SoftwareOne has become too top heavy, its new CEO said as he acknowledged that a “rushed” go-to-market overhaul has slowed sales in the UK and elsewhere.
The SIX Swiss-listed global software and cloud solutions powerhouse – which is currently in talks over a potential go-private sale – this morning unveiled “disappointing” Q3 results showing a small rise in revenues but a fall in profits.
Newly appointed CEO Raphael Erb pinned the blame partly on sales execution issues stemming from the roll out of a new GTM model.
Implemented from towards the end of Q2 in key markets including the UK, the change saw SoftwareONE redefine sales roles and shuffle certain client accounts. New digital sales hubs in Nashville and Barcelona opened in June, meanwhile.
But the “accelerated timetable” for its implementation fuelled “significant sales execution issues”.
Most pronounced in North America, the UK and Mexico, the issues resulted in “missed sales opportunities and unsatisfactory quota attainment”.
“I am convinced the GTM model is 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,” Erb said.
Mixed results
Although Group revenues rose 3.1% year on year to CHF 236.7m, its ‘Rest of EMEA’ segment was down 6.5% to CHF 68.2m (“largely driven by weak results in the UK & Ireland”). This is despite double-digit growth seen at UK peers such as Softcat and Bytes Technology Group.
Reflecting the lower-than-expected growth, Group Q3 EBITDA fell 15.8% year on year to CHF 39.2m.
The 9,300-employee powerhouse added 120,000 new Copilot users in Q3, bringing the total to 720,000 as at 30 September 2024.
Discussions with interested parties regarding a potential going-private transaction are “progressing, but remain challenging given the general business environment”, the Stans-based outfit added. It intends to present an offer to shareholders or conclude discussions by February 2025.
SoftwareOne said it is now aiming to achieve CHF 50m in annual cost savings by focusing on restoring client centricity and sustainable growth.
“Looking ahead, I see a large market opportunity as organisations continue to embrace the cloud and AI, but it is crucial for SoftwareOne to reclaim the agility and client-centric approach that defines us,” Erb said.
“The reality is that the company has recently shifted towards a more top-heavy organisation, and we must restore the right balance. The changes we are implementing will empower our frontline and country organisations by reducing corporate overheads and management layers. This will also lead to significant cost savings and allow us to drive sustainable profitable growth.”
