74Software (74SW) H1 2025 earnings summary

Executive summary

• H1 2025 revenue reached €344.0m, up 6.5% organically, with strong growth from both Axway (+8.9%) and SBS (+5.0%).

• Operating margin improved by 585bps to 12.0% of revenue (€41.3m), and net profit turned positive at €5.8m versus a €15.6m loss in H1 2024 proforma.

• Recurring revenue and ARR grew double digits (Axway +11.8%, SBS +10.9%), with recurring revenue now 75% of total.

• Integration of Axway and SBS progressed, with cost synergies, joint commercial initiatives, and support function integration nearly complete.

• Workforce reduced by 2.6% to 4,679 FTEs, reflecting operational efficiency measures.

Financial highlights

• Gross profit margin improved to 66.3% (up from 63.9% in H1 2024), with profit on operating activities more than doubling to €41.3m (12.0% margin).

• Unlevered free cash flow reached €76.4m (22.2% of revenue), supporting €42m in debt repayment and reducing net debt to €191.8m (leverage 1.83x).

• Earnings per share improved to €0.20, fully diluted.

• DSO improved to 121 days from 145, reflecting better collections.

• Product revenue accounted for 81% of total, with recurring revenue at 75%.

Outlook and guidance

• 2025 guidance confirmed: targeting ~€700m revenue, 2–4% organic growth, and 14–16% operating margin.

• Unlevered free cash flow expected to be at least 10% of revenue; leverage ratio to remain below 2.0x.

• Ambition to surpass €750m revenue by 2027 with >17% margin, targeting ~20% by 2028 and €1bn revenue by 2030.

• Focus on deleveraging, with return to dividends and share buybacks from 2026, subject to leverage targets.