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Crayon looking for public sector growth
Ahead of its tie-up with SoftwareOne, the firm’s CEO outlined its fourth quarter performance and touched on her hopes for 2025
Software and cloud player Crayon has shared results for its fourth quarter ahead of its proposed tie-up with SoftwareOne.
The Norwegian firm issued numbers for Q4, indicating that its strategy to grow its public sector business remained a key ambition, and that the foundations were in place to expand internationally.
The headlines for Q4 included adjusted EBITDA coming in at NOK 321m, representing a margin of 19.6%, which was up from 14.9%, net income ended of NOK 42m, an improvement of NOK 165m compared with Q4 2023. Gross profit increased 2% to NOK 1,637m, and venue was at a similar level, climbing by 2% year on year to NOK 1,843m.
In Europe, gross profit grew 18% to NOK 395m, and software and cloud direct improved by 21%. The performance in the region was negatively impacted by the channel business, which declined 11%.
The small growth on the gross profit front was one area the firm’s leaders wanted to drill into, with analysts to explain why December 2024 didn’t end so strongly for the firm.
On an investor call, Crayon’s CEO said there were several factors that undermined gross profit growth, with a significant amount of the contracts it sealed in the quarter below its traditional levels.
Lower margin public sector business, changes to Microsoft licensing agreements and weak pipeline execution around enterprise software all contributed to make it a difficult quarter. That combination of factors was unusual, and investors were reassured this was an isolated event, and that historically, December had typically finished stronger for Crayon.
Public sector business
Crayon CEO Melissa Mulholland said the firm was looking to follow the successful strategy in its home market of the Nordics and go for more public sector business. “This is a turning point in our business because we now have the size and market brand to compete,” she said.
“I’m pleased that we continue to deliver strong gross sales growth of 28%, profitability improvements and solid working capital performance. However, I’m disappointed that we didn’t deliver the expected gross profit. Tougher market dynamics in the Enterprise Agreements space and underperformance in Enterprise Software impacted the growth in the quarter.”
Looking ahead to the prospects for this year, Mulholland said the firm would look to grow both its direct and channel business, and was particularly keen to expand its presence in the public sector.
“We continue to see strong demand from our customers on both the private and public sector side, and will increase our ability to serve both AWS and Google Cloud,” she said. “We are innately focused on increasing our software procurement with seamless access to software providers in our cloud IQ platform, delivering increased stickiness to our customers and our partners, while providing a creative margin opportunity. We see ample growth opportunity ahead, and we will focus on hiring to deliver upon the GP ambition. Based on this, we expect 15 to 20% gross profit growth for 2025.”
Mulholland touched on the planned combination with SoftwareOne, which is expected in June, and talked about the positives it would bring for the business. “I see a strong strategic rationale behind the proposed merger,” she said.
“I see significant value opportunities for shareholders, customers and employees with the combination of these two global companies,” added Mulholland. “While the combination with SoftwareOne naturally is an important milestone in 2025, we remain committed to deliver further value creation for improving on all key metrics. We continue to see opportunities to expand and grow, and we are well positioned to support our customers with long-term market opportunities. Given our scale and global strength, our international markets continue to scale, nursing stronger profitability throughout the businesses.”
The move by SoftwareOne to merge with Crayon was announced in December 2024, with the Norwegian business being valued at $1.4bn.
