SoftwareOne delivers strong H1 performance driven by services

Cloud solutions provider launches initiative to focus on Copilot rollout and gen AI

SoftwareOne delivers strong H1 performance driven by services

SoftwareOne, a global provider of software and cloud services, has released its H1 2023 financial results.

The company reported a robust 8.5 per cent year-on-year increase in group revenue, reaching CHF 506.8m (£454.7m) in the first half of the year. Adjusted EBITDA experienced a slight dip of 1.7 per cent, totalling CHF 111.7m (£100.2m).

SoftwareOne's operational excellence programme remained on track during H1 2023, with cost savings of CHF 8m (£7.2m) achieved against a CHF 15m (£13.4m) full-year target.

CEO Brian Duffy expressed confidence in the results, citing a "solid first half of the year as we continued to successfully deliver across our key markets.

"This is a testament to the strength of the business, given the challenging macroeconomic environment," Duffy added.

The results put SoftwareOne on track to meet its full-year expectations, stated by Duffy as "double-digit revenue growth" and an adjusted EBIT margin of 24 per cent to 25 per cent of revenue.

Growth driven by software and cloud services

Software and cloud marketplace experienced a 5.5 per cent year-on-year revenue growth in constant currency, driven by gross billings in the Microsoft business, which amounted to $10.6bn in H1.

The company attributed this result to its to the New Commerce Experience (NCE) model, resulting from price increases and improved incentives.

Software and cloud services reported impressive revenue growth of 12.4 per cent year-on-year in constant currency, primarily attributed to strong performance in core service lines, including Cloud Services, Application Services, and SAP Services.

Ignite, focus, accelerate

Duffy introduced the ‘Ignite, Focus, Accelerate' initiative, designed to "put clients at the centre, enhance sales effectiveness, and ignite partner relationships", particularly with Microsoft.

In practice, the initiative's three pillars focus strongly on generative AI and the partner ecosystem.

SoftwareOne will emphasise client and vendor relationships and work together with the vendor ecosystem to help clients move to the cloud and adopt generative AI.

The strategy also places a focus on driving the global rollout of Microsoft's Copilot, which according to the company represents a $100m opportunity.

Lastly, SoftwareOne intends to further develop its generative AI offering and pivot as required . In addition, the company will execute on its Client Portal roadmap to capitalise on the digital opportunity.

APAC delivers bright spot

Regionally, EMEA delivered robust results, with an 8.3 per cent year-on-year revenue increase in constant currency, driven by strong purchasing by large enterprises, especially in DACH, and momentum in core service lines.

In North America, revenue grew by 3.7 per cent year-on-year in constant currency, with a notable 9.1 per cent year-on-year growth in Q2 driven by an acceleration in the Microsoft business.

The APAC region sustained strong revenue growth, reporting a 23.4 per cent year-on-year increase in constant currency, while Latin America (LATAM) faced a slight decline in revenue due to weak Q2 2023 results in Brazil and Mexico.

Company future in flux after rejected Bain offer

The results come on the heels of SoftwareOne rejecting a second takeover bid by Bain Capital on 24 July. At the time, the board announced a strategic review to consider "all options for value creation."

During the results presentation, Duffy outlined the potential outcomes of this review as "remaining a public company, a merger or sale or another potential strategic transaction," with further updates to be provided as the review progresses.

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