Ladies and gentlemen, thank you for standing by, welcome to the SoftwareONE H1 Results webcast. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question- and- answer session. To ask a question via the telephone, please press star and one on the telephone keypad. I would now like to hand the conference over to your first speaker today, Dieter Schlosser, CEO of SoftwareONE. Thank you. Please go ahead.
Thanks, moderator. Good morning, and a warm welcome to our H1 results presentation. I'm Dieter Schlosser. I'm the CEO of SoftwareONE. I'm joined over here with Alex Alexandrov, our COO, as well as Hans Grüter, our CFO. I will take you at the start through some key takeaways and the highlights of the first half of this year. That will be followed by a detailed business update by Alex, then concluded by the financial performance of Hans. I will then turn down to the outlook for the full year, we will then go to a Q&A session as always. Let me also refer to the disclaimer on slide two regarding the forward-looking statement and the non-IFRS measures. As usual, please read them carefully. Starting with a few key takeaways for this presentation.
You remember in the end of 2020, we already started to make some strategic investment. We continued this during the first half of the year. We returned to a very solid level of growth. Very proud to share this with you. On a strategy side, our strategy remains the same. We are focusing on the overall growth with our 65,000 customer, digitizing Software & Cloud, attaching the portfolio of our Solution & Services, everything underpinned via the PyraCloud platform, which is unique in the market. Allow me to go into the business lines. On Software & Cloud, we still showed some residual COVID-19 related purchasing weakness. Let me elaborate a bit more of that. We have seen this till April. From May and June onwards, we have seen improvement and the recovery throughout the geographies. As well, we have a continued shift to pay-as-you-go.
That's something where for those who are new to us, maybe I go a bit more into detail. Pay-as-you-go is a consequence of moving into the cloud. You move from subscription to consumption. It's also a conscious decision, a conscious strategy from SoftwareONE to establish a larger lifetime value with our customers. Pay-as-you-go is more scalable, is recurring revenue, and allows us to be closer to our customers. On the regional side, LATAM, as you know, was quite heavily impacted by COVID-19, particular two, three countries, Brazil, Mexico as well as Colombia to a certain extent. That's rather the macroeconomic environment. On Solution & Services, we delivered a very strong performance. Our portfolio is resonating, whether it's pre-COVID, whether it's during COVID or whether it's post-COVID. Absolute demand is increasing with customers. Our pipeline is rock solid. Our backlog has never been on that level.
All the artifacts, all the signs are there that we continue on the same level of growth for the second half of the year. Our investment in H1 where we capture the market opportunities in cloud-based services will lead to a growing EBITDA margin profile for the full year. We are reiterating the full-year guidance with confidence. We strongly believe that our investments are yielding the results in a full-year basis, and we remain focused on executing our strategy. Let me go now to a few key highlights. We ended up the H1 with growth of 12.3%. That's constant currencies. That's also inclusive of InterGrupo. In numbers, it's CHF 440 million. On the EBITDA side, we are at CHF 109 million. The EBITDA margin you see over here, we are at 26.3%. Fast. This is the pathway to the full-year guidance.
We have seen Solution & Services outperforming with 53.4%. Again, that has become now a quite sizable portion of our overall GP profile. We are talking about 35% of our overall profile. Going to the acquisitions, you have seen the announcements. In essence, you can put them into two buckets. We have done four SAP acquisitions in the first half year, also associated with our strategic agreements with Microsoft, and we have done two acquisitions, one on Google and one on AWS. Let me also draw your attention to the 5.4 million managed cloud users, which we are in the meanwhile supporting. Those who have been with us since the beginning of our IPO, they absolutely know the story, how we have started. We have committed and promised to you that this is a scalable solution which will grow on an incredible level.
At that time, we said we are doubling up every 18-24 months. That has absolutely materialized. It's still, for us, the tenor for the future. It is a sticky lifetime value. It's a close customer relationship. It's recurring revenue. It is absolutely scalable. The contribution margin absolutely outweighs the initial investment, which we need to do if we grow further. Before I come to the executive board appointments, you have seen the announcement. Hans Grüter, our CFO, is retiring by year's end from operational activities. He has been with us for the last seven years. He was instrumental to the IPO. He has built a best practice finance organization. He overall contributed very well to the success of SoftwareONE. I don't want to wish him all the best now because he's still here for us for the next three months.
I want to thank him for his contribution, for his guidance, and for his mentorship, and we will continue to work together till year's end. It's also very notable that SoftwareONE is attracting high caliber talent in the executive board. You will see this also when we go a bit more into detail in the capital market days across the organization. You will also personally get to know many of our global talents. Very happy to announce that Rodolfo Savitzky is joining us from the 1st of January. A very seasoned executive leader, very seasoned CFO from a public listed organization, and he will join us 1st of January 2022. Also, we have announced Bernd Schlotter. Bernd Schlotter has been appointed as the President of Services. Bernd has joined us from BCG, where he has led the Silicon Valley office of BCG.
He has a fantastic, amazing background. He's coming from the top consulting companies, consulting not only service providers on where they need to go, but also the customers, where they need to pivot on the technology as well as on a digital transformation, and has been himself on the service provider side as well. Very authentic, already onboarded, already making an impact, which is very pleasing to see. Let me go to the next slide and talk you through our gross profit growth and to walk along that. You see on the left side, the blue is the Solution & Services. Let me do this at a later stage. Let me focus on the red side, which is our Software & Cloud business line. Over here, you see a slight negative growth of 2.1%. In essence, there are three reasons for that.
Number one, as I mentioned earlier, there was still some residual weakness in Software & Cloud for the first four months of this year. As I said, we have seen that turning around in May and June, we are seeing it continuing to recover and grow. The second is the dilution of our gross profit from Software & Cloud into services, which is through pay-as-you-go. Again, pay-as-you-go is not only a consequence of cloud, it's also our conscious strategy because the scalability and the lifetime value of our customer. The third point is certain geographies have not performed as we wanted them to perform. I mentioned already LATAM, that's macroeconomic through COVID-19. I will show you later a bit more on the rest of the geographies, how we have performed. Moving to the right side and giving you more detail on the Solution & Services.
You remember we spent in 2019 the time to integrate this complex, integrate our service portfolio and the service catalog. We clearly committed and told you that this will lead to an acceleration once we are through the integration. We delivered this in 2020. We accelerated to 23.9%. You see another acceleration up to 53.4%. Yes, you see there is also 36, which is organic. For us, it's more or less the same, whether it's organic or non-organic, because every integration means also attention, means also focus, and means also opportunity cost. The achievement is the achievement. We are very confident that this level of growth continues for the remainder of the year, driven by pipeline, driven by backlog. You also see at the bottom, you see the 59%, which is again, a number which is growing. That's our ratio on managed service.
It means we have recurring contracts, and that's delivery backlog. That's not sales backlog, that is delivery backlog, which is part of your bookings for the future. Going into the geographies, let me start with North America. You see 11.3% growth year-on-year. I'm very pleased over there, particularly from Q2 onwards. We have seen really an acceleration, which is also indicative of what we see in the rest of the market, and also from competitors. On EMEA, we have seen a solid growth of 8.2%. You see below, DACH has really grown very well. In the rest of EMEA, we have two, three countries which have not performed to our satisfaction level, and we have addressed this for the second half of the year. APAC is growing very nicely with 25.1%, and LATAM on the left bottom you see is also growing.
It's growing 48.7%. Let's be clear on this, the biggest chunk is the integration of InterGrupo. If we take InterGrupo out, we have a negative growth of 5.4%, which is what I mentioned earlier, macroeconomically through COVID-19, particular Brazil, particular Mexico, and to a certain extent, InterGrupo. Before I hand over to Alex, let me reiterate our strategy. For those who have been with us for quite some time, you always see five pillars, how we execute our strategy. The first pillar is continue to grow and digitize Software & Cloud. I want to do a bit of a deep dive on that for you. What we see in the market, what we see from our customers, what we see from the publishers and the ISVs and the technology trends, there in the future, in this classical reselling space, will completely evolve.
There will be only two motions going forward. The first motion is the customer wants to do self-service, and whether that self-service is enabled through a platform, whether it's enabled through a marketplace, whether it's enabled through customization, they want to do a self-service. The trend is absolutely going into marketplaces and enabling the customer through that with a digital experience. The second motion is the customer wants a trusted advisor to manage their Software & Cloud spend. They want to manage it completely through a trusted advisor, and that's where we see great potential with our offering. We call this digital supply chain, where we have seen tremendous growth over the past six months. Also on the marketplace, we are well-positioned. It's very important that you see the penetration and the adoption of our PyraCloud, because marketplace is one component of PyraCloud.
We are able to position the marketplace to our customers. They can use our marketplace to consume Software & Cloud. They can use our marketplace to aggregate other marketplaces which are out there, whether it's in Amazon, AWS, or whether it's in Azure or Google. We can also use the same marketplace to do business to business. Really an omni marketplace, which is changing the landscape quite dramatically. Why do I deep dive over here? Why do I elaborate on this so much? It's very important for the community to see that the classical reselling is changing. It is not anymore in the future about optimizing every single deal and take the highest GP out of a single deal. It's about digital experience for the customer, and the customer wants to consume Software & Cloud through a self-service platform.
The second point is cross and upselling our Solution & Services. That's always a very safe terms. The ones looking on metrics are looking at upwards and sidewards mobility. We see it very simple. Every single customer which we have, we want to attach Solution & Services, and every solution and service customers, we want to attach Software & Cloud because they both go together. They are not exclusive to each other. They are synergized. They belong to each other. You see now from a growth perspective on 66% of LTM is already from customers purchasing both software and services. You also see, we have indicated this now quite clearly, an over 70% year-on-year gross profit growth in our X Simple bundles. Remember, X Simple bundles is equal for us for pay-as-you-go. That's a tremendous achievement. It's continuing this way. We don't see any slowdown over here.
As I mentioned earlier, highly scalable, recurring revenue, and the contribution margin on this is just incredible to further scale out. The third area is to look at the customer's digital journey and make sure that our portfolio is addressing that customer's digital journey, that customer's commercial or technology journey. I want to highlight that over here, we want to disconnect the growth of our business with headcount growth. We are focusing on the front end to the customer on absolutely IP-enabled services. We are focusing to do it with a fresh approach where we don't need a bench, where we don't need to grow similarly to headcount when we have a business growth. You will see this also later on the back office, and Alex will go into more detail.
We see the investment in our strategic growth areas are evolving very well to recall, and you see more later in the slides. These are five strategic growth areas such as SAP in the cloud, such as application services, application modernization, or managed FinOps, which is the cloud dynamics in the future. To be crystal clear, in SoftwareONE, we have a golden rule. If we establish a practice, that practice has to have a potential of at least CHF 100 million GP. Our five strategic growth areas are on this journey to cross this CHF 100 million, and will do so in the next two years. On the fourth pillar, we see the scale on the local operating model. That's important because we need to further evolve on an ongoing basis on our margin profile.
There is an automation, and there is a digital enterprise avenue for us where we disconnect the growth from headcount investments. Also it's important that we are there where the customer is. We have to deliver local, regional, and global, and we have to make sure that whatever we can standardize, whatever we can automate is coming through the system. Whatever we can standardize, we can deliver globally. Whatever needs to be face-to-face, whatever needs to be customized towards the customer, that reduced scope needs to be local and regional. Last pillar is our M&A. Over here, we will continue to be very selectively adding to our organic growth, and it's all about jump-starting. It's all about capabilities. You already have seen, we have announced six acquisitions so far.
We will continue to focus on SAP in the cloud, and we will continue to focus also to add capabilities on AWS and our Google practice. With that, I'm very happy to hand over to our COO, Alex Alexandrov. Thank you very much.
Thank you, Dieter. Also a nice warm welcome from my side. It's nice to be back in person as we conduct this call with you. I'd like to spend a few minutes with a business update, and I'll start with the backdrop in terms of our customer base and the markets where we operate. As we've talked about from the IPO, all of our customers are using technology to enable their business. They see technology as a way to differentiate. They see technology as a way to grow, to transform their own business. This technology spend continues to grow within our customers, and it grows as both CapEx and OpEx. The additional complexity, as well as the additional OpEx, puts quite a bit of spotlight on technology, and that's the role, that's the place where SoftwareONE sits in.
We're helping our customers all along those technology needs, whether it's spend, whether it's optimization, whether it's migration and management in the cloud. On the right side, you see our markets, the markets where we operate. We've talked about in the top right, the Software & Cloud market for us is really the enterprise software market. You see here that it's greater than $500 billion market, now growing at over 10% as it recovers from COVID-19. On the bottom right, as you heard from Dieter, all of our services and solutions are built for cloud only. As we continue to build out this portfolio, we'll spend some more time with you in the capital markets day to really show you our specific addressable markets.
Overall, what we can say is the backdrop of the public cloud infrastructure as a service is a good proxy for our markets, and you can see how well it's growing at 30% CAGR over the next several years, and the market is essentially 4 x the size over the next five years. Our portfolio towards the customers is organized in a way to address the customer's pain points, to deliver outcomes to our customers. That's why we speak about commercial transformation. We speak about technology transformation and ultimately digital transformation. What do we mean by this? On the commercial transformation, yes, we are helping customers buy at the lowest cost. We're helping them buy in the right jurisdiction with the right terms and conditions. More and more, we are helping our customers get their arms around their overall spend.
We're introducing visibility, we're introducing transparency, and ultimately management of their overall spend. That's what we're able to accomplish for our customers as part of their commercial transformation. Technology transformation, it's all about helping customers get value from that spend. They are spending on software, they're spending on cloud, often they need help to get there. They need help implementing or migrating. Once they're in the cloud, they need help managing. They need help optimizing. That's where our technology transformation practice plays a big role. As you heard from Dieter, as we continue to add to this portfolio, yes, the portfolio continues to grow because we are trying to address more and more of our customers' needs. We try to do it in very much in an IP-enabled way so that it's not a plain vanilla service.
It is always a SoftwareONE unique service because that allows us to add more value to the customer, allows us to remain sticky with the customer. Finally, when we put commercial and technology transformation together and we add business or vertical expertise, we are able to take our customers all the way to digital transformation. We help them innovate their business model, improve their own customer experience, and improve the experience or optimize their own internal process or employee experience. Our lines of business are increasingly more and more integrated because, as I just mentioned, we are after delivering these outcomes to our customers around commercial technology and digital transformation. For example, we might take a third-party software or a subscription, wrap a SoftwareONE service around it, add analytics and digital interaction with our platform, and come up with a SoftwareONE solution.
That would cross and have gross profit that would drop into both Software & Cloud and Solutions & Services. We might have another example. We might have application modernization. We might move a customer's workload into the cloud, and that would be a service. That application now operates in the cloud environment, we would drive cloud consumption, and that would be a positive for our Software & Cloud business. I wanted to illustrate these two examples just to better show how the two lines of business are working closely together and why we focus so much around our overall growth rates at the customer level. To take it down to the specifics of the line of business performance, on Software & Cloud, you see it at 65% of our gross profit today.
As Dieter mentioned, we are at a -2% for the first half. Some of the contributors I'll guide into now. On the Microsoft side, what we see is our billings growth is very similar to what we see in the market, what we see with Microsoft. At the same time, we continue to see this mix effect that we talked about on our last call, which is enterprise, which is about 2/3 of our billings, continues to grow very strong. It's at a lower gross profit contribution to SoftwareONE. At the same time, SME had been weak through COVID. We're now seeing a nice recovery in SME, as Dieter mentioned, towards the end of the first half, and we expect this to really recover in the second half. The impact of SME recovery, SME growth shows up in two ways.
It shows up in Software & Cloud, and it also really drives our pay-as-you-go dynamic, as Dieter mentioned. The second big impact, the big force that we see in our Software & Cloud business is pay-as-you-go. As you're hearing from Dieter, this is our X Simple bundles. What we do here is customers signing up to a subscription, and we wrap a service around the subscription, and we wrap PyraCloud around it. We create a bundle. That creates much higher margin business, a very scalable and recurring business. What it does is it produces less revenue upfront because the customer is not signing up to an annual or a three-year contract, but it does create a very nice lifetime value of the customer, and it creates a lot of gross profit that is recognized as a service on the Solutions & Services side.
Finally, by region, we saw weakness in LATAM, and this undoubtedly impacted our results. What we expect going forward is, as I mentioned, continued recovery in SME that's driving both our Software & Cloud and our Solutions & Services business, and continued strong growth in pay-as-you-go. What you see in some of the KPIs that we're now disclosing is that the pay-as-you-go business was previously growing greater than 50%, and we're now seeing growth greater than 70% in this segment. On the multi-vendor side, we would say very much closely resembles what we're seeing with Microsoft specifically, which is some purchasing weakness through COVID and a nice recovery in May and June as we wrapped up the first half. Just a few highlights on Solutions & Services , I'll go into more detail.
On Solutions & Services , we continue with our strategy, as Dieter mentioned, to take our customer and do more with them. We measure our success here with our cross-sell metric, which is how much of our gross profit is with customers that do both with us, Software & Cloud and Solutions & Services . The KPI here, as we've talked about consistently, has gone from 60% in prior period to now 66% of our gross profit is customers that are doing both with us. We believe this is very attractive because it creates, again, a stickier, more recurring customer relationship. We are much closer and interacting constantly with the customer.
I will go through the additional detail on the following slide in terms of the contribution of the commercial and technology segments, as well as the growth rates there. We're very excited about the results because in the commercial transformation area, we are seeing return to double-digit growth rates. On the technology transformation, we're seeing 39% growth. Finally, I'll spend a few more minutes on the following slides on our investment areas. As we talk about our integrated business, as we talk about what does the future business model look like and why Dieter spent so much time in the strategy section on this, we see PyraCloud playing a critical role. This is our way to deliver an integrated business model to our customers. It's a way for us to embed our own IP, intelligence, and automation, and that's why we're so excited.
That's why we continue to invest so much in our platform. Our platform has three aspects to it. The first aspect is the marketplace. This is a place where customers can come to buy, select the software, and even select from our services catalog and self-provision some of those solutions. In the middle, what you see is us building a way to interact with our customers in a digital way. We will not be able to replace, and nor do we want to replace, a lot of our human touch points, but more and more, as you're hearing from Dieter, customers want that digital interaction. They want that digital way of doing business, and that's what we're creating with SoftwareONE Digital.
Finally, customers are using multiple clouds, and this is the third aspect of our PyraCloud, of our product portfolio, which is an intelligent management platform for multiple cloud environments. What we want to highlight here is, again, this is the connective tissue, the glue between our Software & Cloud and services and solutions business. We will continue to invest more and more here because this creates a lot of IP and value add for our customers. The statistics show that customers appreciate this and customers are willing to adopt it. More than 60% of our customers are now activated on the platform, and we're seeing significant increases in usage. As I mentioned in the previous slide, our services portfolio is organized around customer outcomes, and this is what we mean around commercial transformation and technology transformation. Let me now spend a few minutes.
On the commercial transformation, we are helping customers with an advisory engagement upfront to understand what are they buying, is it what they need to buy, then as an outcome of that, we help them buy at the lowest cost. This area today contributes a little bit more than 25% to our services gross profit, it's now growing nicely at more than 15% year-on-year. On the right, you see our technology transformation areas. We are offering our customers scalable solutions to move to the cloud. We offer them an ability to manage and optimize their environment in the cloud. Many of these are very much in a managed service format because, again, we always try to balance a professional service that leads to a managed service.
This, for us, is a key ingredient to success because it allows us to build a very scalable, profitable services business. The technology transformation area in H1 contributed more than 50% to our services gross profit, and it's growing very well at 39% year-on-year. The strategic growth areas I will dive into next. This today is a little bit less than 20% of our gross profit contribution and is obviously growing very fast. Let me now spend a few minutes on that. Our strategic growth areas is what we started to break out for you at the beginning of this year. It's something that where we started investing heavily in 2020. We selected these areas based on market opportunity, total addressable market opportunity, and an addressable pain point with a customer. It's very important for us to say, does a customer have a pain point?
Are we able to address it? When we combine those two, the addressable market and the customer pain point, that for us shows it's a good area for us to invest in. We can add value and help solve the customer's problems. The strategic growth areas are made up of application services, SAP to the cloud, hyperscaler factory, industry verticals, where we started with engineering and construction, and finally, managed FinOps. What I want to highlight here is that we are investing in this area. In the first half, we invested approximately CHF 26 million in OpEx, both a combination of internal organic OpEx as well as through our acquisitions. Already, these strategic growth investment areas are yielding approximately 26% of gross profit. We're very happy with where they are today.
At the same time, it's also very clear that these areas are still very much at the beginning of their growth journey and very much at the beginning of their ability to scale and really contribute to our EBITDA. The momentum we see here is really exciting. We're seeing win rates increasing 2x-3x . We're seeing pipeline at 3x . We hope to go into much more detail in these areas with you in our Capital Markets Day. I'll now turn it over to Hans, and obviously a very special and exciting day for Hans and bittersweet for us, as Hans has been an amazing partner for our entire team. Go ahead, Hans.
Thank you, Alex. Also from my side, welcome to this conference call. I'm pleased to go through the financials in more detail. I like to start with the profit and loss statement. The IFRS reported figures H1 2020 and H1 2021 represent the figures which you see in the half year report. More meaningful to assess our performance are the adjusted figures which you see on the right side. The adjustments made are all in line with our policy represented in the annual report as alternative performance measure. We have achieved a total gross profit of CHF 414.4 million, corresponding to a growth at constant currency of 12.3%. Even though the two lines of businesses really belong together, as Alex just alluded to you, we present the line of businesses separately. The gross profit from Software & Cloud declined by 2.1% and achieved CHF 267.6 million.
The gross profit from Solution & Services is CHF 146.7 million and represents extraordinary growth of 53.4%. On the OpEx side, the operational expenses amounted to CHF 305.3 million, which represents 22.5% growth increased or higher than the gross profit, this marks the investments we've made in the growth areas. The resulting EBITDA is CHF 109.1 million, down 9% from the CHF 120 million on prior year period. Depreciation, amortization, financial results, and tax expenses are in sum very similar to the period of last year. To be noted here, we have a small increase in depreciation to a smaller, higher CapEx, and we had special effect, positive effect in last year due to customer relation evaluation and a tax benefit. This one-time positive effects did not recur in 2021.
With this bridge, on the next slide, from reported profit from the period to the adjusted profit, we want to provide you the transparency of all the adjustments made. Starting with the IFRS profit of the period of CHF 38.3 million, we added an expense of the share-based compensation of CHF 7.8 million. This contains two topics or 2 metrics. One is the management equity plan, which was launched prior to IPO and was fully funded by the major shareholders. There is no impact for the SoftwareONE, for the company, near on cash, near on equity. The other one is the free grant share. The CHF 7.8 million is already reduced to last year of CHF 12.4 million, and it will further reduce going forward and will end in 2022.
We have adjusted expenses for the integration of acquired companies of CHF 3.1 million, we have adjusted M&A and earn-out expenses of CHF 5.7 million. This is mainly the earn-out expenses will make up that sum. In addition, we adjusted the depreciation of the shareholdings in the Norwegian-listed company, Crayon, of CHF 1.2 million. Last year, there was an appreciation of CHF 13.3 million. Finally, we make the tax adjustments of all these adjustments made and reach an adjusted profit of the period of CHF 54.3 million. Continuing with the profitability on the next slide. Our profitability here presented as EBITDA is impacted by the investments made in our strategic growth areas. The EBITDA H1 2020 of CHF 120 million decreased by 9% to CHF 109.1 million.
Main drivers have been a gross profit decline in Software & Cloud of CHF 9.6 million, a gross profit increase in Solution & Services of CHF 27.4 million, and already a nice gross profit increase of CHF 25.8 million of our strategic growth areas. These strategic growth areas on the other side had an OpEx of already more on the same level and already reached a break-even point. It's very remarkable at the beginning to be in that good shape. The investment, further investment we have made in delivery capabilities and sales and marketing, all for future growth of our business, results to an EBITDA of CHF 109.1 million. In summary, the investments made are not yet profitable or fully profitable. A very good foundation is made for future growth and increase our profitability.
Continuing with the cash flow, we have achieved underlying an improvement in the net operational cash flow of -CHF 32.4 million. However, on a reported basis, the cash flow decreased from CHF 206 million positive in H1 2020 to this -CHF 32.4 million in H1 2021. As disclosed last year, the cash flow was inflated by about CHF 250 million last year to the COVID-19-related vendor deferral payments. Corrected by this one-time effect in the first half year in 2020, the cash flow from operation activities would have been about -CHF 40 million. There you see the positive, the improvement underlying we have made this year already. Small increases in the CapEx, you see on the left side to CHF 14.3 million. The main contribution to the CapEx are investments in our PyraCloud and also investments internally generating in our processes and improvements.
This demonstrate the small numbers that we are in an asset-light business model and able to generate positive cash flows. Continuing with our balance sheet. We do have a very strong balance sheet. Let me take the most or biggest part of the balance sheet, which is the net working capital. The net working capital is in a negative territory, despite the seasonal effects we have and despite the business growth. Also here you see the improvements underlying made to the prior year. The prior year reported net working capital was CHF 173.4 million negative, but adjusted to this one-time effect presented to you last year of CHF 250 million, we have an improvement made this year very significantly. I can tell you this improvement was not only at the rebalance sheet date, it was achieved during the H1 2020 period every month.
Going forward, I think this trend can continue, but we do not expect that we can achieve this really record low level we have achieved at the end of last year fully, but should be close coming to that. The equity ratio with 24.4% remains on the same level as in December last year. It's on a good level and is also demonstrating the unlevered balance sheet we do have today. The net debt at the end of the period is minus about CHF 400 million, or you could also say the net cash positive is CHF 400 million. Together with unused available credit line with this unlevered solid balance sheet, we are very well positioned for future growth and very well positioned for future acquisitions. Finally, a personal note. As announced, I will step down as CFO and retire from operational activities at the end of this year.
The seven years at SoftwareONE have been the best experience in my career. I enjoyed and will enjoy every day of that extraordinary and ambitious journey I was able to participate and contribute. I'm very glad that we found with Rodolfo Savitzky, an excellent successor, and that we are able to plan a smooth transition. With this, I give it back to you, Dieter. Thank you.
Thanks, Hans. Also thanks, Alex. Let me now, before we go into the Q&A, reiterate the outlook for the remainder of the year, as well as elaborate a bit on our capital market day in October. Coming to the full year 2021 guidance, just to reiterate on the gross profit side, our guidance was and is above 10% growth in constant currency. That's excluding InterGrupo, which we expected to contribute always around 4%. Our key assumptions to the guidance, we see a further acceleration in our gross profit growth in the second half of the year. That's led by a recovery in Software & Cloud, we already shared this with you, with a return to a positive growth and a continued strong momentum in Solution & Services supported by a backlog. Midterm guidance is mid-teens growth in constant currencies. On the adjusted EBITDA margin, approximately 30%.
Over here, our key assumptions are the cost base at approximately the same level in H2 2021 compared to H1 2021, driven by our front-loaded investments, which we have done in the first half of the year. The midterm guidance on EBITDA is the EBITDA growth will be in excess of gross profit growth. On the dividend policy, our guidance is 30%-50% adjusted profit for the year. As you have seen before in the historic trend, we have a progressive dividend policy. The midterm guidance remains unchanged between 30% and 50% adjusted profit for the year. Coming to our event in October, on the 20th October. Hopefully, we see many of you at our Capital Markets Day.
Over here, you will see not only us as the executive board, but we also bring quite a number of global talents demonstrating to you our strategy on Software & Cloud, our digitization strategy on Software & Cloud, as well as our Solution & Services, how everything flows together, and how we make sure that this becomes an IP-driven and not an OpEx or an head count-driven growth plan. Looking very much forward to that and hope you enjoyed the presentation. Hope you have seen what we are doing in SoftwareONE. It's always about winning the business of today while we build the business of tomorrow. Now I'm handing over to the Q&A sessions. Hopefully we can spend the next 30, 40 minutes on questions- and- answers. Thank you very much.
Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take a few moments. To withdraw your question, please press the hash key. Once again, that is star and one if you wish to ask a question. Thank you. Your first question comes from Stacy Pollard from JP Morgan. Please go ahead. Your line is open.
Oh, great. Thank you. A few questions from me. First of all, can you talk about the pipeline for Software & Cloud and what kind of year-on-year growth you'd expect for the second half? Could you make it to a positive growth for the full year? As you look into 2022, do you think there's a bit of a rebalancing? For example, does Software & Cloud get back up to double digits? Solutions & Services , obviously quite exceptional growth in the first half of this year. Where do you see that sort of balancing out on a normalized basis? I'll ask the second question after.
All right. Thanks, Stacy. Great questions. On the first one, in terms of our pipeline, we have already seen the pipeline growing from May onwards. We see continuous rebound in that line of business also in the current months post H1. We have a positive momentum. If you take our geographies and that slide which I showed, Stacy, on LATAM, and if you would normalize LATAM, and if you would take those two, three countries from Europe in a normal performance, we would be already on a positive level in Software & Cloud. That's what we have addressed. Of course, we cannot address the macroeconomic side of it, but as you know Brazil and Mexico and Colombia is also improving heavily on that side. On the second part is whether we see a normalization in 2022. We see this from different angles.
The first one is, of course, we see that positive momentum across geographies, but we also see the SME recovery across the board. The second part, which I want to mention over here, we see a very positive dynamics also in the Microsoft space. For that, we are very confident on 2022 as well, but as you know, 2022 guidance, we will do with the full year results.
Yeah. No, that's fair. Second question, just can you talk about the operating leverage that you're getting in the second half? Now I know it's partly slower investments, maybe what other areas? Obviously Comparex synergies are on target. I guess still though there's some catch-up to do, I think, in the second half, and basically trying to get a sense of just how, are you very confident in that catch-up? Are there any things that we should sort of, kind of watch around the edges that it could sort of, kind of be better or worse?
Yeah, you're absolutely right. If you do the numbers, then you have to see that we have to have an accelerated growth in the second half of the year, but that's not the only piece, right? We also have to make sure that the cost base goes into the same direction. We do have a high-performance culture in SoftwareONE. We absolutely reiterating this over here. That's where our investment into our resources in the first half of the year, we will see the payback, and we will see the acceleration in the second half of the year. The COMPAREX synergies, which is, I mentioned, yeah, we are on track on that. On top of that, the high-performance culture coming out of COVID, coming out of an more empathy year of 2020.
We are back on a high performance and that paired with our investment in H1 will accelerate our growth.
Thank you.
Thank you. Your next question comes from Alastair Nolan, from Morgan Stanley. Please go ahead. Your line is open.
Morning. Thanks for taking the questions. Just to follow up on Stacy's question. Am I right in saying in terms of getting to the 30% EBITDA margin for the full year, if we assume a flat cost base , we're basically implying an acceleration to close to mid-20s FX growth. I think 23% FX growth, which is a pretty material acceleration. Can you confirm that? What gives you the confidence to see an acceleration of that scale? I guess more broadly as we look into the midterm, if services is going to continue to accelerate and become a larger component of the overall business, I think you've alluded to 50% in the midterm. How do we get comfortable that EBITDA can grow at a faster rate than gross profit given services typically come at a lower margin GP to EBITDA?
Those would be the two questions, please.
Yeah. Thanks, Alastair. On the first point, yes, you're absolutely right. It means that we will be exiting 2021 with a higher growth rate. For us, it's absolutely clear that our growth is further accelerating in the second half of the year. There are multiple components over there, which gives us this confidence. First of all, we already have a run rate business, and you have seen this is now 59% of the over 35% of the GP. That is continuously to grow, and that's already a given. It's booked, it's banked into the system. We have a pipeline with a high conversion ratio, where we have the intelligence of what the win rate is in the past. If we simulate this, we are very confident on that as well.
Both together for us is absolutely clear that the acceleration in the second half of the year will continue. We already see this, Alastair. It's already visible now in the running environment. On the second question, where you say if you pivot to a more Solution & Services organization, I just want to reiterate our strategy. Our strategy is not to become Solution & Services alone. Our strategy and where our main differentiator is that we have this synergy between Software & Cloud and Solution & Services, which is quite unique in the market. I know where you come from with your hesitation on saying, a normal system and integrator would have a different margin profile, right? On the EBITDA side. We don't want to become a system integrator.
We want to be a next-gen service provider where we drive IP, where we drive automation, a fresher approach, where even on the Solution & Services, it is absolutely isolated from a head count growth, and we have a scalability, where the contribution margin outweighs our investments. This paired with our digitization on the reselling space, where we have now not only a restriction to 90 countries and to 65,000 customers, which we have today. Once you are on the marketplace, you are suddenly in a digital experience where the addressable market is a completely different one. You take the human factor out of it with the digital experience. It means whatever margin you have on that flows directly to the bottom line. That gives us the confidence.
I understand that we have to talk more about this, and we will do this in the Capital Markets Day, because that's something where I think there's still a gap from a communication point of view.
That's great. Thank you.
Thank you. Your next question comes from Knut Woller, from Baader Bank. Please go ahead. Your line is open.
Yeah. Thank you. Actually two questions. Dieter, you mentioned that you target to achieve around about CHF 100 million gross profit when you do something like the strategic investments that you announced with the release of the 2020 results. Can you share with us something like a time frame when you expect to achieve these run rates in terms of gross profit? When should we see that? Secondly, getting back on the margin side.
I mean, to get to your margin target, you probably need something like a 35% or mid-30s margin in the second half, which looks a bit more than you have done in H1 last year. To which extent does this margin target depend on a recovery of LATAM, and to which extent is that already penciled in by what you have achieved today and given your expectation of a broadly stable cost base in H2 versus H1? Thank you.
Yeah, thanks, Knut. Very good point, both questions. On the first one, on the strategic growth areas, remember we are talking about five strategic growth areas. The principle which I said, if we invest into a practice, if we build out a strategic growth area, the addressable market has to be minimum CHF 100 million GP. That's the minimum. Otherwise, we are not investing into it. What Alex mentioned as well, we always choose areas where there's a humongous addressable market and, he calls it customer pain point, I call it burning platform. You see this in SAP in the cloud. They have to move by 2027. On application services, they have to scale out and modernize their applications, their legacy applications. You see this in the construction vertical. 38% of CO2 emission is from the construction industry. With our solution, we are able to impact this positively.
These are the burning platforms which help us to accelerate those strategic growth area quite tremendously. You want a definite timeline from me, and I have alluded to it, actually, in the call. I said those five strategic areas will all cross the CHF 100 million in the next two years. It's not aggregated, it is individual. Of course, we will evolve further, and there might be a change on another growth area. For those which we have visibility, and we speak here absolutely out of confidence. We see the pipeline, we see the win rate, and we see the ramp-up and the demand from the customer side. That's the first one. On the second one, in terms of the EBITDA margin profile. Our front-loaded investments really will support us. Our resources will be productive. You see this in any sales and service organization.
If you invest in the first half of the year, you get the productivity in the second half of the year. If you do it staggered and you do it out of seasonality every month continuously for 12 months, you never have a jump start on productivity. What we did is a conscious effort to really hire and use also the period where, at the moment, in the first half year, the talent crunch wasn't really there because many haven't really come out of COVID, and we finished with the hiring. We will see the productivity over there backloading our margin profile. The other aspect is, of course, if I take this handful countries and normalize them on an average growth level which we have, then we are absolutely on what we are saying. Just to reiterate our EBITDA margin, what we guide is approximately 30%.
Thank you.
Thanks, Knut.
Thank you. Your next question comes from Michael Briest from UBS. Please go ahead, your line is open.
Yeah, thank you. Good morning. A couple from me. Just to look at the cost base and the guidance that it's flat sequentially. If I think about headcount, it's up 600 in the half, and presumably, that didn't all happen on January 1. Similarly, you've announced a couple of acquisitions of about 400 people, and also you have this plan to get 5,000 new staff and re-certified staff on Microsoft by the end of 2023. Are you saying that headcount is going to be sort of flattish in the second half on the first half? Just, Dieter, coming back on your comments on approximately 30%, would 29% be within the ballpark there?
I'm curious what you said just now about the CHF 100 million GP potential in each of those five strategic areas being deliverable by two years, because if I put that on top of last year's gross profit base, I get well over mid-teens gross profit growth. Maybe you could just square the circle there. Thank you.
Hi, Michael. Thanks. Again, very valid questions for us. On the cost base, you're absolutely right. It was a ramped-up hiring over the first six months of the year. We do need to understand that we have an ongoing attrition as well, right? As an organization, like any organization has. What you have seen is an acceleration in the first half of the year where we actually net new hired on top of this attrition. What you are saying is that we also have strategic co-investors, Microsoft, where we talk about 5,000 headcounts. Let me go into this a bit. We have a contract which lasts to 2023, so it's a three years contract. Over this period of time, ramping up with the business demand, ramping up with the need of the customers, we have to come to a certification level of this approximately 5,000.
We are already on a certification level of 2,500. I want to see our first workforce being productive, we are not building benches. I'm not building a bench for the future. I want to see the pipeline coming through. If we run out of capacity, if we run out of capability, we would hire in the right space. From a focus point of view, at H2, we are focusing on making our resources productive to achieve our targets. On the approximate 29%, what you said is approximately 29%, we said approximately 30%. We will be exiting with a high growth rate at the end of the year. That also needs to be understood, that's also comparing to a weaker H2 in 2020. We will not change the guidance or discuss the guidance for the next year. That will come, of course, with the full-year results.
In terms of your midterm guidance, where you say, are we then talking about high teens or mid-teens? As I said, you see that we are exiting on a high growth, but we talk about the full year's results. Approximately 30% means for us approximately 30%. I mean, Michael, it's a certain range, but it's approximately 30%.
Thank you. Just on the software gross margin, has that now bottomed, do you think, at 6.4%? Just given the comments about Microsoft and the outlook on SME.
Yeah. Absolutely spot on. The outlook on SME has contributed to that. There's also a certain dynamic in Microsoft, which might be not yet common knowledge. We see Microsoft will have quite a drastic price increase in the first quarter of next year for the first time on the cloud component. Since 10 years, they really are increasing the price drastically on Office 365, M365, et cetera. You will for sure see two things, two dynamics happening over here. First of all, there will be an acceleration and renewal prior to this point, and that will be already in the financial year of the companies and not waiting until the new financial year kicks in. You will see an impact towards the year's end, and you will see an impact in the first quarter of next year.
You also will see that customers will require more advisory and will require more hand-holding from us to how to navigate around this situation. The other point, if you talk about bottoming out of margins, as you know, in October, there are always incentive changes from Microsoft. The view which we have is that this year in October, there's no negative change at all, and it goes actually in the opposite direction.
Thank you. Very helpful.
Thank you. Your next question comes from Andreas Müller from ZKB. Please go ahead. Your line is open.
Yes. Good morning, gentlemen. I've got a question on LATAM and also on the rest of EMEA, which was growing not really well. What kind of measures you have implemented in the rest of the EMEA market, and when do you think LATAM is going to recover? If there was also maybe some planned attrition, for example, in Mexico with the InterGrupo full acquisition.
Yeah. Thanks, Andreas. Let me start with LATAM. The measurements over there is really going from a remote sales motion into a contact sport again. Sales is contact sport, right? That has now already evolved in the last couple of weeks. You see the cases in both countries going in the right direction. Not yet over it, but it's absolutely improving. We already see this in the numbers. It's a repivoting of the sales motion, and it's a repivoting of the portfolio. If you look at EMEA, we talk about outside of DACH. DACH is on a very positive track and will continue to be so. Also, some other major countries in EMEA, but we have two, three countries where we were not happy with the performance in the first half of the year.
What we have changed is the approach to the portfolio and the sales activity and the sales motion. We already see, again, an impact which has already kicked in the first month of the second half of this year.
All right. My last question on the SME side, which seems to recover. Can you maybe give some size metrics, how that's going to recover? I think in that, of course, the pay-as-you-go factor dilutes a bit this growth, but just to get the feeling how this SME sector is coming back. Thank you.
Yeah. Two messages over here, Andreas. The first one, it is not geography specific. We see this across the globe now, that recovery on the SME side. We have seen it first in North America in Q2, but we see it now across the globe. For us, the metrics and the indicator is, of course, the acceleration and the growth of our X Simple bundles, our pay-as-you-go, where we added 50% more of acceleration, which is now above 70%. From a target market, pay-as-you-go is absolute targeted to SME. You see that rebound happening through that. The other aspect is that also SMEs, in the meanwhile, are really interested with a digital customer experience. They are driving also towards the digital supply chain on our side. We have a light version for them compared to the enterprise side, and they are driving to our production.
Okay, thanks. That answers my questions. Thanks.
Thanks, Andreas.
Thank you. Your next question comes from Ben Castillo from Exane BNP Paribas. Please go ahead. Your line is open.
Hi. Good morning. Thanks for taking my question. I had a question on, you're seeing strong growth in your X Simple bundles, pay-as-you-go sort of consumption. Can you quantify that in terms of the short-term negative impact to Software & Cloud gross profit, from the revenue recognition standpoint? Then the offsetting or corresponding positive impact from services as more GP gets booked over there. How long do you think that headwind from the shift to more pay-as-you-go consumption could last? Is that a 2021 story or is that something that could continue to be a headwind in the out years? Thanks.
Thanks, Ben. The dilution or the shift from Software & Cloud into services. Again, we are driving a strategy over here for us is really creating more lifetime value on our customer base. If you look at the addressable market of our pay-as-you-go, it's SME again. If you look at our overall portfolio with Microsoft, that's the addressable market which we have to consider. From a metrics point of view and from an achievement number point of view, what we can tell you is that we are already halfway there. From an addressable market, from a target market, we are halfway there to convert our customers to pay-as-you-go from enormous subscription base. It will take us another 18- 24 months max to convert the remainder part of it. Alex, you want to say something on top of it?
Hi, Ben. Yeah, I would say we want to dive in a bit more into this dynamic just to paint a picture for you on the impact on Software & Cloud and services and solution. It is a meaningful impact. What we want to just again highlight with a simple example is while it has an immediate impact, as you would see in the first period, when you go from, in any traditional software company, going from software to a subscription, it has an immediate impact because you lose the upfront. What you pick up is the monthly subscription amount and the margin that we make on it. We want to cover this in more detail. I'll just give you maybe a few stats. We see the break even for us in about six months.
Over the course of three years, which is a typical kind of commitment buying example that we would give you, we see just the three-year lifetime value being 6x-8x higher on this pay-as-you-go model than you would see on the annual upfront. We will then come back and help you quantify the impact on both sides. In terms of a unit economics, it's a very exciting proposition for us.
Sure. No, that makes sense. The lifetime value, absolutely. I'm just trying to gauge how long will this sort of short-term headwind from that initial shift last for. No, I appreciate that. I have one follow-up just a clarification, if that's okay. I think you mentioned 36% growth in Solutions & Services , ex InterGrupo with a CHF 16 million contribution. Can you just give an indication of the contribution from the other acquisitions that you made?
Yeah. Thanks, Ben. For us, we always separate out the bigger acquisitions, which is what we did with Comparex and what we did with InterGrupo. The other ones are bolt-on acquisitions. That's part for us as business as usual, Ben. It's just simply ramping up capabilities faster than we would do with an organic hiring. We are not really separating them.
Okay, thanks.
Thank you. We have no further questions at this time. Thank you all for participating. We can now disconnect.
Thanks everyone for joining us and for our analysts, I'm looking forward to our Q&A later. Thanks for making time for us. Have a great day. Bye.