Full Year 2024 SoftwareONE Holding AG Earnings Call
Ladies and gentlemen, welcome to the softer one full year 'twenty 'twenty four results conference call and live webcast I admire the chorus call operator, I would like to remind you that all participants will be in listen only mode and the conference has been recorded.
The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star one on your telephone.
Operator assistance, Please press star and zero the conference must not be recorded for publication or broadcast.
Anna: At this time, it's my pleasure to hand over to Anna <unk> head of Investor Relations.
Softer one please go ahead.
Anna: Good morning, and thank you to everyone for joining soccer one full year results I'm on a England head of Investor Relations for one I'm. Joining me today are nothing M. A C O and with all sorts of escape CFO in terms of agenda, but I thought it will kick off with an overview of key developments in 2012.
Anna: For the fourth quarter, but also will take you through our financial performance and thereafter, I'm back, but I thought he will provide an update on the combination of lip crayon and outlook for 2025.
Anna: We will finish the session with Q&A as usual.
Anna: Before we get started please let me draw your attention to the disclaimer regarding forward looking statements and non <unk> measures on slide two to three with that I will hand over to that.
Anna: Thank you Ana good morning, everyone and thank you very much for joining the call today.
Anna: Before diving into the full year and Q4 numbers, which are in line with guidance, let me start with some overall perspective on last year.
Anna: 2024, most challenging and our result reflects these but he was also a people to the ear. There in Q4, we undertook fundamental changes to restore customer centricity and build a trajectory of sustainable profitable growth that's helpful. Rob.
Anna: I would like to touch on a few key highlights.
Anna: In terms of financial performance, we delivered 11 4 billion speaks Franks cost belief.
Anna: Lease revenue over 1 billion and adjusted EBITDA of 223 million Swiss francs in 2024.
Anna: As a company we are capable of much more.
Anna: These two years of Organisational change is now behind us I want to clearly communicate our target to more than double reported EBITDA. This year drastically cutting our level of earnings adjustments.
Anna: We have also taken action to resolve the TTM related sales execution issues.
Anna: <unk> made significant progress on our new cost reduction program, which support our outlook for 2025.
Anna: Furthermore, our announced combination with cranial opens a new check so for self serve up yes.
Anna: We are bringing together two leading software and cloud solution providers. These dedicated teams around the world and shaft core values.
Anna: Value creation opportunity is significant.
And for both companies the right next step in our industry, which continues to evolve and consolidate.
Anna: Finally, you have to lead the Rodolfo that Rodolfo will be stepping down as CFO of software alone.
I'd like to thank him for his many contributions including strengthening the finance and it organizations and implementing the operational excellence program.
Anna: This leaves the company with a solid basis for the integration of <unk>.
Anna: But we do not say goodbye, yet as he will still be supporting us into the second quarter.
Anna: Let's now look at our full year and Q4 performance.
Anna: Revenue for the group was up two 9% year on year.
Anna: As expected Q4 was a challenging quarter as customers continue to exercise caution due to the macroeconomic environment.
The annual budget flush was muted, particularly in our largest market.
Anna: In addition, you had certain markets emerging from TTM related execution issue.
Anna: Conversely contribution margin was up 5% for the year driven by efficiencies in our delivery network.
Anna: Adjusted EBITDA margin was 22% down two three percentage points compared to prior year with some immediate benefit from our cost reduction program and tight business management.
Anna: Moving on to the geographical performance, it's a mixed picture.
Anna: APAC continued to deliver excellent result is nearly 16% growth for the year and 19% in Q4.
Anna: This was driven by strong growth in our Microsoft business across the region, but also successful scaling of our AWS biopsies.
Anna: In this region Youre implementing the TTM step by step.
Anna: Very differently from the rushed approach taken in other markets.
Anna: India is a great example, having completed the transformation, while delivering revenue growth of 17% for both Q4 and the full year.
Anna: <unk> grew by 2% for the year, you say solid performance in ultra <unk> offset by the Microsoft business.
Anna: Following a strong Q3, driven by a number of large customer wins.
Anna: Q4 was weak as expected, it's not much of a budget flush.
Anna: The performance in the other regions rest of EMEA and.
Anna: Tom was impacted by the TTM related disruption in the second half.
Anna: Based on actions taken we are now seeing early signs of momentum in new pipeline generation and sales productivity gains.
Anna: Turning to our business lines.
Anna: Australia cloud marketplace revenue was down for the year with slightly higher growth in ultra Isps offset by Microsoft business. The overall decline was due to a combination of our TTM sales execution issues in the second half and external macro conditions.
Anna: We added 67000 co pilot in.
Anna: In Q4, 'twenty 'twenty four we saw natural slowdown in the adoption curve following high initial interest at.
Anna: At the same time, we are seeing continued strong momentum in services.
Anna: Let's explore use cases, which drive ROI and seek our advice on security and governance topics.
Anna: Microsoft has also recently introduced co pilot, allowing organizations to start using AI without the full co pilot investment.
Anna: Services delivered over 7% revenue growth in Q4, driven by cloud services digital workplace and SVP services.
Anna: Revenues from example declined in Q4, largely due to more aggressive pricing by the momentum at the billings level must be maintained.
Anna: While we report our two business lines separately to provide further clarity to the markets. It's important to note that the world of licensing and services is becoming more and more integrate this mean, we should not lose sight of the overall ecosystem view across marketplace and serve.
Anna: Mrs and it's key that this ecosystem continues to grow.
Anna: I'll come back to this topic later.
Speaker Change: At Q3, I sat down certainly immediate priorities, which I'm pleased to say the SD liberto.
Anna: Also progressing the acquisition of Credo.
Anna: TTM, we took action to overcome the disruption and ensure successful adoption of the new model. We now see a foundation for higher growth in apex debt markets.
Anna: Secondly, we delivered on our cost reduction program well ahead of schedule with 58 million Swiss francs of annualized savings from first January this year.
Anna: Thirdly, we took decisions to drive regional empowerment is new leadership appointments across stuff right.
Anna: The rest of EMEA and APAC.
Anna: It's important for me to emphasize that these changes are part of a broader change in mindset.
Anna: Moving away from the top heavy organization that we have to be calm so empowering frontline holding them accountable and re story agility.
Anna: Now focusing on our TTM transformation and the specific actions taken.
Anna: On the people side, we have announced three new regional precedence.
Anna: <unk> kg in dull recall andreoli, leading rest of India and ballroom holywell, taking over APAC from myself.
Anna: They have all been with the company for more than 10 years in various sales leadership roles and understand our business and culture inside out.
Anna: Also implemented further changes at the country level to ensure the right people are in the right seats on the bus.
Anna: Finally, we implemented nearly an experienced central business management team and the cadence to manage our 60 plus counter your organization and ensure we stay focused on our targets.
Anna: To drive improved performance the team's intensified the level of customer engagement to drive pipeline.
Anna: P&L responsibility is now with the regions will be held accountable for results were also adjusted compensation plans these quotas and incentive tailored to different sales roles and tightened business cadence.
Anna: By year end the impacted countries had successfully adopted key elements of the transformation, including the new segmentation digital sales for Smes dedicated resources for new customer acquisition and a focus on service led sales motions.
Anna: Early signs also indicates the generation of new sales pipeline and improvements in sales productivity.
Anna: As for timeline, the remaining markets, including rest of EMEA and APAC are progressing in a phased approach safeguarding customer relationships.
Anna: Meanwhile, Lockdown has completed the transition.
Moving on to the cost reduction program.
Anna: We initiated this program with my CEO announcement and today I'm very pleased about the progress we have made.
Again, it's very important to emphasize that this program is about more than cost reductions.
Anna: It's about shaping the organization towards customer Centricity and sustainable profitable growth.
Anna: As of year end 2024, we had achieved 58 million Swiss francs annual savings against an original target of $50 million by end of Q2 2025.
Anna: We have simplified the organization quickly and refuse remove non value, creating processes and management layers.
Anna: We now expect the cost reductions to reach $70 million before the program is completed at the end of Q1, creating a strong starting position for profitable growth and the integration with <unk>.
Anna: We are actively positioning our offering to support customer needs and capitalize on market opportunities. While also aligning with key profit drivers, including vendor incentives.
Anna: As I mentioned earlier, the increasingly look at our business with vendors more and more from a ecosystem perspective with integrated solutions, consisting of licenses plus services driving business outcomes for our customers.
Anna: We are tailoring our offerings towards customer segments, very aligned with our TTM strategy.
Anna: Where we have dedicated sales teams focusing on specific segments and offerings.
Anna: I would now like to share some exciting developments with clients and partners over the last three months.
Anna: We recently renewed the 'twenty 'twenty four acre framework agreement expanding our role beyond educational and research institutions to supporting the broader public sector.
Anna: This puts us in a unique position to have 25000 public sector organizations across 35, plus European countries as a multi cloud and AI adviser.
Anna: This is a significantly which enables us to scale, our hyperscale solutions around Microsoft AWS and TCP within public sector across Europe, which continues to offer attractive lender incentives.
Anna: In addition, we recently signed a strategic partnership agreement is U S. Based service now combining their leading workflow automation capabilities.
Anna: Software <unk> expertise in optimizing customers' investments.
Anna: We are the only European based partner with such an agreement and it will further enable us to provide tailored solutions in the asset management space.
Anna: AWS continues to be a top priority we grew over 35% in 2024 and aim to build a sizable AWS business in all regions to become the fastest growing partner globally.
Anna: Furthermore, we want the AWS global nonprofit consulting partner of the year in 2024.
Anna: Finally, we have also just been named a global Red Hat's Premier partner Red Hat is one of our top 10 partners and we grew nearly 40% last year.
Anna: To recap this.
Anna: Investments and recognitions are fully aligned with our strategic direction of offering integrated solutions.
Anna: Upselling and cross selling our services and cloud consumption offerings and being a leading partner of choice for our vendor community.
Anna: On that note I hand over to Rodolfo to take us through our financial performance.
Rodolfo: Thank you Rafael and welcome everyone.
Anna: After three years of software won.
Rodolfo: It is now the right time for me to move on to pursue other professional opportunities.
Rodolfo: I have to say it has been an exciting journey.
Rodolfo: Any changes in a few challenges.
Rodolfo: Nonetheless, I'm really pleased that during these times, we managed to build a stronger foundation for softwood one.
Rodolfo: Particulars with operational excellence to.
Rodolfo: To keep the to help the company realize its future growth trajectory and to capture the value creation opportunity of the combination would create.
Rodolfo: With that let me begin by discussing our financial performance at the group level.
Rodolfo: Revenue growth for the crude.
Rodolfo: <unk> was two 9% in constant currency.
Rodolfo: With our revised outlook.
Rodolfo: In Q4 revenue declined by five 1% driven by price.
Rodolfo: Mentally by a muted budget flush in key markets such as that.
Rodolfo: Continued under performance in certain markets, reflecting the Russia implementation of two go to market transformation.
Rodolfo: Our focus on operational excellence continued to yield positive results with further daily delivery cost efficiencies translating into a 5% constant currency increase in contribution margin for the year.
Rodolfo: <unk> expenses decreased by 12, 4% in the full year.
Rodolfo: As a result of GPM ramp up costs and other non personnel cost feedback.
Rodolfo: Our adjusted EBITDA margin stood at 22% for the full year, reflecting lower growth relates to while benefiting slightly from new cost reductions in quarter four.
Rodolfo: In terms of Forex, the strengthening of the Swiss franc versus several key currencies led to a negative impact of two three percentage points on group revenue for the year.
Rodolfo: Finally, I would like to mention that we intend to start reporting organic growth from Q1 this year.
Rodolfo: To further enhance transparency for 2024 organic growth was around 2% year on year in constant currency with M&A contributing approximately 100 basis points.
Rodolfo: Yeah.
Rodolfo: The bridge illustrates the year on year changes in adjusted EBITDA.
Rodolfo: Marketplace delivery cost improved compared to prior year, driven by ongoing process optimization.
Rodolfo: Service delivery costs remained nearly unchanged despite decreased volumes benefiting from a leaner and more agile global delivery footprint.
Rodolfo: Meanwhile, sales and marketing cost increased due to ramp up investments across key countries as part of our go to market transformation.
Rodolfo: Admin expenses grew due to the expansion of corporate functions in the first half.
Rodolfo: In it investments to support automation, all these partially offset by productivity gains.
Rodolfo: Moving onto the business.
Rodolfo: In marketplace revenue declined 8% for the full year, our go to market related sales execution issues impacted the ability to effectively respond to changes in incentives in the second half.
Rodolfo: This was compounded by muted year end customer spending.
Rodolfo: Thanks to improvements in delivery cost contribution margin was 88, 3% for the year.
Rodolfo: Afflicting, an increase of one four percentage points versus last year.
Rodolfo: Adjusted EBITDA margins stood at 49, 6%.
Rodolfo: In services, we delivered seven 3% growth year with a sector, leading margin of 43, 3% up three percentage points.
Rodolfo: The adjusted EBITA margin remained broadly stable due to higher SG&A.
Rodolfo: Finally, corporate costs grew due to it investments and the ramp up of new functions in the first half.
Rodolfo: However, with the ongoing cost reduction target the corporate cost we are confident in keeping them stable or even lower in the coming years.
Rodolfo: As in prior quarters, I would like to remind you that the allocation of some sales and admin costs.
Rodolfo: It's based on a combination of contribution margin and Greg.
Rodolfo: The more muted market based growth in Q4 relative to services significantly impacted the allocation.
We are internally reviewing the allocation keys to presented new third distribution of growth between business lines.
Rodolfo: We report.
Rodolfo: Over the last two years, we have invested significantly in effectiveness and efficiency to create a scalable platform for growth.
Rodolfo: This is the backbone for a smooth integration and synergy achievement we create.
Rodolfo: We can see the impact of the programs on the almost flat development of personnel cost in that media delivery over the last two years, despite inflation and volume growth now, let's look at the different pillars of our initiatives and what lies ahead.
Rodolfo: The go to market transformation is geared towards driving cross selling and increase the F&B revenue.
Rodolfo: <unk> sale itself, which complement create unique channel.
Rodolfo: In services delivery, we remained focus on standardizing, our offerings and leveraging our regional and global footprint.
Rodolfo: Profitability cross sell our differentiated services portfolio we've created.
Rodolfo: Lastly, our regional shared service centers, where we continue to drive process automation standardization will enable seamless integration of fragrance local finance organizations.
Rodolfo: For transactions with customers of around 16 billion fee strength for the combined company.
Rodolfo: Both the latest cost reduction operational excellence and go to market programs.
Rodolfo: Sold it in significant organizational change.
Rodolfo: With redundancies and external advisory costs.
Rodolfo: This extraordinary costs are reflected in our reported EBITDA adjustment for 'twenty, three and 'twenty four.
Rodolfo: To understand our true underlying performance, we applied adjustments of $110 3 million three strengths in 2024.
Rodolfo: Of this total $45 8 million relates better space.
Rodolfo: With these initiatives now behind US we expect below the line adjustment of less than 30 million Swiss francs in 2025 of course, excluding Craig implementation cost.
Rodolfo: As a result reported and adjusted EBITDA will converge over the coming weeks.
Rodolfo: On a 12 month basis to eliminate seasonality, our operating cash conversion, including Capex was $133 million or 60%.
Rodolfo: Adjusted EBITDA with minimal change in net working cap.
Rodolfo: Yeah.
Rodolfo: Capex includes investments in internal it systems or.
Rodolfo: Our market based platform and support to our services delivery.
Rodolfo: Uh huh.
Rodolfo: Again these investments are part of our focus on driving efficiencies and effectiveness throughout your acreage.
Rodolfo: Okay.
Rodolfo: In terms of our net cash development, we have further outflows listening to the M&A and earn out payments restructuring expenses as well as significant return to shareholders in the form of dividend and the share buyback program.
Rodolfo: Leading to a net cash position of $12 6 million Swiss francs at year end.
Net working capital was a negative $155 6 million at end December broadly in line with 2023.
Rodolfo: Our day sales outstanding growth, mainly due to the growth of multiyear consumption based offerings based on <unk> 15, the accrual for the multiyear revenue recognition represents approximately eight additional <unk> phase therefore, our customer payment terms have remained roughly constant during the past periods.
Rodolfo: The accounting for these multiyear contract is also reflected in the PPO.
Rodolfo: Nonetheless.
Rodolfo: Working capital management remains a top priority.
Rodolfo: As such we have put in place initiatives to expedite collection by improving invoicing accuracy accuracy to limit repealed.
Rodolfo: Leverage dashboards to collect transactions.
Rodolfo: Along with new Kpis linked to bonus achievement.
Rafael: I'll now hand back to Rafael to go through the <unk> acquisition.
Rafael: We are convinced that our combination with <unk> is the right next step for both companies.
Speaker Change: To provide further context I would like to take a step back and briefly describe software runs journey until to date.
Speaker Change: One is very much defined by accelerated growth rooted in our strong sense of entrepreneurialism.
Speaker Change: The group is Microsoft diversified is our multi vendor business and expanded globally.
Speaker Change: After complex and the IPO in 2019, we focused on rapidly scaling up our services business.
Speaker Change: Also via M&A in response to customer as part of the months.
Speaker Change: This accelerated growth plus naturally followed by a period of consolidation and investment.
Speaker Change: With this behind US, we have the portfolio and capabilities to succeed in the markets and support the cranium integration.
Speaker Change: To recap the strategic rationale is compelling.
Speaker Change: Our highly complementary from a geographical customer and offering perspective.
Speaker Change: Together, we will offer partners global access across the full customer spectrum from enterprises to Smbs.
Our customers will benefit from our large marketplace and enhanced services portfolio.
Speaker Change: Furthermore, our scalable delivery and transactional platform will support smooth integration and future growth.
Speaker Change: Along with substantial synergy potential in.
Speaker Change: Including 80 to 100 million Swiss francs of cost synergies.
Speaker Change: There is clearly a significant value creation opportunity.
Speaker Change: Over recent weeks, yes, thunberg to reconfirm the substantial synergy potential based on a detailed bottom up assessment. These analyses has also been verified by an independent expert.
Speaker Change: We have full confidence in our ability to deliver on the targeted synergies.
Speaker Change: Meanwhile, we continue to progress along the transaction timeline. The draft prospectus has been submitted and we expect the tender offer period to start around 17th March Yeah.
Speaker Change: We also recently announced our intention to apply for secondary listing in Oslo allow allowing crayon shareholders to hold shares listed in Norway.
Speaker Change: In the meantime, we are making headway.
Speaker Change: And integrating integration planning, particularly from a governance perspective to ensure day one readiness.
Speaker Change: Importantly, we also announced today that crayon founding shareholders Roulette syverson and yen trucks that will be proposed as additional members of the software onboard effective upon closing of the transaction.
Speaker Change: Our in depth industry expertise and experience will be invaluable as our two companies come together.
Speaker Change: Moving on to our 2025 Standalone outlook.
Speaker Change: We are guiding for revenue growth of two 4% in constant currency for 2025 on a standalone basis the.
Speaker Change: We expect a gradually improving trajectory through 2025 as the benefits of our TTM transformation come true is a slight revenue decline expected in the first quarter.
Speaker Change: As announced at Q3, we expect a negative impact of 2% to 3% from the changed Microsoft incentives on Eas.
Speaker Change: These incentives will bottom out in 2025.
In terms of profitability, we are guiding to an adjusted EBITDA margin of 20, 24% to 26%.
Speaker Change: Driven by cost reductions.
Speaker Change: These operating adjustments below 30 million Swiss francs.
Speaker Change: Reported EBITDA is expected to more than double in 2025.
Speaker Change: We continue to guide to a dividend payout ratio of 30% to 50% of adjusted profit.
Speaker Change: The 2026 Standalone targets remain unchanged.
Speaker Change: With double digit revenue growth and adjusted EBITDA margin approaching 27%.
Speaker Change: Before we wrap up I would like to emphasize three key points.
Speaker Change: We have taken decisive actions to resolve our TTM issues.
Speaker Change: Significantly reduce costs and drive regional empowerment customer centricity and agility in the organization.
We are now ready to capitalize on past investments.
Speaker Change: And our scalable platform to drive profitable growth.
Speaker Change: In that context reported EBITDA will more than double this year compared to 2024.
Speaker Change: Finally, we are excited about the unique opportunity to come together with <unk> to create further value based on substantial synergy potential.
Speaker Change: With this I'll now hand back to the operator for the Q&A session.
Speaker Change: We will now begin the question and answer session anyone who wishes to ask a question you May press star and one on their Tennyson.
Tom: Tom to confirm that you have entered the queue.
Tom: If you wish to remove yourself on the question queue. You May press Star and the question is on the phone are requested to disable the loudspeaker mode and eventually turn up the volume from the webcast asking a question anyone who has a question my star one at this time.
Speaker Change: First question comes from the line of Michael <unk> from UBS. Please go ahead.
Michael: Good morning, a couple from me would also obviously succeed.
Speaker Change: Is there anything you can say about the.
Michael: The success.
Michael: I assume it's all internal and.
Michael: External while the industry experienced they have.
Michael: The test will be announced before the tender offer.
Michael: <unk>.
Michael: Just then in terms of free cash flow you talked about the working capital intensity, increasing can you give any guidance on how you think would.
Michael: With these lower restructuring charges and working capital movements et cetera, how free cash flow with developed this year.
Michael: And then finally just on the co pilots progress in Q4, I think you acknowledged it was.
Michael: Somewhat weaker.
Michael: Can you talk a little bit more about what happened there.
Michael: And how you would expect that to progress in 2025.
Michael: Excluding grail. Thank you.
Michael: So Michael Thanks.
Michael: For the comment.
Michael: Well for the question.
Michael: We're going to on the success of what effectively is an external successor as it were.
Michael: As announced.
Michael: You would know more in the coming weeks I think from my side.
Michael: I'm I'm absolutely.
Ensuring a smooth handover.
Michael: My commitment to <unk> and the board.
Michael: But unfortunately I can for reasons of computer and charity I cannot comment more at this stage, but I can say, we will have as a smooth succession and that will happen over the coming weeks.
Michael: I think in terms of the free cash flow.
Michael: Yes, a couple of points there.
Michael: The big improvement element would be the I mean.
We discussed.
Michael: Both property and ICU during the presentation.
Michael: We have now completed this.
Michael: A big reorganization programs, we have investments so the expectations are going forward the level of below the line below the line adjustments would be quite small $30 million. We have of course, that's a big boost for for cash flow and then on the working capital we are taking a lot of measures to optimize.
Part of this process excellence and the better you are you.
Michael: The level of perfect invoices of course, then you eliminate rebuilds and therefore, there's less teachers to immediately collect the money. We're also improving working capital targets.
Michael: With our commercial organization, so that the increased focus on that and so the expectation that we will see.
Michael: We don't have a specific guidance for that but we do expect a significant reduction in <unk>.
Michael: <unk>.
Michael: So as you have seen the impact on cash flow was quite muted on the working capital is well managed but the clear expectations that it will be a positive cash flow generation in 2025.
Michael: And maybe I'll take the question Michael on the co pilot.
Michael: <unk>.
Michael: So yes, as we mentioned in Q4, we added 67000 users.
Michael: Also let's for a slowdown in the adoption curve. Following obviously the high initial interest, which we have seen.
Michael: I think thats important but at the same time, we see strong momentum on the services side around our co pilot offerings, which we have that's really what's Bob scaling and I think in general from an outlook perspective.
Michael: I see.
Michael: Continuous growth on the core pilot sites.
Michael: But let's.
Michael: Let's say not a hyper growth environment, but continues grow throughout 2025.
Michael: Do you think it'll be comparable to Q4 or better than that.
Michael: I don't think it will be much better than Q4 also because from a seasonality perspective, our Q1 volume in general is lower than Q4 volumes and therefore.
Michael: Don't think that will be necessarily in a week.
Michael: Increasing in numbers.
Michael: In Q1.
Michael: Okay, I'm sorry, but also just on the margin for this year can you talk about how that will develop I mean.
Michael: The first half it below last year, perhaps Kevin.
Michael: The way the savings comes from et cetera.
Michael: Look I think as we as we kick off of the year.
Michael: Have said I think it would be a gradual ramp up in terms.
Michael: Okay.
Michael: <unk>.
Michael: So that's one aspect to keep in mind on the other hand, I think all these efficiency measures that we that we have put in place will translate into.
Michael: A relatively strong margin improvement and that we would see throughout the year.
Michael: Okay.
Michael: It would be an acceleration of margin as well.
Michael: Also leveraging the higher growth that we will see in the second half.
Michael: Okay. Thank you.
Matt: The next question comes from the line of Matt.
Speaker Change: From Baader Bank. Please go ahead.
Matt: Yes, good morning.
Matt: Thank you for taking my questions a couple has to start with.
Russell you mentioned that you saw early signs of a positive pipe momentum and improving sales efficiency can you give us some more color here and then touching on the expected synergies of cryo I'm not quite sure whether I understood. The 180 million quite correctly can you give US you also some some more color.
Matt: And then just strictly on Capex for adults, who can you give us here's some color on what you expect for 2025 and E <unk>.
Matt: <unk>.
Matt: Yes, so maybe on the pipeline momentum.
Matt: What we can see is especially on the services side and we mentioned it before also on the co pilot question, we see we see an increasing.
Matt: In demand and pipeline from a from a services perspective.
Matt: Which is which is could we also see in some of the markets where we had.
Matt: The fast in Russia implementation of the TTM.
Matt: Such as the UK as an example, we see.
Matt: A stronger pipeline and we see also higher sales productivity already now in January. These are just some early signs.
Share with you.
Matt: On the crayon.
Matt: Senior key questions, you mentioned $180 million of house.
Synergies, maybe maybe there is a misunderstanding so the cost synergies is $80 million to $100 million, it's not $180 million, maybe I wasn't clear.
Matt: In my message before but it's 80 to 100.
Matt: And maybe on the on the Capex.
Matt: As you have seen.
Matt: The level of Capex of course.
Matt: It.
Matt: Reflects investments across three important fronts one is.
Matt: Internal internal systems development to make sure we accelerate the efficiency and automation also.
Matt: Our investments to support our services portfolio and finally, the marketplaces are also an important area. So with this in mind I mean, the detail drove improvement.
Matt: The improvement in automation and efficiency, we will continue to invest behind.
Matt: Nice thing or infrastructure, however, as part of our <unk>.
Matt: Increased focus on efficiency and cost control, we do expect a modest reduction in capex over the coming years.
Matt: But we're talking more in the mid to high single digit labeled it.
Matt: Improvement percentage improvement.
Matt: Again, we think it's important to continuing to invest behind these automation initiatives.
Matt: Thank you.
Christian bother: The next question is from Christian bother from <unk>. Please go ahead.
Speaker Change: Yes. Good morning, all I have a few questions regarding your number.
Speaker Change: Your stuff I mean, you spent 46 million for severance payments. So I'm, assuming the number of employees will decrease.
Speaker Change: Third.
Speaker Change: Throughout 2025 can you maybe give some numbers where you expect the numbers of in place too.
Speaker Change: Turn out by the year end on a standalone basis.
Speaker Change: Secondly, I would be interested to understand which let's say stuff categories. I'll. Let go I mean, it is a mix across all functions or is this only for head office functions.
Speaker Change: And the third question is also related to that I mean.
Speaker Change: In light of let's say significant reductions of head count.
Speaker Change: And you expected guidance of 2% to 4% growth it implies either.
Speaker Change: At the individual salesperson has to become significantly more productive or.
Speaker Change: Everybody is about to sell a much better product at a let's say a high.
Speaker Change: A higher incentive et cetera. So those are my my my question is about the stuff in place.
Speaker Change: Maybe let me start and elaborate a little bit on your question. So.
Speaker Change: In terms of related to the savings program.
Speaker Change: I think what we have done now in the initial couple of months is mainly we have taken out management layers and.
Speaker Change: Active costs right. So it's not that we have less headcount halfway.
Speaker Change: That reduced our head counts in Q4.
Speaker Change: Ngati <unk> <unk>.
Significantly yes.
Speaker Change: Basically also taken out I would say highest costs are more higher cost management layers.
Speaker Change: And.
Speaker Change: And that's.
Speaker Change: At the same time, we still have stomach few investments as well.
Speaker Change: The front end and then to our service delivery organization to make sure we can deliver the services, which we promised to our customers.
Speaker Change: Maybe Rob also do you want it at all.
Rob: Yes, so look a couple of comments when we when we talk about these initiatives.
Ralph: Ralph described.
Rob: It takes too.
Speaker Change: And through efficiency two different banks should drive this last wave.
Speaker Change: It has been described but by Rafael I don't repeat but that doesn't mean that in other areas of the organization, we don't need to invest to support growth. So at the end of the day.
Speaker Change: Simply take the restructuring of course these are the reductions in Ftes, that's correct, but of course, there has to be hiring of MTS area. So at the end of the day.
Speaker Change: We do expect.
Speaker Change: <unk> development on Ftes rights that you cannot take a one to one assumption, saying these are the restructurings and therefore.
Speaker Change: It's a net reduction there is also some ftes that are coming in as a pilot to explain there is a mix effect in many cases, whereby we will replace III resources in higher cost locations, but by resources.
Speaker Change: In lower cost locations.
Speaker Change: On the point on the sales its a very good point you raised I think in prior presentations, but we have said is we need to increase the level of sales productivity, we know that the benchmark in the industry are around <unk>.
Speaker Change: <unk> already been below and we were we were significantly above that number. So I think we'd all have to measure that.
Speaker Change: Rafael and his team are implementing tims with go to market you can achieve a higher level of sales productivity gets you as youll be five many more sales per sales reps, but this is not like we're stretching resources beyond the normal underwrite that's important to keep in mind that means we are taking our sales productivity line.
Speaker Change: With the top performers in our class right.
Speaker Change: Definitely what we want to be.
Speaker Change: Okay.
Speaker Change: Yes, no no I think that well see I'm, sorry, but just Oh you referred to you most of them. Your latest comment about sales productivity you mentioned a number of 'twenty what does the number 20 main place yet I apologize.
Speaker Change: <unk> expenses as a percentage of.
Speaker Change: You can see it and I think that we've had it in one of our graph in prior presentations, where we showed the ramp down that we expect over.
Speaker Change: Over the coming let's say.
Speaker Change: Program that takes a little longer over the coming years.
I see okay, and just to confirm you said you expect the number of employees to slightly increase due to mix changes right.
Speaker Change: I would I would qualify more of is roughly stable right for the year okay.
Speaker Change: With the of course separations, but then there has to be hiring and changes in mix along the way.
Speaker Change: Okay interesting and then I have another one on your guidance for 2025, and maybe also share some thoughts about which assumptions you're making for the segments in 2025. Please.
Speaker Change: Got it.
Speaker Change: We don't provide guidance by.
Speaker Change: But two.
Speaker Change: I think we shouldn't start.
Speaker Change:
Speaker Change: Okay, and then and then my last one is yes.
Speaker Change: The only one thing I can I can mention of it but it's just reiterating something we.
Speaker Change: We have already discussed we expect some headwind related to Microsoft incentives are 2% to 3% for the year. So of course, if you will say well. This is of brokerage has a bigger impact on the on the license as part of the portfolio of course, you can then do the adjustments in Vietnam, but we don't provide this.
Speaker Change: Terrific guys, thank heico's by discipline.
Speaker Change: Alright, Okay, that's fine and the last one for me, which kind of tax rate should we model for this year. Please.
Speaker Change: I would say accumulate to 'twenty.
Speaker Change: The normal tax rate as we say around 2000.
Speaker Change: 29%, 28%, so I wouldn't I would ask rate.
Speaker Change: Alright, thanks very much.
Speaker Change: As a reminder, if you wish to register for a question. Please press star one on your telephone.
Speaker Change: Your next question comes from the line of machines from Deutsche Bank. Please go ahead.
Speaker Change: Hi, Thanks for taking my question two for me first I wanted to note that in the back half.
Speaker Change: All these initiatives that you are taking to improve their GMT shares how should we think about your marketplace performance in each one and its specific nor M. So I.
Speaker Change: Should we expect a flatter decline here or you think that you have already mitigate risks and you're going to see some growth there.
Speaker Change: And then second one on guidance I just wanted to see what is the scenario TFR no end and high end, that's not glad I think specific needs for their budget Sloshing 2025. Thank you.
Speaker Change: In terms of initiatives. Thanks for your for your questions.
Speaker Change: So.
Speaker Change: What we what we what we expect in terms of marketplace performance.
Speaker Change: <unk> gradually improve quarter by quarter throughout 2025.
Speaker Change: Do you see any improvement in terms of growth compared to Q4 2024, that's really the outlook, which we have interim.
Speaker Change: Have freely.
Speaker Change: Big Bang implementation of TTM. So we will see some we foresee to see some continued headwinds going into Q1, but then also followed by a gradual improvement throughout the year.
Speaker Change: And the guidance question, maybe for those who want to take.
Speaker Change: The guidance, we have provided a range indeed right.
Speaker Change: If you want the bulk part of the range.
Speaker Change: That covers the.
Speaker Change: Volatility or uncertainty around our environment in general we continue to see the the underlying environment as being quite positive but of course like you correctly say there can be some.
Speaker Change: Tom deviations up quarter and so that's why we provide the range so that does capture.
Speaker Change: With Congress.
Speaker Change: Hum.
Speaker Change: Thank you.
Speaker Change: So any further questions. Please press star and one on the telephone.
Anna: No more questions at this time I would now like to turn the conference back over to Anna <unk> for any closing remarks.
Anna: Alright, thanks to everyone for joining and we hope to pick Houston again, thank you.
Speaker Change: Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.
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