SoftwareONE (SWON) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 revenue grew 3.1% year-over-year to CHF 236.7m, below expectations due to sales execution issues, vendor incentive changes, and macro headwinds.

• Adjusted EBITDA margin declined to 16.6% in Q3 2024, reflecting increased sales and corporate expenses.

• Cost savings program targeting over CHF 50 million by Q2 2025, with CHF 17 million annualized savings expected by Q4 2024 and executive board costs to be halved in 2025.

• Leadership changes include the appointment of Raphael Erb as CEO effective 1 November 2024 and Oliver Berchtold as President Software and Cloud.

• Ongoing discussions regarding a potential going-private transaction amid a challenging environment.

Financial highlights

• Q3 2024 revenue grew 3.1% year-over-year in constant currency to CHF 236.7m; forex translation had a negative 1.7 percentage point impact.

• Adjusted EBITDA was CHF 39.2m in Q3 2024, down 15.8% year-over-year; margin was 16.6%, down 4 percentage points.

• Contribution margin reached 64.9% in Q3 2024, up 1.4 percentage points year-over-year.

• SG&A expenses rose 15.2% in Q3 2024 due to higher sales costs and one-off legal/admin expenses.

• Marketplace revenue grew 0.4% in Q3; services revenue grew 6%, driven by cloud and SAP services.

Outlook and guidance

• 2024 full-year revenue growth guidance revised to 2%-5% in constant currency, down from 7%-9%.

• Adjusted EBITDA margin guidance for 2024 reduced to 21%-23% from 24.5%-25.5%.

• 2026 targets revised to double-digit revenue growth and adjusted EBITDA margin approaching 27%.

• 2025 expected to be a transitional year with positive growth and improving margin; official guidance to be provided with FY 2024 results.

• Dividend payout policy remains at 30–50% of adjusted profit for the year.