CHF 1,000	Germany	US	Switzerland	Netherlands	Other countries	Total
Revenue for the six months ended 30 June 2024	94,912	72,450	52,142	33,040	276,672	529,215
Revenue for the six months ended 30 June 2023	101,345	72,211	43,366	33,475	255,966	506,363

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