SoftwareOne reports soft Q1 performance in Europe and the Americas
Macroeconomic uncertainties and GTM transformation dragged down revenue for another quarter
Swiss solution provider SoftwareOne has been through a challenging first quarter and sees headwinds persisting into the next one.
Group revenue declined 5.7 per cent year-on-year in constant currency (ccy) to CHF 232.2m (£209.9m), compared to CHF 246.9m the year prior.
DACH, the company’s main region, went down 4.3 per cent year-on-year, from CHF 74.8m to CHF 71.4m.
EMEA went through the least bad drop, but a drop nonetheless, as it plummeted 1.1 per cent ccy, from CHF 72.2m to CHF 71.3m, driven by soft results in Benelux and CEE.
Sales in the UK, which had been negatively impacted by the GTM transformation implemented in mid-2024, have reportedly improved thanks to actions taken by CEO Raphael Erb.
Southern Europe saw a positive evolution thanks to large customer wins and momentum in services.
NORAM, due to complicated macroeconomic conditions, went through the worst fall this first quarter, as revenue decreased 31.3 per cent ccy, landing at CHF 27.4m compared to CHF 39.1m the year prior.
LATAM was also down 2.9 per cent ccy, from CHF 24.8m to CHF 22.8m.
Both American regions were impacted by the GTM transformation, notable in Mexico and NORAM.
Despite improvements in Mexico, further actions will be taken to turn tables in North America by H2 F25.
APAC was the only territory on the up, with revenue going from CHF 32.8m to CHF 38.3m, a 15.9 per cent ccy increase.
Globally, the solution provider’s total revenue is split between earnings from software & cloud marketplace and software & cloud services.
Software and cloud services went from CHF 121.3m to CHF 121.2m year-on-year ccy, dragged down by weakness across service lines and large transactions in Q1 FY24 in NORAM.
Software and cloud marketplace decreased 11.3 per cent year-on-year ccy, from CHF 125.6m to CHF 111m, due to weakness in the Microsoft transactional business, impacted by changed incentives for enterprise agreements.
On the other hand, the company saw green shoots in terms of EBITDA, as it rose 2.3 per cent year-on-year ccy, from CHF 45.4m to CHF 46m, driven by cost reductions.
EBITDA margin also went up 1.4 per cent, standing at 19.8 per cent this quarter compared to 18.4 per cent at the same period the year before.
“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,” said Erb.
“Thanks to the cost reduction programme initiated in Q4 2024, we delivered improved profitability at the adjusted EBITDA level and have re-established a lean and sustainable cost structure going forward.”
Full year outlook confirmed
Despite lower-than-expected results in North America, SoftwareOne still expects a revenue increase of two to four per cent for FY25.
The adjusted EBITDA margin for FY25 is predicted to stand between 24 to 26 per cent.
Revenue will remain negative in Q2 due to Microsoft incentive changes weighing in June.
The transaction for the merger with Crayon is still anticipated to close in June this year.
“As we progress through Q2 2025, we see headwinds persist as we navigate Microsoft incentive changes and GTM-related fixes take hold,” added Erb.
“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.”