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Profit Leap for Software AG in the Third Quarter

Published: 10/26/2010

  • Net profit up 20 percent to €45.6 million
  • Total revenue up 29 percent to €275.3 million
  • Revenue and profit growth driven by the services business
  • The successful integration of IDS Scheer delivers an increased earnings contribution
  • Profit forecast for fiscal 2010 raised considerably

Software AG (Frankfurt TecDAX: SOW) reported significant revenue growth in all business divisions in the third quarter of 2010. Total revenue rose 29 percent (22 percent at constant currency rates) year-on-year to €275.3 million (2009: €213.6 million). In particular the services business performed well reporting higher revenue than the second quarter of 2010, contrary to normal seasonal development. The successful integration of IDS Scheer AG has resulted in this new corporate division reporting revenue growth for both products and consulting services. In addition, foreign currency rates had a positive impact on both revenue and earnings, particularly in the Americas.

Group operating earnings, net income, and earnings per share again reached record highs, returning two-digit growth rates. This performance is a result of the improved utilization of consulting capacities, cost synergies achieved through the merger with IDS Scheer and the positive, third quarter exchange rate effects. Software AG expects this earnings trend to continue in the fourth quarter and has therefore raised its fiscal year 2010 outlook for profit growth from the previously announced 10 to 12 percent to between 18 and 20 percent.

The third quarter 2010 results again confirmed Software AG’s growth strategy. The new business area, known as Business Process Excellence, encompassing innovative software products for the integration of enterprise applications and processes, continued to grow (product revenue webMethods/ARIS + 27 percent compared to the previous year) and delivered an increased earnings contribution. The objectives of the August 2009 merger with IDS Scheer, namely revenue and cost synergies, had a very positive impact on earnings for the first time in the quarter under review. The earnings contribution from the Enterprise Process Innovation (IDS Scheer) division more than tripled to €14.6 million (2009: €4.5 million).

Read the full Press Release.