Mixed Financial Signals and Leadership Changes Lead to Hold Rating for SoftwareOne Holding Ltd.

In a report released today, Chandramouli Sriraman from Stifel Nicolaus maintained a Hold rating on SoftwareOne Holding Ltd. (SWON – Research Report), with a price target of CHF13.00.

Chandramouli Sriraman has given his Hold rating due to a combination of factors concerning SoftwareOne Holding Ltd.’s recent performance and future outlook. The company’s FY24 results showed weaker-than-expected revenue growth and contribution margins, which were below consensus estimates, although adjusted EBITDA aligned with expectations. Specifically, the revenue from the Software & Cloud Marketplace segment declined, largely due to market disruptions and a decrease in budget allocations in key regions.
Despite these challenges, there were positive aspects that balanced the overall outlook. The Services segment demonstrated resilience with a noticeable growth, and the company maintained its adjusted EBITDA margins. Additionally, the FY25 guidance appears optimistic, with expected improvements in revenue and EBITDA margins. However, the anticipated changes in leadership, notably the CFO’s upcoming departure, add an element of uncertainty to the company’s short-term prospects. These mixed signals contributed to Sriraman’s decision to maintain a Hold rating on the stock.