Four key takeaways from SoftwareONE's full-year 2020

We pick out the top four takeaways from the Swiss giant’s full year results

European software licensing giant SoftwareONE has just closed the books on its FY 2020.

We've rounded up the key takeaways from its annual report.

1. Software & Cloud profits are down

SoftwareONE's overall performance in FY20 was positive.

Revenues grew by 6.4 per cent year on year to CHF 7.91bn (£6.10bn).

Adjusted EBITDA increased 5.1 per cednt year on year at constant currency to CHF 223.1m.

However, one of its core business segments, Software and Cloud, saw gross profit drop by 1.9 per cent to CHF 519.5m.

CEO Dieter Schlosser characterised the segment's performance as "below our expectations".

He pointed the finger of blame squarely at COVID-19 lockdowns across the continent, and wariness among smaller end user decision-makers.

"There was weakness in purchasing by SMEs who became more cautious regarding discretionary or one-off transactions which are typically project-related," the Swiss giant's annual report read.

"While some improvement in purchasing levels was seen in mid-2020, the re-introduction of lock-downs later in the year negatively impacted customers' decision-making."

Schlosser expressed concern, noting that the SME market is critical to the partner's earnings.

"SME's typically serve as the group's growth and profitability engine," he said.

"They reduced their spend significant in 2020."

However, the Software and Cloud business segment remained the biggest-earner for SoftwareONE.

Revenues for Software and Cloud grew marginally by 3.8 per cent year on year to CHF 7.59bn.

2. Solutions and Services logs double-digit profits growth

In contrast, the Swiss firm's Solutions and Service's segment logged gross profit growth of double-digits, rocketing 23.9 per cent to CHF 210.1m (€189.98m).

Schlosser said the segment is likely to continue to be the pan-European partner's fastest growing segment in its FY21.

"We are entering 2021 with confidence that our strategy and momentum in Solutions & Services will return SoftwareONE to double-digit growth, while further increasing the proportion of high-quality recurring revenues."

Revenues for Solutions and Services grew marginally by 5.4 per cent year on year to CHF 312,923m.

3. The Comparex mega-merger is still ongoing

FY 2020 also marked the first full financial year of SoftwareONE being public company.

Last year, Schlosser conceded that the integration of its 2019 acquisition of Comparex was so work intensive that all other potential large-scale M&A activities were on the back-burner.

The merger created a licensing behemoth that manages some €10bn in software sales annually, and a workforce of 5,500 in 88 countries globally.

Two years on, SoftwareONE claims it is now around 4/5 of the way through the integration of both companies.

"The integration of Comparex is nearing completion," the Swiss partner said.

"More than 80 per cent of targeted cost synergies have been achieved."

The goal is to realise CHF 40m. in cost savings.

4. A focus on SAP on Azure for 2021

In it's annual report, CEO Dieter Schlosser said one of the key focus areas for the partner in 2021 will be "in the areas of application modernisation - on SAP in the cloud."

And on the same day as it published its financials, SoftwareONE also announced a strategic agreement with Microsoft to bolster its SAP consulting services on Microsoft Azure.

As part of the deal, SoftwareONE will hire and train up to 5,000 specialists by 2023.

"Companies that are running their businesses on SAP-based ERP solutions are facing pressure from several sides to move these critical workloads to the cloud in order to ensure successful business continuity and differentiation," the firm said in its FY20 financials.

"SoftwareONE intends to further deepen its unique offerings in SAP cloud migration and next generation S/4HANA solutions, focusing on technology advisory, strategy and enablement of managed platform services specialised in SAP technology applications on hyperscale partners."

SoftwareONE's FY20 also pointed to other investments the Swiss partner is making in its SAP managed services portfolio.

Earlier this month it bought up BNW Consulting, a fellow DACH specialist in SAP platform transformation, public cloud migration and application management services.

"BNW is strengthening and extending SAP Technology Services capabilities focused on public cloud migrations and S/4 HANA transformation."