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SoftwareONE Holding AG / Key word(s): Quarter Results/Quarter Results
SoftwareOne delivers solid start to 2024 and reiterates full-year guidance
15-May-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
Media Release - ad hoc announcement pursuant to Art. 53 LR
SoftwareOne delivers solid start to 2024 and reiterates full-year guidance
Stans, Switzerland I 15 May 2024 - SoftwareOne Holding AG, a leading global software and cloud solutions provider,
today published its Q1 2024 trading update.
. Group revenue up 7.4% YoY constant currency (ccy) and 3.1% YoY reported currency to CHF 246.9 million in
Q1 2024
. Adjusted EBITDA up 18.8% YoY ccy to CHF 45.4 million, with margin up 1.8pp YoY to 18.4% reflecting
continued cost control
. Acceleration in NORAM to revenue growth of 26.4% YoY ccy supported by a number of large client wins

. Execution of Vision 2026 progressing as planned, with a focus on driving strategic growth priorities,
sharpening execution and margin expansion
. Ambition to become #1 Copilot partner and deliver on USD 100 million revenue opportunity across licensing
and services on track
. Implementation of transformed GTM model ongoing based on new client segmentation and coverage model, with
a phased roll-out starting in key markets in Q2 2024
. Outlook for 2024 reiterated based on YTD performance and stabilising market environment
. Transaction Committee chaired by Till Spillmann and comprised of all independent members of the Board of
Directors has been established to address approaches received from several parties

Brian Duffy, CEO of SoftwareOne said, "We delivered our Q1 2024 results against a backdrop of uncertainty in the
economic environment. With our integrated offering of software & cloud, services and data & AI, we are strongly
positioned to serve our clients with outcome-oriented solutions to meet their needs. In particular, we made great
progress in supporting clients with the implementation of Microsoft 365 Copilot this quarter, helping them bend the
productivity curve, while addressing security, governance and other considerations.
We are focused on executing our updated strategy 'Vision 2026 - a new chapter of growth'. We have finalised the
blueprint design for a transformed GTM approach based on our new client segmentation and coverage model, with roll-out
in key markets starting in Q2 2024. We have also made significant progress in forming a well-defined global alliance
organisation to manage prioritised partnerships with ISVs. Lastly, we continue to see traction on our Marketplace
Platform, with the number of clients, cloud subscriptions and sales steadily increasing. Combined with a continued
focus on operational excellence, we are confident these strategic initiatives will drive accelerated growth and margin
expansion in line with our Vision 2026 targets.

Rodolfo Savitzky, CFO of SoftwareOne added, "Our Q1 2024 results are a testament to our resilient business model and
the successful execution of our operational excellence programme. We continue to be on track to deliver our target of
CHF 70 million in annualised savings in 2024. Based on our performance this quarter, we reiterate full-year guidance of
revenue growth of 8-10% and an adjusted EBITDA margin of 24.5-25.5%."

Key figures ? Group

CHFm Q1 2024 Q1 2023 % ? % ? (CCY)

Software & Cloud Marketplace      125.6   125.6   0.0%      4.6% 
Software & Cloud Services         121.3   113.8   6.6%     10.4% 
Total revenue                     246.9   239.4   3.1%      7.4% 
Delivery costs                   (87.7)  (91.4) (4.1)%    (1.1)% 
Contribution margin               159.3   148.0   7.6%     12.6% 
SG&A                            (113.9) (108.4)   5.1%     10.3% 
Adj. EBITDA                        45.4    39.6  14.5%     18.8% 
Adj. EBITDA margin (% revenue)    18.4%   16.6%  1.8pp         - 

===
In Q1 2024, revenue at the group level grew 7.4% YoY ccy and 3.1% reported currency to CHF 246.9 million, compared to CHF 239.4 million in the prior year period.

The strengthening of the CHF versus several major currencies, including the EUR, USD and GBP led to a negative FX translation impact of around 4.3 percentage points on revenue.

Solid growth in key markets

Revenue by region

===
CHFm Q1 2024 Q1 2023[1] % ? % ? (CCY)

EMEA                 147.0      148.9  (1.3)%      3.0% 
NORAM                 39.1       32.6   19.9%     26.4% 
LATAM                 24.8       23.1    7.3%      4.3% 
APAC                  32.8       31.3    5.0%     14.4% 
Group, FX & Other      3.1        3.5 (10.4)%         - 
Total revenue        246.9      239.4    3.1%      7.4% 

===
By region, EMEA grew revenue by 3.0% YoY ccy to CHF 147.0 million, with good momentum in Southern Europe, Benelux and CEE, particularly within services.

NORAM accelerated on the back of a number of large client wins, driving revenue growth of 26.4% YoY ccy to CHF 39.1 million in Q1 2024.

APAC was up 14.4% YoY ccy to CHF 32.8 million in Q1 2024, driven primarily by Microsoft and related services.

Revenue in LATAM grew 4.3% YoY ccy to CHF 24.8 million in Q1 2024 with improved performance across the region on the back of new leadership since last year.

Continued growth momentum across business lines

Software & Cloud Marketplace

Key figures - Software & Cloud Marketplace

===
CHFm Q1 2024 Q1 2023 % ? % ? (CCY)

Revenue                               125.6   125.6  0.0%      4.6% 
Contribution margin                   108.2   106.6  1.5%      6.1% 
Contribution margin (% of revenue)    86.1%   84.9% 1.2pp         - 
Adj. EBITDA                            57.9    53.3  8.6%     13.0% 
Adj. EBITDA margin (% of revenue)     46.1%   42.5% 3.6pp         - 

===
Revenue in Software & Cloud Marketplace grew 4.6% YoY ccy to CHF 125.6 million in Q1 2024.

Gross billings in the Microsoft business amounted to USD 4.3 billion in Q1 2024, up 6% compared to Q1 2023. Revenue growth in the Microsoft business continued to offset lower growth in other ISVs.

Contribution margin grew by 6.1% YoY ccy to CHF 108.2 million in Q1 2024, with the margin improving to 86.1% of revenue.

Adjusted EBITDA grew by 13.0% YoY ccy to CHF 57.9 million in Q1 2024, compared to CHF 53.3 million in the prior year period.

Software & Cloud Services

Key figures - Software & Cloud Services

===
CHFm Q1 2024 Q1 2023 % ? % ? (CCY)

Revenue                               121.3   113.8  6.6%     10.4% 
Contribution margin                    51.1    41.4 23.5%     29.2% 
Contribution margin (% of revenue)    42.1%   36.4% 5.8pp         - 
Adj. EBITDA                             4.4     2.3 89.1%     93.6% 
Adj. EBITDA margin (% of revenue)      3.6%    2.0% 1.6pp         - 

===
Software & Cloud Services delivered revenue growth of 10.4% YoY ccy to CHF 121.3 million in Q1 2024, up from CHF 113.8 million in the prior year period. Growth was driven by Cloud Services and Software Sourcing & Portfolio Management (previously known as ITAM).

Focus on cross-selling continued with 73% of LTM (to 31 March 2024) revenue generated by c. 15.9k clients purchasing both software and services, up from 15.5k a year ago

Contribution margin increased to CHF 51.1 million in Q1 2024, driving the margin to 42.1%, driven by continued optimisation of the delivery network.

Adjusted EBITDA was CHF 4.4 million in Q1 2024, compared to CHF 2.3 million in the prior year period. The margin was 3.6%, up 1.6 ppts compared to one year ago.

Focus on profitable growth

Adjusted EBITDA for Q1 2024 was CHF 45.4 million, increasing 18.8% YoY ccy driven primarily by optimisation of the delivery network and strict cost control.

The operational excellence programme generated additional cost savings of CHF 7 million in Q1 2024 and is on track to achieve the CHF 70 million target this year.

Restructuring expenses relating to the operational excellence and GTM programmes, as well as discontinuation of the MTWO vertical totalled CHF 12.2 million in Q1 2024.

Update on implementation of Vision 2026

At its Capital Markets Day on 15 February 2024, SoftwareOne announced 'Vision 2026 - a new chapter of growth' to drive accelerated growth, margin expansion and cash generation by pursuing key growth priorities and through sharpened execution, while leveraging its unique value proposition. The implementation of Vision 2026 is progressing as planned.

Strategic growth opportunities

In terms of its strategic growth priorities, SoftwareOne remains on track to becoming the #1 Copilot partner for Microsoft and achieving the USD 100 million mid-term revenue opportunity, with over 325,000 new Copilot users and 325+ services engagements in the quarter.

Sharpened execution

With regards to sharpening execution, transforming the company's GTM approach and implementing pricing and renewals initiatives were priorites in Q1 2024. A blueprint design of the GTM model based on the new client segmentation and coverage model was finalised in the quarter. Roll-out to key markets is planned for Q2 2024, followed by an organisation-wide launch towards year-end.

To execute on its focused ISV strategy, significant progress was made in establishing the global alliance team to manage prioritised partnerships with the hyperscalers and other ISVs.

To increase wallet share and expand its addressable market, the company remained focused on accelerating adoption of the Marketplace platform, which continued to gain traction with both vendors and clients in Q1 2024. With over 17k clients actively using the platform, the number of cloud subscriptions increased to 34.5k and LTM gross sales to 31 March 2024 was CHF 668 million.

Margin expansion

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