SoftwareOne is in discussions regarding a potential going-private deal, with a decision expected by February 2025 in line with FY2024 results.
SoftwareOne has announced “disappointing” Q3 2024 results which the company attributed to lower-than-expected revenue growth due to “a loss of sales momentum”.
Raphael Erb, who stepped into the CEO role last month, following Brian Duffy’s stint, said that despite the company’s very solid foundation, “our third-quarter results were disappointing. This was due to a combination of factors, including the rushed implementation of our new go-to-market (GTM) model, which led to sales execution issues impacting our ability to effectively respond to changed vendor incentives, as we have done in the past.”
In early 2024, SoftwareOne introduced its global GTM transformation to better align sales resources with the needs of its different client segments and to drive sales productivity. However, the company has now admitted that the accelerated implementation of the GTM model in July across key markets hindered its ability to effectively respond to vendor incentive shifts, as well as seeing more cautious customer spending behavior in key markets.
The company’s revenue increased 3.1 percent at constant currency to 236.7m Swiss francs ($268.5m). Adjusted earnings before interest, taxes, depreciation and amortization dropped nearly 16 percent at constant currency to 39.2m Swiss francs, seeing a 16.6 percent adjusted margin.
Under the leadership of the new CEO, the company reassured that “broad and decisive action has been taken to mitigate the immediate impact, generate new sales pipeline and resolve the issues as swiftly as possible”.
At the same time, Erb confirmed his confidence in the GTM model as the right approach. “We have identified the execution issues and our top priority is to fix them, while adjusting our roll-out plans for the remaining markets.”
SoftwareOne’s CFO Rodolfo Savitzky, added that “with operational excellence and the GTM concept, we have built a solid foundation and now the focus must be fully on execution.
“We already see progress in many areas such as the significant improvement in contribution margin, and our goal now is to extend the strong execution to all areas of the company.”
Looking ahead, he said that the company will also be further adjusting its cost structure to reflect the renewed focus on client centricity, “targeting over CHF 50 million in annual savings by H1 2025, of which CHF 17 million are expected to be realized in Q4 2024”.
Another major development for SoftwareOne is that the company said it is currently in talks with interested parties over a potential going-private deal. The Board of Directors is to present an offer to shareholders or conclude discussions by February 2025, in line with FY2024 results.
