SoftwareOne reports margin improvement despite revenue decline in Q1 2025

21 May 2025 07:00 CEST

Stans, Switzerland I 21 May 2025 – SoftwareOne Holding AG (SIX: SWON), a leading
global software and cloud solutions provider, today announced its Q1 2025
trading update.

-Group revenue down 5.7% YoY in constant currency (ccy) and down 6.0% in
reported currency to CHF 232.2 million in Q1 2025
-Adjusted EBITDA up 2.3% YoY ccy to CHF 46.0 million, with a margin improvement
of 1.4 ppts to 19.8%, driven by cost reductions offsetting lower-than-expected
revenue growth
-All regions in line with expectations, with the exception of NORAM due to
continued GTM-related execution challenges and increased macro-economic
uncertainty; action taken to drive turnaround in H2 2025
-S&C Marketplace impacted by incentive changes as expected despite 10% YoY ccy
gross billings growth in the Microsoft business; flat revenue growth in S&C
Services driven by NORAM and large transactions in Q1 2024 distorting
year-on-year comparability
-Cost reduction programme completed with CHF 88 million annualised savings,
overachieving target of CHF 70 million (upgraded from CHF 50+ million
previously)
-2025 outlook (on a standalone basis) confirmed based on an expected turnaround
in NORAM and strong positive momentum in H2 2025; combined company guidance to
be provided post-completion
-Successful tender offer for Crayon, with SoftwareOne reaching over 90% at end
of offer period; closing expected in June 2025, subject to remaining regulatory
approvals

Raphael Erb, CEO of SoftwareOne said, “Q1 2025 marked a challenging start to the
year, driven primarily by a weaker-than-anticipated performance in NORAM, while
all other regions developed in line with expectations. We expected six months to
resolve the GTM-related issues, and further turnaround measures have been
implemented in NORAM. Thanks to the cost reduction programme initiated in Q4
2024, we delivered improved profitability at the adj. EBITDA level and have
re-established a lean and sustainable cost structure going forward.
As we progress through Q2 2025, we see headwinds persist as we navigate
Microsoft incentive changes and GTM-related fixes take hold. Taking into account
the positive developments in April, we are confident that we can drive strong
momentum in H2 2025, given lower negative impact from incentive changes, an
acceleration in service-led offerings such as CSP and benefits of the GTM
transformation coming through.
Meanwhile, I am thrilled to be embarking on a new chapter with Crayon. Based on
our combined global footprint, enhanced offering and deep partner relationships,
we will be excellently positioned to capitalise on the large, fast-growing
market of software, cloud, data & AI. We have already made strong progress in
terms of integration planning to ensure Day 1 readiness ahead of closing. I am
thankful for both teams’ spirit and dedication as we come together.”

Rodolfo Savitzky, CFO of SoftwareOne added, “With the successful implementation
of our cost reduction programme, we were able to drive improved margin compared
to prior year despite the decline in revenue. With the completion of these cost
reductions and the operational excellence programme, we have laid the foundation
for scalable, profitable growth.”

Key figures ‒ Group
CHFm Q1 2025 Q1 2024 % Δ % Δ (CCY)

Software & Cloud Marketplace 111.0 125.6 (11.6)% (11.3)%
Software & Cloud Services 121.2 121.3 (0.1)% 0.1%
Total revenue 232.2 246.9 (6.0)% (5.7)%
Delivery costs (84.4) (87.7) (3.7)% (3.2)%
Contribution margin 147.8 159.3 (7.2)% (7.1)%
SG&A (101.9) (113.9) (10.6)% (10.8)%
Adjusted EBITDA 46.0 45.4 1.3% 2.3%
Adjusted EBITDA margin (% revenue) 19.8% 18.4% 1.4pp -

Group revenue declined 5.7% YoY ccy and 6.0% in reported currency to CHF 232.2
million in Q1 2025, compared to CHF 246.9 million in the prior year. On an
organic basis , revenue declined 6.2% YoY ccy.
The strengthening of the CHF versus, in particular, the Euro, Indian rupee, and
Colombian peso, largely offset by a weakening against the US dollar, led to a
negative FX translation impact of 0.3 percentage points on group revenue.
Mixed performance by region

Revenue by region
CHFm Q1 2025 Q1 2024 % Δ % Δ (CCY)

DACH 71.4 74.8 (4.5)% (4.3)%
Rest of EMEA 71.3 72.2 (1.3)% (1.1)%
NORAM 27.4 39.1 (29.9)% (31.3)%
LATAM 22.8 24.8 (8.1)% (2.9)%
APAC 38.3 32.8 16.6% 15.9%
Group, FX and Other 0.9 3.1 - -
Group revenue 232.2 246.9 (6.0)% (5.7)%

By region, DACH revenue declined 4.3% YoY ccy to CHF 71.4 million in Q1 2025,
compared to CHF 74.8 million in the prior year. Weak results in the Microsoft
transactional business were partially offset by solid momentum in CSP and strong
growth in other ISVs. A large customer transaction in Q1 2024 also distorted
year-on-year growth.
Rest of EMEA was down 1.1% YoY ccy in Q1 2025 to CHF 71.3 million, compared to
CHF 72.2 million in the prior year, driven by soft results in Benelux and CEE,
while Southern Europe delivered strong growth with several large customer wins
and momentum in services.

Revenue in NORAM was down 31.3% YoY ccy to CHF 27.4 million in Q1 2025, compared
to CHF 39.1 million in the prior year. This was driven by persistent GTM-related
sales execution issues impacting results across both business lines, as well as
increased macro-economic uncertainty leading to delays in customer
decision-making and transaction slippage. In addition, certain large
transactions in the prior year period reduced comparability to current year.

APAC delivered revenue growth of 15.9% YoY ccy to CHF 38.3 million in Q1 2025,
compared to CHF 32.8 million in the prior year, driven by strong results in
India, Japan and South-East Asia. Growth in services was very strong, with
continued expansion of the AWS practice and momentum in Application Services.

Revenue in LATAM decreased by 2.9% YoY ccy to CHF 22.8 million in Q1 2025,
compared to CHF 24.8 million in the prior year, impacted by the loss of a public
sector contract in Colombia in 2024. Mexico delivered another quarter of strong
double-digit revenue growth on the back of actions taken to resolve the
GTM-related issues, while Central America & Caribbean also reported good
results.

Revenue decline driven by Marketplace
Software & Cloud Marketplace
Key figures – Software & Cloud Marketplace
CHFm Q1 2025 Q1 2024 % Δ % Δ (CCY)

Revenue 111.0 125.6 (11.6)% (11.3)%
Contribution margin 96.0 108.2 (11.3)% (11.0)%
Contribution margin (% of revenue) 86.5% 86.1% - -
Adjusted EBITDA 53.6 57.9 (7.4)% (6.5)%
Adjusted EBITDA margin (% of revenue) 48.3% 46.1% - -

Revenue in Software & Cloud Marketplace declined 11.3% YoY ccy to CHF 111.0
million in Q1 2025, compared to CHF 125.6 million in the prior year, driven by
weakness in the Microsoft transactional business as a result of changed
incentives for enterprise agreements as expected.

Gross billings in the Microsoft business, including direct and indirect billings
on a gross basis, increased 10% YoY ccy to CHF 4.4 billion , while revenue
declined primarily due to the above-mentioned incentive changes.
SoftwareOne added approximately 36,000 new Copilot users during Q1 2025 to
around 823,000 users at 31 March 2025. In addition, there were over 280 new
services engagements in Q1 2025.

With over 41 thousand active clients and 57 thousand cloud subscriptions, LTM
gross sales to 31 March 2025 on Marketplace Platform increased to CHF 915
million, up 37% YoY compared to prior year. New features are continuously added
to enhance the Platform’s capabilities and improve existing functionalities.

Contribution margin was CHF 96.0 million in Q1 2025, down 11.0% YoY ccy,
reflecting a margin of 86.5%, compared to CHF 86.1% in Q1 2024 driven by the
decline in revenue.

Adjusted EBITDA declined by 6.5% YoY ccy to CHF 53.6 million in Q1 2025,
compared to CHF 57.9 million in the prior year period. The adjusted EBITDA
margin improved to 48.3%, compared to 46.1% in the prior year driven by delivery
cost and SG&A reductions.

Software & Cloud Services
Key figures – Software & Cloud Services
CHFm Q1 2025 Q1 2024 % Δ % Δ (CCY)

Revenue 121.2 121.3 (0.1)% 0.1%
Contribution margin 51.8 51.1 1.4% 1.3%
Contribution margin (% of revenue) 42.8% 42.1% - -
Adjusted EBITDA 8.4 4.4 90.9% 92.6%
Adjusted EBITDA margin (% of revenue) 6.9% 3.6% - -

Software & Cloud Services grew by 0.1% YoY ccy to CHF 121.2 million in Q1 2025,
compared to CHF 121.3 million in the prior year, driven by weakness across
several service lines and large transactions in Q1 2024 in NORAM. Excluding
NORAM, group revenue grew 6.2% YoY ccy in the quarter.

Focus on cross-selling continued with 76% of LTM (to 31 March 2025) revenue
generated by c. 16.2k clients purchasing both software and services, up from
15.9k a year ago.

Revenue in Essentials was up 14% YoY ccy in Q1 2025, driven by an acceleration
in clients transitioning from enterprise agreements to the CSP model.

Contribution margin increased 1.3% YoY ccy to CHF 51.8 million in Q1 2025,
slightly up from 51.1 in the prior year, with delivery costs remaining stable.

Adjusted EBITDA was CHF 8.4 million in Q1 2025, compared to CHF 4.4 million in
the prior year period. The margin improved to 6.9% compared to 3.6% in the prior
year, driven by lower SG&A expenses.

Margin improvement driven by cost reduction programme
Adjusted EBITDA for Q1 2025 grew to CHF 46.0 million with a margin of 19.8%,
compared to CHF 45.4 million and 18.4% in the prior year, benefitting from the
cost reduction programme.

Announced in late 2024, the cost reduction programme was concluded as planned by
the end of Q1 2025, with annualised savings of CHF 88 million, compared to the
initial target of CHF 50+ million, driven by a reduction of management layers
and corporate overhead costs.

Total adjustments amounted to CHF 19.3 million in Q1 2025, compared to CHF 16.6
million in the prior year. Of this total amount, CHF 18.2 million related to the
cost reduction programme, exceeding the target of CHF 15 million as a result of
the above-mentioned higher-than-planned savings and resulting severance
payments. Total adjustments are expected to be below CHF 30 million for
full-year 2025, excluding Crayon implementation costs.

For a reconciliation of reported to adjusted EBITDA for the period, see page 6
of this media release

Further action taken to address GTM-related challenges in NORAM
The GTM 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 led to
sales execution issues in certain countries, including NORAM, UK and Mexico.
Under the new CEO leadership, decisive action was taken to resolve the
disruption, leading to improvements in the UK and Mexico. However, given
persistent challenges in NORAM, further action has been taken in to drive a
turnaround in this region by H2 2025. This includes strengthening the regional
leadership team with Executive Board member Oliver Berchtold on an interim
basis, strategic re-hiring to drive other ISV growth and building dedicated
teams for priority sales motions.
Outlook for full-year 2025
On a standalone basis, SoftwareOne confirms its 2025 full-year guidance as
follows:
-Revenue growth of 2-4% for the group in constant currency, based on a
turnaround in NORAM;
-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.

Revenue growth is expected to remain at a similar negative level in Q2 2025
compared to Q1 2025 due to Microsoft incentive changes weighing in particular on
June. Looking to H2 2025, the company expects a turnaround in NORAM based on the
actions taken and strong positive momentum driven by lower impact from the
Microsoft incentive changes in the second half, an acceleration in service-led
offerings such as CSP, benefits of the GTM transformation coming through, as
well as a more favourable comparable period.

The achieved cost savings and strict cost control will continue to drive margin
improvement compared to prior year. Total adjustments are expected to be below
CHF 30 million for full-year 2025, excluding Crayon implementation costs.

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

Successful tender offer for Crayon
On 7 May 2025, SoftwareOne announced that it had received acceptances under the
offer, which together with the shares already owned or controlled by
SoftwareOne, had reached 91.6% of Crayon’s issued and outstanding share capital.


Furthermore, Euronext Oslo Børs decided on 12 May 2025 to admit SoftwareOne to
secondary trading. The first day of secondary trading is expected to be on or
around the closing of the transaction.
Closing is expected in June 2025, subject to remaining regulatory approvals.
SoftwareOne intends to carry out a compulsory acquisition of the remaining
Crayon shares.

Integration planning
Integration planning continues to progress between the two companies, while
taking regulatory and anti-trust restrictions into account. Since February the
project has accelerated across all workstreams, including strategy, sales &
marketing, people & culture, IT, finance, amongst others, with support from
external post-merger experts. Day 1 readiness is planned to be achieved ahead of
the expected closing date in June. In addition, detailed roadmaps for milestones
around Day 30, Day 100 and beyond are being defined.

Financing
A bridge facility of approximately CHF 700 million is currently in place to fund
the acquisition and will be re-financed at transaction closing.
Post-transaction, SoftwareOne expects proforma net debt / adjusted EBITDA to be
below 2.0x at year-end 2025.

 
RESULTS OVERVIEW
Reconciliation – Reported to adjusted EBITDA

CHFm Q1 2025 Q1 2024
Reported EBITDA 26.7 28.7
Impact of change in revenue recognition of Microsoft Enterprise
Agreements 0.5 0.3
Integration, M&A and earn-out expenses 1.5 3.1
Operational excellence restructuring expenses - 4.1
GTM restructuring expenses - 5.1
Cost reduction programme 18.2 -
Discontinuation of MTWO vertical 0.1 3.0
Other non-recurring items (0.9) 1.0
Total adjustments 19.3 16.6
Adjusted EBITDA 46.0 45.4
Source: Management view

Q1 2025 TRADING UPDATE DOCUMENTS
The Q1 2025 trading update documents can be found on SoftwareOne’s website in
https://www.softwareone.com/en/about/investors/results-center.

CALL FOR INVESTORS, ANALYSTS AND THE MEDIA
A webcast for investors, analysts and the media with Raphael Erb, CEO and
Rodolfo Savitzky, CFO will be held today at 9.30 CEST and may be joined via the
link:
https://urldefense.com/v3/__https:/event.choruscall.com/mediaframe/webcast.html?
webcastid=ISc3REIs__;!!FI8geUfy_tKP!leHnubS28BRaVsauKQLXNZcTU492iWmITvWAvGzt6rux
EoCper2mVv2ENjjOhOSnnja4tc5krKXw7XdWLlFe44ptKYCWJOtUFUw92ME$

If you wish to actively participate in the Q&A session or are unable to join via
the webcast, you may call the following numbers, 10 – 15 minutes before
conference start
Switzerland / Europe: +41 58 310 50 00
United Kingdom: +44 (0) 207 107 06 13
United States: +1 (1) 631 570 56 13

The webcast will be archived and a digital playback will be available
approximately two hours after the event in the
https://www.softwareone.com/en/about/investors/results-center
CORPORATE CALENDAR
2025 Half-year results and Half-year report 21 August 2025
Q3 2025 Trading update 13 November 2025
CONTACT
Anna Engvall, Investor Relations
Tel. +41 44 832 41 37, anna.engvall@softwareone.com
FGS Global, Media Relations
Tel. +41 44 562 14 99, press.softwareone@fgsglobal.com
 
ABOUT SOFTWAREONE
SoftwareOne is a leading global software and cloud solutions provider that is
redefining how organizations build, buy and manage everything in the cloud. By
helping clients to migrate and modernize their workloads and applications – and
in parallel, to navigate and optimise the resulting software and cloud changes –
SoftwareOne unlocks the value of technology. The company's ~9,000 employees are
driven to deliver a portfolio of 7,500 software brands with a presence in over
60 countries. Headquartered in Switzerland, SoftwareOne is listed on the SIX
Swiss Exchange under the ticker symbol SWON. Visit us at www.softwareone.com
SoftwareOne Holding AG, Riedenmatt 4, CH-6370 Stans

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This media release may contain certain forward-looking statements relating to
the group’s future business, development and economic performance. Such
statements may be subject to a number of risks, uncertainties and other
important factors, such as but not limited to force majeure, competitive
pressures, legislative and regulatory developments, global, macroeconomic and
political trends, the group’s ability to attract and retain the employees that
are necessary to generate revenues and to manage its businesses, fluctuations in
currency exchange rates and general financial market conditions, changes in
accounting standards or policies, delay or inability in obtaining approvals from
authorities, technical developments, litigation or adverse publicity and news
coverage, each of which could cause actual development and results to differ
materially from the statements made in this media release. SoftwareOne assumes
no obligation to update or alter forward-looking statements whether as a result
of new information, future events or otherwise.

More information:
Access the news on Oslo Bors NewsWeb site

646966_SoftwareOne_Q1 2025_Trading update_EN.pdf