74Software (74SW) H1 2025 earnings summary

Executive summary

• H1 2025 revenue reached €344.0m, up 6.5% organically and 6.2% in total year-over-year, with both Axway and SBS contributing solid growth.

• Operating margin improved to 12.0% of revenue, up 585bps from H1 2024, driven by favorable revenue mix and cost control.

• Net profit turned positive at €5.8m (1.7% of revenue), a significant turnaround from a €15.6m loss in H1 2024 proforma.

• Recurring revenue and ARR grew strongly, with ARR up 11.8% at Axway and 10.9% at SBS, and recurring revenue now 75% of total.

• Integration of Axway and SBS progressing, with cost synergies realized, support functions largely combined, and enhanced partner ecosystem engagement.

Financial highlights

• Gross profit margin improved to 66.3% of revenue, up from 63.9% in H1 2024.

• Profit on operating activities: €41.3m (12.0% margin, up from 6.1%).

• Unlevered free cash flow reached €76.4m (22.2% of revenue), supported by strong collections and factoring.

• Net debt reduced by €58m to €191.8m, leverage ratio down to 1.83x.

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

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 for FY 2025.

• Leverage ratio to remain below 2x into 2026; ambition to surpass €750m revenue by 2027 with >17% margin, and €1bn by 2030.

• Plans to return to dividends and share buybacks from 2026, subject to leverage targets.