Results review
Key figures - Group
|
CHFm |
H1 2024 |
H1 2023 |
% Δ |
% Δ (CCY) |
Q2 2024 |
Q2 2023 |
% Δ |
% Δ (CCY) |
|
|
|
|
|
|
|
|
|
|
|
Software & Cloud Marketplace |
285.8 |
276.6 |
3.3 % |
6.1 % |
160.2 |
151.0 |
6.1 % |
7.4 % |
|
Software & Cloud Services |
244.2 |
230.2 |
6.0 % |
8.1 % |
122.8 |
116.4 |
5.5 % |
5.8 % |
|
Total revenue |
529.9 |
506.8 |
4.6 % |
7.0 % |
283.0 |
267.4 |
5.8 % |
6.7 % |
|
Delivery costs |
–170.7 |
–178.2 |
–4.2 % |
–2.9 % |
–83.0 |
–86.8 |
–4.3 % |
–4.8 % |
|
Contribution margin |
359.3 |
328.6 |
9.3 % |
12.4 % |
200.0 |
180.6 |
10.7 % |
12.2 % |
|
SG&A |
–237.4 |
–216.9 |
9.4 % |
13.0 % |
–123.5 |
–108.6 |
13.7 % |
15.6 % |
|
Adj. EBITDA |
121.9 |
111.7 |
9.1 % |
11.3 % |
76.5 |
72.1 |
6.1 % |
7.2 % |
|
Adj. EBITDA margin (% revenue) |
23.0 % |
22.0 % |
1.0pp |
– |
27.0 % |
27.0 % |
0.0pp |
– |
|
Adj. EPS (diluted) |
0.27 |
0.32 |
–16.0 % |
– |
– |
– |
– |
– |
|
|
|
|
|
|
|
|
|
|
|
IFRS reported |
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
–295.3 |
–286.4 |
3.1 % |
– |
– |
– |
– |
– |
|
Net debt/(cash) |
208.7 |
71.6 |
– |
– |
– |
– |
– |
– |
|
Net working capital (after factoring) at period-end |
182.6 |
176.8 |
– |
– |
– |
– |
– |
– |
|
|
|
|
|
|
|
|
|
|
|
Headcount (end of period) |
9,327 |
9,257 |
0.8 % |
– |
– |
– |
– |
– |
Group revenue grew 7.0% YoY ccy and 4.6% reported currency to CHF 529.9 million in H1 2024, compared to CHF 506.8 million in the prior year period.
The strengthening of the CHF versus in particular the Euro, US dollar, Japanese yen and Turkish lira led to a negative FX translation impact of 2.4 percentage points on group revenue. The significant appreciation of the Colombian peso had a positive translation impact of 2.1 percentage points on revenue for LATAM in H1 2024.
Solid growth in key markets
Revenue by region
|
CHFm |
H1 2024 |
H1 2023 |
% Δ (CCY) |
Q2 2024 |
Q2 2023 |
% Δ (CCY) |
|
DACH |
156.6 |
154.3 |
3.2 % |
81.8 |
77.5 |
6.1 % |
|
Rest of EMEA |
154.4 |
152.9 |
4.3 % |
82.1 |
80.8 |
3.2 % |
|
NORAM |
85.1 |
75.8 |
15.3 % |
46.0 |
43.2 |
7.2 % |
|
LATAM |
53.6 |
47.7 |
10.1 % |
28.8 |
24.6 |
15.3 % |
|
APAC |
76.5 |
72.3 |
10.1 % |
43.6 |
41.0 |
7.7 % |
DACH and Rest of EMEA reported separately going forward due to IFRS requirements, following division of operational leadership in early 2024; 2023 includes reallocation of revenue between Group and the regions to align with 2024 reporting, with no change to total revenue
By region, DACH grew revenue by 3.2% YoY ccy to CHF 156.6 million in H1 2024, compared to CHF 154.3 million in the prior period, primarily driven by lower results in the Microsoft business. Momentum improved in Q2 2024 driven by other ISVs and services, with key client wins in IT Portfolio Management and SAP Services.
Rest of EMEA was up 4.3% YoY ccy in H1 2024 to CHF 154.4 million, compared to CHF 152.9 million in the prior year period. Growth was supported by strong performance across Southern Europe, particularly within services, and CEE, offsetting softer results in Northern Europe and the UK & Ireland.
NORAM grew revenue by 15.3% YoY ccy to CHF 85.1 million in H1 2024, driven by a number of large client wins, compared to CHF 75.8 in the prior year period.
APAC delivered revenue growth of 10.1% YoY ccy to CHF 76.5 million in H1 2024, compared to CHF 72.3 million in the prior year period, with strong growth in the Microsoft business across the region. Revenue in Q2 2024 was up 7.7% YoY ccy, driven by strength in India, partially offset by China and Australia.
Revenue in LATAM increased by 10.1% YoY ccy to CHF 53.6 million in H1 2024, compared to CHF 47.7 million in the prior year period, as turnaround measures implemented by the new leadership team led to improved results across several markets. Revenue growth in Q2 2024 accelerated to 15.3% YoY ccy, with particular strength in other ISVs in Brazil.
Continued growth momentum across business lines
Software & Cloud Marketplace
Key figures – Software & Cloud Marketplace
|
CHFm |
H1 2024 |
H1 2023 |
% Δ (CCY) |
Q2 2024 |
Q2 2023 |
% Δ (CCY) |
|
Revenue |
285.8 |
276.6 |
6.1 % |
160.2 |
151.0 |
7.4 % |
|
Contribution margin |
252.5 |
238.9 |
8.6 % |
144.3 |
132.3 |
10.6 % |
|
Contribution margin (% of revenue) |
88.4 % |
86.4 % |
– |
90.1 % |
87.6 % |
– |
|
Adj. EBITDA |
143.3 |
135.9 |
7.9 % |
85.4 |
82.5 |
4.9 % |
|
EBITDA margin (% of revenue) |
50.2 % |
49.1 % |
– |
53.3 % |
54.6 % |
– |
Revenue in Software & Cloud Marketplace grew 6.1% YoY ccy to CHF 285.8 million in H1 2024, compared to CHF 276.6 million in the prior year period.
Gross billings in the Microsoft business amounted to USD 11.9 billion in H1 2024, up 8.1% compared to H1 2023. In Q2 2024, billings increased 9.0% YoY to USD 7.6 billion. Revenue growth in Q2 2024 was broadly consistent with Q1 2024.
Revenue growth in other ISVs accelerated to double-digit in Q2 2024, benefitting from initiatives around pricing and renewals, as well as an increased focus on prioritised partners.
Contribution margin grew 8.6% YoY ccy to CHF 252.5 million in H1 2024, compared to CHF 238.9 million in H1 2023, reflecting an increased margin of 88.4%.
Adjusted EBITDA increased by 7.9% YoY ccy to CHF 143.3 million in H1 2024, compared to CHF 135.9 million in the prior year period. The adjusted EBITDA margin improved to 50.2%, compared to 49.1% in the prior year period.
Software & Cloud Services
Key figures – Software & Cloud Services
|
CHFm |
H1 2024 |
H1 2023 |
% Δ (CCY) |
Q2 2024 |
Q2 2023 |
% Δ (CCY) |
|
Revenue |
244.2 |
230.2 |
8.1 % |
122.8 |
116.4 |
5.8 % |
|
Contribution margin |
106.8 |
89.7 |
22.5 % |
55.6 |
48.3 |
16.9 % |
|
Contribution margin (% of revenue) |
43.7 % |
39.0 % |
– |
45.3 % |
41.5 % |
– |
|
Adj. EBITDA |
17.8 |
7.1 |
148.7 % |
13.4 |
4.8 |
174.5 % |
|
EBITDA margin (% of revenue) |
7.3 % |
3.1 % |
– |
10.9 % |
4.1 % |
– |
Software & Cloud Services delivered revenue growth of 8.1% YoY ccy to CHF 244.2 million in H1 2024, up from CHF 230.2 million in the prior year period. Growth was driven by Cloud Services, IT Portfolio Management and SAP Services.
Focus on cross-selling continued with 74% of LTM (to 30 June 2024) revenue generated by c. 16.1k clients purchasing both software and services, up from 15.6k a year ago.
Revenue in xSimples(1) was up 15% YoY ccy in H1 2024, driven by clients continuing to transition to the CSP model.
Contribution margin increased to CHF 106.8 million in H1 2024, with a margin of 43.7%, up from 39.0% in the prior year period driven by continued optimisation of the delivery network.
Adjusted EBITDA was CHF 17.8 million in H1 2024, compared to CHF 7.1 million in the prior year period. The margin improved to 7.3% compared to 3.1% in the prior year period, driven by a strong contribution margin and operating leverage as the business continues to scale.
(1) Including AzureSimple, 365 Simple and AWS
Focus on profitable growth
Adjusted EBITDA for H1 2024 was CHF 121.9 million, increasing 11.3% YoY ccy from CHF 111.7 million in the prior year period. The adjusted EBITDA margin was up by 1.0pp YoY, reflecting an improved contribution margin, partially offset by higher SG&A as a result of growth investments.
Adjusted profit for the period was CHF 41.6 million in H1 2024, representing a decrease of 16.9% YoY in reported currency, compared to CHF 50.1 million in the prior year period.
IFRS reported profit for the period was CHF 27.9 million in H1 2024, compared to CHF 33.8 million in the prior year period.
For a reconciliation of IFRS reported profit to adjusted profit for the year, see Alternative Performance Measures.
Implementation of Vision 2026 well on track
During H1 2024, SoftwareOne progressed various initiatives in support of ‘Vision 2026 – a new chapter of growth’ to drive accelerated growth, margin expansion and cash generation by pursuing key growth priorities and sharpened execution.
Strategic growth priorities
Following a strong start in Q1 2024, SoftwareOne maintained its momentum in capturing the Copilot 365 market opportunity. The number of Copilot 365 users nearly doubled to over 600,000 at 30 June 2024, with 240 new services engagements in the second quarter.
Sharpened execution
Based on the new client segmentation and coverage model, the transformed GTM model was rolled out to key markets, including NORAM, DACH, UK & Ireland, Mexico, Brazil and India. New sales hubs were opened in Nashville and Barcelona, taking a digital-first approach to capture market share in the under-served SME segment in a scalable, cost-efficient way. Bogotá and São Paulo are also currently opening to serve the Latin American market. The hubs will initially focus on the Microsoft tech stack, before offering a broader portfolio. Meanwhile, client coverage was reorganised to allow account managers to go deeper with clients in the enterprise and corporate segments. As a result of the changes, restructuring expenses of CHF 14.2 million were reported in H1 2024.
Supporting the digital sales motion, the Marketplace Platform continued to gain traction with both vendors and clients in H1 2024. With over 17k clients transacting through the platform, the number of cloud subscriptions increased to 35.9k and LTM gross sales to 30 June 2024 was CHF 825.2 million.
Additionally, a global alliance team was established to manage prioritised partnerships with the hyperscalers and other ISVs, and to drive cross and upsell across the broader portfolio.
Lastly, initiatives to drive pricing excellence and renewals via AI-based risk prediction models were implemented.
Margin expansion
SoftwareOne completed its operational excellence programme in H1 2024, reaching CHF 76 million annualised cost savings compared to its target of CHF 70 million, of which CHF 7 million were reinvested in growth initiatives. Continued margin expansion over the Vision 2026 period is expected to be driven by improved commercial effectiveness with the new GTM model, as well as further delivery model efficiencies and right-sizing of support functions.
Balance sheet developments
Net working capital (after factoring) increased by CHF 5.8 million to CHF 182.6 million, compared to CHF 176.8 million in the prior year. Net cash from operating activities was CHF (295.3) million in H1 2024, compared to CHF (286.4) million in the prior year period.
Capital expenditure totalled CHF 32.7 million, including investments in the SoftwareOne Marketplace Portal, compared to CHF 26.7 million in the prior year period.
The net debt position was CHF 208.7 million as at 30 June 2024, compared to CHF 71.6 million as at 30 June 2023.
Board of Directors’ update
As announced in the trading update of 15 May 2024, the Board of Directors has been approached by several parties regarding a potential going-private transaction and has established a Transaction Committee to ensure an orderly follow-up. Indications of interest have been received. Discussions, although challenging given the general business environment, are progressing. The Board will provide further updates if and when required.
Revised revenue guidance for full-year 2024
As a result of continued macroeconomic uncertainty impacting clients’ purchasing behaviour, SoftwareOne updates its 2024 full-year guidance as follows:
- Revenue growth of 7-9% (previously 8-10%) for the group in constant currency;
- Adjusted EBITDA margin of 24.5-25.5% of revenue (unchanged);
- Dividend pay-out ratio of 30-50% of adjusted profit for the year (unchanged).