Crayon Q1 hit by underperforming Nordics

Crayon Group has shared its first-quarter numbers as the firm continues to prepare for its combination with SoftwareOne.

The channel player indicated that it had achieved a gross profit growth of 5% and an adjusted EBITDA margin of 12.1%, down 1.8% year on year (YoY), for the three months ended 31 March.

Outside of the Nordics, the markets of which have been “soft”, the performance was better, with double-digit growth in all the major regions.

“Growth in Europe ended at 19%, and I would like to highlight the exceptional 71% growth in our consulting business,” said Crayon CEO Melissa Mulholland, who added that there was decent growth in APAC and the channel side of the business, as well as a strong performance in the US.

“I’m pleased with our solid international growth this quarter and that we continue to demonstrate our ability to deliver strong net working capital. However, the performance in parts of the Nordics was disappointing, consequently impacting our overall figures,” she added.

The underperformance in the Nordics prompted the firm to make management changes, with Mulholland stating that Q1 was not good enough: “The results of the Nordics is not at the desired level. We have therefore implemented changes in the management team.”

Those changes have seen the general manager of Denmark, Allan Jakobsen, take on a regional executive vice-president role for the whole of the Nordics.

The mood was more positive when discussing the performance of Crayon’s main market offerings.

“Our channel business is showing steady performance, growing 12% and delivering a 68% adjusted EBITA to margin, which is at the same level as last year,” she said.

“Our two service businesses suffering cloud economics and consulting are also improving, growing gross profit with 8% and 16% respectively, and improving their profitability. I am pleased to see the improvement in the consulting margin, despite the underperformance in the Nordics.”

Mulholland said that changes in the Microsoft partner landscape, with the vendor looking to increase its focus on high quality CSP partners, had caused some bumps in the road but were being ironed out.

“We saw a negative development in gross margin in Q4 ‘24 due to the change in the market dynamics as Microsoft restructure incentives to drive the change from EA to CSP,” she said.

“This led to unclear rules of engagement and sales execution issues. Microsoft has publicly confirmed there were challenges and have taken corrective actions by restructuring account ownership and segmentation of customers, as well as instituting sales incentives.”

Mulholland added that the business was in position to adapt and manoeuvre through various challenges: “With the recent macroeconomic turnout and the ongoing debate over US tariffs, it is important to highlight that we are that we still see a robust and resilient demand environment.

“The underlying demand drawings are strong in both our businesses and our global presence gives our customers great flexibility within their procurement setup.

“We are well-positioned to drive continued profitable growth based on market position, strong CSP capability and service offering. As we experience strong demand, not least in the public sector, we are scaling up and onboarding new colleagues across key markets.

“At the same time, we are preparing for the combination of SoftwareOne and Crayon, which will further enable us to capitalise on our mutual strengths, not least our hyperscaler partnerships, including with Microsoft, Google and AWS.”