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Ladies and gentlemen, welcome to the Software 1 Q3 2025 Trading Update Conference Call and Live Webcast. I am Valentina, the Chronos Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Kjell-Arne Hansen, Head of Investor Relations at SoftwareOne. Please go ahead.

Good morning, and thank you for joining SoftwareOne's Q3 2025 Trading Update presentation. My name is Kjell-Arne Hansen, Head of Investor Relations at SoftwareOne. Joining me today are co-CEOs Rafael Herr and Melissa Muhalla, and our CFO Hans-Peter Schreier. In terms of agenda, Melissa and Rahal will start with a summary of our Q3 performance. Hans-Peter will then take us through our detailed financial performance. And finally, Melissa will share an update on integration and closing remarks before going into the Q&A. Before handing over, please let me draw your attention to the disclaimer regarding forward-looking statements and non-IFRS measures on slide 2 and 3. And with that, I will hand it over to Melissa.

Good morning, everyone, and welcome to our Q3 2025 presentation. In Q3, we continue to build momentum as one integrated organization. Our focus remains on execution across our operational business performance, delivery on synergies, supporting customers and partners, and positioning Software One for sustainable, profitable growth. Let's look at our Q3 performance. On a reported IFRS basis, revenue grew 46%, reflecting the consolidation of Crayon from July 1st. I will emphasize the combined like-for-like view as it best reflects the underlying performance, as well as what we have framed our 2025 outlook on. On a combined like-for-like basis, I am very happy to report that Software 1 is back to growth. Our revenue grew 0.6% year-over-year in constant currency. Adjusted EBITDA increased 18.1% to 65.2 million Swiss francs, with margins improving 2.9 percentage points to 19%. This reflects early benefits from integration and previously initiated cost reduction programs. Additionally, on a like-for-like basis, our reported EBITDA improved from 30 million to 42 million, reflecting a growth of 39.6%. Slide 7 illustrates the combined growth performance since 2024. Following three quarters of negative growth as we have implemented the go-to-market model, navigated Microsoft's incentive changes, closed the transaction between Software 1 and Crayon, and started the integration, we returned to positive growth in Q3. The trend is improving quarter-on-quarter since 2025, driven by stronger service growth and early signs of cross- and up-sell opportunities materializing. also reflecting stabilization across NORAM, go-to-market, as well as easing of the negative impact from Microsoft incentive changes. Turning to our businesses, direct, channel, and services, we continue to see steady progress and improved growth trend across the combined model. Each business plays a distinct role, and together they give us a balanced exposure across segments, regions, and customer buying behaviors. Our direct business declined by 8.2% in constant currency in Q3, as changes in incentives for enterprise agreements continue to weigh on the business throughout 2025. Meanwhile, the enterprise agreements to CSP conversion is gaining strong momentum, supported by Microsoft's commercial changes, which are expected to further accelerate customer migration and strengthen the CSP value proposition. Revenue in software and cloud channel increased 18.3%, driven by strong Microsoft CSP performance, continued AWS momentum, and successful investments in large, high-potential markets such as NORAM and APAC. Software and cloud services delivered revenue growth of 5.9%. The performance on a regional basis is supported by solid improvement in the Nordic services business, as well as strong growth in APAC and rest of EMEA. We see continued demand for cloud optimization, as well as AI and cybersecurity services. Customers increasingly focus on hybrid and multi-cloud environment, and we see strong growth in AWS in particular. In bringing the organization together, we continue to leverage the combined capabilities and have increased the usage of internal resources in our project delivery, resulting in higher utilization. I will now hand it over to Rafael, who will give you an overview of the regional performance, including a closer look at our strategic focus and importance of our NORAM business.

Thank you, Melissa. I will now walk you through the regional development based on a combined like-for-like performance. In Q3, Noram grew 0.3% in constant currency, driven by strong performance across the Crayon business. Turnaround measures to improve performance are materializing at a slow but steady pace in the legacy SoftwareOne business. We have taken the right actions and we see a clear improvement in the underlying growth trend. Under the new regional leadership, the strategic focus has been refined. I will give you some additional color on this in the next slide. Performance in DACH region is improving and growth ended at negative 0.8%, mainly driven by a decline in the direct business. As a reminder, our largest exposure on enterprise agreement incentives is in the DACH region, so this was expected. Yet, this was partially offset by strong growth in our multi-vendor business. Revenue in the rest of Europe grew 1.6%, supported by improved performance in the Nordics, as both direct and services business grew high single digits. APEC grew 8.6%, driven by robust performance in Australia and India, supported by strong performance in our channel business across the region. The 5.2% revenue decline in LATAM is primarily driven by weakness in the direct business, as changes to incentives remain a challenge in many markets. A favorable market has been Brazil, which continues the strong performance delivering double-digit growth in Q3 2025, driven by strengthened Microsoft partnerships and digital investments to support faster CSP growth. In Noram, we are making slow but steady progress. The region is transitioning to an aligned GTM, leadership changes and commercial refocus. And we are now beginning to see the groundwork translate into more stable performance and selected pockets of growth. We now have a combined leadership in place with an organization of 590 fully operational employees. Our sales pipeline visibility has improved. Moreover, it's trending to support our full year 2025 outlook. Under our new regional leadership, we have sharpened the strategic focus towards segments and routes to markets where we see the strongest return potential. We are scaling the proven Crayon Partner Model in the US, expanding relationships with managed service providers, hosters, solution integrators, and digital-led partners. This gives us reach in high-velocity SMB and mid-market demand, with lower cost to serve and faster sales cycles. We are prioritizing accounts with meaningful cloud renewal cycles, supported by our IT portfolio management and FinOps capabilities. Focus is on deepening wallet share and expanding service penetrations in existing customers. Public sector modernization and cloud adoption trends in federal, state, and education are structurally strong. We are investing in dedicated go-to-market motions and certifications to accelerate traction here. We continue building a more digital and partner-led engine for SME customers. This aligns with Microsoft's cloud and AI priorities and provides scalable growth potential over time. Market environment is volatile with U.S. tariffs and government shutdown affecting multiple industries. We are confident that U.S. presence is essential to serve global enterprise clients. NORAM remains the world's largest cloud and AI market. While competitive, it presents a significant long-term revenue and profitability opportunity. Slide 11 shows an example of how we partner with our public sector customers. We are supporting the federal government of Germany in advancing the modernization of Germany's public administration and ensuring its IT landscape is fit for the future. The agreement has an initial term of one year with the option to renew it for up to three one-year extensions. The total potential volume amounts to 1.5 billion euro. This is a significant win and reflects our competitive position in the public sector in the region. I'll now hand over to Hans-Peter to walk through the financial results in more detail.

Thank you, Rafi, and a warm welcome to everyone joining us today. In this section, we are presenting the IFRS figures in reported currency. The numbers reflect that the acquisition closed on 1st of July, with Crayon being included for 3 months and SoftwareOne for 9 months. On a reported IFRS basis in Q3, revenue grew 46% year-over-year, driven by the Crayon consolidation. Reported APTA margin ended at 12.2%. While the APTA development also reflects the impact from the ground acquisition, it is also driven by continued discipline spend management, impact from the previously initiated and completed software cost reduction program, as well as early cost synergy capture. On a nine-month basis, revenue increased 8.6%, with an EBITDA margin of 15.3%. I would also like to mention that contribution margin and delivery costs are not present in this quarter, as Grain and Software One have historically applied different approaches to cost allocation and reporting. As of Q4, we will resume reporting contribution margin and segment level profitability on an adjusted EBITDA basis. In this slide, I will take you through the adjusted to reported EBITDA bridge. Our reported EBITDA ended at 42 million in Q3. Adjustments mainly relate to Crayon transaction and integration costs of 13.7 million and 7.8 million respectively. Excluding fees, adjusted EBITDA was 65.2 million. We remain on track with our integration cost targets and are committed to keeping non-grade adjustments for financial year 2025 below 30 million, reflecting our focus to materially lowering the level of adjustments. As a reminder, the structuring expenses of 19.2 million year-to-date relates to the previous cost reduction programme initiated in 2024 and closed in Q1 2025. Slide 15 provides an update of our cost synergy realisation. We are progressing well towards our 80 to 100 million run rate cost synergy targets by end of 2026, with 21 million run rate savings achieved by early November. In the last few months, we continue to streamline the organization by removing roles, leadership applications, and enhancing efficiency. We are tapping into the combined internal resources to defer non-critical hirings, capturing additional near-term savings. We have also mapped out overlapping office locations to be consolidated or closed. Finally, we have eliminated third-party contract to spend in IT and customer platform. and are currently streamlining and optimizing our combined internal licensing costs. Before I hand back to Melissa, who will take us to the closing perspective and 2025 outlook, I want to briefly walk you through the adjustments we have made to the 24 like-for-like financials following the alignment of accounting policies between the two companies. Previously reported Crayon figures have been aligned to Software 1's accounting policies, mainly in relation to IFRS 15 principal versus agent applications to services contracts. Overall, this led to a reduction in revenue of 31.1 million compared to the revenue figure we have provided as a basis for our full year outlook during H1-25. The revenue adjustments have a minimal impact on revenue growth, given that their magnitude is very similar in the first half of 2025 compared to the first half of 2024. This change is purely technical, reflecting accounting policy alignment under IFRS, and does not affect on-the-line performance or outlook. With that, I will now hand over back over to Melissa.

Thank you, Hanspeter. As we have come together as one organization, it is important to illustrate how we support our customers across the entire software and cloud lifecycle, from optimize to innovate. We start with optimize, where we help customers manage and optimize their software and cloud spend through our advisory, IT asset management, and FinOps services. This is core to our roots as a combined business, We then move to source, giving customers access to a broad range of multi-vendor reselling and procurement services. From there, our services business helps clients build, migrate, implement, manage, and modernize their cloud environments. Finally, in innovate, we help customers to unlock new business value through data and AI-driven solutions. Together, this creates a continuous flywheel from optimize to innovate, a customer-centric lifecycle approach that defines how we engage with our customers, fostering long-term retention and help them grow sustainably over time. It is this combined offering that makes Software One stronger across our three strategic pillars, growth, scale, and innovation. First, growth. In direct, we are focusing on enterprise and corporate customers with large renewal cycles attaching our full service portfolio. In channel, we are leveraging Crayon's ecosystem and partnerships with solution integrators, hosters, managed service providers, and digital partners. Within services, we offer deep expertise across data and AI, digital workplace, cloud migration, and modernization. ITAM, FinOps, and cybersecurity. And across all motions, cross-sell remains central. Every contract and renewal represents a services opportunity. Second, scale. Shared platforms. Marketplace and CloudIQ provide our capability to scale, including pricing tools, delivery hubs, and digital sales capabilities. Drive consistency, speed, and efficiency across the organization. And finally, innovation. Our services are increasingly AI-enabled. from FinOps automation and ITPM analytics to secure AI adoption across Microsoft and the hyperscalers, inclusive of multi-cloud platforms. We are scaling CoSell and hyperscalers as key ISVs, supported by improved data and lifecycle insights. And internally, we are deploying agentic AI workflows to raise productivity in both sales and delivery. Now turning to our revenue synergy ambition. Alongside cost synergies covered by Hans-Peter, we are laying the foundation for substantial revenue synergy realization. We have launched multiple sales plays to drive cross-selling, complementary services, and multi-vendor licensed solutions. A joint digital sales strategy is being developed to win new clients through coordinated, aligned, and targeted marketing campaigns. We are improving renewal rates and tender win ratios through better sales execution, streamline tender handling, and optimize account management. As a combined company, we continue to strengthen vendor alliances and have already achieved higher status among several vendors like Adobe and ServiceNow by bringing the two companies together. We leverage Crayon's channel business to capture further revenue streams, cover additional markets like Canada through SoftwareOne's country portfolio, and optimize the SMB sales strategy. We confirm our 2025 outlook, which is based on combined like-for-like financials. Revenue growth is expected to be flat in constant currency and adjusted EBITDA margin to be over 20%. We expect positive momentum in Q4, driven by acceleration in CSP across both our direct and our channel businesses. In addition, we see strong services momentum as shown in Q3 and carried over to Q4 by bringing the organization more efficiently together, increasing utilization, and taking advantage of the services opportunity we see in the market. Continued benefits of go-to-market improvement, including the North America turnaround. Further reduced impact from the Microsoft EA incentive changes, which, as we have indicated, will bottom out in Q4. Strategic initiatives launched to drive cross and upsell across our expanded customer base. And a more favorable, comparable period. Margin development is driven by reduced spend, ongoing cost control, as well as early impact from cost synergies. To summarize, we are very happy to be back on a growth trajectory. We are focused on improving profitability by continuing cost discipline and delivering on both cost and revenue synergies. We are strategically strengthening our vendor agreement status, which I am pleased to confirm we continue to benefit from. Progressing well on the integration, we are positioning the company for sustainable long-term value creation. With this, I'll now hand it back to the operator for the Q&A session.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Chris Tong from UBS. Please go ahead.

Thank you for taking my question. Maybe just two from my side. On the Microsoft incentives and the EA impacts, can you just talk a little bit about the impact and add a bit more color on the direct business? And how has the sort of removal of EA discounts impacted the CSP transition? Anyway, I'll leave it there before going on to my next question.

Thanks, Chris. Great question. The Microsoft and EA impact, as a reminder, a majority of that has already been covered from Q1 through Q3, with the final remaining amount in Q4. For 2026, we do not see any negative impact from the Microsoft incentive changes, as the real emphasis has been focusing on CSP growth, which as stated, we are seeing strong CSP growth overall. And this is important to state because as we reconfirmed our outlook and guiding for the year, we see that acceleration across the business in Q4. And this has really been a focused effort across the entire organization. Microsoft continues to emphasize CSP as the hero partner-facing motion, and the reason for that is it provides more value-added capability, driving services growth across the overall portfolio. The pricing changes that Microsoft implemented November 1st actually helped to create parity across the enterprise agreements at CSP. giving more capability to service our customers through CSP adoption, and hence why we remain confident based on our ability to execute across the overall business.

Got it. And maybe just a comment on current trading. So, I mean, it implies, I guess the guidance implies a bit of an acceleration in Q4. Can you just talk about what you're seeing in October and maybe November?

Great question. Q4 is then an important quarter for us, as it is our largest quarter throughout the year. We are seeing acceleration in terms of the early signs of the quarter, hence our reconfirmed guidance. It's also important to state that we see the growth potential across all our business lines, direct, channel, and services. So this continues to be a focus across the organization as we capture revenue opportunities with co-selling and bringing our organization closer together.

Got it. Thank you very much.

The next question comes from Ines now from BNP. Please go ahead.

Hi, thank you for the presentation. Just a follow-up question, the Microsoft Contracts. Could you just give us more color in terms of products delivered and whether this will mostly fall within the services segment or into the channel category? And what would be the impact on the potential revenue if, for example, the contract length remains range-bound within one year or if it actually extends towards three years? Thank you.

Thank you so much. Can I just ask you to repeat the second part of your question? I heard your question around the overall Microsoft, let's say, where does it fall across the business lines? But it would also be just good to understand the last part of your question because you cut out.

Yeah, sure. So my second question was more in terms of revenue opportunity if the contract length is range bound to one year or if you actually extend it towards three years? What could be the range actually of the contract in terms of quantum? Because you say 1.5 billion, but is it impacted if the contract is shorter than three years? Thank you.

Yeah, thank you for the question. Let me take this one. So it's basically the revenue is impacted for our software and cloud direct business, as this is a Microsoft framework agreement, licensing agreement, which we successfully renewed with the German Federal Ministry of the Interior. It's a large framework agreement where all these ministries over time can buy the licenses through. So we will see this gradually over the next three years, we will see the 1.5, up to 1.5 billion gross sales impacting.

Thank you. And are you just, are you seeing a lot of opportunities in Germany, notably on further public spending on IT modernization, or do you think it's just a one-off and you benefit from this renewal?

Well, in general, our public sector business in Germany is a very, very big and important business for us. It's growing very well, and we see continuous focus and growth potential in the public sector area, specifically also Germany.

Okay, thank you.

Thank you.

The next question comes from Christian Spetalen from Arctic Securities. Please go ahead.

Hi, good morning, guys. I just have a few questions on the cost base for me. First, it looks like the underlying cost base declined into Q3. Can you provide us with an updated headcount? And second, how do you see this headcount developing into Q4, should we only account for the synergy trajectory, or is there any notable increase in the headcount aside from this? It's just that your margin guidance at the very low end could imply a jump in cost into Q4. And lastly, a short one on the one-offs. Will the transaction cost from this grant acquisition come down towards low single digits or zero in Q4. Thank you.

So let me start with the, thanks for the question. Let me start with the transaction cost. Yes, the transaction cost will come down to close to zero in Q4. So it means the majority of the cost is in the P&L. Regarding the FTs, I mean, FTs are reducing as part of the synergy program. And you see the effects already in the P&L in the OPEX line. And this will continue in Q4 and in 2026. Okay.

Thank you.

The next question comes from Christian Wader from Zurich Accounts and Oil Bank. Please go ahead.

Yes, good morning. A couple of questions for me, and I'd like to do them one after the other. So, first of all, talking about your cost base for the fourth quarter, are there any, let's say, seasonal effects like bonuses or provisions that we should model?

No, the bonus accruals and the bonus expense is in line with our expectation for the 2025 results. So I think there's nothing to model. So it's a real cost base based on our forecast. Okay.

And you have been relatively upbeat in your commentary for revenues in the current quarters and the fourth quarter. Can you maybe provide a little bit of background information why you expect this, let's say, acceleration, especially from Microsoft CSP incentives?

Thanks, Christian, for asking. We see continued momentum as we transition enterprise agreements to CSP on our direct business. In addition, the channel business continues to grow. This is important because the channel business is primarily represented of a lot of CSP agreements through our two-tier business. And with the expansion that we see across the Microsoft ecosystem, this presents further growth opportunities in Q4, but also 2026. And last but not least is our services business, as it's deeply connected to how we go to market with our customers. And we're seeing improvement across our services business for the quarter as well.

Okay. And the last one for me really is, I mean, are there any, let's say, market software or software reselling market-related topics or any, let's say, vendor-related developments that we should be aware of that could, let's say, negatively or positively influence your business in the immediate future.

I wouldn't say there's anything negative to be concerned or aware of, but only positive. In bringing the two companies together, it's actually strengthened our vendor business as a whole. The feedback, the support has been greater than ever, as we provide more opportunities to scale across the overall vendor portfolio. As I mentioned, Adobe is a great example where now we have even a greater, let's say, status and capability than if we were on a standalone basis as a company. So this provides more growth opportunities, and as Raphael mentioned, the multi-vendor business, including Microsoft, has also been extremely important to our overall growth focus as a company.

Okay. If I may follow up on this one, I mean, I Are there any, let's say, remarkable changes of incentives of any of your vendors?

Not at this time, no.

All right. Okay. Clear. Thank you.

Thank you. The next question comes from Nushi Niyati from Deutsche Bank. Please go ahead.

Hi. Good morning. Thanks for taking my question. A couple on... North America, first you mentioned sales pipeline visibility has improved. Can you please share a call on the pipeline for the next 12 to 18 months possibly? And then can you also remind us of your exposure in public sector in North America and whether shutdowns has impacted you in any way in the past couple of weeks? And the last one is on the integration. Can you please elaborate on how you are managing the integration of the two organizations in the U.S. while addressing the challenges of go-to-market? Specifically, what progress have you seen in aligning teams, culture, and responsibilities? And how would you describe the experience over the past few months in terms of ensuring a smooth transition? Thank you.

Thank you very much. Let me start with the last point on integration and progress. I think we are very happy with the progress, especially with the integration with Crayon, which has happened over the last three months. And we have been advancing very, very fast in the US. We mentioned the organization is fully established, the combined organization. It's not just on a leadership level, it's really throughout the entire organization. We work as one company. Coming back to the, I would say, GTM issues which we have, I think the actions which we have taken end of 2024 are really now starting to have a positive impact. also on a standalone basis. We mentioned it's slow progress, but it's very steady. And I would say we really see an improvement and clear trends of growth now. And you can also see that in the numbers, we tried to highlight it. I mean, we had in, what was it, in Q1, 25 in Noram, we had a negative 23%. growth or a decline of 23%. In Q2, it was 18. And now in Q3, we are at positive 0.3. It's a significant progress from this perspective, and we are positive that this is going to continue going into Q4 and the next upcoming quarter. So from this perspective, We are very pleased with the progress we mentioned, of course, around the government shutdown in the US. Our government business is one of the key priorities for us. We see on one side good potential, good growth. It's a massive market. We have limited market share, but we have a good team in place. And this is something where we see continuous growth. The current shutdown certainly doesn't help, and we saw our pipeline slightly impacted by this, but overall it's not a material concern. And maybe on your pipeline question, overall we see a very good acceleration in the pipeline over the last couple of months, which is good. I still think we need to work on an improved win rate, to really make sure we realize the potential fully. That's something which is a priority for us.

Thank you very much, Eric. As a reminder, if you wish to register for a question, please press SA and 1 on your telephone. The next question comes from Olaf Rodevan from Pareto Securities. Please go ahead.

Hi, good morning. Two questions from me. The first one, I appreciate you being one company now, but could you give us some color on the performance of Crayon and SoftwareOne in the US this quarter, just to kind of understand the improvements you're seeing there?

I mean, specifically related to the U.S., I think we mentioned it on a software-run standalone basis, we still see a slight decline, right? And I would say the growth which we have as a combined company is very much impacted as well by the good continuous performance which we see in the Crayon standalone business.

Thanks. And then the last one for me is, do you have some sort of split on your exposure on EA versus CSP now, just to kind of understand how much of your exposure has been shifted to CSP to sort of understand which share of the revenue will gain incentives going into 2026?

It's a good and fair question. We don't publish that view, just the stance we've taken, but certainly we've seen this shift accelerating across the contracts that we see overall. And this is also due to the, let's say, positive developments that Microsoft has taken to further emphasize the CSP program overall. It is also important to say that for certain large, especially large enterprise customers, especially from the software one heritage side of the business, those agreements would continue to remain on an enterprise agreement. But with that said, we're continuing to scale in the services as well as multi-vendor. And that's also, I think, illustrated throughout the growth that we see going into 2026.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Shilana Hansen for any closing remarks.

Thank you, and thank you all for joining our Q3 training updates. We wish you all a good day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Coral School, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.