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Software AG Closes 2015 with a Record Quarter

Digital Business Platform license revenue up 23 percent in Q4

  • Impact of Go-to-Market transformation drives improvements in all key performance parameters
  • Strong Adabas & Natural customer retention leads to stable maintenance revenue
  • Highest Group maintenance revenue in company’s history, 10 percent up year-on-year
  • Digital cloud market gains further relevance
  • Operating earnings exceed outlook 2015
  • Operating margin sets new historic record in Q4
  • 2016 Outlook with strong digital business growth

[If not stated otherwise, all figures rounded including potential currency impacts.]

Darmstadt, Germany, 1/19/2016

Software AG (Frankfurt TecDAX: SOW) today announced its preliminary financial figures (IFRS, preliminary) for the fourth quarter and the full year 2015. The company’s new Go-to-Market strategy had a positive impact on all key performance parameters. In the fourth quarter of the year, the Group set several new records: The Digital Business Platform reported a license increase of 23 percent, while its maintenance improved by 10 percent. Additionally, Software AG increased cloud bookings in 2015 by more than 130 percent.
Adabas & Natural showed the lowest decline in four years as A&N-based applications remained highly relevant for customers, supported by Software AG’s strong customer focus and innovative product developments.
With a rise in total revenues of 4 percent in Q4, the Group managed once again to increase its profitability over-proportionately: Both the operating earnings margin (EBITA, non-IFRS) at 36 percent as well as the EBIT margin (IFRS) at 31 percent set two new historic record levels. For the full year, the operating earnings margin reached 30 percent, exceeding the outlook (28 to 29 percent), already raised three months ago.
Driven by the positive developments in the fourth quarter, Software AG successfully closed the 2015 financial year with revenue and earnings growth. For 2016, the company is well positioned to further accelerate this profitable growth.


"The fourth quarter results underscore the huge market potential of our Digital Business Platform and confirm our undisputed technology leadership“, said Karl-Heinz Streibich, CEO of Software AG. “Our excellent product portfolio, the great progress in our Go-to-Market transformation, strong Adabas & Natural customer base retention, and continued efficiency improvements are the core reasons for our strong upwards trend, which is expected to continue in 2016 and beyond. The operational improvements and corresponding successes that we have seen over the past year have indeed matured from a quarter-by-quarter development into a real growth trend.”

“In the past quarter, we lifted Software AG’s profitability to a new level through organic growth and focused process optimization", said CFO Arnd Zinnhardt. "For the future, we are optimally positioned and expect to further increase our company value.”

Development of the business divisions
The Digital Business Platform (DBP) achieved license revenue of €74.0 million (Q4 2014: €60.2 million) in the fourth quarter, reaching a new record level in Software AG’s history - corresponding to significant growth of 23 percent over the previous year. Maintenance revenues amounted to €63.6 million (Q4 2014: €57.9 million), approximately 10 percent over the same period and also setting a new record. Accordingly, total product revenue (licenses and maintenance) amounted to €137.6 million in the fourth quarter (Q4 2014: €118.1 million) up 17 percent. For full year 2015, DBP revenue was at €431.5 million (FY 2014: €394.5 million), up by 9 percent. 

The Adabas & Natural (A&N) business line recorded revenue of €68.2 million (Q4 2014: €77.0 million). License sales were €28.9 million (Q4 2014: €38.4 million) and maintenance €39.1 million (Q4 2014: €38.4 million). For the full year 2015, A&N revenue of €248.0 million (FY 2014: €245.3 million) was up 1 percent, reflecting the strong commitment of the A&N customer base to continue to run their critical business applications on Software AG’s proven technology. 

Revenues in the Consulting line of business were €51.8 million (Q4 2015: € 52.2 million). For the full year 2015, revenue was €193.6 million (FY 2014: €195.8 million, adjusted for revenue from the divested SAP consulting business unit). At the same time the segment contribution improved to €21.8 million (FY 2014: €16.9 million) and the segment margin to 11 percent (FY 2014: 8 percent) due to the divestment of non-strategic services.

Total revenue and earnings development
Software AG’s total revenue in the quarter under review was €257.5 million (Q4 2014: €247.3 million), an increase of 4 percent. For the full year, total revenue was €873.1 million (FY 2014: €857.8 million), up 2 percent.

The company’s product revenue was up 5 percent for the quarter at €205.6 million (Q4 2014: €195.0 million). For the full year 2015, product revenue was up 6 percent to €678.8 million (FY 2014: €641.4 million).
The maintenance revenue reached €102.6 million (Q4 2014: €96.4 million), up 6 percent in the quarter marking a new quarterly record. For the full year, Software AG booked €406.9 million (FY 2014: €371.3 million), a 10 percent rise and also a new record high.

The license revenue for the fourth quarter was €103.0 (Q4 2014: €98.6 million), representing a 4 per-cent rise. For the full year 2015, license reached €271.9 million (FY 2014: €270.1 million).
The operating earnings (EBITA, non-IFRS) increased strongly due to a higher product revenue, improved sales mix, higher efficiency and active cost management. Software AG’s operating earnings (EBITA, non-IFRS) increased to €92.2 million (Q4 2014: €88.4 million) in the quarter reported. Accordingly, the operating earnings margin (non-IFRS) reached 36 percent (Q4 2015: 36 percent). For the full year 2015, operating earnings improved by 8 percent to €259.1 million (FY 2014: €239.3 million), the operating profit margin (non-IFRS) jumped to 30 percent (FY 2014: 28 percent).

The company’s profit before interest and taxes EBIT in the fourth quarter was €80.1 million (Q4 2014: €71.4 million), a plus of 12 percent. EBIT in fiscal 2015 was €209.4 million (FY 2014: €176.0 million), an increase of 19 percent. This corresponds to an EBIT margin of 31 percent in Q4 (Q4 2014: 29 percent) and to an EBIT margin for 2015 of 24 percent (FY 2014: 21 percent). 

Achieved Goals 2015
With the Q4 financial results, Software AG has achieved its 2015 goals. At constant currency, the DBP revenue grew by 2 percent, which is above the mid-point of the company’s guided corridor of between +0 and +3 percent. A&N at constant currency represented a slight decrease of -5 percent for the total year, in-line with the guided -4 to -8 percent corridor. With 30 percent, the operating earnings margin (EBITA, non-IFRS) even exceeded the outlook of 28 to 29 percent.

Outlook 2016
Based on the increasing market relevance of the company’s portfolio and the further expected positive impacts of its Go-to-Market strategy, Software AG is now targeting a currency-adjusted increase of DBP product revenue of between +5 and +10 percent for  2016. For A&N, the Group expects currency-adjusted sales to decline between -4 and -8 percent over the previous year. Moreover, the company expects further improvement of its operating profit margin (EBITA, non-IFRS) reaching 30 to 31 percent.


###

 

Key Figures for Q4 2015 (IFRS, unaudited)

in € millions

Q4/2015

Q4/2014

∆ in %
as stated

Total revenue

257.5

247.3

+4

Product revenue

205.6

195.0

+5

Maintenance revenue

102.6

96.4

+6

License revenue

103.0

98.6

+4

Digital Business Platform

137.6

118.1

+17

as % of total revenue

53%

48%

 

DBP maintenance

63.6

57.9

+10

DBP licenses

74.0

60.2

+23

Adabas & Natural

68.2

77.0

-11

as % of total revenue

27%

31%

 

A&N maintenance

39.1

38.4

+2

A&N licenses

28.9

38.4

-25

Consulting

51.8

52.2

-1

as % of total revenue

20%

21%


Sales & marketing expenses

-71.3

-71.9

-1

Research & development expenses

-27.1

-28.1

-4

EBIT*

80.1

71.4

+12

as % of total revenue

31%

29%


Operating Earnings (EBITA, non-IFRS)**

92.2

88.4

+4

as % of total revenue

36%

36%


*  = consolidated net income + income tax + other tax + financial result

** = EBITA adjusted for reduction of acquisition-related product revenue by purchase price allocation, other acquisition effects, share-based payment, restructuring/severance payments and operating income of divested units


 

 

Key Figures for FY 2015 (IFRS, unaudited)

in € millions

2015

2014

∆ in %
as stated

Total revenue

873.1

857.8

+2

Product revenue

678.8

641.4

+6

Maintenance revenue

406.9

371.3

+10

Licenses revenue

271.9

270.1

+1

Digital Business Platform

431.5

394.5

+9

as % of total revenue

49%

46%


DBP maintenance

248.0

215.6

+15

DBP licenses

183.5

178.9

+3

Adabas & Natural

248.0

245.3

+1

as % of total revenue

28%

29%


A&N maintenance

158.9

153.7

+3

A&N licenses

88.4

91.0

-3

Consulting

193.6

195.8

-1

as % of total revenue

22%

23%

 

Sales & marketing expenses

-268.0

-263.0

+2

Research & development expenses

-106.4

-109.1

-2

EBIT*

209.4

176.0

+19

as % of total revenue

24%

21%

 

Operating Earnings (EBITA, non-IFRS)

259.1

239.3

+8

as % of total revenue

30%

28%

 

*  = consolidated net income + income tax + other tax + financial result

** = EBITA adjusted for reduction of acquisition-related product revenue by purchase price allocation, other acquisition effects, share-based payment, restructuring/severance payments and operating income of divested units


The full set of key figures will be published on January 27th, 2016 on Software AG’s corporate website.

About Software AG

Software AG empowers customers to innovate, differentiate and win in the digital world. Its products help companies combine existing systems on-premise and in the cloud into a single platform to optimize and digitize their businesses. The combination of process management, data integration and real-time analytics in one Digital Business Platform enables customers to drive operational efficiency, modernize their systems and optimize processes for smarter decision-making. Building on over 45 years of customer-centric innovation, Software AG is ranked a leader in many innovative IT categories. Software AG has more than 4,400 employees in 70 countries and had total revenues of €858 million in 2014.
Learn more at www.softwareag.com

Software AG | Uhlandstraße 12 | 64297 Darmstadt | Germany

Detailed press information about Software AG including a picture and multimedia database are available under: www.softwareag.com/press 

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Contact:
Software AG
Byung-Hun Park
Senior Vice President Corporate Communications
Uhlandstrasse 12
64297 Darmstadt
Germany
Tel: +49 6151 92-2070
Mobile: +49 151 64 911 317
byung-hun.park@softwareag.com
http://www.softwareag.com

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