SoftwareOne Holding AG (SWX:SWON)

CMD 2021

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Oct 20, 2021

Good afternoon, everyone, and welcome to SoftwareONE's 2021 Capital Markets Day. We are live from Zurich, Switzerland. My name is Anna Engvall from Investor Relations at SoftwareONE, and I will be your moderator for today's event. We have an exciting agenda for you a plan for you today, including 5 speakers from our Executive Board and a guest appearance by our incoming CFO, who will officially join us on the 1st January. We will finish the events with a Q and A session. If you would like to actively participate in the Q and A, Please see the dial in details available on our website. You will also find the presentation materials on our IR website. Please take just a moment to review the disclaimer with regards to forward looking statements and non IFRS measures. And with that, let's get started. It is my pleasure To introduce our CEO, Dietrich Lasser. Thanks, Anna, for the nice introduction. I'm very excited to be here with you today for our 1st Capital Markets Day. Today, I want you to take three things away from our presentation. We continue to see an acceleration of technology adoption on the back of COVID. We also see that the tech adoption creates what I call cloud dynamics. And you will hear a lot of us talking about cloud dynamics. It's basically the consequences of moving into the cloud. The customer has to deal with additional complexity, and the rules of engagement for service providers are driven by born in the cloud experts, IP generation, Delivery automation are not anymore by the size of the organization or the sheer amount of headcounts and people and resources they have. 2nd, digital customer experience will completely change the reseller space. And we will demonstrate to you how our foundation and our platform and enables us to really participate and capture on this market opportunity. Last but not least, We will share with you that we have built the right strategy. We focused clearly on execution of our strategy. We have the proof points that we accelerated, but that's the journey. We also show you that the destination of being a next generation service provider is paired with sustainable profitable growth as well as a fresh approach to talent acquisition. Many of you have joined us since the IPO, But we might have we do have a few ones who are new to SoftwareONE. So allow me to quickly go through a few key lights of SoftwareONE. We have a very diversified expert base across 90 countries. We are serving 65,000 customers. We do this in the local language. We do this in the local culture, But we do this backed with a global portfolio, with a global delivery model and at the back of a global organization. Over 6,000,000 users in the cloud, and we do this on a 24x7 basis in 13 languages. I will show you later how this service is growing on an ongoing basis. For the first half year twenty twenty one, We have concluded with a growth of 12.3%, which is in line with our full year's guidance for 2021. We have been able to acquire entrepreneurs with their teams. We have been able to attract them and make them part of SoftwareONE. You see the numbers we have acquired, 8 Beautiful companies in 2021 already. This helps us dramatically to ramp up our growth streams and build up our capabilities. But let me freeze for a moment and go back in time from the time of the IPO till today and share with you our strategic achievements since the last 2 years. We committed to you that we attach services to our software and cloud customers. We have committed to you that we build a global service business. We have scaled it out in the meanwhile for over 300,000,000 It's growing above 30%. You have seen the recent number in the first half year. So that's really just the beginning. We integrated Comparex in the same year as we went public, in the same year as we had the IPO. And we committed to you that we reach our synergies and we harmonize our portfolio, which we have achieved. At the same time, we use that experience to build an M and A platform, which allows us now to acquire 6 to 10 acquisitions per year in a seamless way. We accelerated Piracloud, And we are now having over 60% activated of our total customer base with a triple digit growth on usage. That foundation becomes significantly important for us in the future with our marketplace strategy. We always said we want to be agnostic. And we have in the meanwhile, we have achieved the highest levels of certifications across all hyperscalers. Remember hyperscalers, we talk about Microsoft with Azure, we talk about AWS, and we talk Google with GCP. At the time of the IPO, we have told you that we have managed 1,700,000 users in the cloud on a 24x7 basis. In the meanwhile, We have reached $6,700,000 We committed to you, we do a double up every 18 to 24 months. So we have been a bit faster on that, and we will share with you what this means for us in the future. Let me quickly share with you our market in which we are operating. It's a massive market. There's no doubt about it. The addressable market is already over €600,000,000,000 If you look at the CAGR of 14%, We talk about the doubling up in the next 5 years. So we participate in a massive market, but that has even been Change to the benefit of SoftwareONE. COVID has really taken out the why of digital transformation. Customers asking when and how fast can I scale in the cloud? It has taken away 7 years of lagging time of digital transformation. But customer have problems. They have issues because the IT personnel is not equipped yet on the same level what you require as digital transformation. The cloud dynamics on the other side has created a tremendous complexity for our customers. The financial impact to move from On premise to the cloud, to move from CapEx to OpEx, to move from CapEx to OpEx aggravated by permanent Changing consumption has not been well managed by the enterprises. Every customer has wastage. Every customer has a massive leakage wastage when they move to the cloud. And they seek support from a discipline which has been now only established, which is called FinOps. Not to confuse with the other ops, which we have seen in the technology before. It was started off with DevOps. It went to Dev Security Ops. And now we talk about FinOps. FinOps stands for Financial Operations, and it's something which is a requirement, a requirement to manage the cloud spend in the future and provide the right governance for U. S. And enterprise. Customers need to deal with what you see over here This is a 30% wastage, and they require the support for our trusted advisers who are certified in FinOps and have the global best practice such as SoftwareONE. We also see that customers are not buying only 1 cloud. They are not only in the cloud. They are not only on premise. They are on premise and they are multi cloud. They are buying Azure, they are buying AWS, they are buying GCP, And they are buying maybe something else on top of it. Hybrid multi cloud has become the standard in the technology sector. All of the above, all of this creates a tremendous headache for our customer. But this is an amazing opportunity for SoftwareONE to capture on. So let me Talk to you a little bit about our opportunity in software and cloud. We see the reselling space Changing completely. Customers expect digital experience. Digital experience like they know when they book a car on Uber or when they buy something On Amazon, so in a sense, you can say that the technical giants like Amazon are defining The customer experience standard of the future. Now customer, when they go into their professional life, They want to buy software in the same way they order something on Amazon. They want to self serve. Alternatively, if it's not core for them, they seek for a complete managed service. Both motions We are able to capture with our marketplace the self-service and this digital supply chain the managed. The traditional reselling, which is defined through High transactional, every deal is our own transaction, highly people intensive. We still have a runway for the next 3 to 5 years, but the digital roadmap is absolutely clear for us. My colleague Neil will tell you later more about the opportunity in software and cloud and how we win the business of today while we have built the business of tomorrow. But let me not forget that we always said software and cloud and solution and services It's highly synergistic because we are taking care of the entire lifecycle of our customers. So we are very good in the meanwhile of attaching services to our software and cloud customers. We do this in an absolute scalable manner with our simple bundles, as you would expect from a next generation Service provider. Talking about the next gen service provider, let me dig a little bit deeper into that. Do we have the right to play? Do we have the right to win? Absolutely, yes. Certainly, for sure. We have the door open because we have 65,000 customers Where we have an existing relationship, they trust us. We don't have legacy. We don't have History. We don't have a brownfield. We have experts born in the cloud. We have a highly diversified portfolio, which is aligned with the customer lifecycle. We have a unique IP with our PirraCloud platform. And we have data insights and intelligence, which is unprecedented in the industry. Do we have the right to play? Yes, we have the right to play, and we win. But maybe there's one more thing which is more important to you, which is, are we able to grow as a next generation service provider and really decouple the growth from OpEx investments. Are we able to increase the gross profit Without adding headcounts and experts on an ongoing basis and having built allows us not only to scale to the right level, but also allows us to provide a sustainable, Profitable growth in that area. Talking about profitable growth, we have 3 enablers which are crucial in that aspect. This looks very simple. This looks very simple, but The most simple things are the most powerful things. And we are taking care of them for a number of reasons. The first one, innovation. We make sure that we innovate not only in our platform, that we not only innovate in our SAP practice, and you will see later the examples on that, that we not only innovate on delivery automation, Brand will also share some insights into that. We also make sure that we have a different approach to people and culture. We are in the service business. The people are our biggest assets. So we have to be different. There is a talent crunch out there, and we will share with you later in my next chapter on what we are doing differently in people and culture. Last but not least, Alex will share with you How we are able to build additional capabilities for our growth streams through a very Richard, but also very agile M and A approach. With all of that, we are very confident that we are able to deliver our guidance for 2021 and our midterm guidance. Let me quickly go through the guidance, and I will start with the gross profit on the left side. So for FY 'twenty one, we have guided you with 10% growth on GP. That is not including Intergroupo. For the midterm guidance, we have guided you with mid teens. For the adjusted EBITDA margin, we guided you for 2021 with approximately 30%. For the midterms, we guided you that the EBITDA growth is in excess of the gross profit growth. For the dividends, we have a range of 30% to 50% of the adjusted profit. As I said, all our strategic levers will lead us to that guidance. So what are the key takeaways? If you talk about SoftwareONE, You should have in mind, we plan the plan and we work to plan. We are not Building a strategy and replacing this strategy with another strategy. That's not how it works in SoftwareONE. We build a strategy, we execute, we learn, we build a new strategy. Reselling is going digital. Our starting point is incredible. Neil will share this with you. We will launch our digital marketplace at the end of this year in Noram, followed by a few focused countries in our first half of next year. We believe this has a significant upside, which is not currently considered in the business plan. And we do hope that we will give you the right indicators, the positive indicators in the second half of next year. We continue to scale out our solution and service business. And because we classify us and we categorize us as a next generation service provider, We will do this with a very attractive level of profitability. We have our 3 core enablers To facilitate our growth, we focus on innovation, we focus on people and we focus on and acquisition of capabilities. And last but not least, as I mentioned before, all our strategic levers are leading to our guidance, which we have given to you and we reiterate it. With that, thanks for your attention. And now I hand over to my dear colleague, Alex, who will lead you through a market and the strategy update. Alex, the stage is yours. Thank you. Thanks, Dieter, and welcome a warm welcome from me as well to our 1st Capital Markets Day, Virtual won this year. Over the next few minutes, I hope to cover as Zira mentioned market and strategy. And really what I want to cover is why we're so excited About our fast growing large markets, why we're so excited about the portfolio we've built focused on our customers. I'll touch a little bit about our competitive differentiation and I'll finish up with how we supplement our organic growth with M and A. So first on some of the key trends that Dieter mentioned. You've heard about many of these and I really just want to highlight what does it mean for SoftwareONE. When we speak about acceleration and digital transformation, it's all about the increase in spend, the cloud first strategy, The subscription and SaaS and public cloud adoption. What it means for SoftwareONE is our markets are really healthy, growing strongly And the pull through, you'll hear a lot about pull through today, the pull through of our services and solutions. When we speak about the rising complexity for our customers, what we're talking about here is The wide number of choices that they have, the complex cloud migration journey that they're on, As well as what Dieter mentioned, this concept of being hybrid as well as multi cloud. What this does for us is it means we can engage with customers on an ongoing on a recurring basis and this is really powerful and we'll go through that today. And finally, what we're seeing in the market Is software as a service SaaS and public cloud really dominating share of spend? So you're seeing spend moving from traditional IT, whether it's data center or hardware into SaaS and public cloud. And this has two impacts for us. 1, Our role with customers as a trusted provider is really important. They're in a new world, they're navigating it and we're there to help them with that journey. 2nd, we're really close to the largest software players in the world and we are helping them reach that customer base. We are helping them make sure the customer base understands their cloud products and is using them. And that's really critical as we know for SaaS and public cloud because it is all about renewal and consumption. This is on our trends. Now let me go into our markets. And I'll first cover our software and cloud markets followed by services and solutions. In software and cloud, we operate In large fast growing markets, the market is more than $600,000,000,000 It's made up of on premise, SaaS and public cloud And the market is roughly doubling over a 5 year period. This type of growth rate, these secular trends is why we chose our business over a number of years to focus on software and cloud and not really focus on hardware because of these growth rates, because of these trends. The global nature of our business allows us to take advantage to really benefit from the growth we see across the different regions in software and cloud. And finally, the final dynamic that we see is Emerging markets are adopting public cloud at a faster pace as they catch up to the developed markets. And again, our global diversification gives us the benefit of growing with those customers as they catch up with the developed markets. That's the fast growing, the large software and cloud market. Now let me touch on the services and solutions market. We focus our portfolio and we focus on the cloud only aspects of services. This is a subset of the overall IT services market, which is about $1,000,000,000,000 It's growing roughly faster than GDP. Where we focus our portfolio, where we focus with customers is cloud only as I mentioned. And this naturally at first attaches to Infrastructure as a Service. In this market, you can see grows from $60,000,000,000 to over $250,000,000,000 So 4 times as large in a matter of 5 years. This is our natural attachment points, a 30% growth rate. In addition, when we help customers with their cloud journey or supporting them in the cloud, We are naturally also addressing their application landscape and supporting them in the cloud. And so we naturally broaden our market beyond just services attached to infrastructure as a service. In addition to this attractive fast growing services market, we make investments. We make investments in strategic growth areas where first we see a customer pain point. We also see a large fast growing addressable market and most importantly, we see a SoftwareONE expertise, SoftwareONE strength that gives us that unfair competitive advantage to win. You started hearing from us at the beginning of this year on these strategic growth areas. They are SAP on cloud, application modernization, industry vertical, as well as hyperscaler and FinOps. As you heard from us, our aspirations for all of our practices for all of our lines of business and services is to be greater than 100,000,000 What's really exciting for us is these new strategic growth investment areas, We expect to actually reach $100,000,000 over the next 2 years. And as you've heard from us in terms of a clarification, 3 of them are brand new. That's what you see at the top of the slide. We expect them to generate incremental 100,000,000 Hyperscaler and FinOps are already part of our core portfolio. We again, we expect them to reach that scale, but as part of our growing core services portfolio. We're excited, but also confident in our ability to execute here because of our history. A few years ago, As we saw the pay as you go phenomenon emerge, we started building out what we call our x simple portfolio. You'll hear a lot about that today from Neil from Bernd. Our X Simple portfolio helps support customers as they go to pay as you go. We identified the need, we built a portfolio and within a few years we've been able to reach $100,000,000 of gross profit towards the end of this year. That's what gives us the excitement as well as the confidence to achieve this. Now let me spend a few minutes On how we go towards the customer, when we think about customers and what we deliver to them, we think about outcomes. And the foundation of our outcomes, the foundation of what we deliver for customers is commercial transformation. This isn't just about buying at the lowest cost or with the right terms and conditions and the right jurisdiction. Commercial transformation for customers goes as far as helping the customer clean up the house, figure out what they should be buying. And once we do that, We also help them keep that house in order by putting in place frameworks and governance. That is what we call commercial transformation. An analogy to that is moving houses. If you were to move from one house to the next, you might pack up your house, 100 different boxes, you might pack up all your furniture and move it to the new house. When you get to the new house, you might figure out that some of the furniture doesn't fit or you may want to buy some new things. And you may have some boxes that always remain unpacked. And that is the same phenomenon that customers face as they move from their existing environment, whether it's on premise or hybrid into the cloud. And that's exactly what we try to address with them through commercial transformation, get the house in order. When we do that, We really get to know the customer. We get real insights into their current operating environment and where they want to go. We use those insights to transition to help them with technology transformation. Technology transformation is about helping customers get value out of their spend. Time to value, optimizing and managing their spend as well as minimizing security risks. The 2 most common use cases that we see here are helping customers gain additional scalability by moving to the cloud or helping customers move from the Current application environment into a modern application environment. They need to look at what applications they have, which applications should stay on premise, which need to be modernized for the cloud. These are the outcomes that we deliver with technology transformation. When we can combine commercial transformation and technology transformation for our customers and we can add vertical expertise, We can go all the way to digital transformation for them. What do we mean here? What we're after with customers is helping them improve their competitiveness or helping them create a new business model. This really does require for us to know what the customer is doing to help them go all the way to digital transformation. One concrete example of what we're already doing today is by partnering with 1 of the leading players software players in the construction vertical. We're able to build up this industry expertise, this vertical expertise, approach players in the engineering and construction space and help them become more competitive, save cost, organize their labor as well as the raw materials better, be aware and manage their carbon footprint and ultimately finish projects on time faster, more cost effectively. This for us is the combination of helping combine all of our strengths in commercial and technology transformation, Adding vertical expertise to help customers with digital transformation. Let me give you a few concrete examples with customers On our integrated model, you heard this from Dieter, he called it they're synergistic and this is what we mean. When a customer engages with us on an everyday purchase, Microsoft 365, we add reactive and proactive support, We add analytics through our platform. We put all of that together into a solution for the customer. That's what we're calling our solutions, our bundles. You see them throughout the day. This is a way which a software and cloud transaction pulls through services and solutions. In another decision, a customer might be facing a large investment in a software platform. We help them not only transact that software, we first help them with an advisory engagement around it. What is their current need? What do they need for the business? What do they need for the future? These are all the things that we would help them with. So a simple, I just need help buying something pulls along a service with it. When customers come from the other side and they and we're engaged with them on application modernization or moving their SAP, their critical environment into the cloud. We do that based on our expertise. We do that as a project. We then maintain it as a managed service. But what it also does is it then also pulls along the cloud consumption because that application is now running in the cloud. These are some of the examples of how our business has become more and more integrated towards the customer and has created this nice recurring model for us. In fact, when customers think about their technology lifecycle, They think about going from advise or design, what do I need to do to buying, to implementing, to managing. And as I mentioned, our commercial transformation gives us a seat at the table of Almost any customer in the world, every customer is focused on buying at the lowest cost, buying in the smart way. What we do as I mentioned is we go a bit earlier than the buying decision and first help them decide on what should they be buying. That's the advise function. We then what I call help them keep the house in order. That's the optimize and manage, make sure that that spend stays well managed. When we do that, we have so much information, so much data, so much insight on the customer. We are then able to deploy our technology transformation really end to end, again, from advising the customer on what should be done to actually helping them, let's say modernizing their environment to then supporting their cloud environment and optimizing it when it's running. So we landed With commercial transformation, we expand with our technology transformation. This is what we think about as Dieter mentioned, Do we have a seat at the table? Do we have the right to win? And finally, as the next gen player, we're really focused on injecting our own IP into our solutions. 1st, we want to add more value to customers, whether it's recommendations or insights based on what we see in their environment, whether it's the based on what we see in their environment, whether it's the digital experience, the self-service that Dieter mentioned or it's the single pane of glass where they can manage their multi cloud environment from one place. This is the IP that we inject into all of our solutions. We invest here because we want to add more value to customers and it also creates a nice sticky recurring customer relationship for us. As we participate in the market, we see many strong players along this value chain. Many of the players focus and they might focus on the next customer facing application or they might focus on overall share of spend. I just want to supply you with whatever you're buying. They might focus on the next Application as a how do I take this next application for you and move it to the cloud or they might focus on the enterprise segment of the market. We see very many strong players, many strong peers in the market. Our competitive differentiation, our value position to customers is really the foundational pillars that I described for you. We start with commercial transformation. We help the customer get their house in order. We learn from that. We transition to technology transformation. We attach our technology transformation offerings to what the customer is buying. And finally, we're working on this, but we are building out more and more vertical Industry expertise. Let me summarize these key ingredients of our success as I just went through. First, our customer base gives us the incumbency. It gives us this captive audience that is already with us. They already are doing software and cloud with us. What our track record shows is when we engage with those customers And when we can attach services and solutions, 66% of our gross profit is doing both with us, Software and Cloud and Services and Solutions. When we attach the services to our customer base, The gross profit opportunity currently is 8 times. That's been growing. And it's really interesting and exciting what you'll hear from Bernd that the opportunity is much greater because our portfolio is still landing, our portfolio is still expanding with our customer base. This captive customer base is so powerful for us. 2nd, the history, the foundation of SoftwareONE is Publisher and hyperscaler expertise. As customers shift more and more of their spend to the biggest software companies in the world. As they shift more and more of their attention to the hyperscale functionality, We are there to provide him that expertise. We are there to provide him those solutions. The other side of that is We're the largest global player for the hyperscalers to reach out to, to have them reach this broad customer base. As we build our services and solutions, what you're hearing from us is, we really focus on how do we make them differentiated, How do we make them scalable? And this is the IP point. Our IP is pure cloud, which is the glue. We are constantly adding more and more Intelligence, we're constantly adding more and more functionality because we want the services to add more value to customers and we want that to be a nice recurring business for us. The second important aspect of our operating model is how is our global diversification. This really matters as Dieter mentioned in the competition for talent. We are so diversified across many different countries and regions. We draw on talent from many parts of the world. This is so evident across SoftwareONE. We have so many amazing colleagues contributing to common cause from everywhere in the world. The second is, when we do deliver, we can introduce a blended delivery model. We don't have to deliver in a specific country or a specific region. We can offer customer options and with those options we can offer a blended cost delivery model. And finally, we believe that all of this is only possible because of the SoftwareONE team. All of us are here because we want to be here because we're excited to build this future. And this is what we see through our work through our entire team of colleagues, which is they're highly engaged, they're energized, they are helping us reinforce this high performance culture. This is how we build the story. This is how we reinforce the story. Let me now touch on for a few minutes on how we use M and A to even further accelerate it. As you heard from Dieter, we really built up quite a robust M and A organization. M and A for us is first finding the right opportunities Align to our strategic objectives, partnering and identifying and partnering with the right entrepreneurs. We really as a he used a really interesting word, we really want to attract the right teams, the right entrepreneurs to the SoftwareONE platform. We want them to see the value of being at SoftwareONE. We want them to see how we can accelerate their existing trajectory inside our ecosystem. We work quite a bit on that and I know it sounds almost a bit strange to talk about this in terms of an M and A framework. But it's no secret that in today's world, in the areas where we're doing acquisitions, I'll cover that next, There's plenty of competitors who are standing up and willing to acquire these companies. And we believe One of the attractions of how we're able to be successful in M and A is that the entrepreneurs, the teams, they want to join the SoftwareONE platform. They want to continue to be successful with the extra added fuel that we can offer them. Finally, as you would expect from us, we have a very rigorous Financial discipline, we do a lot of we do a business a joint business cases. And finally, We spend a lot of time on what is value creation and value creation for us is the integration piece. We over the years, we've now developed playbooks on what does it take to be successful in integrating various types of companies. We take these playbooks as a starting point. We adjust them based on the situation, based on the team, based on the company, absolutely. But we have really been working on how do we develop an approach, how we develop so that The entrepreneurs that we're bringing on as well as our internal teams know how to be successful together. Let me cover our track record. You heard from us, it's 13 deals since the IPO, many more even prior to the IPO. Our acquisition engine has been focused on practice building. This is what you see on the left in blue. We have been focused on practice building in terms of SAP on cloud and hyperscalers. We are trying to add more and more IP automation. And finally, as all of you know us, we did do 2 acquisitions of scale. I think what you can expect from us going forward is a continuation of this picture. We will continue to build the practices. The practices are growing so nicely organically based on what I identified earlier. The market, our competitive edge, customer pain point and we want to continue to add to that growth. What you should expect from us in terms of these acquisitions of capabilities is 6 to 10 deals per year. What we also do is we are very focused on we're acquiring growth companies. But in addition to that, we actually accelerate their growth much more than what they can do standalone. And in addition, we bring them to the level of profitability of SoftwareONE in just 2 to 3 years. This is really key for us because often we're acquiring smaller companies, so they need to both grow and scale in terms of profitability. And finally, we continue to evaluate acquisitions of scale. We believe we have a real competitive advantage here based on our track record successfully completing Comprex, being able to integrate into Grupo. However, these acquisitions need to go through a very strict financial and strategic filter before we would bring them on. So continue to expect roughly this picture from us. And let me just dive into one example of how SAP has been critical to our practice building. We identified the SAP to the cloud trend a few years ago. We started organically, we hired a team, we hired a leader. And then as we did that, We started bringing on additional talent through the acquisitions. We started with B and W and then as you see since then we've done 5 other deals. So 6 deals in total over the course of 2 years. What this has allowed us to do is organically and through M and A build up more than 500 experts in this area. As you heard from Dieter, these cloud dynamics have really changed how we can play and compete in this space. It used to be that the SAP space was really dominated by the largest systems integrators that had thousands and thousands of SAP experts. However, as companies think about SAP today, they are really focused on How can I run my SAP environment in the cloud? How can I pilot it? What does it mean for me? And this is exactly the value that we deliver to them. We don't need what we would call an army of consultants. We need real expertise on SAP and the hyperscaler to show customers that value. That's what we've been able to do with a combination of organic and M and A. And finally, you see the recognition here with Microsoft doing the only strategic co investment deal with us, given our ambition, given the momentum that they see in our business. Let me wrap up. First, we're extremely excited about our end markets. They're large, they're fast growing. The importance of technology, software and cloud is so critical to our customers because they use it to enable, they use it to transform their business. Our value proposition is an integrated one. We want to help customers with software and cloud. We naturally pull along services and solutions with it. We are focused on customer outcomes Because customers don't always want to buy one thing or the next, they want to know what will they get, can you deliver this outcome for us. And this is why we speak about Commercial Technology and Digital Transformation. Our right to win starts with our seat at the table, our foundation, our knowledge, our expertise, The insights we get about those customers extending that to our right to win with technology and digital transformation. We have a captive customer base. We have so much more opportunity with those customers, but we're also expanding our addressable universe and you will hear more about that from Neil. And finally, we really focus on how do we become recurring, how do we introduce IP and intelligence to our customers so that they value the digital relationship as well as the human relationship with our team. And finally, M and A. We use M and A as an accelerator, as an accelerator for capabilities, as an accelerator for IP. And finally, M and A for us is a way to bring on additional talent. We believe that we have a unique edge in the market in terms of attracting talent and retaining talent. I want to turn it over on this topic back to Dieter. Thanks, Alex, for this insightful presentation. It's actually an excellent segue to what I want to share with you now. We have been speaking and you have been hearing a lot about digital transformation. You have been hearing a lot about technology transformation. None of them works if we are not considering the human capital. We call this unleashing the human magic. Without that, there is no success. And you have seen me very passionate if you talk about our business model If you talk about our ambition and if you talk about our execution, but this is really dear to me. This is really dear to my heart. This is dear to all of our hearts in SoftwareONE. And if you if I show you now the next slide, And I tell you that this is the biggest differentiator of SoftwareONE, how we attract talent and how we retain talent. I would like to see you not only virtually, but in real, what do you think? So these are our core values. These are our 7 core values. And you will say now, I've seen such things before. We might have something like this in our organization. We have vision statement. We have mission statements. Why would that be different? It is fundamentally different. That is the key ingredient why SoftwareONE has been successful From the start till today until tomorrow, we absolutely believe that you cannot dictate culture Top down. Culture is a result, is inherently coming out on how you deal with your colleagues, with your customers, with your stakeholders. So you have to define The right core values which are relevant for you and you see some which might be jumping in your eyes saying speed And I'll say later a little bit about that. If you have defined the core values, you have to find the right people who appreciate the core values and lift the core values. And if you have done this, then you need to make sure that everybody of us remains an ambassador and calls each other out. I know this sounds nice, but I'm called out If I don't answer an e mail in a speedy manner, we all are calling out each other. We're making sure this is embraced and lived On a daily basis, and this, if you ask our 8,300 employees, What do you think is the biggest differentiator of SoftwareONE? I'm certain all of them will tell you. It's the core values and the culture. Now if I share with you a few numbers, you see that we have a highly diverse workforce. Over 80 nationalities, Over 3,500 really core technology experts, one of the highest ratio when it comes to gender diversity. I want you to see the 4.7 years average tenure. That is something in the technology industry which is quite high. So we are doing something right. We are doing something right because we are able not only to attract talent, but retain talent. And what is that? What is that ingredient what we are doing right? I would say very simple, we are close to our people. How do we how are you close to your people? You hear their voices, and we do this on a regular basis. When we do an engagement survey, we get one of the highest respondents rate, not only in our industry, Well across industry. But what makes me really happy is that we are far above the industry benchmark when it comes to engagement score of our teams. And if we do those service, This is not only multiple choice. We give every employee the chance to add comments. Now I tell you there will be over 20,000 comments each and every time when we do the survey. And I tell you all of us We'll read through those comments and we act upon. And that's how we not only stay where we are, that's how We are improving. I also shared with you that the gap on the skill sets in the digital transformation And technology transformation, the higher demand, the ever growing demand on that side This is really driving a challenge for every technology organization. That's where we thought we have to find a different, a fresh approach. We have to have a constant inflow of talent, which are also attained not only attained, but retained by us in a different way. And is there a way to combine this as a business model but also There's a purpose behind it. So we inaugurated what we call the SoftwareONE Academy, and we are very proud of this. We are very proud of this Because we have built a curriculum, a syllabus, which gives a platform to youngsters, which gives a platform to Graduates, fresh grads, non grads, all walks of life, employed, unemployed, doesn't matter. With the right attitude, We move them through the syllabus and we teach them from application services to cloud services to SAP services. We have started this in many locations already. We have around 100 students at the moment. And each of that student is doing this as apprenticeship. And once they are certified, And this platform is scalable to a couple of 1,000. And we will see this that we increase the locations in the future. Now I want to swap to another very important topic. And that has become really On the radar of every organization and by right so, it's ESG. It's environment, social and governance. If it would be after me, I would be renaming this. I would call it PESG because we fundamentally believe that if you fix the people, If you have the right mindset with the people, you empower them to do the right things. You hire the people with the right attitude who want to do something in an organization with some purpose, environment, social and governance is an inherent outcome. And with that, it's no wonder that we have always lived ESG even at a time when it wasn't called. And we have always been prioritizing ESG even though it was not necessary to have a tick in the box. We don't want to do this for a tick in the box. We want to make a real impact as we always do when we apply our core values. We are not a manufacturing company, so we are not taking materials. We are not having, in that sense, carbon emissions. So for us, it is really important that our 8,300 people are behaving on a daily way So in such a way that we leave for our generations the same world, maybe a better world in the future. What we can do as an organization is we can also combine our business with purpose, And that's like magic. And I want to give you two examples how we are doing this. Think about what we just shared with you And what Bernd will go very much into detail, if we migrate workloads, systems, applications, storage, compute, Whatever it is, if we migrate this into a cloud, whether it's Azure, whether it's AWS, whether it's GCP, You see on this chart, there is an energy reduction of 79% if we move workloads in the cloud. There is a CO2 reduction of 88%. It even goes to 98% if that provider is using Renewable energy. And if you now consider that we do a couple of 1,000 projects, Mainly in the enablement and in the move into the cloud, you see it's fantastic to make sure that energy consumption and CO2 emission is reduced through our daily activities. Alex mentioned to you our cooperation with RIB Schneider in an industry. It's called Architecture, Engineering and Construction. It's one of the largest industry, I think at 13% of the global GDP, A lot of demand in terms of digital transformation. And we, in the beginning, we thought that's an amazing, amazing opportunity for us. A huge addressable market, a burning platform because of the digital transformation. Until we realize that this industry is accountable for 38% of CO2 emission. And the solution which RIB has developed, M2, which is the construction cloud, has a potential and the possibility with their 6 dimension, with their 6 d BIM model where the 6th dimension is sustainability not only to impact the energy consumption on how you build buildings, but also impact the entire supply chain from the sourcing of the construction material to the supply chain of delivering it and reducing the 38% CO2 emission on an ongoing basis. We have built this corporation 9, 10 months ago, and we are absolutely confident to be successful with the business, but also be successful with the 6th dimension of sustainability and combine here business and purpose. To complete and to summarize, we have a clear roadmap. We have made sure that We have the governance in the board. We have made sure that we have the right attention in the executive board. I'm the executive sponsor. We are aligning to roadmaps like the U. N. Or GI. And we have appointed a third party, which makes sure that we are fixing the right metrics and reporting on the right progress. Before I conclude on that chapter of people and culture, Personally, I have worked in many corporates and many organizations. I really believe that SoftwareONE is unique when it comes to people and culture. We are genuine. We are authentic. We live it. And I also like to believe that this was one of the reasons Why we are able to attract talent? Why we are able to attract global talent on a complete different level? And I'm very happy and I'm very excited to invite Rodolfo to the stage now, Who will be our CFO from 1st January, 2022? Rodolfo. I'd like to thank you, Dieter. Rodolfo, I think everybody would like to know first before you go a bit into the background of yourself. You had been on a fantastic journey through Lonza. You have seen it and transformed it through becoming a 54,000,000,000 Market Cap Company. What have made you to decide to join SoftwareONE? So Dieter, great question to Fios, my introduction. First of all, good morning, good afternoon from my side. I may have met a few of you in my current role as CFO of Lonza. So I very much look forward to reconnecting or to meeting you once I start with SoftwareONE in January. Now back to Dieter's question. The answer is straightforward. I'm proud to be closing a successful chapter as CFO of Lonza and I'm very happy to start a new and very exciting chapter with SoftwareONE. Let me share a few highlights of the two chapters. I start with Lonza because I remain its CFO until the end of the year. Many of you may not know of Lonza. It has gained visibility because it manufactures is a drug substance for Moderna's COVID-nineteen vaccine. But when I joined, it was a combination of B2B Specialty Chemical Manufacturing with Pharmaceutical Contract Manufacturing. And together with the executive team, We transformed Lonza into the leading pure play pharma services company and we did this by investing behind growth In financing the investment, we accelerated productivity. The transformation, as Dieter said, resulted in a 6 fold increase in market capitalization from €9,000,000,000 in 2016 to €54,000,000,000 today. Now my motivation and back to Dieter's question, My motivation to join SoftwareONE is straightforward. I want to be part of this exciting and promising growth journey. Dieter and the team today during the Capital Market Day will share the very attractive I joined a strong team of very dedicated professionals With a clear track record of successful entrepreneurship and last but very importantly for me, In my interactions with the team, with the board, I have experienced an exceptionally positive culture and team dynamics. Now the question Dieter could have asked me is what do you bring to the table? Let me Just briefly answered the question with a few highlights about my education and my career. So I completed my undergraduate Degree in Industrial and Systems Engineering from the Monterrey Institute of Technology in Mexico, where I was born and raised and then I completed my MBA at the University in the U. S. I've worked for 3 companies P and G, Novartis and Lonza. At P&G, I learned the basics. I moved up the ranks. And after 15 years, I decided it's time for a change. Then I joined Novartis in 2002 and I was able to help them accelerate Financial and operational excellence by reapplying best practices. The company was still reshaping itself. In my last role at Novartis was CFO for Animal Health, a very dynamic entrepreneurial division where we led a turnaround in performance, improved results and then ultimately we ended up selling the business to Lilly for 5 times sales. So based on these experiences and together with the SoftwareONE team, I am confident that I can help them accelerate financial discipline, operational excellence in a very dynamic entrepreneurial company like SoftwareONE and help the team in their strategic growth journey. So Before we go into the coffee break, final word from my side. I'm lucky to join SoftwareONE with a strong foundation that Hans has put in place. I've met his Global Finance Leadership team and I been impressed by the professionalism, the speak up culture. Hans and I are already coordinating the transition And I very much look forward to starting with SoftwareONE in January. Thank you. Thanks, Rodolino. You're initiating the Break or I initiate a break? I thought I would be through. We will now go for a quick break. But please don't go too far away from your screens as we'll be back in 10 minutes with our President of Services for a deep dive on software and cloud. Thank you. Welcome back from the coffee break. My name is Neil. I'm excited to take you through our software and cloud strategy, how it will grow steady growth and also deliver services led acceleration. On top of that, how our investments in Marketplace and PureCloud will provide additional growth opportunities. So let me take you back to the IPO where we presented our unique value proposition and position in the market, both for customers and for vendors. First of all, for our vendors, as Alex and Dieter said, we provide them with unprecedented reach into our 90 markets From a customer perspective, the world is getting more complex and the software and cloud space continues to grow. The choices they have that we can, of course, deliver it at the right price, in the right location and in the right terms. That is our unique value proposition to the market, and we With that, let's take a look at software and cloud at Agamas. So reminding you of our H1 results, 65% of our gross profit was delivered by software and cloud. And we continue to see The same behavior in our customers. They are buying ad hoc quotes and orders coming in a manual process to resellers like SoftwareONE and peers. Not only that though, they're looking for that digital experience that Dieter spoke about and we're seeing acceleration of that demand And of course, software and cloud spend is continuing to grow. We expect that because it's the foundations of our customers' digital transformation. Indeed, today 70% of our Microsoft of our software and cloud spend is delivered by Microsoft and 30% through multi vendor. The 70% is the lowest it's ever been, which makes us less dependable on Microsoft and it's a testament to the fact that our multi cloud and multi vendor approach is driving additional growth. However, we're really excited about our leading position with Microsoft and our really, really strong partnership. So let me first of all take you deeper into that Microsoft partnership. We've been going 30 years as a relationship with Microsoft. We have strong relationships at their top executive level. Satya's executive team has nominated an executive sponsor, which is Amy Hood, their Group CFO. Dieter and I meet with her on a regular basis, We talk about our joint partnership and how we can continue to make that sustainable and profitable for both our organizations. And we are well known and experts in driving customers to the Microsoft Cloud from the on premise environment. Indeed, 70% of the Microsoft revenue that we represent is now in their cloud. That's the highest it's ever been. And we also previously announced at our results about the strategic partnership we have with Microsoft on SAP and on app services. Today, we have enabled 40 markets with our SAP services and taking the Intergroupo acquisition and building on the academy on top, We've used that as a platform to grow our app services practice with Microsoft. Indeed, Bernd will talk more about that later. Finally, we're in an elite group of partners that has a tremendous amount of gold competencies. Why is that important? It's important to Microsoft because it shows that we have that trust to be able to deliver not just software and cloud, but also add services to their customer base to get the most out of it and that's what's really important to both Microsoft and our customers. Microsoft look at their business across 3 segments. Let me talk to you a little bit more about those 3 segments. There's enterprise and there's public sector. Through the COVID pandemic, we have seen accelerated spending in those segments. Indeed though it's typically a lower margin business, but we have cleared growth drivers across all three segments. For those particular 2, we have a revenue growth, On top of that, we have market consolidation opportunities and Microsoft and customers see the value we provide Because we have our Piro Cloud platform, which we'll talk about later, as well as the commercial transformation advisory services Alex talked about And indeed, we are providing a digital experience which I'll go into later as well. For SMEs, they were more adversely affected by COVID. We saw a slowdown there. We talked about that in previous calls and now we've seen a continued recovery of the SME spend And that is a typically higher margin business for us. And as SMEs have come back, they've demanded more from partners like SoftwareONE as in terms of pay as you go and we're delivering pay as you go to our SME customers through our bundle called x Simple. Let me now talk to you about what xSimple means to SoftwareONE and our customers. So let's take a typical customer that takes a cloud product. In this case, let's think about something like 365. When they buy the cloud product, then they have to make a decision on how they're going to support that in the future. Are they going to hire people or take on a maintenance contract for when things go wrong and to optimize that and when things go wrong, who are they going to call. Also when they are deploying this cloud or 365 to their end users, how are they ensuring that those end users know what to do with that product? Take a product like Teams, how are they going to use it? How are they going to adopt that? So then they're looking at adoption services. Also after they've bought the cloud product, they're also thinking about well this is now OpEx, so do I really want to buy upfront and then worry about deployment later or do I want to pay as you go and actually manage that? And also, how am I going to make sure that I'm optimizing that environment so the right subscriptions go to the right users And also the right number of users match the right number of subscriptions. So this all comes after the buying cycle when a customer buys the cloud. We saw this gap in the market. We saw the demand in SMEs. So we decided to package all that services, that platform IP I'm putting it into a single product called X Simple. So now the customer has one purchase and they pay as they grow and indeed pay as they go And that's what we call X Simple. It's been tremendously well received by the market. We launched it 2 years ago. We're about halfway through this transition. It's delivering a really high growth. We talked about the 70% growth that this is driving. It's highly scalable on our IP platform, PureCloud, backed up by our global delivery centers. Not only that, but we expect this growth to mean that this business exits FY 21 with a €100,000,000 run rate. With those type of financials, it's worth me talking through a specific example of how we report that in our P and L. So I'm going to take you through now an indicative example. Let's take a customer that's buying $1200 per year in cloud. The top pie charts you see in red there are typical Buy only commitment offer from a customer through a traditional contract. If they take that from SoftwareONE, we invoice them immediately in month 1 We make $60 in month 1, that's what the first pie chart shows because we've invoiced them in month 1, after year 1, it's still $60 And then indeed over the 3 years, which you see in the 3rd red pie chart, we've made $90 Why 90? Well, the customs contract has continued to grow typically and therefore, we make $90 over the 3 years. Now let me take you through the pay as you go example, which in our case is the X Simple Bundle. In this case, we add those services, We add that IP, we invoice that to the customer and we make $15 That $15 of course is made up of software and cloud and Services and Solutions. Of the $15 we represent that 20% of it goes to the software and cloud business line and 80% goes to Services and Solutions. Therefore, dollars 3 goes to Software and Cloud in month 1 and $12 goes to services and solution. The 2nd pie chart on the bottom shows that we're delighted about the experience that gives our customers. They don't have to keep coming back finding providers to help them with the cloud journey and for us, we can make $180 over the course of the 1st year. But let me remind you from a software and cloud perspective, it takes us 20 months to break even because of the eighty-twenty split we apply. However, we're really excited about this journey not just the experience it provides the customer but of course it allows us to make 6 times more gross profit for us from those customers as well. Finally, I have to remind you, Alex talked about the fact when we add service and solutions to customers, we can make more money and be more profitable and this is a good example of how that happens in practice. And again, this is a scalable solution and indeed the contract we provide to the customers is evergreen. Let me zoom out now and look at how this impacts and affects our overall Microsoft business. So we talked about we have growth drivers in all three segments. We continue to expect revenue growth and the market consolidation in enterprise and public sector. And then for SMEs indeed they're driving the Simple bundles which is impacting our software and cloud growth and accelerating our services and solutions. So we're very happy and comfortable with the Steady growth will provide in this business line as well as the accelerated growth opportunities it provides in services as well. So that concludes the end of my Microsoft deep dive. Let me take you back now to software and cloud and how we overall see the market and how we approach that. So Dieter touched upon this earlier. We see The traditional model continuing for many years from a perspective of customers will come to providers typically VARs or resellers and ask for quotes On particular software and cloud products, our customers in SME have 50 to 100 vendors maybe, Enterprise customers may be 400 to 500 vendors, so they go into a lot of partners to go and get those quotes and it's very manual and very intensive. We will continue to operate that model that we have today. However, we're super excited about the digital approach that we're taking with our customers now what we're planning for in the future. The second bar shows the digital supply chain. That is an existing service we have today and I'll talk you through that in a second. And then of course, digital marketplaces, you may have already heard about that. It's quite a fragmented market today. We see ourselves as a key player Not only because of our platform, ParaCloud, but also because of our vendor breadth that we have, we will be a key player in providing a digital experience through marketplaces in the future. So let me talk first of all about digital supply chain. What is that? Again, let me give you a typical customer example. If a customer today is buying software in cloud and it's not digital, they typically have 300 to 4 100 vendors in an enterprise environment and they may be using 10 or more suppliers to actually get access to those products. They're going to those providers for looking for the best price, the best terms, they're also looking for the breadth that they each of them offer an individual breadth. We go to those customers and we say, why don't we integrate your systems that you have on your side, they'll be operating something like SAP or Oracle and connecting with our systems on our side. And every time you want a software and cloud product, we connect it and provide that dynamically to you without this manual process. That has a huge impact on the customer. They have more efficient operations. They can see all their contracts and renewals because it's coming from 1 provider and not many. They have clear trustworthy data And of course, the entitlement visibility and that allows them not only just to manage and optimize their spend, but the data is also the form that Bernd will talk about to add value on their technology spend. Finally, let me Point you towards this bottom right chart. This gives you a real life example of what happens when we connect our systems to our customers via digital supply chain. You can see this customer and if you look at the bottom you can see the number of invoices they have. That shows you this ad hoc spend they have with a provider like SoftwareONE. In May 2021, we went to this enterprise customer who said You spend a lot of software, it's super fragmented, why didn't you consolidate it through SoftwareONE? Connect your systems to ours and we can have these all these benefits. They executed that with us and you can see the impact it had in the Q3 of 2021. We are now processing 557 invoices. To be clear, those 557 invoices would have happened for the customer anyway just in a fragmented way. Now we've consolidated that through SoftwareONE to provide All these outcomes I've discussed. We're excited about digital supply chain, but we do know its limitations. Its limitations are based on the enterprise customers wanting to connect to SoftwareONE, we have to have that interface and we do build that and we build this customized catalog, but it is limited by the fact of finding these customers and doing these integrations. But the digital experience is great, So we want that digital experience to be expanded to all our clients and indeed every prospective customer out there. So how are we going to give this digital experience to more customers? That leads me into what talking to you about marketplace. So the first key point here is that we've done our homework. We are not starting from 0. We are already authorized with 7,500 vendors that represents one of the broadest marketplaces in the industry. To give you an example, most VARs and resellers are dealing with a few dozen to a few 100 vendors in the software and cloud space. Indeed, the hyperscalers like Azure or AWS maybe have 1 or 2,000. We also connect to their marketplaces. So our marketplace is one of the broadest in the ecosystem. However, customers today access that ad hoc in the manual fashion as we talked about which is traditional as well as those customers that connect with us have that digital experience. So to get this digital experience in these 7,500 vendors to all customers, this is what we need to do. We are executing our marketplace. This is in pilot phase, as Dieter discussed, in Q4 this year. We will then soft launch next year in key markets. This is then providing customers access to this marketplace without integration and also without the need to engage with SoftwareONE to set themselves up as a customer. Indeed, this is going back Alex and Dieter's point around providing this digital experience they get in their personal lives into the corporate environment. We're excited about this not just because we can provide that experience, but of course we can provide all this data to the customer. This data will allow them to execute FinOps. FinOps, Dieter spoke about earlier and Ben will go into more details. And of course this product itself marketplace is built on our existing platform, Pira Cloud. So with that, I want to talk to you a little bit more about what Pira Cloud is already delivering today for our customers. These are the 3 pillars of ParaCloud. The first one we spoke about that's marketplace. The second one is well established that's our digital column. That one is the digital experience we drive and we create for our customers through digital supply chain. And the 3rd column is cloud, cloud management. Again, imagine our customers today are buying cloud solutions from a single provider like Azure, it's okay for them to go to the Azure platform and manage that spend in the Azure platform, but then they add AWS, Then they add Google Cloud Platform. Then all of a sudden they have multiple points to manage their entire cloud spend as well as they always have their existing software and cloud spend, which makes it super complicated. PureCloud gives them the single pane of glass Connecting to these public cloud providers to manage their entire software and cloud spend. As our customers are moving to multi cloud, we spoke about that. They're also now saying to us, we're not just moving multi cloud, we're going multi public cloud and with this complexity will drive even more relevance into our Pira Cloud platform. Finally, all these three pillars, we have a foundation under it called SoftwareONE Insights, that's the data we gather from that and then we serve that back to the customer. That data we serve back to the customer allows them to self serve and manage and optimize their spend in a more efficient manner and we also serve that to our consultants so they can teach our customers How to be smarter and how to adopt technology faster and get more value out of the spend. As Dieter also spoke about, We've seen the continued activation of customers. We're now up to 60% of our customers on the platform and triple digits growth in usage. So I've talked a lot about Pira Cloud, so it would be good to show you a demo. So Mike Fitzgerald, who's our Chief Technology Officer Let's pull a short demo video together talking about some of these features I've just discussed with you. I'm now going to show you the video. So as you can see here, this is our new public marketplace launching later this year, which provides customers with access to the 7,500 publishers as well as allows integration features for our digital supply chain services as well. Just a quick look around. You can see this customer here can search very quickly, find the products they're looking for, build a cart, add those things to the cart, build a whole bill of materials, call down from direct from the SoftwareONE credit account or use different payment options and Significant other dual payment options will be added over time. Customer can also manage their orders this location. So they're allowing we're allowing customers to manage their software spend here. They can also look at Any agreements that they have to manage their renewals of this process, whether that be on prem licensing or cloud based renewals, They can also find access to their assets here or their license keys for different licenses and different pieces of software that are being purchased. So you can see here as part of our marketplace platform, our digital insights technology is providing customers with insights to manage their software estate. This particular customer is buying Office 365 or has an Office 365 agreement, and the platform is making a recommendation to change the agreement type from E1 to E3 and making a recommendation on saving to do so. And because this is built on top of the marketplace experience, it's looking at the customer's buying patterns and use cases. And the algorithm is giving the option for automation at the bottom here to say you can automate that change of subscription from E1 to E3. So this is Insights, Our own IP that is powering decision making for the customer based on buying patterns through marketplace. Built into our managed services and our professional services, we include the Pirap Cloud platform to help customers make digital decisions about their software portfolio and get digital outcomes from our services. Here's a good example in an Azure managed service where the customer can use our cloud optimization technology to break down spend management. So you can see here, we've seen total predicted cost and then total predicted savings and at the bottom, giving some automation through the platform that supports the service delivery to the customer. So here in this case, We've got the capability of switching plans, of rightsizing resources or actually shutting down some virtual machines using the automation that's built into the platform. Great. I hope you enjoyed that video. Thank you, Mike, for putting it together for this event. Let me now leave you with my key takeaways. First of all, we offer 1 of the broadest platforms for 7,500 vendors to our customers in the ecosystem. Today, we provide that ad hoc and in digital supply chain and in the future marketplace. We are highly valued by these vendors because not only do we offer them access to these markets and to our customers, but we add services on top to add even more value to their solutions. Microsoft and SoftwareONE is a joint success story. We continue to invest in that partnership and it continues to drive IP related reoccurring services revenues as well as software and cloud. The adoption of multi cloud is one of the most exciting things that's in the industry and again that will make ParaCloud, our platform, more valuable to our customers and help them manage and optimize their spend. And then finally, we see steady growth in software and cloud driven by multi vendor, Piura Cloud, digital supply chain, marketplace and of course, there's continued recovery of SME is driving our x simple business contributes to our growth in software and cloud and accelerates our services business. With that, I'm going to hand over to my friend, President of Services, Bernd. Thank you, Neil. Good afternoon, everybody. I'm the 2nd new kid on the block. My name is Bernd Schlotter. I'm now 100 days in as President of Services, so still brand new. I spent 25 plus years of my career in client services and in software at companies such as Bain and Company for 17 years, HP, Atos and the last few years at Boston Consulting Group. I'm very excited to be here. And just as Rodolfo elaborated before, It is quite a long process to get to know SoftwareONE. Dieter and John and Alex and Neil, we started talking in January. I was actually getting through COVID in Hawaii, and I was sitting there in my shorts and my nice dress shirt. And I was talking to Dieter. And I felt like this is a culture that I want to be a part of. The 7 values resonated with me. And over time, I got more and more and more excited about the opportunity to build $1,000,000,000 or Swiss franc services business. So let me tell you where we are coming from. So we reached just under €200,000,000 in revenues or 146,000,000, 147,000,000 in gross profit in the first half of twenty twenty one. It's about a bit more than a third of group profits, gross profits, and it's about 3:one in terms of Technology transformation versus commercial transformation. Commercial transformation is the core of where we're coming from. It's the source of our Competitive advantage, and I will elaborate on that a bit. But technology transformation is where a lot of the revenue opportunity is, as you also see in our growth investments. So today, I want to talk about 4 things: 1st, very briefly about the opportunity and customer pain points. 2nd, a bit longer about our right to play and our right to win, why we think we can be successful as a still relatively small player in a very, very big market, about our strategic portfolio, how it ties together, how it's integrated with software and cloud. And lastly, I want to reassure you we are very cognizant about profits and about profitable growth, and I show you the levers that we will pull in order to be profitable. But let's start with the opportunity first. As most of you will know, IT services grows very predictably, usually 200 basis points, 300 basis points above GDP. So it's all the game is all about identifying the hypergrowth segments. In this case, for us, it's services on top of infrastructure as a service and some sub segments of the application segments and focusing on then and driving growth for ourselves aligned with the market growth, which is what we're doing. But market growth alone is not enough. It has to be paired with customer pain points, with problems that we can solve or help the customer solve themselves. So here on the left, you see some of the key cloud challenges. The top 4 roughly relate to technology. Security is a big issue in the age of the cloud. It has to be embedded everywhere. Multi cloud management, Cloud migration, of course, and then the war for talent is on across both technology and commercial. There's just not enough Talent out there and companies are looking for help and SoftwareONE can provide it. The bottom 4, 5 are the commercial Pain points, very real. How do we manage our cloud spend, governance around cloud spend, compliance and bring your own license and other issues around the journey to the cloud. As was mentioned before, you see on the right hand side some key stats. It's estimated that on average almost onethree of cloud spend is wasted because people buy capacity they don't need, They commit to contracts they don't need. They don't take advantage of falling prices. The world is multi cloud and hybrid at the same time, And spend in the cloud is increasing tremendously. So we are uniquely positioned to support customers in their own journey to digital transformation. And let me tell you why we think that is and what we think our sources of competitive advantage are. We think there are 4 major ones. The first one is the big and, as I call it. It's design and make and buy and migrate and operate. End to end coverage together with software and cloud, helping the customer across their whole all of their needs across their whole digital journey. We have 65,000 customers. So we have a seat at the table. We get that proof of concept and we can convert that proof of concept to a relationship, 1st projects and then recurring. So it's about share of wallet. It's not about hunting new customers. This is a very important advantage. 2nd is insights, together with our platform, With our ability to benchmark alike companies, to see historical patterns, usage, We can drive proprietary insights that make us relevant in the conversations with our customers and drive a differentiated ability to serve them better than others. 3rd, mentioned a lot, our PuraCloud platform, 3 modules. The module that is most relevant for services is cloud, It's a single pane of glass, allowing for managing multi cloud environments and also delivering insights for value based customer journeys, allowing us to drive value and outcomes with the customers in the most relevant fashion. And last but not least, we don't have technical debt. We don't have legacy. We're born in the cloud, and we can drive a different economic model than our customers can. So let me go into those 4 in a bit more details. The first three in this section and then the next the 4th one in our portfolio section. So as I said, it's the big end. Together with software and cloud tightly integrated, we can advise them on the front end. We can allow them to design the right solutions for their business need. That will lead to a make versus buy decision. And if they want to buy, We can support them and then can implement in the next stage. If they want to make, we can make the solutions. If they have a solution and the best is to migrate. We can migrate the solutions. And at the end, we can pull everything together, manage it and optimize it further. I don't think there are Many players out there, in fact, probably none, that can do all of this as well as we do it end to end. So our linkage to software and cloud is also showing results. On the left hand side, you see in the red color The gross profit, the share of gross profit that is generated by software and cloud only customers, it went up I went down from 40% to now 34%. The blue is the revenue or the gross profit generated by both software and service and software and cloud customers, so customers that buy both. It has gone up to 66%. So we're steadily increasing. We're steadily penetrating our customer base. The right hand side is actually much more important and much more powerful. As you see, a year ago, 1st from the first half of this year, trailing 12 months, the leverage we got from a customer when they converted from software and cloud only to both was 7.7x in gross profit, so quite a significant uplift. Now this year, it has grown to 8.6. And to be honest, we think this can go dependent on the customer segment for the smaller customers to 20x, for the larger customers up to 200x. So there's tremendous growth opportunity in it for us and it's in it for us as a game of share of wallet not necessarily hunting down large customers. However, we have to have credibility with the customer. We have to have relevance in order to drive this leverage further up. So that's where our insights driven approach comes in. We have our own platforms, and there's a few more than the 3 components of PuraCloud. We acquired a few companies that gave us proprietary data and platforms. We also work, of course, with many suppliers. All of that combined delivers relevant conversations with customers about things like planning and tracking optimization of cloud usage, optimizing their software value chain about modern applications, SAP and cloud and new ways of working. And this is all fueled by a single source of truth for customer health. We know how they're doing. We know how likely they are to have emerging needs, how likely they are to upsell, cross sell or the risk of them leaving us. And we have an engine that will recommend the next logical action with that customer. So all of this together is a very powerful instrument in our share of wallet strategy. The customer conversations then are framed in terms of customer journey. So this is not transactional. This is a long run interaction with the customer. As we are now, I'm going to start on the top right with Discover and Evaluate in the Engage segment that customers nowadays do research and by the time they call a vendor, they have done 70% of the decision making already. So you need to be early in the game. It helps that we have an existing customer base. We can create that awareness. We have the right to have a seat at the table, a tremendous advantage. Then of course, We have a good engine from our transactional business for the transaction piece. And then the second half of this chart is, I always say, services is the new sales. It's very clearly we start at every touch point with the customer to influence how they feel about it and how likely they are to purchase more from us. And so we are focusing on onboarding, we are focusing on customer adoption and engagement to customer All of this, as I said before, fueled by our PureCloud platform that also will deliver real time insights on potential for spend, for cost reduction, on workload and operational status that allows us to predict before the trouble happens and as you see in other areas like security threats or stuff like that. So that's an integrated machine that we're building that we think is adding to our competitive advantage. And then the 4th one of our competitive advantages I want to cover in a lot more detail in our strategic portfolio section. As we say, we are driving a portfolio, a share of wallet strategy. So it has to hang together And it has to be integrated. So the way we're doing this is on the top, you see those blue boxes. These represent what we call service lines. This is the way we make decisions when we think about capabilities, when we think about M and A. So this is the way we drive business cases and this is also the way we manage margin because these are separate business definitions that have separate economic models, and we cannot average out across them. Otherwise, we will never be able to manage our margin up. So on the left hand side, you see commercial, FinOps, digital item, we call it digital because we don't do hardware, And digital supply chain, on the right hand side, you see future workplace, new ways of working application services and SAP and cloud, our big investment areas. And in cloud services, where we have one service line for now for all for each of the hyperscalers. The reason for that is we're acquiring capabilities, we'll later talk about an AWS acquisition and we're also building relationships with the hyperscalers on these tower levels. At the bottom, Across, very important, security for us is not a stand alone go to market. It's embedded in everything we do. So we will invest into security, but we will embed it into our offerings. And we will have cross portfolio integration. Our architects will be together. We will make sure that the architect are offering innovative, it makes it hang together. And last but certainly not least at the bottom, we have consulting. We have governance adoption and change management capabilities because as Dieter said before, the journey to the cloud is still people and culture driven. And for many of those service lines, for example, FinOps, changing behavior and changing the culture is just as important as delivering the technical or software capability of doing so. So we feel all of this fits nicely together. Let me give you an example, actually two examples. The first one is around commercial transformation. So I won't take you through every I can hear, but the beginning of the journey is a software and cloud customer. We'll design a very easy, simple landing offer that is quick to value, Quick to consume, low barrier to entry. Out of that and together with our insights, we might branch out into 3 things. The first one on top, FinOps, making sure that the cloud investments are managed properly. The second one about the long tail. Nir was talking about the hundreds of suppliers that they may have, And we have an automated way of dealing with that spend. And at the bottom, probably the most sophisticated at the moment is for your very large vendors and Oracle and Microsoft and SAP as examples. We have a very sophisticated advisory and our managed services to make sure that you get the most value out of those relationships as well. So let me start with the top, and let's define What we mean by FinOps. FinOps is one of those passwords where if I say FinOps and you have 50 people in the room, you might get 20 plus different definitions. At the very essence, it's cloud financial management. It's planning, monitoring and optimizing cloud spend. It is combining systems, best practices and culture, very important, to increase an organization's ability to understand and better manage their cloud cost. And then last, Financial accountability to cloud spend, making it clear that governance And financial responsibility matter when subscribing to cloud services. All of this enables IT to be an internal service provider. We're in the business of making IT look good to the organization. And as with everything we do, it's underpinned by our platform. We have the solutions designed already, many of them building on the IP we gained with the examples. And then obviously, we're certified as a platform as a provider for FinOps, and we are also certified with the 3 hyperscalers. So a very good story and an area where we are investing tremendously and an area that we are embedding in all of our activities. That's why we're saying This is growing together with the business. It's not growing separately on a stand alone basis. Now let me go to the middle branch that we saw before, The management of the long tail. So it has to be consumed, Like Neil said before, in a B2C like manner, so it has to be an easy process with quick approvals for the users, the primacy of self-service. We are delivering a pre approved service catalog, so making it very simple To buy off that catalog that is approved by IT, that has been vetted by procurement, so we're providing alignment of all the stakeholders. We're making it easy and we are improving that process seamlessly over time. We think that will be a tremendous opportunity for us, and we are ahead of the curve in comparison to our competition in this digitization. Now look at the bottom of the branch where we are dealing with our most biggest vendors if you're a customer. So we are bringing the right solution here to business requirements at the right cost. And especially the right cost It's quite in the neighborhood of a PhD thesis sometimes in order to understand all the complications of doing business with large software providers. So we are an 800 pound gorilla in this space. We have 1,000 plus customers in long term digital ITEM managed services. We do 2,500 plus projects every year. We have probably the largest digital item consultancy Worldwide, we're automating a lot. So that number of consultants might not go up as much, but our capabilities and our volume will go up. And we have 3,000 plus certifications. Even though this is a sizable business for us, it is growing nicely north of 20%. And as you may have heard, we are recognized in the leader quadrant by Gartner for Software Asset Management Managed Services. So very nice story, and we will continue to invest in this. You hear us talk a lot about application services, SAP, cloud services. These are our growth vectors, but a lot of it will be fueled from the commercial side and will be fueled by the insights and the learnings that we get from both FinOps and ITEM. Now let's take a second to explore How this then spills over in our ability to grow and drive share of wallet through technology services. So we might have again or we have again A software and cloud customer, we might use FinOps or an existing ITAM managed service as the entry vehicle. This leads naturally to our cloud subscription because if we allow the customer to better manage their cloud financials, It is natural for us to manage subscriptions, which then opens up so many insights for us that allow us, for example, here To talk to them about workplace migration, this could be Office 365, this could also be Google Workspace. And at the bottom, talk about the complete application, estate and assess along the famous 6Rs if a workload should retain an application and the workload should be retained, should be retired, should be rehosted, replatformed or refactored or replaced by a commercial application. So let's start at Future Workplace, so at the top, Workplace migration. I'm using this to demonstrate to you The modularity of our approach. At the beginning, on the left hand side, you want we'll be offering something that every customer needs. There doesn't have to be an opt out. This is the bare minimum they need. On top of that, they can custom configure to their actual needs. It could be, of course, security, it can be backup, it can be unified communications and collaboration, can be a FinOps element to it, but the customer will feel this as customization, but it's really configuration from our point of view. And then, of course, it will be integrated with our marketplace. If they want applications on top of that integrated, they can procure them easily in our marketplace. So that's a very fundamental approach. We have to decompose our offerings. We have to sell the customer exactly what they want in a standardized and automated way. And the only way to do this is modular and with automated configuration. Now let's go to the bottom and look at assessing the application estate and thinking about modernizing applications and then also about migrating workloads. In that business, we entered in a big way with acquiring Intercrupo, as you know. We have advisory capabilities, delivery capabilities on a project basis and also manage service capabilities. And as you see on the left hand side, 80 plus new logos this year alone year to date, 22 countries with active revenues, 150 ish new opportunity every month, 150 new resources, Greater 100 students in our academy that we are feeding into the business, something that we all are very excited About it, it was one of the key selling factors for me that a company is so creative and Creating opportunities for so many people and making it a win win with the business. So great, great opportunity. So we're gaining traction here. 2022, 2023 will be breakout years for application services. Let's talk about 1, Workload migration that you heard a lot about today, SAP in the cloud. Again, similar. We have Great discovery and advisory services on the front end. There's 3 paths that customers can take: an implementation or reimplementation of SAP, A conversion of SAP to S4HANA or migrating their current SAP just lift and shift to the cloud, for each of those, we have an offer. We have a lot of momentum in the business. As you see on the next page, almost 200% revenue growth over the last 12 months, 5x the experts in the business, 50 new logos, 40 active countries. And most importantly, again, coming back to what Dieter said about people and culture, people who come to us like it and stay with us. And so we will build differentiated talent by our ability to attract retain talent. We have 300 plus active discussions and other projects. And at the bottom right, you see we've been honored as the most promising partner by SAP last year. So It's a great story. However, the biggest obstacle is not necessarily our ability to deliver. It's the hesitancy of the customers in the market to make the jump. As you all know, I'm sure, Companies invest a lot to get SAP up and running. Once it's running, it's awesome. But people are afraid of the risks that they take if they migrate their system. And so what we have done is we have designed an offer that allows them to better assess the risks, see some quick value and bring along in a change management motion The internal stakeholders that may be pushing back to moving now, why not moving later? There is a deadline out there, 2027. There's a lot of pressure, but people companies are hesitant. And so it's important to give them a tool where they can start exploring and learning How to do this? And so this is a case study. We are allowed to use the name. It's of the largest health care services groups in Asia, with their purpose is to make health care more accessible. We did an initial situation assessment, feasibility of converting a very fast track full scale S4HANA pilot, new Fiori user interface and readiness assessment. And the value that this delivered was the proven feasibility, it can be done, Higher transparency on the cost, the benefits and the risks. And almost most important is increasing stakeholder buy in. The internal stakeholders are learning that this journey is feasible and that it can be done. So we believe this is the way to go in the SAP market. And obviously, this is ongoing, converting to the full scale migration. So once we have that, the next logical step is then cloud services, managed cloud services, Helping our clients on an ongoing basis, this comes back that we already have scale 50% year over year growth in managed services, 6 point 7,000,000 active users, the full portfolio of offering and also an area of investment. And let me show you one example. It's from our recent acquisition, Helicloud. And I call it the perfect trifecta of what M and A needs to deliver. It delivered talent, certified talent, great people in the right place. It delivered a platform, The next generation managed service blueprint that we are looking for with automation, orchestration, compliance the way we want it, something we can take and scale across the globe. We can add value. We are a better owner of that asset than it was standalone. And then lastly, It is in the right place to deliver services to our most important markets in Germany, Switzerland, Netherlands and U. K. So this is the kind of investment that Alex and the team are driving and something that we really will do more of because it will enhance our capabilities. So this is the perfect time to talk about profitable growth. So we need to be cognizant that we will not scale this business with people. We are next generation service provider. We scale this platform with industrialization, with automation. And so on the left hand side, you see the 4 levers that we are going to pull to drive profitability. The first two ones are by far the biggest ones. It's about modularity in the service catalog, machine learning driven configuration, automation and the benefits of scale once our service lines are scaling. It's about an optimized delivery network, clear accountability for remote And about IP on top of PureCloud, it's about de averaging the business and protecting the higher margins that we have in parts of our business that are very accretive to the average margin and making sure that we drive more of those. And then lastly, closely related to software and cloud, The share of wallet game, motions, blueprinting that allows our account teams to lower their cost of sales and drive more share of revenue for us. So we're excited about this. I'm 100 days in. It's the beginning of the journey. You'll hear a lot more about this next year, but we started and we're going down that path and we are Convinced it's feasible and valuable, which leads me to my key takeaways. It's a massive opportunity. That's number 1. It is high growth with big customer pain points. We're going to build something big. Our right to wing is rooted in our existing customer relationships, our customer insights and because we're born in the cloud. We have tremendous leverage already if we add solutions software and solution services and solutions to software and cloud, And we will drive that multiplier more and more. We're all about complete customer journeys and to port customers in their own digital transformations, and we're building for profitable growth. And with that, I conclude my remarks, and I want to invite my dear friend, Hans, our CFO, who will talk about financial performance. Thank you very much, Bernd, and welcome to this Capital Market Day from my side. My name is Hans Grutter. I'm the CFO of SoftwareONE Since 2014 and as announced earlier, I will retire at the end of this year. I'm very glad that with Rodolfo Sawicki, a highly experienced CFO and leader, will take over at the beginning of 2022. I will spend all the time necessary that the transition will be a smooth and successful one. Before going further, I would like to clarify We will not provide today an update on our Q3 performance in adherence to our current half year reporting cycle. I will focus on key financial drivers of the business and the midterm gross profit and EBITDA perspective. The first financial driver is the growth of our business. We returned to solid level of growth in H1 2021. In the last years, we have group gross profit delivered in the context of The acquisition and integration of Comporex as well as the pandemic of a solid 4% year on year at corn currency growth. You see that in the gray bubbles. Based on investments made, strategic investments made, we have been able to increase the growth to 12.3% at the half year twenty twenty one and even more accelerated the gross profit from solution and services to 53.4%. This 53.4% does include the gross profit from Intergroupo, which we have acquired recently And without increase of still significant of 36% would have been resulted. This acceleration was accompanied by an increase of the managed service as part of the total service pie. In line with our strategy, we have been able to increase that from 55% to a number of 59% in the half year twenty twenty one. Going to The second financial driver, which is our globally diversified business. We are diversified across Geographies, you see that here in the slides of the gross profit, which we have achieved on the half year. We are also diversified across our sectors, industry sectors and customers with very low customer concentration. This diversification does reduce the risk, increase the stability of our revenues and give us stability going forward. Furthermore, About 70% of our accounts receivable are insured or are with top credit customers, which adds security as well to our balance sheet and cash in. Our Global delivery footprint, which delivery centers in New Delhi, in Leipzig and in Mexico And in addition, regional delivery centers, for example, in Malaysia, the Philippines, Romania or Colombia, helping us to enable the cost optimization, cost reduction as well as Additionally, benefiting from standardization and automation. These are very important drivers of our margin improvement, As Jos Bernd told you in his presentation. Going down the profit and Loss statement from EBITDA. This translates into an attractive bottom line profit. You see the figures here on the left side for the half year result. The key drivers for the different line of businesses are For depreciation and amortization, about 45% of that relates to tangible assets and to internally generated assets, which mainly is our PuraCloud. This bucket, we expect to increase marginally because of investment in our PuraCloud engine. 30% of that total depreciation and amortization relates to our offices, which we do lease, but under IFRS also need to report it under amortization. We see in one way a slightly increase because of the business volume, but on the other side as well a decrease based on new working concept past COVID. The remaining 25% is related to our M and A activities, for example, by amortization of customer base. This is linked to the merger activities and will also then develop depending on the activities in Monde. When it comes to the net financial result, we are a global company and therefore, exposed to foreign exchange risk. We are hedging that risk. And as a consequence, about 70% of that bucket is based on hedging costs and foreign exchange remaining adjustments. We believe that this will grow with the business volume going forward. 30% of the financial results is income financial income and costs and this will remain on the same level going forward. On the tax side, we have reported in the last periods a tax rate to the adjusted EBITDA of 26% or less. We benefited from extraordinary items which are not repeatedly going forward. So we think that Going forward, the tax rate will be a reduction from originally guided 30% at the IPO to 28%. We control and manage all these key drivers to make sure that These are helping to increase or to maintain the attractive bottom line profit. Moving on to the cash flow statement. We are in a position to have a strong Cash flow generating. When you see on the left side the cash flow from operating activities, we have been able to increase year by year to this EUR 276,000,000 in 2020. For the half year, the cash flow from Operating activity is negative. It's negative because of seasonality of the business and in particular about the net working capital, which I will show you later on some more details. Please be aware of that last year, on the half year, The cash flow from operating activities have been inflated by vendor deferred payment program we enjoyed in the magnitude of about EUR 250,000,000, which was related to the very beginning of the COVID pandemic phase. We are in an asset light business model and therefore, capital expenditure is on a Low base, you see that we have spent in the last year less than €25,000,000 Most of that is linked to PuraCloud. We expect going forward that this will increase a bit based on the investments in our engine, PureCloud. The change in net working capital has provided support for the cash flow of operating activities in the past years. And similar to what I said from half year on the cash flow generation, you see that on the change in net working capital, which is based on seasonality negative. Let me go in more details about the net working capital situation. The net working capital does fluctuate during the year with a constant pattern, which is linked to the business seasonality with the peaks in June, in December, in April and in September. And this then correlates 1 or 2 months later in peaks in the net working capital. We have been able to decrease the net working capital year by year. You see here measured about the monthly net working capital as average to the annual Gross profit and it went down from 22% to 13% 10% at the half year this year. This is driven by constantly improvement on the cash collection on one hand And on the other side as well to be prudent about the payment terms we are granting to our customers. It's a balance we need to make every day to benefiting the business or benefiting the pure financial view of the Net working capital. We have achieved low net working capital. I said record low net working capital at December 'twenty two, but also in June 2021. It's probably ambitious to say we can beat this year by year. It can be that it will not be able to, at the exact balance sheet date, to be better off in going forward, But please be assured we are continuously working on the net working capital and focusing and make sure that it helps to improve our cash flow generation. Going to our balance sheet. We have a very solid balance sheet, which is positioned for accelerated growth and Progressive dividend payment. The balance sheet is unlevered at the end of June in the magnitude of CHF €400,000,000 In addition to this starting point, we are generating net cash year by year And this enable us not only to invest in growing in the business and to acquire bolt on and sizable acquisition targets but also paying progressive dividend, as we have guided, in the magnitude of 30 to 50%. Going in the midterm gross profit and EBITDA perspective. With this slide here, I would like to summarize the presentations made by my colleagues and translate that into the financials. Starting with the gross profit, the mid teens gross profit growth is based on excellent market development, and we are very well positioned to benefit of this market development. When it comes to the line of When it comes to the line of businesses, then we see for software cloud a steady growth driven by Microsoft multi vendor, including the digital supply chain as well as the pure cloud. When it comes to solution and services, we see continuing high growth momentum. We see the pull through of services with our large software and cloud customer base. We see a focus in expansion of our recurring managed services as well as PuraCloud. And we have, as discussed today and presented today, We fool that also with strategic growth areas, which are contributing significantly. Beyond the cloud as well application services and the verticals as stand alone, while 2 of them, the FinOps and Cloud services are integrated in solution and services and are growing together with this core business. When it comes to the EBITDA development, which you see on the right side, the EBITDA growth in excess of the gross profit growth is driven by the growth of the business, by the shifting of the business line mix and benefiting of scale and IP enabled operation model, which Bernd has Greatly presented in his presentation. When it comes to software and cloud, here we see Stable, strong margins with even improvement potential through automation and digitization. And when it comes to solution and services, we see the continued margin increase as service line will and scale. We build on growth in our highly recurring, for example, a simple IP enabled solution and we are continuing optimizing our delivery model, including the growth of our global workforce. Summarizing my part and the takeaways, what I wanted to show you, SoftwareONE has a business model for growth, A business model for increasing the level of recurring growth and recurring revenue, It's a business model for generating attractive profitability as well as attractive cash flows. We have a solid balance sheet and we're very well positioned for our strategic journey. And last but not least, for the midterm growth, we can base our midterm growth on very attractive market opportunities. And last but not least, we are focusing all what we are doing for steady margin improvements. And with this, I hand over to Dieter. Thank you. Thanks, Hans. Very insightful. Just stay a moment here with me, please. I think this will be maybe your last Public appearance with us. You will be with us for another few months, but we have the opportunity over here to thank you personally. You have been absolutely fundamental to the growth of our organization, where we are today. You are a key contributor towards it. We will always remember you as not only a very competent leader, but an amazing colleague and a good friend. Thank you. Thank you very much and same to you, Dieter and to my team. So if I So if I would like to summarize now in three points what we have shared with you today, it would be We have an amazing opportunity, tremendous opportunity, whether it's in software and cloud or in solution and services. In software and cloud, whether it's pay as you go, whether it's digital supply chain or whether it's marketplace. On solution and services, The cloud dynamics has completely changed the entry criteria. We have become a leader in our growth streams, And we have an amazing opportunity to grow further. Being a next generation service provider will give you that attractiveness from a profitability as well. Secondly, the opportunity is nothing worth If you are not able to execute, you have seen SoftwareONE follows always the same rule. We plan the plan, we work the plan. And last but not least, it's not good enough to be customer centric. In today's world, you have to be customer centric and people centric. And with that, I thank you for your attention for the day. We will now wrap up and Have the Q and A session in I think there will be a delay of 20 seconds. So whenever you have registered Yes, we can hear you. Yes, we were reserving the first spot for you anyhow. Well, thank you. I missed it quite a while ago. Thanks very much for your presentation. And nice to meet a few of the new execs on the team. Just maybe three questions from my side. First of all, growth outlook organic? And what percentage of revenue contribution do you expect to come from M and A on a regular basis? So save the assumption of 6 to 10 M and A deals per year? The second question, how much of total gross profit is recurring? So I see the 59 on solutions and services, how much is coming from what's the sort of split in software and cloud? And maybe can you just remind us of the average customer spend per year with you as well in gross profit terms? And then the third question, what is your expectation For gross profit growth in solutions and services, how much of this would be driven by commercial transformation service lines versus technology transformation and then where is that solutions and services margin today? And really, I guess, I'm trying to get at if the mix shift is towards services, isn't that lower? And so do you have a negative mix shift? And are you saying that that's being offset by the automation and scale effect? Yes. Thanks, Stacy. Let me start with your last question. You have seen that we have doubled up the service business over the last 2 years with hardly any deterioration on our margin profile. And that's what we also will continue to see regardless of the mix shift. We have a healthy mix of services in our portfolio. We have services which are highly scalable, highly profitable. And then we have services which are in start up mode, and those services will mature and scale out in the future. So from that angle, we see no impact on the mix shift. In terms of whether we report contribution margin or other metrics, which you just referred to, We will see this in the next 12 to 18 months what kind of metrics we will provide in additional reporting. In terms of the TP or the midterms growth from an organic or nonorganic point of view, The midterms growth for us is inclusive to bolt on acquisitions. We would always separate it out. It would be if it would be a bigger one like we have done with Intergroupo, But it would be usually in that space. If we have bolt on acquisitions and we talk about 6 to 8 or 6 to 10, You can always assume we talk about the range of €50,000,000 to €100,000,000 GP in that range through acquisitions. The third one you want to take, Alex? Yes, sure. So hi, Stacy. So yes, so in services and solutions, we break out the managed and recurring, that's the 59%. On software and cloud, It's the nature of these customer purchases is very much As we know, customers are buying software, buying cloud and they renew or they consume more. That's kind of The natural recurrence that we have in our business, I would say that business is highly naturally recurrent. It is not locked into what you would consider a traditional kind of 3 year agreement. I don't know, Neil, anything else you'd add to that? Yes. Thanks, Alex. Yes, as you said, it's naturally reoccurring. We have contracts with our customers, long established relationships with those. This continues to be reoccurring. We do have additional growth opportunities, of course, as we grab more of their software spend when we make ourselves more relevant with the digital approach or digital supply chain. And when we do take customers to that approach, it makes it even more reoccurring because of course then we do enter contracts when we go into digital supply chain. And lastly, in services, as you know, you measure net retention. So it's not contract by contract, but you measure revenue that is recurring from the same customers versus revenue that is incremental. And so there, we have a lot of opportunity ahead of us to drive more the type of 55% up to 60% or 70% in the coming 2 years. Thanks, Stacy. And just One quick follow-up. The average customer spend per year, that may not be too busy, I appreciate. Yes. We Average. I can take that. We've got we're roughly when a customer is purely software and cloud, They're going to be around $8,000 per customer. And when we when a customer is both Software and Cloud and Services and Solutions, it's kind of 35,000 to 40,000 per customer. And that's kind of the 8 times multiplier that we already have today and Bernd kind of referenced that he sees a much greater opportunity there in terms of share of wallet. Yes. And as you may imagine, there's a long tail of customers with lower spend and then there is the top fewer customers have a significantly higher spend. If you want to build a larger services business, we obviously need to drive higher spend per account. That's great. Thanks. Thanks, Steve. Thanks, We have the next question coming from of Alastair Nolan from Morgan Stanley. I've got 2 or 3, if that's okay. The first would just be to and apologies to labor the point on the kind of The mix shift as we move more towards services, just kind of zoning in on the margin. Can you give us a little bit of a better feel as You mentioned, obviously, you expect certain service line items to mature, scale and benefit from automation. But as it stands, what is the margin differential between the services side and the sale of software? Or even within that, the recurring piece of services, How much more of a margin uplift do you get versus the kind of more project based services that we might typically expect to be More people heavy and or people intensive and therefore lower margin. And then just 2 others. One was just on the M and A contribution going forward. Just confirm I heard that right, it's kind of €50,000,000 to €100,000,000 is the ballpark gross profit contribution we'd expect going forward from M and A. And then just finally in terms of kind of trying to assess the growth opportunity, do you have a good feel or anything you can provide us with In terms of your current share of customer wallets and kind of maybe where that's trending from and where you That might be able to get to over the midterm. That would be really helpful. Thank you. Thanks, Alison. Yes, as we Mentioned earlier, in terms of the mix shift, we haven't seen any considerable impact by doubling up our business. So you can assume that the margins on the service business already on a good level. We believe that we will grow the services very much decoupled from the OpEx investment. We will invest rather into automation and into IP And does that have a different scalability? At the moment, we are not disclosing contribution margins or service margins. Alex, you want to say something on the last point? Yes. On acquisitions, thanks For clarifying that, Alistair. We do think about M and A as kind of an additional Growth opportunity on top of organic. The reason Dieter mentioned that we Break out the larger deals, but not every deal is because there is a real trade off in our business. So even when we're doing the 6 to 8 to 10 deals per year, The smaller bolt on deals, it takes time and attention from Burns practice that they can be dedicating to organic growth. So we really feel that We want to do these deals where the practice building, it's not always kind of one for 1 where we say, well, it's either organic or M and A because oftentimes when we have M and A, it's to supplement organic and we're dedicating some of our valuable resources on that M and A. That's just to clarify that differentiation. And then on the numbers, I think what we're comfortable saying at this point, again, we're ramping in terms of our M and A capabilities. What we're comfortable saying is 10% to 20% of our growth seems to be coming from these bolt on acquisitions. And so I would rather think about it in those terms. You can certainly say how much is that in terms of gross profit, But I would really think about 10% to 20% coming from M and A each year. So Yes. I think it's also I said it's also important To wrap on that, if we really buy technology businesses, in particular on the cloud services, in particular in certain growth streams, There's a reason why they usually sell as a revenue multiplier. And with that, it for us, of course, We bring them in because of the capability. We don't bring them in because of the customer or the market. We bring them in because of the capability And then we uplist the margin to the level where we want to be. Great. And I think just one other then just on kind of wallet share, maybe any numbers you might be able to provide around where you think you're currently at and kind of what the opportunity is there? The share of wallet in terms of customer, Alistair? Yes. You want to say something on that? Yes, sorry, yes, exactly. Yes, in terms of their kind of IT expense. I think Neil and I should answer separately because it's very different for software and cloud, I would assume then it is for solutions and services. The solutions and services, especially in the enterprise and in upper corporate, it is Small, so there's a lot of opportunity for us to grow. While we might have significant share of wallet on the Software and cloud side, we're just beginning the journey of attaching our services to it. So there is a lot of headroom. I don't think that there is any barriers that are coming up in the next few years and our ability to drive that share of wallet. Yes, I guess from my side, I'd say that going back to Stacy's point, the contracts we have in software and cloud are highly reoccurring and we continue to be a stable business where we see opportunities to get more of the customer contracts and more of the spend, that's why we're focused on the digital aspects. And of course, on top of that, We see, of course, good growth drivers with the other hyperscalers of AWS and GCP. That's why we've invested organically and in M and A in those particular recently because that will pull through additional software and cloud share of wallet for our customers and that's what we're also focused on. Great. Thanks very much. We have the next question coming from the line of Ross Schaller from Citi. Please ask Good afternoon. Thank you very much for a fantastic and fascinating presentation. I've got 3 questions, All at a relatively high level, I believe. I don't know if that's good or bad. So my first question is, you've painted a very compelling story of how you can take your in technology transformation and you can move it into business transformation. But there's two sides to every coin. And so I'm just wondering what extent is there opportunity for people to do the opposite, the people who've got business transformation skills, maybe the larger system integrators to be interested in moving more into technology transformation? So I guess that's question number 1. Question number 2, you've also painted a very compelling picture of how you're able to provide the customer with a very, very comprehensive support solution as they migrate to the cloud with one notable exception, which is hardware, which I know has been a deliberate decision. But to what extent could you see yourself potentially doing hardware in the future? And could you give us any color on how you actually help your customers with the hardware implications? Because cloud migration obviously often has data center implications. And then my third question is perhaps a slightly simpler question, which is just about as this service business grows, how much of this service Revenue is going to be fixed is or is going to be fixed price in nature in the future? Thank you. Sorry, I didn't get the last question. Fixed price versus fixed time and material. All right. Okay. Yes, let me go 1 by 1, Drew. And thanks for those questions. The first one in terms of digital transformation as a result of technology or Technology transformation as a result of digital transformation. From our point of view, there is either way possible. And that's what we mentioned with Cloud Dynamics. You have the opportunity to move to the next level and offer a service. We believe digital transformation only works if you speak the language of that certain industry. Digital transformation only works if you come from the core processes, The core business processes from the customer in which the customers industries, that's what you have seen on the Architecture, Engineering and Construction vertical. We believe that's a natural pathway from us. On the other side, Going the other way downwards and saying technology transformation is, of course, always possible. But you have to assume that every global SI has a legacy business, As long term contracts, 7, 10, 15 years contracts, complete end to end outsourcing agreements with high end margins at the tail end of the contracts, and that's the natural friction which they have compared to moving to the cloud and advising the customer to go into that direction. That was the first question. Now you have to Remind me again on the second one. About the role of hardware. Yes. From a hardware point of view, and you're absolutely spot on, we made a conscious decision not to do hardware because We believe that requires everything around homologation, supply chain, inventory, etcetera, etcetera. So if you end up with the metal, there is an impact on the metal. And that's where we advise the customer where really they can cut down top down end to end and do not stop on the database level, but go beyond this as well. So that's the real impact, The real financial impact and benefit, but also what we earlier discussed on ESG is felt from a customer point of view. And maybe one addition to that, we, of course, have some larger relationships where data center plays a role and there's impact on hardware. But we've been doing this with 3rd party providers, with partners without having to get into hardware ourselves. I think That's going to be the strategy going forward. It's just a whole different ballgame and we don't believe that the growth and the profits are there for us to go there. Yes. And on your last question, in terms of T and M and fixed price, time and material and fixed price, We have 59% managed service, that's recurring revenue fixed price. On the professional services, We actually do not prefer T and M. That's not our preferred go to market. Our preferred go to market is a fixed price and a gain share on top of that. That's the usually go to market. But if there is no other choice, we still take the business on T and M, but it's the exception. That's very helpful. Thank you and thanks once again. Sure. We have the next is coming from the line of Nut Waller from Baden Bank. Please ask your question. Yes. Thank you. Three questions also from my side. And I understood, Hans, that you said there won't be any trading update to Q3. But is it fair to assume, given your confirmed targets, that the SME recovery you envisaged at the end of the second quarter is continuing in the second half of the year? The second question, you talked or you reiterated your capital allocation plans regarding dividend policy, also M and A. Would it be also an option for you, especially in light of the current valuation of the shares, to use the excess money for a buyback? Then thirdly, I learned a lot about the delivery on the service side, and hence, I think a couple of concerns I heard from investors regarding the scalability of this business should have been alleviated. Still on SAP, for example, on the delivery here, I would like to get some more clarity Why you don't need more headcount to do the transformation to S4HANA or the migration to S4HANA on a standardized way, I would like to get some more color here as well as for FinOps to get some better understanding here. Thank you. Thank you for the questions. So let me start and then hand over to Hans for the buyback, and then we have a discussion, Bernd, about the S4HANA migration, I would assume. So from an SME recovery, yes, you're absolutely right. The SME is continuing to recovering in the second half of the year. Are we back to pre COVID level? Not yet, but we assume that's to be happening next year. Hans, you want to say something on the buyback? Yes, of course. I think what you see now with our balance sheet, what we have today, it's a very solid balance sheet and you could think of going in this direction. I would say yes. If you are not where we are today, I think SoftwareONE is a growing company And I would like to be in a position that I can finance the bolt on acquisitions out of the cash flow we are generating. And I would also like to be in a position that I can finance sizable acquisition going forward. And that's basically the reasons why we have come up with this kind of, let's say, spend for M and A and growth, but on the other hand, only going for dividends. There are, of course, other options, as you say, as one of them, which we could think of, but that's only, I would say, in sense of not having enough growth opportunity going forward. And continuing on your last question on the scalability, How do we really decouple that from adding additional headcounts? And you mentioned the S4HANA migration. It's The principle of how we built this business is we do the project to get to the managed service. So we don't want to be the largest project expert in the world. We want to make sure that whatever we migrate, We can manage afterwards and have recurring revenue with those customers. For that reason, we also build already front load already the automation right in the beginning so that this journey is an inherent journey for the customer. They should have another choice than going through our cell migration and then automatically it will become a managed service. I'll give you an example over here. While the normal behavior would be you have like 9 to 12 months projects. And if you go functional, it's 24 months to 48 months projects. We try to be time boxed everything between 3 to 12 months as an outcome. We have our own IP where we reduce heavily the workload and automate as much as we can. For instance, we have an IP where we provision in the landscape and we can do this in 1 or 2 hours compared to others who would need for the same purpose A couple of months. And that's where the differentiator comes in. And Bernd, maybe you want to It's absolutely right. And so there is, of course, A customer specific people driven engagement, it's around the solution architecture upfront. That will be done locally. But even the rest of the project, as Dieter said, is highly automated with remote delivery from places that cost effective as opposed to doing it over and over again in each different in each individual country. We have the next question coming from the line of Ben Castillo from BNP Paribas. Please ask your question. Hi, good afternoon, and thanks for the presentations and questions. So 2 from me. Firstly, you've got the strong uplift in GP when you attach Services. My question is, if you look at your customer base, can you give us a sense of how many of those customers are taking services today, I. E, what your attach rate might look like? What sort of run rate do you want in terms of adding services to customers don't currently take it. So what might be a reasonable target attach rate to think about over the midterm? My second question is on the ex Simple and Pay As You Go bundles, that slide, I think, 47 was a helpful illustration. You have that 20 month breakeven Time line for software and cloud, you have some GP shifting into the solutions and services bucket. So how long do you think will be until you lap those initial headwinds and the net impact to software and cloud is a net positive. And then secondly, If we think about the pay as you go has a 6x GP multiplier, can you give us a sense of what the corresponding EBITDA multiplier might be? As obviously some of that increase in GP is going into solutions and services at presumably a lower margin. Yes, thanks for the question. On the first one, on the service attached, so I think at the moment, we stand by around 12,000 customers where we have attached services. And if you ask what's our total addressable market, you would naturally say the 65,000 customers, but Not all of them are really addressable from our side, and some of them are really small where you wouldn't get the right share of wallet. So we assume that half, 50% of our existing book of business is an addressable market to attach services. Now on pay as you go, maybe, Neil, you want to answer here and help you. Yes. Thank you. Yes. Thanks, Ben, for the question. We're about halfway through that journey, as we said. I think we're now coming especially with the SME recovery, we're coming towards the end of the headwinds. And Alex has talked about in previous calls about the 6 months breakeven point and maybe that's a useful point for you. So We talked about that $15 in the 1st month, and we're delighted about the 3x that we make in the 1st year. But we think about it from a margin perspective that it's a 6 month breakeven on the total GP that we make if you think about it from an EBITDA perspective. So that's what we focus on internally. We have the next question coming from the line of Michael Breese from UBS. Please ask your question. Yes. Thank you. Good afternoon. A couple for me as well. Just sort of going back to Slide 47. I think the last question was along that lines, Neil. The chart seems to imply that the services contribution from Microsoft will more than double over the next 4 years. Could you maybe give us a feel for how many ex simple customers you have now? I think it was €1,700,000 at IPO. And then implicitly is that going to be a sort of €200,000,000 run rate business exiting 2025. And then I've got a question for Hans around the cost base. Yes. Thanks, Michael, and good to have you back. So the 1,700,000 users are The 1.7 are the users, not the customer. I'll let Neil answer on that and then you can raise the question to We haven't disclosed a number of customers. What I would say is that we look at those 3 segments, enterprise, public sector and SME, and SME is as a proportion of that business. When we think about the 1,700,000 users, I think we discussed prior in the presentation, we're over 6,000,000 Users now predominantly driven by xSimple, but also other cloud services where they're attaching user managed service into that as well. But you can think about that 6.7 million being driven predominantly from Ex Simple. And then the last point? €200,000,000 magnitude. Yes. So we exit yes, we expect to exit FY 'twenty one at €100,000,000 run rate. And as we explained as well, the growth rates are strong in that business. Okay. And so Would you assume there's any pricing power in this? Or if you're going to double profits from the services side, you're going to double the users of the managed cloud services? That's cost proportional? Yes. So GP is proportional. And then as we discussed prior, we still want to apply even more automation to the platform. It's driven by 2 aspects. 1 is our PuraCloud platform, which is delivering Let's say, the experience to our customers where they can leverage and manage the users' basis. And then, of course, the automation based on the Global Service Delivery Centers, that's adding all the services on top. So we continue to want to invest there and make sure that we have a positive outcome. And of course, we'll also invest in upsell and cross sell on that customer base as we acquire more. Yes. Thank you. You want to say something? Michael, just one second. Don wants to add something. No, just because you're we're always talking about the service margin As we are trying to get across, there is no service margin. It's a mix of very different businesses. And The eximples are highly favorable in that mix. So driving eximple growth will be very favorable to the service margin in aggregate. Understood. And then Hans, just going back to the cost side of things, I think at the interims you guided the cost will be flat in the second half sequentially. Can you give a bit more detail on that? Because I mean the comp rec savings sort of fully come through now. And obviously, you've made a number of acquisitions through the course of the last 9 months and we've seen headcount increasing. So the natural assumption is Costs go up sequentially. Why is that not going to be the case this year? So we have 1st of all, I think we have Front loaded investments. So this is, let's say, that the first half and the second half will be rather equal than what it was in the past. So that's what's one driver of this that we can say it will be more or less the same total OpEx at the end of the year or the second half versus first half. Another point is that we have made a project or decision that we go for improvement of all what we are doing and providing internally and get rid of people which are not delivering. And this is helping and contributing to that equation and we are very carefully about replacing of people which leave SoftwareONE and this is a great lever to manage the cost base going forward. I'm not sure if I have covered all the other or you would like to add something on this. Yes. So these are Michael, these are mainly the topics, right? We said we front loaded our investment. Now they have to perform, so we get to leverage out of it. On the other side, we also have clear expectation on how performance looks like in SoftwareONE? And then from an acquisition point of view, You want to say something in terms of acquisition? Yeah. When it comes to acquisition, you have also in both sides on the equation. You have on one the cost side, but on the other side you have also the gross profit that these acquisitions will deliver and will contribute. And of course, I think when you look back and say it's very hard to predict About what acquisition you will be able to land, I think the 2 acquisitions we just made on Helicloud and Centic, It was very difficult to predict and so that you cannot plan with all this. But basically on the M and A Part, it's these two levers, which I just mentioned, which is on both sides, on the OpEx as well on the GP. But will there be any exceptionals related to removing underperformers in the second half? And do you think broadly headcount will be flat at the end of the year versus The end of June? So from a growth point of view on headcount, We are pretty clear that we have invested into the headcount in the first half of the year and would only replace in the second half of the year if that is directly related to a commitment to a customer. Okay. And no exceptional items then? There will be exceptional items exactly, which will be also then disclosed in detail based on our rules which we have already in place. But you can't give any guidance today on roughly? No. Okay. Thank you. Thanks, Michael. There are no further questions at this time, sir. Please continue. Thank you. Are there any further questions? There are no further questions at this time. Okay. All right. Thank you very much. So want to close officially, Anna? No. Well, thank you very much for your time today. And the questions from the analysts, much appreciated. Thanks, everyone. Thank you. Thank you very much. Bye bye. Bye bye. Bye.

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