SoftwareOne marks strong Q3 driven by cost savings and Microsoft bookings

Swiss firm did not provide an update on its ongoing strategic review and potential takeover

Swiss cloud services giant SoftwareOne has reported a noteworthy 8.4 per cent year-on-year revenue growth in constant currency for Q3 2023, reaching CHF233.4m (£210.8m).

Bolstering this positive financial trajectory, the company's adjusted EBITDA registered a 14.1 per cent year-on-year increase to CHF47.9m, with a margin of 20.5 per cent.

These results come on the heels of two consecutive quarters of growth, as SoftwareOne reiterates its commitment to maintaining stringent cost discipline while achieving substantial growth.

According to SoftwareOne, one of the key reasons for its resilient performance has been the success of its operational excellence programme.

The programme delivered cost savings of CHF27m by the end of September 2023, outstripping the full-year target of CHF15m.

The Swiss firm also announced several strategic organisational changes. This includes several senior appointments, such as a new chief strategy & partner officer, chief information officer, president of LATAM, and regional president DACH.

Regional breakdown

Geographically, SoftwareOne's performance reflects varying market conditions. In EMEA, the company demonstrated resilience with a 9.6 per cent year-on-year revenue increase to CHF136.7m.

This growth was driven by robust momentum in key markets such as the UK, Netherlands, and Spain.

In APAC, SoftwareOne sustained a robust revenue surge, witnessing a 19.8 per cent year-on-year increase to CHF35.9m, underscoring excellent results across the region.

However, in NORAM, cautious client spending and extended sales cycles led to 4.7 per cent year-on-year growth to CHF36m.

Business lines

The software & cloud marketplace reported a 5.7 per cent year-on-year revenue increase to CHF121m. Notably, gross billings in the Microsoft business reached USD3.9bn in Q3 2023, marking a substantial nine per cent increase compared to the same period in 2022.

Meanwhile, software and cloud services showcased remarkable growth, with an 11.4 per cent year-on-year revenue increase to CHF112.4m.

This growth was driven by core service lines, digital workplace, and software sourcing & portfolio management, with particular momentum in Beniva, a ServiceNow partner acquired in mid-2023.

SoftwareOne's full-year guidance has been revised in response to the changing macroeconomic landscape.

The company now anticipates high single-digit revenue growth for 2023, adjusting down from the previous double-digit forecast.

However, the adjusted EBITDA margin target remains unchanged at 24-25 per cent, underscoring the company's commitment to maintaining a balanced and sustainable financial position.

Additionally, the dividend pay-out ratio target remains at 30-50 per cent of adjusted profit for the year.

The results announcement didn't deliver any significant updates on its ongoing strategic review, initiated after the company rejected two takeover offers by Bain Capital earlier this year.

In October, it was reported that the company had received multiple bids from at least four PE firms.