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 from a rushed GTM model, vendor incentive changes, and cautious spending.

• Adjusted EBITDA margin declined to 16.6% in Q3 2024, reflecting lower-than-expected growth and increased sales and corporate expenses.

• Cost-saving measures targeting over CHF 50 million are underway, with CHF 17 million in annualized savings expected in Q4 2024 and further savings by Q2 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 continue amid a challenging environment.

Financial highlights

• Q3 2024 adjusted EBITDA was CHF 39.2m, down 15.8% year-over-year; 9M 2024 adjusted EBITDA reached CHF 161.0m, up 3.2%.

• Contribution margin improved to 64.9% of revenue in Q3 2024, up 1.4 percentage points year-over-year.

• SG&A expenses rose 15.2% in Q3 2024, driven by higher sales costs, GTM ramp-up, and one-off admin expenses.

• Forex translation negatively impacted revenue by 1.7 percentage points, but EBITDA margin impact was minimal.

Outlook and guidance

• 2024 full-year revenue growth now expected at 2%-5% in constant currency, down from previous 7%-9% guidance.

• Adjusted EBITDA margin guidance for 2024 revised to 21%-23% (previously 24.5%-25.5%).

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

• 2025 expected to be a transitional year with positive growth and improving margin.

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