Crayon benefiting from SoftwareONE-Comparex merger, claims CEO

Norway-based software and cloud partner claims merger has created ‘unique opportunity’ in European market as it closes out record growth in Q4

Crayon's co-CEO Torgrim Takle plans to capitalise on the drawn-out integration process between two of its largest competitors in Europe, SoftwareONE and Comparex, with heavy headcount investments in the region.

Swiss Microsoft reseller SoftwareONE closed its merger with German peer Comparex at the beginning of last year, creating a licensing firm that manages €10bn in software sales. When the deal was first announced, Crayon's Takle said the merger was "one of the biggest opportunities we've seen over the past five years", as he anticipated a long integration period between the two competitors.

Speaking to investors, Takle said Crayon saw its biggest-ever headcount increase during a single quarter in Q4. The firm hired 130 staff during the quarter, including 60 in Europe, taking its headcount to an average of 1,128.

The Norway-based firm's revenues rocketed by 54 per cent year on year during the quarter to NOK 4.2bn (£350m), while adjusted EBITDA rose by an even greater 79.4 per cent to NOK 97.9m.

The large headcount increase put pressure on Crayon's EBITDA margin, with Takle claiming the employees on-boarded during the quarter have yet to reach peak productivity.

Crayon's business in the US and Europe (excluding the Nordics) now makes up a third of Crayon's total gross profit, with both regions marked as major growth engines for the coming five to 10 years.

Takle said that the integration process between SoftwareONE and Comparex has created a unique opportunity for Crayon to take market share in Europe.

"The merger between two of our European competitors, SoftwareONE and Comparex, has provided us with initial market opportunity as the integration results in people and customers on the move. As a consequence, we are heavily investing in this region," he said.

Gross profits in Europe increased by 49 per cent, Takle said, driven by a strong performance in the UK, Germany and France.

He also said that Crayon's expansion into central and eastern Europe is "on track" from a commercial and financial perspective, adding that SoftwareONE's merger is one factor that influenced Crayon's decision to move into new markets.

"New and attractive markets are opening up and there's a greater degree of support from leading hyperscalers such as Microsoft for supporting us, and they want our capabilities in new geos. So that means the financial risk of establishing new markets is significantly reduced," he said.

"We are in a position where we can establish new markets faster with stronger teams and resources, particularly in Europe with the market opportunity provided by the integration of SoftwareONE and Comparex. We also have a shorter time to target profitability with new markets opening up."

But despite putting more feet on the ground in CEE, the UK, France and Germany present the best growth opportunities for Crayon over the next five years, claims Takle.

"In France, the UK and Germany we have a very strong opportunity now, with strong commercial momentum and a relatively low market share, so these are very attractive markets where we will continue to invest in growth," he said.

The quarter also saw Crayon's channel business vastly outpace its direct selling operations. Its Software and Cloud Channel arm grew gross profit by 28.5 per cent while its direct equivalent logged just 3.9 per cent gross profit growth.