Good day, thank you for standing by. Welcome to the SoftwareOne H1 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star one and one. Today—please go ahead. One moment, please. Good day, and thank you for standing by. Welcome to the SoftwareOne H1 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anna Engvall, Head of Investor Relations. Please go ahead. Thank you, sorry for the delay. Good morning, and thank you to everyone for joining SoftwareOne's H1 2023 results. I'm Anna Engvall, Head of Investor Relations at SoftwareOne. Joining me today are Brian Duffy, our CEO, and Rodolfo Savitzky, CFO. In terms of agenda, we will kick off with a summary of our H1 results presented by Brian. Rodolfo will then take us through our financial performance, after which Brian will provide a CEO update. We will finish the session with Q&A as usual. Before handing over to Brian, please let me draw your attention to the disclaimer regarding forward-looking statements and non-IFRS measures on slide two. With that, I will hand over to Brian. Thanks, Anna. Good morning. I'm pleased to welcome everyone to our H1 2023 results. We had a solid first half of the year as we continued to successfully deliver across our key markets. This is a testament to the strength of our business model, given the challenging macroeconomic environment as evidenced by peers. Revenue for the group was up 8.5% year-on-year, and the adjusted EBITDA margin was 22%. Our operational excellence program is fully on track, with CHF 8 million of cost savings achieved year to date, against our full year target of CHF 15 million. Building on the progress made with operational excellence, we are today announcing Ignite Focus Accelerate to sharpen our execution, particularly our sales effectiveness, and deliver enhanced performance as we move into a new era powered by data and AI, and I'll come back to that later. I would like to reiterate that with these results, we are on track to meeting our targets for the full year, which are double-digit revenue growth and an adjusted EBITDA margin of 24%-25% of revenue. Before moving on, I would also like to provide an update on the ongoing strategic review. On July 24, the board of directors announced that the revised offer from Bain Capital had been rejected and that a strategic review will be launched to consider all options for value creation. These include remaining a public company, a merger or sale, or another potential strategic transaction.... The review is currently ongoing, and we will provide relevant updates as the process progresses. In the meantime, the company remains fully focused on the execution of our strategy for the benefit of all stakeholders. Now, moving on to regional performance. Our largest market, EMEA, delivered a solid half year, with revenue up around 8% as our enterprise clients, particularly in the DACH region, continued to invest in cloud solutions. APAC delivered an outstanding performance with growth of 23%, with these strong results across the board. NORAM drove a strong recovery in Q2, particularly in the Microsoft business, as its clients transitioned from legacy CSP to the new commerce experience model. LATAM was flat following a weak Q2, driven by good momentum in services, offset by softer Microsoft revenue development in Brazil and Mexico. Moving on to our business lines, software and cloud services delivered around 8% revenue growth in Q2 and over 12% for H1. Our core service lines, cloud, application, and SAP services, grew by around 20% in H1, partially offset by an acceleration in the phasing out of legacy services. xSimple grew 22% at a normalized rate in line with our expectations. In terms of cross-selling, we saw good progress compared to prior year, and now we have nearly 16,000 clients purchasing both software and services. Moving on to software and cloud marketplace, which was up 5% in the first half overall. Microsoft billing grew at a healthy rate of 12%, reaching $10.6 billion in H1 2023. After a soft Q1, Microsoft revenue growth accelerated in Q2, with customers transitioning from legacy CSP to New Commerce Experience, which comes with higher pricing, more favorable incentives, and longer term subscriptions. In other ISVs, revenues declined in Q2 after a very strong Q1 and a high comparable last year. Now, SoftwareOne's greatest strength is our 65,000 clients who place their trust in us, along with our portfolio, and I'm delighted today to present a few examples of how we continue to add value and drive business outcomes for them. In Europe, we secured the renewal of a multi-year contract for the provision of a 24 by 7 managed service for SPAR's entire business-critical IT environment, helping to ensure a smooth and satisfying shopping experience for all SPAR customers. With our public sector experience and Microsoft expertise, we supported the government of Mexico with the development of a new collaboration hub based on Microsoft 365 to streamline communication between the government and citizens. We also helped Savills with the negotiation of Microsoft license terms across 35 countries to reduce costs and complexity. F inally, in the US, we supported Red Roof, a leader in the lodging industry, with migration to AWS and the provision of shared services to franchisees to accelerate their transformation to a new business model. I'm very proud to say that today we reach an important milestone at SoftwareOne and publish our first ESG report. As a company, we fully recognize the role that we can and must play in creating a more sustainable future. Importantly, we aim to be net zero for Scope 1 and 2 by 2030 by reducing the carbon footprint that we are responsible for and investing in impact projects for the remaining emissions. We will achieve this through a carbon reduction plan, which primarily includes reducing emissions from our car fleet and generating energy-efficient workplaces through our Green Offices initiative. In addition, we will continue helping clients with their ESG journey via our Cloud Sustainability Program. This aims to provide clients with accurate emissions data for their cloud solutions and advice on the complexities of cloud emissions. I would like to thank our ESG team and all our SoftwareOne leaders and employees who have contributed thus far. Let's keep up that great work and deliver on these important commitments. On that note, Rodolfo will now take us through our financial performance, and I will follow up after him. Rodolfo? Thank you, Brian. A warm welcome from me as well. Revenue growth in H1 was solid at 8.5%, supported by an acceleration in Microsoft as we had anticipated, but we also faced headwinds in other ISVs in the phase out of legacy services. Contribution margin increased by 0.9 percentage points in H1 and 1.2 percentage points in Q2, reflecting optimization of delivery costs in our services business line as part of our operational excellence program. SG&A expenses grew by 16.2% in H1, with personnel expenses mainly growing in line with wage inflation. This also reflects the impact of operational excellence, with the majority of the SG&A increase driven by non-personnel expenses. I will provide more detail on the next slide. With the strong Swiss franc, Forex headwinds had a significant impact, about 5 percentage points on revenue growth. However, given our natural hedge with similar exposures on OpEx, the Forex impact on adjusted EBITDA continued to be small. I would also like to point out that certain restatements reflecting IFRS 15 have been made to the services business line prior year numbers. For H1 2022, this resulted in a reduction of both revenue and delivery costs by CHF 11 million. The contribution margin and EBITDA, of course, remained unchanged. The year-on-year development of adjusted EBITDA is shown in the bridge. The incremental revenue was almost fully reflected in incremental contribution margin, given the minimal increase in delivery cost. Similarly, general admin stayed almost flat year-on-year. The major increases in expenses related to a normalization of non-personnel expenses, specifically higher travel and sales and marketing costs, as well as one-off co-marketing investments from last year coming from strategic partners. Moving on to the business line view. Our core service lines continued to grow at around 20% in both Q1 and Q2, with the decline in legacy services accelerating in Q2. The contribution margin in services was 39% of revenue in H1, up 3.3 percentage points compared to prior year, and approaching best-in-class levels as a result of progress with our operational excellence initiative. SG&A grew at a lower rate than contribution margin, translating into an adjusted EBIT of CHF 7.1 million and a margin of 2.1%. This year-on-year improvement yet again confirms that we are on track to meet our 15% target for 2024. In Marketplace, while Microsoft delivered a significant rebound in Q2 as expected, other ISVs significantly slowed down in Q2, resulting in steady overall growth in both quarters. The adjusted EBITA margin was 46.1%. This is down compared to prior year, reflecting increased SG&A, partially driven by the allocation of solution consultants to this business line. We remain focused on getting the full benefits from the operational excellence program. Going through the key pillars. In the commercial work stream, we continue to rebalance sales resources. We have also scaled up our AI-driven cross-sell pilot in NORAM and initiated a similar pilot in APAC. In services delivery, we have made great progress, with the majority of personnel transitions now fully executed. The presale process has also been revamped, and the organization-wide rollout is underway. Finally, in the support functions, country finance transition to shared service centers continue to progress fully in line with plan, and standardization of financial processes is underway. In HR, we are piloting a shared service center for EMEA, with APAC to follow. By June, with good progress across the pillars, we have achieved CHF 8 million of cost savings and are fully on track to achieve the targeted savings of CHF 15 million this year. The bridge illustrates that our adjusted personnel expenses have grown by 10% in constant currency, of which around 5% is due to wage inflation. The minimal increase in FTEs, despite the continued solid growth momentum, has only been possible thanks to the improvement in efficiency and effectiveness across the organization. Working capital ended the half year at CHF 177 million after factoring, broadly in line with our position one year ago. I see this as a good outcome given business growth. Our Days Sales Outstanding have increased due to overall market conditions and growth of consumption-based offerings. With these offerings, customers are invoiced later compared to prepaid enterprise agreements. On accounts payable, we optimize our payments to align with the longer customer payment cycles. While we were satisfied with the result, we do see scope to tighten working capital management, particularly collections. We have consistently sought to improve the quality of our disclosures, and in this regard, we have now simplified our definition of net debt. The new, more stringent definition comprises bank overdrafts, plus current and non-current financial liabilities, less cash and financial assets, including our holding trade. Importantly, this definition no longer includes other non-current receivables. This change implies that as of June 30, 2023, we had a net debt position of CHF 72 million, compared to CHF 5 million one year ago. We have done this to align with industry best standards. Now, on a twelve-month basis, and we did that to eliminate seasonality, core operating cash flow, including CapEx, was CHF 141 million, reflecting a 60% cash conversion compared to adjusted EBITDA. The CapEx investments of CHF 51 million include our digital marketplace. R egarding other outflows, CHF 62 million is attributable to M&A, earnouts, and restructuring, while CHF 71 million relate to our dividend share buyback program and finance income. I will conclude this section of our presentation with the full year outlook. We have had a solid start to the year, with strong underlying demand across our portfolio. We remain focused on continuing to implement operational excellence across SoftwareOne to step improve our efficiency and effectiveness, and to deliver the planned savings. While we recognize the uncertain macroeconomic environment, we generally see healthy demand in our markets and are confident in meeting our guidance for the year. Thank you, and now I will hand back to Brian. Thanks, Rodolfo. It has been around three months since I joined SoftwareOne, and amid unique circumstances, I've taken the time to meet with many of our customers, partners, and of course, the wider SoftwareOne team. At this stage, I would like to share my initial perspectives on what makes me excited about SoftwareOne's future. It's fair to say that we operate in a dynamic and high-growth market environment, strongly supported by a whole range of mega trends, some of which you see highlighted on the slide here. The opportunity ahead of us is massive. Organizations continue to prioritize investing in cloud solutions, and there is a long runway to go, with only 30% of workloads in the cloud already. Cloud journeys bring challenges and complexity. Multi-cloud and hybrid environments are generally the norm today, and for over 80% of organizations, controlling cloud spend has now surpassed security as the top challenge. Meanwhile, the demand for data and AI is exploding, with over 70% of organizations exploring generative AI opportunities. At SoftwareOne, we have and continue to develop our portfolio of value-adding solutions to manage these highly complex and business-critical cloud journeys for our clients. Now, let's go into more detail on the components that make up this great opportunity for SoftwareOne. The overall market for software and cloud spend was nearly $640 billion in 2022. Of this, the reselling serviceable market, or SAM, is nearly $18 billion. By 2026, our SAM is expected to be worth $30 billion. That implies a CAGR of 14%. Digitalization will play a key role in driving this growth as customers trend towards self-service. We are already well-positioned with one of the largest marketplaces globally, comprising 7,500 ISV partners and a number of very different delivery models. Our end goal, however, is to establish one digital workplace. Leveraging our investments in Goldpath and PureCloud, we are launching our SoftwareOne Client Portal for existing PureCloud clients and providing the opportunity for all customers to embrace digitalization and self-service. Scaling out services has been a key pillar of our strategy over recent years. Services are critical in a cloud and subscription-driven world with big customer pain points. With unique insights and our integrated born in the cloud portfolio, we are in a strong position to help clients along their entire cloud journey, from advisory to optimizing their cloud environment with a managed service. Our services SAM is worth $58 billion today, and is expected to grow to over $110 billion by 2026 at a 19% CAGR. There is, again, a very significant opportunity for us to grow at least in line with the market and to capture share, given the high level of fragmentation that exists. Now, in my prior role, I led one of the largest cloud transformations in the industry. We were highly successful in achieving our goals because we had a solid foundation, and it was built on clarity, activating the ecosystem, and focusing on my favorite word, execution. At SoftwareOne, there is more than we can do to capture the market opportunity. That is why we are initiating our ignite, focus, accelerate approach, and let me walk you through what we plan to do. Firstly, ignite. 65,000 clients across the world have placed their trust in SoftwareOne. I firmly believe that we are in a position of strength to ignite these relationships as clients look to answer three very important questions. Firstly, how will we move to the cloud and transform? Secondly, how are we going to embrace generative AI? T hirdly, and very importantly, which has been SoftwareOne's strength for so many years, how are we gonna keep those cloud transformation costs under control? Now, I want to share with you all an example. In Q2, we assisted a large U.S.-headquartered Fortune 500 company as they looked to move a critical application to a hyperscaler. They wanted to embrace AI, but unfortunately, they had a transformation with a systems integrator that was running over budget and behind time. We got stuck in, and we assisted them in designing a fresh, new blueprint and laying out a roadmap to allow the business to timely adopt innovation and to do so within budget. This customer story is similar elsewhere across the world. What's common is businesses can no longer wait. They have to drive innovation now in order to compete and survive. In addition, at SoftwareOne, we have 7,500 partners around the world, and I've spent time with several of the largest ones since joining, and I am energized by the opportunity that we can ignite together. Customers have made it loud and clear, they need the entire ecosystem to work together for them. At SoftwareOne, we will mobilize 9,257 men and women to connect partners to serve our joint customers in the best possible way. Now, moving on to our second pillar, focus. Microsoft 365 Copilot is a massive opportunity for SoftwareOne and our clients to completely reimagine productivity for employees. SoftwareOne, as you know, was a key partner for Microsoft when Office 365 was launched, and today we have tens of thousands of 365 customers. I recently attended a roundtable with the CEO of Microsoft, Satya, and this week, our team and the Microsoft team are meeting to finalize our go-to-market plan. M y plan is very, very simple: We aim to be Microsoft's number one partner for Copilot globally. Sales excellence and execution are key to driving growth, and we are now laser-focused on both. I found over the years, the sales teams, they enjoy a challenge, they enjoy direction, and they enjoy rigor. The changes I am implementing to continuously evaluate our progress and bring the best of the best to support our journey will fully reinforce this. We have already implemented new cadences, embraced new tools to double down on key initiatives. Let me give you an example. In North America, we launched an AI-driven initiative across the entire region, which directs our teams to a next best action for a client based on customer benchmark data, of which we have tons, and this is showing incredible results so far. Finally, as you would imagine, bolt-on M&A remains a priority to add capabilities and geographical reach. Now, finally, accelerate. In order to win, we will further develop our generative AI offering and pivot as needed. We will also fully embrace AI as much as possible internally to support our own transformation. We see a huge opportunity to scale SoftwareOne Client Portal to leverage our existing base and expand beyond that in a highly cost-efficient digital way. We have made considerable progress in this space, and we will execute on our roadmap. We will also continue to invest in our people and weave a great tapestry of talent to support our customers and partners. I want to take some time to emphasize the great opportunity we have with Copilot, and it's huge. We have run some preliminary numbers to estimate the short-term market opportunity, and based on the 12.5 million addressable seats that we have, and a conservative, very conservative, 15% adoption rate, we estimate a revenue opportunity of over $100 million across reselling and services. Our relationship with Microsoft is something we are hugely committed to, and the quote you see here reflects the value Microsoft also places on the partnership journey with SoftwareOne, given our global reach, deep understanding of our clients' needs, and proven track record. The opportunity in data and AI extends beyond Copilot, of course. It's also not new to us at SoftwareOne. We already have significant capabilities with 250 data and AI experts, and more than 230 projects delivered since 2021 across seven delivery hubs. But let me be clear, AI is not just a technology, it's an enabler for organizations to achieve significant improvements in efficiency, insight, customer and employee experience, and ultimately, innovation. It's about becoming a data-driven enterprise. Yet to achieve the full potential of AI, many elements need to be taken into consideration: data management, governance, security, and adoption and change management, to name just a few. SoftwareOne has incorporated this experience into an offering we call SoftwareOne Intelligence Fabric, a powerful foundation to help customers resolve the complexities and transition into data-driven and AI-powered organizations. Let me take you through an example of how we helped ACCO, a U.S.-based leader in the HVAC industry, drive operational efficiencies and create predictive capabilities using data and AI. They faced a very typical situation of needing to future-proof their environment by consolidating and securing decentralized data after years of rapid growth.... Partnering with AWS, we offered the platform, the tools, and the expertise to build the data lake to address ACCO's needs, and we leveraged our migration acceleration program expertise. As a result, ACCO is today at the cutting edge of governance and predictive data analysis, and able to raise the customer service bar even higher. To conclude with everybody, I would like to highlight the following: We have delivered a solid half year and are on track to meet our full-year guidance. Our operational excellence program is fully on track to deliver the promised savings. With Ignite, Focus, Accelerate, we will ignite customer and partner relationships, take advantage of the new market opportunity in AI, and sharpen execution to deliver enhanced performance. T hank you, everybody, and now let's move on to Q&A. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. Hi, thanks for taking my questions. A few for me, please. Firstly, on the macro environment, I think you noted that you've been seeing a healthy demand backdrop. Can you just comment on how the current trading in July and August has evolved, and if the strategic review situation has impacted any conversations that you have with your customers? Then secondly, on Microsoft, it actually seems that the billings growth slowed in Q2 versus Q1. But you noted an acceleration in the revenue growth. So could you maybe just quantify the revenue growth and comment on how much of that growth came from the price increases? F inally, it was quite surprising to see that the services margin was down in Q2, especially given the progress you made on the services delivery. So could you provide a bit more color there? Thank you. Sure, thank you for the question, and I'll split this with Rodolfo a little bit. Firstly, in terms of the strategic review, which is ongoing, I guess to answer that question, I'll look through a lens of our customers and also our employees. So firstly, in terms of customers, that has not impacted one relationships or trading with customers. Secondly, in terms of employees, our employees are focused on one thing, which is delivering for our 65,000 customers around the world. Then in relation to specifically our trading for July and August, obviously, we can't go into too much details around our July and August numbers specifically. But what I will say is that, given our broad portfolio to deliver solutions across the world, it allows us to navigate through the uncertain times that customers experience. I would also stress that AI is certainly fueling the demand that we see even more and more from customers around the world. Obviously, our SoftwareOne Client Portal is a huge opportunity for us, and services is what allows us to differentiate ourselves from the competition, specifically. I will turn it over to Rodolfo on the remaining questions from you. Thanks, Ryan. Hi, Katinka. So on... Let me take the last question first on the services. So when you look at the numbers in for the quarter, I think where I would like to point your attention is to the contribution margin. For me, this is the most critical measure. While there was the slowdown in growth in services, let me reiterate again, the core services portfolio continues to grow 20%. What we saw is really a drop in the legacy services. W hat is super encouraging is contribution margin growth grew to close to 20%. When you see the contribution margin as a percentage of revenue, it crossed the 40% mark, which is best in class too. Now, why did the margin decline, right? We have a high increase in SG&A, and as you know, from the presentation, this is mainly related to non-personnel expenses. There's a couple of one-offs that is impacting that. But going forward, for me, the most critical thing is, with this very healthy contribution margin, with all the efforts around operational excellence to also reduce and streamline SG&A, the possibility of operating leverage is extremely high. I don't know, did we miss one of your questions, Katinka? Yeah, just on Microsoft. It seems that the billing slowed there in the second quarter, because you reported 13% growth in Q1, but then you mentioned you saw an acceleration in revenue growth. So could you just quantify that revenue growth and maybe give us a sense of how much of that growth was driven by the price increases? M aybe just one quick follow-up on the current trading. Did you see an acceleration already in Q3 of growth? Thank you. Yeah. A little bit more. We don't provide a detail on the, let's say, split in our marketplace business line, but we did say last time that Multivendor grew around 30%, right? So that gives you a reference point Microsoft decline, and we expected that. In Q2, I would say, high single-digit growth in revenue for Microsoft. H ere, the biddings continue to be very healthy. As you say, it's clearly in the double-digit territory, and it's mirroring very closely the revenue that Microsoft itself is reporting, right? So in this sense, we continue to maintain slash gain market share, and the kind of rebounding revenue is clearly driven by the margins around New Commerce Experience, by the higher pricing and so forth. We talked a lot about in the quarter one call that we had been a bit penalized, given that we have lost many customers in the old CSP until, let's say, March, April this year, right? S o we're seeing what we expect. Thank you. Thank you. We will now take the next question. One moment, please. The question is from the line of Florian Treisch from Kepler Cheuvreux. Please go ahead. Yes, thanks for taking my question. My question is around the, the legacy services, simply to get a better feeling how big the impact really was, or better said, what is or what you expect the impact to be, or what, what is left basically for H2, to better really understand when the services growth rate will clearly accelerate, assuming that the legacy drop will, at some point in time, no longer be such a headwind as it is today. Then a question around Copilot. I appreciate your comment, and I think it is a big opportunity for the whole reseller space or the whole Microsoft camp. Can you mention a bit on assuming today it's zero from Copilot, what you expect it can be in the coming quarter, so let's say 2023, 2024, to really get a feeling how kind of realistic this $100 million you put into the display on a short-term case? T he second one on Microsoft incentive levels. Do you expect, let's say, a stable development in coming quarters for core products like 365, Azure? W hat do you think is a fair assumption for incentive levels on the Copilot side? Thank you. Okay. So we'll, I'll take the Copilot and then the Microsoft piece here. So firstly, in terms of the Copilot, as I said, I think we have a massive opportunity. This is a moment for organizations around the world to bend the curve in terms of productivity, firstly. For ourselves, we have enabled our sales force already. We have been provided access by Microsoft in terms of access to the product. A s a reminder, the product is not generally available yet from Microsoft. We anticipate that to happen within, let's say, early 2024. A s I said, we have 12.5 million seats in Office 365, who are, let's say, primed and ready to receive Copilot. Then in terms of the opportunity that's available, the $100 million obviously is highly dependent on when we, the product is made generally available. But $100 million would cut across both services and the reselling space, and I certainly believe that we have an opportunity to really accelerate, on that $100 million as soon as the product becomes available. W e internally are mobilizing our teams to ensure that we are ready to hit the ground running once it is available. Secondly, in terms of Microsoft, I've spent a lot of time, as I said, with our key partners, large ones and, some other partners since joining. I certainly believe that we have an opportunity with Microsoft now, not only to do what we already have done, but actually to reimagine that partnership. I have committed to Satya and team that we will be partner number one for Copilot. L ike I said, we had the Microsoft partner team here with us this week. R eally what we're choosing not only is to stabilize, you know, the incentives, but actually to reimagine what the partner of the future for Microsoft actually looks like. T here is a willingness top-down from Microsoft to have those conversations and explore what good looks like in that space. Then Rodolfo? Yeah, Florian, thanks for the questions. Then going back to the legacy services. Look, as this portfolio loads, of course, is comparing against the prior year base, we do expect that we'll still see an important effect in quarter three, but by quarter four, we expect that the effect would be significantly small. I think again, let me reiterate, the very encouraging development in the portfolio is this strong growth in the core services line. Okay. Thank you. Thank you. We will now take the next question. It comes from the line of Joe George from J.P. Morgan. Please go ahead. Yes. Hi, guys. Thanks very much for taking my questions. I have two just on the AI front, please. Firstly, Brian, on the split of that $100 million-plus revenue opportunity- ... Can you just give us some color on how that would broadly be split between reselling and services? W ithin the services piece, could you just give us some detail on what sort of services you guys will be providing? Because obviously, this is, you know, white space. S econdly, beyond Microsoft, within the AI opportunity, you know, who are the vendors that you see, you know, more significant AI opportunities with, and why as well? Thanks. Sure. Thanks, Joe, for the question. Firstly, in terms of... Maybe I'll work backwards a little bit. In terms of the opportunity, and like I said, it's massive. I think the challenge for customers now is nobody is asking, "Why should we, you know, transform at a high level?" Or, "Why should we embrace AI?" They know that they need to do it, otherwise they're gonna be left behind. The challenge for all of these customers is how, and how are we gonna embrace it, and how are we going to actually fundamentally change our business with it? I think the lesson... Many customers have learned lessons from the past in terms of adopting innovation, to make sure that now they're gonna be set up for success. T hat, honestly, is where we come in to answer that how question. So right now, in terms of services that we can offer with our Fabric offering, it's really around getting a customer ready to adopt AI. Like I said, you know, earlier, from a governance, from a security, from a risk perspective, from a data management perspective, all of these services are available to a customer now. But then, obviously, when Copilot comes for us, the opportunity that's available is now to around the implementation and the adoption of the Copilot offering, and enablement for organizations around the world. In terms of the split, for us, I anticipate that that would look approximately like a 40-60 split, 40 on the resale side, 60 on the services side. I will say that, I believe that those are conservative numbers that we have. Again, when you look at the 12.5 million users that are available. You would also ask around other partners that we're looking at working with and talking with. We are, as you would imagine, in conversations with AWS as well, in terms of their AI offering, which will be announced here shortly to the market. We are in conversations with them in terms of how we can partner with them to further that offering. T here are, of the other 7,500, there are many, as you would imagine, who are coming out with other generative AI offerings, which could be relevant for customers. The one thing that we are going to do, and hopefully you picked that up from, my commentary earlier, is focus. We have 7,500 partners, and we have a segment of those partners that are the key ones that are delivering, most revenue, for us. W e are going to double down our focus in terms of those partners and at the, and the business, opportunity that's available. A lso my commitment is, at the top of those partners in terms of, working on and defining a clear go-to-market with each and every one of them. Thank you, Joe. Thank you. Thank you. We will now take the next question. It comes from the line of Balaji Tirupati from Citi. Please go ahead. Hi. Thank you, Balaji Tirupati from Citi. Two questions from my side, if I may. Firstly, would you be able to comment on drivers of your expectation of material growth ramp over second quarter in the second half period? W hat is the expected contribution from M&As within that? S econd question on, ISV. Could you share color on growth rate with other ISVs in the second quarter period? S hould we think that all deceleration was on account of base comp, and how should we expect growth with them in second half of this year? So, Balaji, thanks for the question. It was a little bit difficult to think on the... Let me just see if I got the question right. So, you're talking about the growth of ISVs in Q2, and then what do we expect for the balance of the year, and then what are the drivers, overall drivers of growth in H2? Is that right? Yes. A lso, if you are factoring increased contribution from acquisitions in second half period. Okay. Now, thanks for the question. Look, again, as I said, we don't provide, let's say, specific numbers on the growth for Microsoft and ISVs. But of course, again, if you do the math, you would see that there was not much growth in the ISV portfolio in Q2. Then when you double-click the portfolio, and this ties nicely with what Brian said before, we see that for many of the key ISVs, the growth continues to be okay, but the... It was really the very high, let's say, decline or lack of growth, was in the tail end of the portfolio. H ere, again, it's sometimes difficult to have the clear good cost analysis. But as we shifted a lot of focus to Microsoft, it was a very important quarter. Some of that may have played in the development in the ISV. Now, when you take the average, I think, you know, this is a subset that where we see opportunity for very, very healthy growth. And I build on what Brian said. He's really driving focus on the key ISVs, making sure we have the right sales slates with these key partners. So we would expect anyway, let's say, when taken on average, a similar development in H2 as in H1, but with everything that is on the table right now, we expect an acceleration of growth. I think when it comes to the second half, again, the core services remains growing in line ahead of market, which we expect to continue slash accelerate. Very positive momentum with Microsoft. I can only echo what Brian described before. I mean, we're really coming together. This, this is Brian coming into the organization. He, he has kind of reset, in a very positive way, the, the relationship with Microsoft. I think that should translate into, into a higher degree of alignment for joint programs that will impact second half, will impact clearly 2024. S o that, that is, that is definitely part of the growth expectation for the second half. As far as acquisitions is concerned, we remain—this remains a priority for us, both on, but none of the guidance is relying on, let's say, any significant inorganic opportunity. We, we, we have—we announced a small bolt-on in the first half. There may be one or two in the second half, but again, nothing material. So the guidance is not, is not banking or counting on any bolt-on. Oh, understood. Understood. If I may add one more question, and on the cash flow side. Group's working capital has continued to move up. Has the evolution been in line with your internal expectations, and how should we think about it going forward? Look, it's a very fair question. When you look at the slide with the net working capital, we see that the development is very similar to development of last year. Now, we did say at the time, we were not particularly pleased with the development in H1 2022. Now, a lot of things have changed since then, right? We have a worsened financial environment, and this is here. We are shifting much more into consumption-based offerings, where the payment terms are longer. So I would say, and this is what I qualified during my presentation, the fact that the net working capital in H1 2023 is pretty much in line with 2022, I see that as a good development considering three things: the growth, number one, and the financial situation, and the shift in the portfolio. The team has done a very good job at making sure we mirror that with making sure our payment cycle is, you know, consistent with the collection. T herefore, the impact from net working capital you see in the cash flow is really minimal, right? I mean, for level of growth we have. But we do see, with operational excellence, we see an opportunity to improve certain financial processes that will reduce the collection time, and we do see some of that already having an impact towards the end of the year. Understood. I appreciate it. Thank you. Thank you. We will now take the next question. One moment, please. It's from the line of Andreas Müller from ZKB. Please go ahead. Yes, thanks for taking my questions. I have, two or three, one after the other. The first one is, in SG&A, when would you expect the normalization of the marketing and travel spend will be washed out, on a year-on-year comparison? That's the first question. Well, this one I take. I think clearly in alignment here with Brian. Again, look, it's this is a business cycle, where we were in COVID. We stopped everything, right? Now, you know, following a normalization of business life, you get an upswing in the wrong direction. So we have definitely put measures in place now to get to the right level of spending in travel, in some sales activities and so forth. So we expect this to impact ourselves, you know, already in few weeks. So this is in place. A gain, it's just normal, right? It's probably part of the business cycles, and measures have been taken to normalize this then. Okay. T he net debt position, what do you expect by the end of 2023? I mean, is it could it be a net cash position again with these new measurements? Look, we don't provide guidance on cash flow, right? I think I don't want to now start at one. I would say what you know that typically from a cash flow perspective, our H2 is much stronger, right? S o we will see. I mean, compared to H2 of point of last year, we should see a similar evolution as we had in. But again, we cannot. We will not provide guidance on cash. Okay, thank you. T he last question, I was still wondering on this AI-driven cross-selling pilot. I mean, is it now going to be fully rolled out in North America, and another pilot will be done in Europe, and has it fully fulfilled its expectation? W hen would you think that a full rollout would be here in for all regions? Thanks, Andreas, for the question. So, firstly, it has been fully rolled out in North America. With this AI pilot that we ran at the time, we basically are taking all of the data that we have on our customers, crunching that data, and then with an algorithm, suggesting to our sales teams the solutions which should be provided next, to them, the services, and the price that it should be sold at. We have, as I said, seen considerable impact from that in terms of opportunity creation, but very importantly, opportunity closure as well, which is why we moved from pilot phase to roll out across the entire region. The plan is for the second half of this year, that we will look to embrace that and roll it out to the rest of the world as well, given the promising signs that our pilot showed to us. Which again reinforces the opportunity that AI presents itself to all customers globally. Okay. Thank you very much. Thank you. Thank you. We will now take the next question. From the line of Knut Woller from Baader Bank. Please go ahead. Yeah, thank you. Looking at LATAM, which was the weak spot in Q2, can you share here from a qualitative perspective at least, whether you saw here an improvement of the demand momentum in Q3? T he second question, looking at the co-marketing invest headwinds in terms of the comparables, we saw that came down a bit from CHF 5.1 million in Q1 to CHF 3.5 million in the second quarter. Can you please provide here an update on the expected headwind for the second half? Thank you. Sure. I'll take the first part of that question. So, Latin America, firstly, a massive geography for us, and one which is very important, and one, in fact, where the partners rely heavily on us. As a market, it's probably most similar to APAC for us, and you can see the growth rates that we have in APAC. In Q3, we will have a leadership change in Latin America, to bring the necessary focus to the business that we need in that part of the world. We are unique in that we have a very significant presence from a services perspective. In that regard, most players in this space don't have such a presence there. That is one of the differentiators for us. With this leadership change, I firmly believe that we will have the focus back on the business that we need, given the growth potential that we have there. I would just comment that many partners don't have the same presence in that part of the world that they do in other parts of the world, which is why they would be heavily relying on us. W e plan to make further investments into that space, to grow that business. I'll turn the next part over to Rodolfo. Yes. Thanks, Brian. So on the, on the co-marketing... Look, again, we don't provide too many details on, on these topics, but in general, I would say these co-marketing investments that we had last year were, were relatively front-loaded. So I would say roughly, 70% would fall under H1. So there's still a remaining 30% that, that we should expect happening, and, and this would be even in, in, in the, in the coming two quarters. But again, the impact should be significantly more. Thank you, guys. Thank you. Thank you. As a reminder, if you wish to ask a question, please press star one and one on your telephone. That's star one and one if you wish to ask a question. I would like now to hand back over to Brian Duffy for final remarks. Great. Thank you, everybody, for joining this morning. I appreciate it. Thank you for your time, and we look forward to following up with you afterwards as well. Thanks, everybody. Bye-bye. That concludes our conference for today. Thank you for participating. You may now disconnect.