Thanks to everyone joining us for the first half-year results of financial year 2020. This is Dieter Schlosser, CEO of SoftwareONE. I'm here together virtually with Hans Grüter, our Chief Financial Officer, and Alex Alexandrov, our Chief Operating Officer. A real pleasure to have you on the call. I will walk you through the first half year results, which is also available online on our webpage. I will start with the key highlights and the business update. Hans will then give you a detailed update on our financial performance. Thereafter, I will turn to our outlook and take you through what we see in the second half of this year. Alex, Hans, and myself will then round off this Q&A at the end of the session. Let's start with the presentation.
First point, there's always to the disclaimer on page two, the forward-looking statement as well as non-IFRS measures. Please read them carefully and let me straight jump into slide five. I'm really happy to share strong results in an extremely difficult environment, a global pandemic, a global crisis where we wanted to make sure, and that's our top priorities, that our employees are safe, our customers can operate and continue to operate their business. We stick to what we have told you in the last results presentation and come out much stronger of the crisis than we entered in it. You will see this throughout the presentation, when it comes to our progress on the transformation, when it comes to the progress on the integration side with Comparex, but also on the financial metrics. Starting off with our great results on solution and services.
Our customers really relied during that period and in general on cloud and trusted us completely on our services, and we were able to achieve an acceleration and a year-over-year growth of 15.1%. We were also able not only to increase our EBITDA level to 18.2%, but also our margin above 32%. You might recall, we ended up last year was around 30%, so that goes towards the midterm guidance, which we guided to, was 35%. Our run rate on Comparex-related cost synergies have reached now CHF 31.9 million. That's ahead of the plan, ahead of the curve, and I will give you further details later on. Also very pleased that our business model, which we always told and shared you, is a resilient business model. We are able to grow, and we are able to benefit when the economy and the environment is good.
We also pulled from our customer into the business when the environment is in a difficult situation because of our portfolio. We were able to leverage that business model and continued on our strategy, invested into acquisitions and into talent. There's a saying, never waste a crisis, and we have been able to utilize that and acquire companies which are on the market, interesting companies helping us on our future transformation and our growth, but also very good talent across the globe. We hired so far in the first half-year, 380 new collaborators, and that's a journey which is continuing for the rest of the year. On the financial side, further unlevered balance sheet, significant liquidity, and a cash flow generation, which Hans will share with you in his part of the presentation.
If I go a bit deeper on slide six into our two lines of business, very solid performance on software and cloud. We have seen customer rushing into everything which is COVID-relevant, renewals of mission-critical software. On the other side, also certain scrutiny of whatever is discretionary. On the solution and services side, here we really benefit that our entire service portfolio is geared up to the cloud, and customer consuming with the increased consumption on the cloud, also our services. That's across our two practices, which is Software Lifecycle Management. I give you an example, for instance, cost takeout advisories, to relieve the customer with certain OpEx challenges or on the technology services, where we helped our customer on cloud optimization, and on cloud management. You see below on the revenue, there's a discrepancy when you look at the revenue of H1 2019 compared to H1 2020.
That's an intended consequence of our portfolio cleanup, which we shared with you earlier in this year. You remember, we have exited and sundowned whatever services are non-core for us and non-profitable or low profitable. The result you see over here with less revenue, we are able to achieve a higher gross profit. If I then go into slide seven and show the Software and cloud business into more detail, we see a strong demand from customers when it comes to renewals and to mission-critical software. Whatever is relevant to keep on the light has continued to grow. On the other side, discretionary spend which is focused on innovation, which is not at the same time relevant during the crisis, and project-related software has been delayed in that sense. On Microsoft side, we are now 75% of the GP, and customers buy from us.
When I go deeper into the products, 60% on cloud and 40% on-premise. On-premise is something which we maintain, which we keep as a running book of business, even though the growth is much slower over there and it's limited cross-profit opportunity. As you can imagine, these are the cloud journey travelers of the future. By maintaining them in our book of business, we will benefit in the future when the customers are ready to migrate to the cloud. Talking about the 60% in the cloud, it's all split between the three different clouds Microsoft is providing. It's the productivity cloud, which is Office 365. It is the Azure cloud, which are the workloads, and it's the Dynamics cloud, which is the ERP of the future. Given our portfolio mix on customer segments, we do have around 50% on SME.
We experienced a lower growth in that particular segment because SMEs were the ones which were hit first during COVID. During H1, we had fewer upfront deals where customer pre-bought to get larger discounts. That's usually happening in Q2 during the year-end of Microsoft, such deals are usually very healthy for us. Customers that focused on pay-as-you-go, which in the long run is very positive for us. You see we have a growth over here above 50%, that's promoting the customer relationship which we have, the transformation. Also on the software cloud subscription revenue, a huge upside for us with the adoption of further cloud products. Looking into the services instead of showing you some numbers, I thought I'd share with you a real case. There's also a video out there on social media.
We are talking about a customer who is one of the largest food distributor in the U.S. When they entered into COVID, they faced dramatic challenges, not only from enabling remote working, but really maintaining the service level to their customers, which is the modern trade, the general trade, the mom-and-pop shops. We partnered very quickly with them. We migrated them completely to Azure, and we deployed the Azure Virtual Desktop, enabling them to not only keep their employees safe and maintain the business, but really have the sales stocked on an ongoing basis and benefit from the COVID scenario as well. There are many customers like those, which you will see as a reflection in our performance on solutions and services. Coming to our synergies and to our major acquisition and integration efforts on Comparex.
Beginning of the year, we shared with you that we made the hard decisions in 2019. We harmonized the solution and services portfolio in the beginning of the year. Right from the get-go, from January, we started with one portfolio. We aligned the sales enablement. We harmonized compensation, which is one of the most important topics if you are a tax-based organization. The ongoing concern at that time was the integration and harmonization of the ERP systems. I'm very happy to share with you that we basically have by now the entire SoftwareONE company on our ERP and on our harmonized ERP system in place. That's a major step forward, so we can make a tick in the box in terms of the integration effort with Comparex.
The synergy realization is, of course, ongoing, and you can imagine from next year onwards, when you have a full financial year, calendar year in one harmonized process and back office, we will also have a further traction on the synergies. If you look at the numbers on the right side, the monetary aspect, we finished this in the first half year with CHF 15.6 million on synergies. On a run rate projected for 12 months, that's CHF 32 million, which is far ahead of what we guided initially. We said we would achieve around 60% of the CHF 40 million target, so we're already ahead of the curve. Just to already share this with you, we will also adjust the guidance on that, which I will share with you later on. When it comes to acquisition, again, it's a proof, it's evidence, it's a validation of our resilient business model.
We didn't change the strategy. We continued on our strategy to really utilize the crisis and acquire companies which are in the market. The same goes later on for the talent. Happy to share with you that on top of the eight acquisitions which we have done till the end of last year, we added another three. B-lay is a Dutch organization which is focusing on Software Lifecycle Management and gives us strong additional capabilities on Oracle and SAP. make IT noble are extremely specialized experts on Microsoft who joined us in our Swiss office. GorillaStack is capabilities in IP, which provides cloud cost management and event monitoring on AWS. We are currently integrating that into our platform, into PyraCloud, which will boost up our cloud platform management to a complete different level.
We are also on the verge of making that as a feature parity for Azure in the same way. We are really hyperscaler on the cloud platform management. With the other set, we will wait until we are through with the Comparex integration before we open the opportunity on acquisitions on scale. As I have shared with you earlier, we are well on track. We actually done the integration on Comparex, the window of opportunity for such acquisitions would open up by year-end in 2021. On talent, same scenario. The crisis offered to us a unique chance to hire talents in the market. We did this very aggressively in our growth streams. We have three growth streams. One is the cloud-managed services, where we are fast-growing now on AWS, but of course, further utilize our opportunity being the number one player on Azure.
We have, furthermore, application modernization, where we help to really our customers embark on their digital transformation, re-platform, refactor, and re-engineer their legacy applications, which is a necessity if you want to maintain those in the future. At the same token, our critical workload practice, which is SAP on the cloud, which we also reinvested heavily into this practice. These are growth streams which we believe are growing for the next between 8 and 15 years, depending on which one we are talking. For us, it's very crucial that we continue to invest in them. Equally also in our back end, which is a scalable business model, as you know, through our global delivery model and also paired with our platform, which helps our customers to really optimize their digital software supply chain. We are getting many awards on a yearly basis, as you can imagine.
This one I wanted to share with you for the simple reason of, actually two reasons. Number one, this is the first time that Gartner really produced a Magic Quadrant on Software Lifecycle Management. What it means is that there is now an acceptance that Software Lifecycle Management becomes even more strategic in the future, because when you have every IT resource in the cloud, every single IT spend becomes OpEx. The management of those digital assets become more and more important to make the right decisions, to go faster on digital transformation, but also to optimize and leverage your spend so you can focus on innovation and reuse your discretionary spend to the right things.
There's one more award, which I quickly want to share with you, which is an SAP award through the CIOReview magazine, where we have been named as one of the most promising SAP consulting and service company in the cloud. That's exactly where we build up the practice with our acquisition last year on BNW, but also organically with our own practice build-up and help our customers now to move SAP onto Azure and AWS. With that, I'm handing over to Hans Grüter, our Chief Financial Officer, and he will give you more detailed information on our financial performance. Thank you. Hans, over to you.
Thank you, Dieter. Also from my side, I'd like to welcome you to this conference call. I'm pleased to go through the financials in more detail. Let's start with the page 14 and an overview of the profit and loss statement. The IFRS-reported figures, H1 2019 and H1 2020, represent the figures in the half year report. To remember for you, in H1 2019, the Comparex figures have only included for five months as we have acquired Comparex at the end of January 2019. More important to assess the performance of our business are the adjusted figures, which you see on the right side of this slide. We make adjustments based on our alternative performance measure. It's highly controlled, and it's in line with our internal rules. These adjustments include pro forma adjustments for Comparex, as it would have been with us since the beginning of January 2019.
It includes the bad debt presentation in line with IFRS as part of OpEx in 2019. This presentation is going on in the future, and OpEx adjustments for share-based payment, IPO, Comparex integration, M&A, and earn-out. I will come back to these adjustments later on and would like to say some words about the figures itself. We had achieved in the line of business gross profit from sale of software and other revenue, CHF 274.6 million gross profit, which is a growth in constant currency of 0.9%. On the gross profit for solution and services, we have achieved CHF 96.2 million, a growth of 15.1% compared to prior year, and a total gross profit of CHF 370.8 million growth, all in constant currency of 4.3%.
The EBITDA increased from CHF 107.4 million to CHF 120 million, which is a growth of 18.2% and represents an EBITDA margin of 32.4%, well above the 28 points rule we have achieved a year ago. The profit of the period is CHF 67.9 million, a bit higher than it was last year for that period. On the next page, we would like to give you the full transparency of all the adjustments made and show you here the bridge from the reported profit for the period to the adjusted profit of the period. We start with the reported period and made the adjustments for 2019 for Comparex. This figure is CHF 5.7 million, which represents basically the January of Comparex. We adjusted share-based payment in two areas. One is the Equity Management Program, which we disclosed during the IPO.
To remember here, it's financed by the major shareholders, but we need to present due to IFRS grant to P&L. The second part is a free grant. We have granted to our employees a number of shares and offered them to all of our employees with a vesting period for two years. The adjustment made for these two programs are CHF 12.4 million. Going forward, we expect this figure to be for the full year 2020, CHF 24 million. It will continue in 2021 with CHF 13 million and expected in 2022 to be CHF 4 million. Further adjustments we have made for IPO expenses, CHF 1.9 million in 2019 and CHF 0.5 in 2020. Integration expenses for the acquisition of Comparex of CHF 2.9 million in 2019, respectively CHF 4.4 in 2020. M&A and earn-out expenses net of CHF 0.1 in 2019 and CHF 0.4 million in 2020.
Further adjustments we have made for the appreciation of the Crayon shares, which was CHF 11.5 million in 2019, and it's CHF 13.3 million in 2020, and made all the tax impact of these adjustments reflected in the adjustment figures, which is an expense of CHF 0.6 million in 2019 and CHF 3.2 million in 2020. Going into the performance of our line of businesses, we have achieved GP growth and acceleration GP growth in our line of business solution and services of 15.1%, as well as a solid growth in the sale of software and revenue of 0.9%, all at constant currency, and overall a growth of 4.3%. Going to the EBITDA, as earlier mentioned, we have increased the EBITDA of CHF 107 million- CHF 120 million and the EBITDA margin of 28%- 42%.
This was possible, this improvement, basically one on growing the GP, with less growth on the cost side, with realization of our synergies, with some savings, for example, on the travel expenses, but also as offsetting some of this is the investment made in key talents and M&A, as Dieter explained to you earlier. We have achieved a strong cash flow from operating activities for the period as an amount of CHF 206.7 million, compared to a -CHF 15.1 million in the period a year ago. A main driver of that was the change in net working capital, which you see here in the middle part. All these figures are based on reported figures. We have benefited from a vendor payment program that made a big impact on this, where I will come back to in more detail in another slide.
The capital expenditure is about CHF 10 million for a half of the year. For a full year, about CHF 20 million. It's on a low level, as we always said. It demonstrates the asset light business model that SoftwareONE has. I would also like to remind you that in this investment, the bigger part is for investment in our PyraCloud, the platform for interacting with our customer and the platform for enrollment our business. Important to note here as well is our good position and managing the customer credit exposure in this not so easy time of COVID-19 situation. First of all, I would like to remind you that we have a very diversified customer base, a diversification based on a geography, but also on industries. We have a centralized process in place for credit line and payment terms with our customer, and try to ensure as much as possible.
When you see the chart on the left, we have in our portfolio, 80% of our portfolio is all insured or really high-rated customers. This position is very solid and a very good situation, in particular in this time. We have increased the bad debt provision for our accounts receivable from CHF 16.2 million to CHF 18.5 million. I would like to note here that this increase is an increase based by management assessment, and it's a provision only. Coming into the balance sheet, we can present you a very strong balance sheet with a very good net cash position of CHF 333 million, up from a net debt of CHF 35 million a year ago at the same time. The net working capital, which is a big part of our balance sheet, is at -CHF 173 million at the end of H1 2020 compared to CHF 104 million one year ago.
As mentioned to you, this net working capital was supported by a vendor deferred program we have in place. We expect that this program will end in H2, and we will expect as well that there will be a cash outflow of that in the magnitude of about CHF 250 million. This vendor program helped us extremely to support our customer in this difficult time. I would also like to mention to you that we have made some progress in the underlying net working capital mainly on the collection side on it, and expect this positive cash generating that we can do that also in H2. As we had at the last year, continuing unused bank credit lines going forward, we do have an equity ratio consistently on about 20%.
As a summary of this slide, we really have a strong balance sheet, which is good positioned for continued growth, being internally or through acquisition. With this, I would like to give the word back to you, Dieter.
Thank you, Hans. Let me go into the outlook for the remaining part of the year, for the second half of 2020. With regards to COVID-19, of course, the future development remains highly unpredictable, and it's difficult to judge. We see trends in our customer operating environment which really suggests a certain normalization. This is, of course, dependent on which geography. We see a faster pickup in Europe and parts of Asia compared to the U.S. Of course, it's also related, dependent on which industry segment we are referring to. Looking at the guidance and assuming no material deterioration of the environment through COVID, we expect that we can keep the gross profit level as we have seen in the first half of the year, also followed for the full year of 2020, and that's on software and cloud, and solution and services.
Again, this time and the crisis has evidenced that our business model is resilient. Only the practical experience of this year has really proven the foundation of our business model. That's why we are able to give you that guidance. If I go further into detail, how this looks in terms of breakdown on software and cloud, we would be talking about GP growth on the same level as in H1, which is around 0.9%. As you know, the user behavior with corporate customers is that there is a certain burn down on the IT budgets, depending on their financial year. If the financial year is aligned with the calendar year, you usually see this happening in the last quarter, in Q4, particularly in December. The question is, of course, is that happening?
Will that happen in the same way as it usually happens in the past, and will it happen also during a COVID phase? Will there be a real reduction of the OpEx and the reduction of the baseline for the future? We are rather conservative from this end. Hence, we are expecting to grow on the same level than we have proven in H1. On the solution and services side, we also assume and we guide that we have a growth of 16.1% for the rest of the year. Actually, the signs are really evident over there. I shared this with you also in the beginning of the year that we assume a creeping up of the backlog, and that's why it was so important not to reduce capacity and capability, but really reinvest into capacity and capability so that we are able to deliver that.
That has really occurred. The backlog is at the highest level on the professional services now, as well as on the managed services side. We are very confident on that guidance. In terms of synergies, we uplift the guidance over here from the 60%- 80%- 85% of the CHF 40 million OpEx synergies, which we guide to achieve by FY 2021. As I mentioned earlier, the entire company is now on one system, on one process, on one back office. Once you have a full calendar year, full financial year on that back office, of course, there's further upsides for us visible. On the EBITDA margin, we will be approximately on the same level we have achieved in H1 2020 for the full year.
That's, again, it's evidence that the business model is moving towards the targeted one and the guided one in the midterm, which is 35%. Dividend policy hasn't changed, and it will be between 30%-50% profit for the year. That was the end of our presentation. I'm happy to refer back to Stewart, our operator, and we go to the Q&A session.
The first question is from the line of Stacy Pollard from JPMorgan. Please go ahead.
Thank you very much for taking the questions. I have a few, actually. First of all, you mentioned 50% SMEs grew a bit slower. Can you maybe quantify that? What progression are you seeing in the pipeline for Q3 and Q4? That's one question. Maybe my second one, do you mind just talking about other vendors? You talked about Microsoft being 75% of your GP for software and cloud. Just some color on what other vendors are strong or weak, and pipeline there. Third question, do you mind just reminding us of the share ownership and when lock-ups end? Last question, really for CFO, can you talk about expectations for cash from operations in H2? There were a few moving parts, so I was hoping to settle that. Thanks.
Thanks, Stacy. We have four questions. Let's start with the last one. Hans, you want to quickly address the last one?
Yes, sir, I can do that. It was the question about the cash flow from operation, what we expect to be in H2. As I always say, it's very linked to the net working capital and, of course, the performance of the underlying business. I think that the net working capital is the more topic you would like to get some color in. The net working capital does underlie a trend in our business, which is linked to the trend of our business, with peaks in June, in December, in March, and September. This we see reflecting in the net working capital a month or two later on. We have had in H1 this vendor deferral program, which has helped for the net working capital to this level I have provided to you, which is CHF 173 million negative.
We expect that these programs will end, and it's a magnitude of CHF 250 million. When you say, when I'm coming back to this regularity which I've seen, then I would refer to the cash flow we have generated in the last year, and think that we will see some pattern going forward also in this year. It will depend as well on when we close the balance sheet. Have the customer really paid that day, or is a day later or whatever? This micromanagement topic is a topic which always is with us. Will be a bit decisive what happens at the end of that period. I think this is more what happens there, but I see positive in all what I've seen here in this COVID situation since March until today. We have seen a constant flow of cash in of our collection.
We have even improved compared to what I have seen in the last year and made some progress. I have no doubt today that this will continue on the caveat that the situation stay as is. I see the strength going forward also for H2. I hope that helps you a bit, Stacy.
Stacy, let me quickly share something on the non-Microsoft as well as on the small and medium enterprise customer segment. What we see on the non-Microsoft is everything which is UCC, unified communication collaboration. Everything which is related to remote working, virtualization, virtual desktop, digital workspace. What we see in terms of cloud enablement, whether it's the Red Hat of the world. Then on the other side also, the security posture and particular cybersecurity, and policies and control, because, as you can imagine, during the first phase of COVID, many companies threw out their security policies because they had no chance maintaining their business by following them. They are obviously gaining control back, and that's something which is also visible. In terms of the small and medium enterprise, I shared with you, that's 50% of our customer segment, 50% is enterprise.
We have a higher profitability on the SME side versus the enterprise side. What we have seen is that the SME were tougher hit and were more hit and faster hit than the enterprise level. We also see from our pipeline and from our backlog that they are coming out faster again. That's a positive sign for us. As I said, for us, it's really important that we keep up with our resource and capabilities requirement to deliver on the backlog, which has been creeped up over the last couple of months. On the shareholding lockdown there, Patrick, you want to quickly give the exact dates? One is end of October. Can you just confirm that, please?
The first lockup will end on the 21st of September. That's for the selling shareholders, KKR, Raiffeisen, and the heirs of Patrick Winter. On the 25th of October, the lockup will end for the founding shareholders and also for EB members. Please be reminded then on 25th of October, one-third of the MEP of EB members, the lockup will end. These are the dates currently.
Thanks, Patrick. Thanks, Stacy, for the questions.
Yep. Thank you.
Next question is from the line of Alastair Nolan from Morgan Stanley. Please go ahead.
Hey there. Morning. Thanks for taking my questions. Just a couple, if you don't mind. Maybe first, could you maybe comment on a little bit more around the kind of trajectory of growth through the first half? Give us an idea of how much, when COVID had the biggest impact, and maybe something around exit rates towards the end of the period. Secondly, on synergy, sorry. It feels as though obviously progress is pretty solid, ahead of expectations. As a result, is there any thought or any possibility from what you've seen so far in the fact that maybe those targets may ultimately end up higher than where we are or where you've currently outlined? Finally, just on the commentary around an increase in pay-as-you-go contracts. Could you maybe give us a little bit more detail around this?
My understanding from what you mentioned was that previously there were some more multi-year deals done in the second quarter, and maybe COVID impacted that, so more people shifting towards pay-as-you-go. Is that something more structural that's not really impacted by COVID? They're just those three questions, please.
Thanks, Alastair. On the first question, in terms of the trajectory with regards to the COVID timing. When we did the FY 2019 presentation end of March, we shared with you that we see actually a pickup in certain aspects on the business, particularly through the work from home. That really went through the end of first quarter, end of March. In April and May, we saw rather a reduction, particularly on the discretionary spend for the customers. June, again, was a much stronger month for us. That's coming to the third question on the pay-as-you-go as well, and I'm happy for Alex to answer here on the second part of it as well. What we usually see, is that particular enterprises are going on pre-purchase and pre-buying commitment to achieve larger discounts, and they utilize that window.
It's either in the financial year end of the publisher or of the year-end, in general, the calendar year end. Microsoft is end of June, and hence Q2 is usually the quarter for that kind of purchasing behavior, and particular in June is something which we expect. That's not something which will go away. That will always happen as long as they have the financial year in that month. This year we saw much fewer of such deals coming in. The customers were rather pivoting to the pay-as-you-go, which is then you need a full year cycle to recover on that from a revenue recognition. On the synergy side, yes, I mentioned we are ahead of the curve. We also see that the CHF 40 million are very realistic. I don't want to commit now beyond that.
You can have your hypothesis on it if we run a full year of the entire company on one process and then one back office, that there might be upside. I don't want to commit beyond.
Great. Thank you very much.
Thanks, Alastair.
Next question is from the line of Michael Briest from UBS. Please go ahead.
Great. Thank you. Good morning. A couple from me as well. Can we look at revenues for a moment? Just in terms of the Microsoft business, I think on note five, page 27, the Microsoft indirect revenues are up 1%, and I guess with currency it is maybe 6% or 7%. I know Microsoft's called out SME weakness, the 365 business was up 20%, Azure was up 50%, Dynamics up 40%. Within your revenues, I appreciate gross profit is skewed towards cloud, but is it fair to assume that the majority of revenues are on-premise, and that is why you are somewhat divorced from the trends that Microsoft is seeing? Looking to next year, obviously you are guiding for a re-acceleration to high single-digit growth in software gross profit. What is the driver of that? Is it that margins will improve? Is it that the revenue growth will re-accelerate?
Can you just talk about what's the assumptions behind that? Is it macro? I've got one on cost.
Thanks, Michael, and thanks for your report, which you sent out this morning. The second question is on the macro, then leaves the first question to Alex to answer. As you remember, our guidance was on high single digits on software and cloud, and high digits on solution and services. On solution and services, for us, the accelerator of digital transformation was really COVID, right? We believe that is something which will not only continue, but rather exponentially grow in FY 2021. On the software and cloud, what we're already seeing, it's visible the hard dollar of cost savings of the customers. In usual ways, it's very tough for you to save more than 10% on an ongoing basis without shutting down part of your businesses and part of your operational function as an organization.
You will see the majority of our book of business coming back to a normal spend behaviour. Again, Michael, this is dependent on how COVID progresses or where the light at the end of the tunnel is really the light, right? What we see currently from the customer side, there is an improvement already there. Are we going into a full recovery in Q4? Most likely not yet. Is it something which is globally across any geography? I think it's rather for a few geographies. U.S. will be a bit on the backbone, as well as LATAM, particularly in Brazil and Mexico. To that, I would say for FY 2020, if COVID develops as we have the hypothesis, then that's our midterm guidance. On the first one, Alex, you want to answer on that?
Yes. Hi, Michael. On the Microsoft side, we see ourselves on the top line, on the revenue line, which includes what we look at as both what you see on our P&L as well as the direct purchase volume, which does not hit our P&L. I'd say the entire volume for us is in line, slightly faster growing than what Microsoft is seeing. The reason you see, and why we try to lay out slide seven, is it is a combination of on-premise and cloud, and our gross profit is very much geared towards the cloud segment of the Microsoft spend for our customers. In the cloud segment, that's where we see a number of these intersecting lines, which is as SME customers were more impacted, that impacted our mix. We naturally make more gross profit in the SME segment.
To Alastair's question, as customers did more pay-as-you-go rather than a commitment, while that had an immediate impact in the first half, we really like that model because, again, it attaches us very closely to customers, allows us to add value to them every day, every week. We believe the long-term prospects of that business are very healthy. Finally, even on the Azure side, we make gross profit as customers are consuming. That consumption trend continues to accelerate. There's a slight nuance because in the market, what's being reported is build Azure. Again, we continue to see a very strong, very healthy runway of cloud consumption, and that's how our gross profit is geared.
Thanks. Can I just follow up? I think at IPO, 60% of the cloud gross profit from Microsoft was 365 related. Has that changed much? Has it moved more to Dynamics and Azure?
Well, I don't have the specific number for you today. I would say, just given the growth dynamics of Azure, I would say Azure is going to be picking up, let's say, our share of our gross profit, because the growth trajectory there, as you see from us and from Microsoft, is much higher than 365. 365 continues to be a major contributor and very healthy growth. We probably mentioned on some other calls, with 365, even though it's highly penetrated, we see a very big opportunity with customers to actually own adoption. Many customers are on 365, but they may be on a kind of initial or basic version of 365.
As they get to know the functionality, they are able to adopt more and more, and so they can go from something basic to something that allows them to utilize unified communication collaboration, to even something that allows them to utilize security. We see quite a healthy runway for 365.
Thanks. Then just a final one on cost. A lot of other companies have reported benefits from lower travel, marketing and things like that. Has that affected your profitability this half, or do you expect a tailwind from that in the year? Thank you.
I think Hans mentioned a bit during his presentation, but, Hans, you want to elaborate further on this?
Yes, Michael, there is a travel where we benefit as well. We have in the first half year, there was probably three or four months where we had no possibility to travel, and it seems so that this will be continuing as well going forward. This has an impact for us as well. I would say the magnitude in H1 of travel expense savings was about CHF 4 million.
Thank you.
Thanks, Michael.
The next question is from the line of Charles Brennan from Credit Suisse. Please go ahead.
Thanks. Good morning to everyone. If that's okay, I'll carry on the tradition of asking a few questions. Just two on Microsoft quickly. Last year, for the full year, I thought that Microsoft was 54% of the gross profit. In these H1 numbers, you're talking about it being 75%. Does that reflect some significant Microsoft seasonality with their year-end being June, or have you changed the way in which you're defining the Microsoft gross profit? Secondly, related to Microsoft, you seem to be attributing your performance to exposure to SMEs and some shift to the cloud. Those dynamics are presumably relevant for Microsoft as well, and yet Microsoft is still reporting faster growth. Across the industry, I've heard some suggestion that Microsoft is looking to go direct with more business.
I understand if they go direct, they'll still pay you an agency commission, but maybe that's slightly lower than you would get if you were managing the relationship. Is that a dynamic you've seen, and can you comment on that? Thirdly, can I just turn to the services business? The way in which you report your gross profit is to exclude third-party costs. If you just internalize the way in which you deliver some of those services, you can increase gross profit. In light of what's happened to revenues in the services line, how do we get comfortable that the gross profit growth is a genuine underlying growth as opposed just to the way in which the contracts are delivered? Thank you.
Yeah. Thanks, Charlie. On the first one, on the 54%, which we showed to you for last year, that was against the entire business. The 75%, which we showed you today in that slide, is against line of business software and cloud, and I guess that explains the difference. On the incentive side, Alex, it continues in the same discussion. You just want to add on that?
Yes. It's exactly still 54. Microsoft is still 54% of the total and 75% of the software and cloud. Charlie, to your point on how does it compare to Microsoft. Microsoft doesn't really, to my knowledge, doesn't disclose their own mix of enterprise and SME. What we can just say is that in our own model, gross profit is really geared to make more gross profit, both incentive and upfront margin, from the SME. As the SME market is usually very healthy, we benefit when it takes a hit as it did in the first half. That's what hurt us, relatively speaking to Microsoft. I'd say, relatively speaking to what's going on in the market, we think the results were fairly strong.
Add to the trend of Microsoft.
Oh, go ahead.
The trend I've heard in the industry, Microsoft going direct in some of the larger accounts. Is that something you've seen across your customer base?
It's a-
Charlie.
Oh, go ahead.
Yeah. What is different is that you see on Microsoft, obviously, what they have is bill revenue. We benefit on the consumer's revenue, the consumption itself. That's what you also see from our portfolio. We all geared up and our transformation is really driving towards building, driving, and transforming consumption. With that, we cater to the pain points and the road map of the customer. At the same time, we also participate on the economics with the publisher ecosystem. For instance, application modernization. Every dollar what you spend on cloudification of it, will end up in around about three to $5 on the consumption side. The same on sticky workloads like you have on SAP, it drives to consumption. This is exactly the scenarios where our transformation on the services side and our practices, which we have built up, is going to.
The last question on what you had on the third party. It is true that the cost profit is below third party. We gave you some examples also for last year. We really shut down individual teams which were on hardware, which were on-premise services, which were not strategic relevant for us. If those customers were not willing or had no road map or plan to go to the cloud in the next three to five years, and we didn't see any profitability, we really made those hard calls and unwound them and transitioned out of that. That's what you see as an impact on the revenue stream. Whatever is core for us, we will do ourselves. Whatever is non-core for us, we rather have the negative hit in the year of integration, which was last year, than carrying it on.
Maybe just to follow up and add to this point on services, Charlie, what you'll see in our gross profit chart on solutions and services is that because we did the cleanup in the second half of 2019, you already see us taking that adjustment in the second half last year. We believe we look at growth year-over-year, but if you wanted to look period-over-period, you can also look at that versus second half, and we grew revenue and gross profit there in this cleaned-up format.
Perfect. Thank you.
Thanks, Charlie.
Next question is from the line of Andreas Müller from ZKB. Please go ahead.
Yes, thanks for taking my questions. One is on sales synergies. Have you achieved already something there or is that still a midterm target, the CHF 20 million you wanted to achieve on the sales synergies? Could you size, please, the organic growth impact of the pay-as-you-go shift? Do you see that development also to continue in the second half? What was the impact there? That would be interesting. The last question is on the competitive environment. Do you see any shifts in the industry due to COVID on the competitiveness of certain business model? I'm thinking about dimensions such as large global volume players versus local or regional players. Or pure play software and cloud resale, as well as the one with have hardware content as well. Do you see there any shifts in your industry? Thank you.
Yeah. Thanks, Andreas. On the sales synergies, we always said that's towards the end of our guidance, which is 2021. We already see a certain development in that, and we believe that we have not only an achievement of this CHF 20 million, but really the individual points are going on that number, and even an upside possible. On the pay-as-you-go, Alex, you want to refer to this?
Yeah. What we see is this will really I think we've mentioned before, it takes us less than six months to make up the difference when a customer switches from an upfront commitment buying to a pay-as-you-go model. For us, in terms of our gross profit impact, because we're able to attach much more services and solutions and platforms, PyraCloud platform, when customers go to a pay-as-you-go format, our gross profit dynamics are actually reasonably favorable. We are able to do the crossover and break even within six months. Again, we really like that business, and while it does have very near-term impact, we think within six months, we're already above that break even. We continue to see that accelerate.
We would say it's still a small part of our gross profit because, again, customers' buying patterns, customer preferences are still to do the commitment, the upfront commitment to get a discount. As we see with many other publishers, and even with Microsoft, that's continuing to change gradually over time. While it's still a small percentage, it gives us a pretty long runway.
I think it's fair to say, Alex, on this, that we wish that everything will become pay-as-you-go. If you look at the stickiness towards the customer, there are three levels of stickiness. One is the relationship, the customer relationship. The second one is a process integration, and the third one is a tool integration. This pay-as-you-go and our bundles which we are providing through that, we are covering all three. Fair to say that this is definitely a journey for us in the future. In the competitive environment, we have seen a complete different picture in the first half of the year. Wise to know those ones, which are mixed portfolio, they had some issues post-March when the supply chain went down, and on the hardware side, delivery was a difficult event because it was all physical assets.
Also on those who were focusing on on-premises as well as cloud, you saw the on-premises side. It was a mixed picture. In terms of consolidation, we have seen a few acquisitions happening. We believe that there will be further consolidation in the market, in the near future. What is currently visible is that quite a number of companies are out there which are really on a revenue multiplier, which is, of course, always an indication that there is not much EBITDA and profitable business model behind it. The question is whether that is moving forward or whether that's something which is changing in the future. Alex, from a landscape, you want to add something?
I would say, just to add to your comment, the only other thing we see is where we see smaller consulting or services firms, they really struggled in this environment. What really allowed us to accelerate was the managed services side, because as you'd imagine, the professional services side ended up being start and stop and in waves, depending on the country, depending on COVID. The managed services side, because it's so well-suited to the cloud environment, grew very strongly. That's a big difference that we saw to some of the other players in the industry. To be honest, they're really great players. They have great skills, great talents, and so we'd love to partner with them and bring them on board. Through the current environment, they might struggle if the model is really set up in a professional services in a project-based way.
As Dieter mentioned, I don't have anything to add on the hardware versus pure-play. I think both formats, some great competitors out there, but as you've seen on the hardware side, it did become quite difficult after the COVID buying finished up.
Thanks, Andreas.
Okay, thanks.
As a reminder, if you'd like to register for a question, please press star followed by one on your touch-tone telephone. The next question comes from the line of Ross Jobber from Citi. Please go ahead.
Thank you very much. Morning, gentlemen. I just want to dig a little deeper on a few of the issues that have been raised so far, just two. My sort of long-term question. I'm interested in your thoughts on what long-term impact the pay-as-you-go model has on the dynamics of the business in terms of increasing sensitivity to consumption over and above the sensitivity that you will have historically had from the link between IT spending and customer trading activity. My first question really is a longer-term question about how do you think, or does it increase the group's sensitivity exposure to consumption in a way that wasn't always the case? If so, are there things that mitigate that? My second question goes back to the point about the third-party service delivery costs and that saving half year on half year of CHF 50 million.
I understand what you say about the fact that you've done some cleaning up, that's one reason why that's falling. Some of your peers have also enjoyed quite significant savings because they haven't used third-party contracting much in the period. Of course, that could and should come back in more normal, quote-unquote, trading. Do you think that some of that saving would actually, under more normal pre-COVID trading conditions, actually come back? If so, how much? Thank you.
Thanks, Ross. It was a bit difficult to understand, but I heard the long-term impact on the consumption model versus the convention model. I believe that a consumption-based model in the long run is more predictable, simply because it's not a commercial construct, but there's real technology resources behind it. It always takes an event and a migration out strategy, often customer, to change that. From that angle, I prefer this as a model. On the second point, on the third party, remember that we have quite a maturity of our services on managed services. Even during COVID, we could not change that, right? We had to deliver the service level towards our customers, and we are very happy that we were able to do so. Whatever resources and capacity was in place was always utilized during that period.
That would not resonate for me, but your hypothesis on that.
I guess if I rephrase my second question, apologies. I suppose if I could phrase it this way, is the H1 2020 run rate for third-party service delivery costs a typical run rate that you would expect, all else being equal, to be the same once COVID conditions have reversed?
Again, our strategy is very clear. If we have a standardized portfolio, a standardized service catalog across our 90 countries, whatever is in that catalog is to be delivered from SoftwareONE internally, and because it's core. If there are contracts which bound us to a longer delivery and where there's a certain lock-in, then that would be a migration out strategy. It's not related because of COVID, it's related of what is core and what is non-core for us.
Okay. Thank you.
Next question is from the line of Martin Jungfleisch from Kepler Cheuvreux. Please go ahead.
Yes. Hi, good morning, and thanks for taking my questions. I have three questions, please. The first one is on your guidance for this year. You expect a similar gross profit growth rate in the second half as seen in at constant currencies, which would likely mean lower stated gross profit growth due to stronger forex effects in the second half. On my numbers, assuming a similar margin, this translates into lower absolute EBITDA in the second half of 2020 compared to the second half of 2019. Is that assumption roughly correct? Can you provide some color what the drivers behind these expectations are, and also touch a bit on how currency impacts your bottom line? I think the impact should be a little bit less than on the top line. That's the first question, and then I'll go back in the queue.
Okay, thanks, Martin. Hans, can you take that question, please?
Yeah. The guidance we have provided on the growth is we say we see similar growth in the total fiscal year 2020 as on H1 2020. That's a bit the reference you need to make. Underlying the H1 and H2 businesses are not the same. The H1 is a bit stronger than the H2, and that probably may being the reason for your questions. The guidance goes into to say we see the similar growth for the full year 2020 compared to 2019 as we have seen to compare the first half year this year versus the first half year last year. We see that the Forex part being the same as we have seen in H1 2020.
Okay. Thank you. The drop-down to the bottom line, in terms of Forex, can you provide some color on that, please?
I have not really understood the mechanics why you're saying then there is a drop-down to?
What kind of the sensitivity is on the EBITDA from changes in currency?
Well, you have seen, I think we have given some guidance in the deck, how in what currency our OpEx are. You see as well in the result H1 versus H2, where we have provided the growth rate on constant currency. I think it was about CHF 17 million, which the OpEx in 2020 H1 was lower based on the currency part. Perhaps this helps and for you.
Okay. Yeah, thanks. Second question is a bit on the enterprise agreements and subscriptions. Can you provide some color how these have changed? Were there any true downs during the first half of the year in the enterprise agreements, or would you expect any true downs in the coming quarters, should the economy not improve materially?
Yeah. Good question, Martin. True down is not a word which exists in the vocabulary of publishers. They don't have that. They only have a true up officially. Yeah, I think isolated, there are some outliers in there. It was really not visible across the board. There were one or two exceptions where they really struggled in the business and went into liquidation, but, that's not anymore true down. That's rather going towards the Chapter 11 version. Overall, I would say, it's really more an anomaly than the norm, but the true-up scenario has changed, of course. Right?
Yeah. Okay. Then the final question is on PyraCloud. If you could provide some detail how that has performed in the last couple of months, also if you could provide some detail on monetization of the solution to your clients, please.
That's a very exciting story for us, and I'm very passionate about that because I believe that PyraCloud will really become the game changer in the industry. We narrow it down to three areas. We have an aspect of cloud platform management where we are really neutral across hyperscalers and help our customers to manage the cloud and secure the cloud at the same time. We have our digital software supply chain aspect where for the customer, it just becomes a more efficient and more transparent, and automated way of digitizing the software supply chain. That is all underpinned by our, what we call IDP, our intelligent data platform based on AI and machine learning, where we give the customers the insights on the spend behavior and on the vulnerabilities and on the optimization potential.
That's really, in the meanwhile, second to none in the industry. There's none existent who will be able to deliver that or provide that. We refocused in terms of our monetization to rather make it viral and give it to every customer than purely a direct sales play and become a kind of a product or an IP company. For us, it was more important to put PyraCloud into every bundle which we have in every engagement, every service customer who receives a result on managed service through their quarterly business review on a daily basis uses the PyraCloud as a user interface. Every order which comes in is digitized through PyraCloud. Every communication a customer has with us is going through our digital assistant. That's rather where we want to be.
We want to use that also for us internally to digitize our enterprise. The monetization is rather in bringing it to 65,000 customers. Alex, I'm not sure whether we have newer numbers, but the last number I was aware of, that we have around 7,000 customers on PyraCloud right now.
No, that's right. Yeah. I would say we've held off on disclosing exact PyraCloud numbers, while we transition everyone on the same system. I think as Dieter mentioned, once this is completely cleaned up this year, I think we will be able to report very cleanly across this. Yeah, the opportunity is really to completely differentiate and digitize our business. As Dieter said, that opportunity is our entire customer set.
Thank you. Very helpful.
Next question is from the line of Stefan Slowinski from Exane BNP Paribas. Please go ahead.
Yes. Hi. Thanks for taking my question. Just on Comparex, can you tell us in the first half of the year what the growth trends were like between the legacy SoftwareONE business and the Comparex business? If that business was growing 1%, is it fair to say that Comparex is still underperforming the whole business? How do you see that evolving going forward when we look out to 2021? Obviously, potentially there's upside from the macro improving. What is maybe a bigger driver? Is it getting the Comparex business to re-accelerate? Or is it just some of these pay-as-you-go and subscription-type pricing that will drive acceleration and growth into next year? Thank you.
Yeah. Thanks, Stefan. We from the executive board spend so much time to have convinced everyone in the organization that from 1st of January 2020, there is no Comparex and there is no SoftwareONE. There's only SoftwareONE. Everything is integrated. The account plans are harmonized and the system in the back end from reconciliation are harmonized as well. In essence, we are not looking anymore into separate views on that. It's also not what we want to discuss internally and externally. It's one organization. It's now harmonized, and going forward, it's only SoftwareONE. On the growth drivers which you mentioned, you're absolutely right. There are multiple growth drivers. One of them is our book of business. We continue to transform our book of business towards services attached.
We were quite successful also in the first half of the year and made good progress to convert transactional customers and attach services with a higher profitability. That's definitely the growth driver for the next couple of years. Aside of the macro we have those growth streams, which we are participating from a window of change, which is happening on the hyperscalers, on the workload, which is happening on SAP and which is happening on application modernization. Just to give you a number, there are 50 million- 100 million legacy applications out there, and nobody really knows the exact number. It's fair to say that it's in the high double-digit million. Those legacy applications, every single customer needs to make a decision whether they require them in the future. If they require them in the future, they need to cloudify them.
That's where a DevOps practice like we have acquired with Intergrupo comes into play and where we see one of the fantastic growth opportunities in the next couple of years. That's an ongoing journey for the next eight to 10 years, for sure.
All right. Great. Thank you very much.
Next question is from the line of Chandru Sriraman from Mainfirst. Please go ahead.
Yeah. Hi. Thanks for taking my question. Morning, everyone. Just a couple of quick ones. The multi-vendor business was up quite nicely in the first half. I just wanted to check if you'd like to flag any specific vendor with a particular strength. Also wanted to clarify if it's largely cloud-based. My second question is on the solutions and services business, which was up H1 on H2. I just wanted to reconfirm that the strategic process of cleaning up low-quality contracts, all those is done, and we are moving forward from H1 to H2. Thanks.
Yeah. On the last point, Chandru. We have done that. Actually, it was part of our budget process in 2019 already, where we identified it, and maybe there was a lag because of termination clauses and exit conditions. That exercise has been done, and we don't carry any burden on this anymore. On the multi-vendor, which are the Citrix CEO went out there and was very happy presenting how they have grown. So have many of the security providers. Has Splunk, so has Red Hat, Adobe. There are multiple publishers which have benefited from even during this. The logical ones is always four aspects during a crisis, during that crisis.
That's the one which are related to the workspace, that's the one which are related to scalability, that's the one which are related to business contingency, and that's the one which are related to security. If you are in those four buckets, you could assume there is an upward trend.
Okay. Thanks.
That was the last question. I would like to turn the conference back over to Mr. Dieter Schlosser for any closing comments. Please go ahead.
Yeah. Thanks. Thanks to everyone on the call. Thanks also for the lively debate. We are all looking forward to see you also in life again, and in person again, and aside of having the audio calls and the video calls. Hopefully that can be done sooner than later. We wish you a very good day, and again, thanks for the attention and for participating in that result presentation. Thank you very much, and have a great day.