SoftwareOne H1 2024: Soft growth as business reorg delivers tentative benefits
Company in discussions with potential buyers despite slowdown in revenue growth
Switzerland-based SoftwareOne a global software and cloud solutions provider, today announced its H1 2024 results.
The first half displayed cautious signs of a turnaround after the firm rejected several acquisition bids over the past year and opted for a strategic reorganisation instead.
"We delivered solid H1 2024 results against continued uncertainty in the economic environment thanks to our relentless focus on our clients' needs and improved execution across all areas of the company," said Brian Duffy, CEO of SoftwareOne.
Growing in an uncertain economy
Overall, group revenue grew 7 per cent year-on-year, and 4.6 per cent reported currency to CHF529.9m (£475.9m) in H1 2024 (prior year: CHF506.8m).
Macroeconomic uncertainty and strengthening of the Swiss Frank compared to the Euro, US dollar, Japanese yen and Turkish lira led to a negative FX translation impact of 2.4 per cent on group revenue.
On the other hand, the increase in value of the Colombian peso had a positive impact of 2.1 per cent on revenue for LATAM.
"As a result of continued macroeconomic uncertainty impacting clients' purchasing behaviour in DACH and the impact of the change of government on our application services business in Colombia, we now expect revenue growth of 7-9 per cent. We confirm our adjusted EBITDA margin target of 24.5-25.5 per cent," said Rodolfo Savitzky, CFO of SoftwareOne.
Divergence in results around the world
The company saw soft growth in Europe, with the DACH and EMEA regions respectively seeing 3.2 per cent and 4.3 per cent year-on-year growth, due to lower results in the Microsoft business and middling sales in Northern Europe and UK & Ireland.
The momentum in DACH did improve in Q2 2024, driven by other ISVs and services, with key client wins in IT portfolio management and SAP services.
SoftwareOne experienced a spike in the Americas, with NORAM growing revenue by 15.3 per cent year-on-year, and LATAM growing revenue by 10.1 per cent year-on-year, thanks to large clients wins, and turnaround measures implemented by the new leadership team led to improved results across several markets.
APAC also saw a decent uptick of 10.1 per cent year-on-year in H1 2024 thanks to the Microsoft business experiencing a rebound.
In a bid of confidence in the region's economic strength, the software reseller recently appointed Raphael Erb - the former president of Asia and Pacific - as CRO.
Vision 2026 still in sight
During H1 2024, SoftwareOne progressed various initiatives in support of "Vision 2026 – a new chapter of growth" to drive sales, margin expansion and cash generation by pursuing key growth priorities and sharpened execution.
"'Vision 2026 – a new chapter of growth' programme is progressing according to plan," added Duffy.
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.
The acquisition saga continues
SoftwareOne's board of directors revealed that it has been approached by several parties regarding a potential going-private transaction and has established a transaction committee.
They also reported that discussions, although challenging given the general business environment, are progressing.
This new board of directors was elected April 2024 following an intervention by SoftwareOne's founding shareholders - von Stockar, Gilli and B. Curti Holding AG - who had called for changes at the board level.
This is also not the first time SoftwareOne has been approached by buyers, and follows a tumultuous couple years, between discussions and shut downs, with for example the company refusing a £2.5bn takeover offer from Bain Capital in 2023, but reported to still be 'in discussions' with the private equity firm in January 2024.