SoftwareOne's Integration Pays Off: Margin Expansion and a Strategic Pivot to AI-Driven Efficiency
Post-Crayon merger synergies delivered ahead of schedule, with adjusted EBITDA margin up 4.5pp and cash conversion at 69%.
SWON.SW · Earnings Call · 2026-08-26
H1 2026: A Merger That's Already Working
SoftwareOne's first half of 2026 demonstrates the full value of the Crayon acquisition. On a combined like-for-like basis, revenue grew 11.6% year-on-year, with all regions and business lines contributing to growth. “We delivered a 24.9% adjusted EBITDA margin, a 4.5 percentage point improvement versus the prior year with our profitability translating into a cash conversion ratio of 69% over the last 12 months.” — Raphael Erb, CEO · 2026-08-26 The company also achieved CHF 100 million of run-rate cost synergies, hitting the top end of its target six months ahead of schedule. This is not just a numbers story; it's about the structural shift from integration to commercial execution.The Channel and CSP Engine
A key driver of the growth is the Channel business, which grew an exceptional 35.6% with adjusted EBITDA margin expanding to 57.2%. Channel business proved its scalability, as the CEO emphasized, "This clearly proves the key message from our CMD. This is a very scalable business model." The growth was led by the Cloud Solution Provider (CSP) business and strong ISV activity, with AWS at the forefront. The CSP conversion from Enterprise Agreements is accelerating, and the company noted a ~4pp tailwind in H1 from early renewals and Microsoft price increases. This conversion is also boosting the Services business, which grew 17.4% and saw its margin jump to 8.5% from 3.3%. The broader cloud and AI market is clearly in favor, as evidenced by the global theme of "AI data center" and the rising demand for cloud services.AI and Automation: The 2030 Margin Ambition
Looking ahead, SoftwareOne laid out a clear path to its 2030 adjusted EBITDA margin target of above 28%. The largest contributor, around 3 percentage points, comes from automation efficiencies and further embedding AI across internal processes. The CFO clarified that CapEx will increase to 7-8% of revenue in 2027-28 to fund these investments, but the funding will come from net working capital release, making it cash-neutral. This is a strategic bet on AI to drive scalability, especially in the Services business. The company's focus on internal AI is a company-unique angle compared to the market's broader AI infrastructure themes, but it aligns with the increasing adoption of AI for operational efficiency.Organization and Execution
The company also announced an evolved Executive Board, increasing regional representation and bringing a Chief Channel and Ecosystems Officer. This is a deliberate move to bring decision-making closer to customers and partners. The CEO explained, "We have 3 overarching regions with EMEA, Americas and APAC, focusing exactly on this." This organizational refinement, combined with the completion of integration, sets the stage for sustained execution.The strong H1 margin performance (24.9% vs. 23% guidance) raises the question of why the company only reiterated guidance. The answer lies in H2 moderation as EA-to-CSP tailwinds fade and comparisons get tougher. Still, the confidence in not hitting the bottom of the range reinforces the underlying strength.We are comfortable that we will land in the range, and we are from an EBITDA margin positive that we will not land at the bottom of the 23%.