Softwareone Holding Ltd. · SIX:SWON
Softwareone — Crayon Group Holding — Q4 2022 Earnings Presentation
33 slides from Softwareone's earnings presentation, Feb 14, 2023
Slide 1: Quarterly Results Q4 2022
Quarterly Results Q4 2022 Melissa Mulholland, CEO Jon Birger Syvertsen, CFO 14 February 2023
Slide 2: Resilient demand driving strong growth
FINANCIAL REVIEW Resilient demand driving strong growth Amounts in NOK Q4 2022 1 Resilient market demand Gross Profit Adj. EBITDA 1,302m +37% 287m +28% Continued growth across all FY 2022 1 regions and business areas Gross Profit Adj. EBITDA 4,353m +43% 890m +36% Strong growth in adjusted EBITDA Ret
Slide 3: Solid market opportunity - software and services outperforming the sector
STRATEGY AND AMBITION Solid market opportunity - software and services outperforming the sector Digital transformation driving continued IT spend Enterprises accelerate innovation and see investments in technology as enabler of cost efficiency Digital technology applied to create new revenue streams
Slide 4: Resilient international markets
STRATEGY AND AMBITION Resilient international markets Software market growth constant currency* 20 Emerging Asia / Pacific Growth constant currency 15% North America Mature Asia / Pacific 10% Eastern Europe Western Europe 5% 0 2021 2022 2023 2024 2025 2026 Year *Source: Forecast Analysis: IT Spendin
Slide 5: Global expansion continues - 59% of Gross Profit coming from international markets
ABOUT Global expansion continues - 59% of Gross Profit coming from international markets 2022 Gross Profit growth 1 Gross Profit share 2 US 12% Nordics +16% 41% Nordics APAC & MEA 27% Europe US +25% +33% Europe 20% APAC & MEA +140% ▪ Successful strategy for international growth continues ▪ Crayon bu
Slide 6: Key 2022 global achievements
YEAR IN REVIEW Key 2022 global achievements ▪ Strengthened leadership competency People-centric ▪ Celebrated 20-year anniversary – kicked off Crayon Cares strategy ▪ Invest in employee development – 94.5% employee retention ▪ Established global DEI strategy – No. 2 on SHE Index ▪ 95% customer retent
Slide 7: Increasing our commitments to ESG
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE Increasing our commitments to ESG 2022 main achievements 2023 priorities ▪ 2022 marked the first year of ▪ Report all GHG emissions Crayon’s ESG campaign, including global implementation of Crayon ▪ Achieve Science Based Targets Cares initiative initiative valid
Slide 8: AWS Migration and Cost Optimization
CUSTOMER STORY AWS Migration and Cost Optimization RecruitOnline is an Australia-based software company that helps with the entire recruitment process. It has thousands of customers in Australia, New Zealand New Zealand, and the Philippines. The company aims to make recruitment easier and more effic
Slide 9: SCA Optimization and Direct Licensing
CUSTOMER STORY SCA Optimization and Direct Licensing A Fortune 500 company with more than 13,000 employees worldwide, United States including dozens of subsidiaries and affiliates and net sales over $9 billion annually. Client Problem ▪ The company was looking for a new LSP to help drive their EA re
Slide 10: Financial Review
@®) Crayon Financial Review
Slide 11: CFO highlights
FINANCIAL REVIEW CFO highlights ▪ Strong Gross Profit growth resulting in EBITDA growth ▪ Successful integration of rhipe over the past 12 months, resulting in strong APAC performance 2022 ▪ Robust financial position – net debt / EBITDA 2.0x with available liquidity reserves of NOK1.5bn ▪ Final impl
Slide 12: Final implementation of agent principle
FINANCIAL REVIEW Final implementation of agent principle Previous ▪ On April 20, 2022, the IFRS Interpretation Committee (IFRIC) concluded on Updated 4 496 4 353 principal vs agent assessment under IFRS 15 for Software Resellers 3 040 3 165 ▪ For 2022 quarterly reporting, this has been implemented b
Slide 13: Continued strong growth momentum and value creation
FINANCIAL REVIEW Continued strong growth momentum and value creation CAGR Gross Profit 12 months rolling 1 CAGR Adj. EBITDA 12 months rolling 1 41% NOK million 31% NOK million Adj. EBITDA 4,353 22% 889 Adj. EBITDA margin2 21% 18% 16% 655 3,040 13% 2,345 413 1,809 1,486 292 188 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 14: 59% of Gross Profit coming from international markets
FINANCIAL REVIEW 59% of Gross Profit coming from international markets Gross Profit 1 Adj. EBITDA 1 NOK million NOK million 38% 43% 48% 51% 59% -7% 13% 25% 41% 48% 4,353 890 40 655 430 3,040 2 548 269 2,345 413 1,809 1 546 292 105 1,486 1 119 188 38 23 535 600 774 558 335 415 1 765 266 1 235 1 516 9
Slide 15: Strong growth momentum across all market clusters
FINANCIAL REVIEW Strong growth momentum across all market clusters Crayon rhipe3 Q4 Gross Profit by market cluster 1 Q4 adj. EBITDA by market cluster 1 NOK million NOK million 57 1 302 60 13 149 287 334 15 52 60 45 -22 266 282 175 496 Nordics Europe APAC & MEA US HQ/Elim Q4 2022 Nordics Europe APAC
Slide 16: Scale supporting profit expansion
FINANCIAL REVIEW Scale supporting profit expansion ▪ Consistent pattern of growth and margin Profit Expansion by region (2017 - 2022) improvements as the business scales in local 2 000 markets and regions 1 800 1 600 ▪ The Nordic region represents the margin 1 400 potential of the business model ope
Slide 17: Crayon Philippines status
FINANCIAL REVIEW Crayon Philippines status Tax audit Outstanding Receivables from Public Sector ▪ Tax audit in Crayon Philippines revealed incorrect VAT reporting ▪ Change of government in the Philippines has led to delayed on payments related to purchases of software from foreign payments across th
Slide 18: Working capital in line with historical seasonality
FINANCIAL REVIEW Working capital in line with historical seasonality Adjusting for Philippine public sector Net working capital Q4 2022 1 receivables, working capital performance NOK million Net working capital over time would be in line with Q4 2021 – a substantial improvement from Q3 2022 NOK mill
Slide 19: Cash flow in Q4 2022 reflecting improving working capital
FINANCIAL REVIEW Cash flow in Q4 2022 reflecting improving working capital Cash flow from operating activities NOK million 975 630 449 478 341 Cash flow from operations is seasonal and driven mainly by changes to net working capital -401 -328 -497 -544 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
Slide 20: Profit and loss – Q4 2022
FINANCIAL REVIEW Profit and loss – Q4 2022 NOK million Q4 2022 Q4 2021 2022 2021 Revenue 1,506.6 1,186.8 5,199.5 3,658.8 Cost of sales (233.7) (180.8) (704.0) (494.0) ▪ Increased Depreciation & Gross Profit 1,272.9 1,006.0 4,495.6 3,164.7 Amortization compared to Q322 2 related to write down of rhip
Slide 21: Summary of adjustment items
FINANCIAL REVIEW Summary of adjustment items Adjustment items (mnok) Q4 2022 FY 2022 ▪ Share based compensation related to Share based compensation 8.8 13.5 accruals for options and bonus shares under ESPP program Philippine tax reassessment 30.5 30.5 Fair value adjustments earn-outs 27.8 27.8 ▪ Phi
Slide 22: Balance sheet – Q4 2022
FINANCIAL REVIEW Balance sheet – Q4 2022 31 Dec. 31 Dec. 31 Dec. 31 Dec. Assets Equity and Liabilities 2022 2021 2022 2021 Contracts 541.3 598.8 Shareholders' equity 2,540.3 2,352.8 Goodwill 3,146.7 2,998.2 Lease liabilities 410.0 87.2 Other intangible assets 303.0 280.7 Other interest-bearing debt
Slide 23: Outlook
(ea) Outlook
Slide 24: 2023 outlook
2023 OUTLOOK 2023 outlook 2022 2022 FY 2023 Medium 2022 Outlook Comment Comparable3 Restated Outlook term Gross Profit growth 2023 outlook implies organic growth 35-40% 43% 42% ~20% ~20% in line with medium-term outlook Gradual Continuing growth while also improving Adj. EBITDA margin 1 22-23% 20.4%
Slide 25: Growth and profit dynamics
2023 OUTLOOK Growth and profit dynamics Key value drivers ▪ Expanding business opportunity with existing customer base Nordics ▪ Strong position in services – Cybersecurity, Data & AI, Migration ▪ High share of public sector clients ▪ Gaining market share in major markets, e.g Germany, France, UK an
Slide 26: 2023 priorities
2023 OUTLOOK 2023 priorities People-First Customer-Centric Shareholder value Continue to deliver a people-first Deliver value to our customers, Driving profitable growth in key culture, enabling our employees to execute with excellence, and focus on international markets while maintaining develop an
Slide 27: Q&A
Q&A
Slide 28: Appendix
CY) Crayon Appendix
Slide 29: Solid growth across all business areas
FINANCIAL REVIEW Solid growth across all business areas Q4 Gross Profit by business area 1 Q4 adj. EBITDA by business area 1 NOK million NOK million 76 1 302 34 15 369 155 287 189 -98 240 181 429 SW & SW & SCE Consulting HQ/ Q4 2022 SW & SW & SCE Consulting HQ/ Q4 2022 Cloud Cloud Elim Cloud Cloud E
Slide 30: Inherent business seasonality impacting net working capital
FINANCIAL REVIEW Inherent business seasonality impacting net working capital Net working capital 1 Trade Working Capital NOK million 25 ▪ Receivables collection and timing for vendor payments are key drivers 280 337 414 289 for trade working capital 152 172 206 167 -77 223 97 108 28 17 -198 -198 -11
Slide 31: Restatments impacts reported net working capital
FINANCIAL REVIEW Restatments impacts reported net working capital Net working capital over time 253 NOK million 25 -3 -121 -207 -188 -230 -276 ▪ Change in policy increase Contract -320 assets, which is included in Other receivables -456 -463 -491 -522 -637 ▪ This increases historic net working capit
Slide 32: Margin development
FINANCIAL REVIEW Margin development 12-months rolling adj. EBITDA margin 1/2 40% ▪ Nordics maintaining strong margins Nordics 30% ▪ APAC margins impacted cost related to PH tax audit APAC & MEA 20% Europe ▪ Europe continues to invest in growth 10% US ▪ Margin reduction due to 0% reallocation of HQ c
Slide 33: Margin development
FINANCIAL REVIEW Margin development 12-months rolling adj. MNOK HQ Cost 2 EBITDA margin 1/2 40% 60 ▪ Nordics maintaining strong margins 30% 50 ▪ APAC margins impacted cost 20% 40 related to PH tax audit 10% 30 ▪ Europe continues to invest in growth 0% 20 ▪ Margin reduction due to -10% 10 reallocatio