Quarterly Report • Oct 19, 2018
Quarterly Report
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QUARTERLY STATEMENT Q3|2018 TABLE OF CONTENTS
| KEY DEVELOPMENTS IN THE THIRD QUARTER |
4 |
|---|---|
| MANAGEMENT'S ASSESSMENT OF THIRD QUARTER RESULTS |
5 |
| BUSINESS LINE PERFORMANCE | 6 |
| TOTAL REVENUE AND EARNINGS PERFORMANCE |
6 |
| EMPLOYEES | 6 |
| 2018 OUTLOOK | 7 |
| KEY FIGURES | 8 |
|---|---|
| CONSOLIDATED INCOME STATEMENT |
9 |
| CONSOLIDATED BALANCE SHEET |
10 |
| CONSOLIDATED STATEMENT OF CASH FLOWS |
12 |
| SEGMENT REPORT | 13 |
| DBP SEGEMENT | 15 |
| STATEMENT OF COMPREHENSIVE INCOME |
17 |
| SAFE HARBOR STATEMENT | 18 |
Software AG's New CEO: On August 1, 2018, Sanjay Brahmawar started as CEO of Software AG. In his kick-off speech he stated: "The Internet of Things will play a major role in the new chapter of the company's history. And we are more than ready for it. In a very short period of time, Software AG has achieved tremendous progress with its new IoT strategy—a strategy that can set us apart from other software companies. We do what other, larger companies cannot do. We make IoT real."
Software AG Back in the MDAX: A revised index structure took effect on the German stock exchange as of September 24, 2018. Software AG qualified for the MDAX based on market capitalization and trade volume. The MDAX is the second-largest index and now includes 60 members after having increased from 50. Software AG will also remain listed in the TecDAX, which consists of Germany's 30 largest tech companies.
Software AG Acquires Built.io: On September 28, 2018, Software acquired built.io to accelerate leadership in hybrid and cloud Integration. The San Franciscobased market leading iPaaS company introduced its iPaaS offering, built.io Flow™ in 2015. It has subsequently been named a Challenger in Gartner's 2018 "Magic Quadrant for Enterprise Integration Platform as a Service"1 and was named a Cool Vendor in the report "Cool Vendors in Pervasive Integration, 2016."2 Built.io's Flow and Embed products will come together as a single integrated offering with Software AG's globally recognized webMethods Integration platform. Customers will benefit from easy-touse and robust integration solutions leading to significantly accelerated time-to-value, critical to the success of IoT and digital transformation solutions.
ship: Software AG announced on October 11, 2018 an extended partnership with Dell Technologies with the goal of bundling Software AG's Cumulocity IoT Edge with a selection of Dell's servers. This will provide a joint plug-andplay solution for rapid deployment and simple configuration for instant IoT. Cumulocity IoT Edge, powered by Dell Technologies, is a high-performance industry-proof bundle, combining hardware, software and services for IoT. It enables customers to connect, power up and start their IoT projects immediately. Customers can connect any number of different end devices and sensors in just a few minutes. Features like integrated streaming analytics, preconfigured smart rules and field bus connectivity make it possible to create complex IoT solutions quickly and smoothly.
Software AG a Strong Performer in IIoT: Software AG was positioned as a Strong Performer with the highest current offering score among other strong performers in a 24-criteria evaluation of Cumulocity IoT (Internet of Things) in The Forrester WaveTM: Industrial IoT Software Platforms, Q3 2018. In this report of the "15 providers that matter most", Forrester defines industrial IoT as "Software solutions that connect to and manage smart devices and infrastructure in industrial and manufacturing environments to integrate operational data and control into business processes."
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
1 Gartner, "Magic Quadrant for Enterprise Integration Platform as a Service" by Keith Guttridge, Massimo Pezzini, Eric Thoo, Bindi Bhullar, Betty J. Zakheim, 18 April 2018.
2 Gartner, "Cool Vendors in Pervasive Integration, 2016" by Eric Thoo, Massimo Pezzini, Keith Guttridge, Elizabeth Golluscio, Ehtisham Zaidi, 10 May 2016. Gartner Disclaimer:
As digitalization continues to effect radical changes in the business world, digital transformation must be on every enterprise's agenda. A growing number of large corporations worldwide are choosing our leading technology to implement their digitalization strategies. The demand for our solutions is especially high in the rapidly growing global Internet of Things market. Q3 underlined this clearly. After a strong Q2, Software AG again delivered strong results in all product business lines in Q3.
We continue to enable the digital journeys of industry leaders with our ever evolving leading portfolio. The Digital Business Platform (DBP) (excl. DBP Cloud & IoT) showed a growing momentum compared to Q1 and Q2 in every single category revenue line. License revenue from Software AG's Digital Business Platform (excl. DBP Cloud & IoT) rose by 15 percent to total €37.1 million. And product revenue increased by 8 percent year-on-year. Maintenance grew by 5 percent at constant currency.
Integration is fundamental to digital transformation; on premise, hybrid, in the cloud and on the edge. There is no digital enterprise that is not a connected enterprise, and Software AG is the undisputed leader in connectivity and integration. The acquisition of built.io in Q3 should be seen in this context.
Customers and prospects continued to demonstrate a high degree of interest in our IoT and Cloud offering in the third quarter. All areas of revenue reflect this dynamic performance. Our new Cloud & IoT business continued its dynamic growth with €9.1 million in total revenue, an increase of 144 percent. Annual recurring revenue (ARR) the key indicator of 12-month cash flow based on (recurring) contracted revenue—more than doubled year-on-year. Fueled by high demand for independent, open and cloud-based platforms, ARR in the Cloud & IoT business increased by 111 percent. All KPIs clearly underpin Software AG's market success. They also demonstrate that this business has become and continues to be an increasingly relevant factor in our business model and is thus important to the valuation of our company.
The Adabas & Natural (A&N) database business also continued the strong performance of the last six quarters recording a dynamic license and product revenue growth. License revenue in Q3 was primarily driven by new modernization projects. This is extremely gratifying and significant in that it demonstrates Software AG customers are choosing to build their futures on their heritage of business-critical applications, built on our technology over decades. This overall positive performance also underlines the stability of this segment and the high degree of loyalty of the A&N customer base. Our Adabas & Natural 2050+ innovation program provides customers with long-term investment protection and plays a strategic role in modernizing their IT landscapes. Based on A&N's highly stable pipeline and the associated predictability, the outlook for 2018 was confirmed.
The Consulting business continues to focus on supporting our major license projects and strategic partners.
"I'm extremely proud of our team for delivering a solid Q3, with revenue growth in all product lines. Our customers tell me that our technology is integral and strategic to their business and these strong results demonstrate the continued trust they have in us. Combining innovative IoT solutions with a leading core integration platform gives us a unique position in the global software market; something on which we will continue to build." Sanjay Brahmawar, CEO, Software AG
"The strong revenue performance in the Cloud & IoT business illustrates the dynamism of this rapidly growing market. Our acquisition of built.io in the third quarter was a further step toward completing our cloud portfolio. ARR is the key indicator of successful development of our Cloud & IoT business alongside growing profitability." Arnd Zinnhardt, CFO, Software AG
BUSINESS LINE PERFORMANCE | TOTAL REVENUE AND EARNINGS PERFORMANCE | EMPLOYEES
Up 144 percent year-on-year, DBP Cloud & IoT revenue demonstrated robust growth to total €9.1 million (2017: €3.7 million). ARR in the Cloud & IoT business more than doubled year-on-year. The growth trend in the IoT business line was fueled by ever greater customer demand and strengthened by Software AG's extensive partner network. For example, the company recently expanded its IoT partnership with Dell and laid the basis for incremental revenue starting next year. DBP (excl. Cloud & IoT) license revenue climbed 15 percent to €37.1 million (2017: €32.5 million) in the third quarter. Maintenance revenue was €67.7 million (2017: €64.9 million), which reflects 5 percent growth over the previous year. Accordingly, DBP product revenue totaled €104.7 million (2017: €97.5 million) in the third quarter of 2018, an increase of about 8 percent. The Digital Business Platform (DBP) business line including Cloud & IoT totaled €113.8 million (2017: €101.2 million) in revenue in the third quarter of 2018, reflecting 13 percent growth.
In the first nine months 2018, DBP Cloud & IoT revenue reached €20.7 million (2017: €10.2 million), an increase of 108 percent at constant currency. DBP (excl. Cloud & IoT) revenue reached €296.0 million (2017: €301.3 million), reflecting 3 percent growth at constant currency.
The Adabas & Natural (A&N) business line continued to perform extremely well. Of particular note was the 48 percent increase in license revenue generating €16.1 million (2017: €11.3 million) in the third quarter. Maintenance revenue was €36.0 million (2017: €37.4 million). A&N product revenue grew 11 percent to total €52.1 million (2017: €48.7 million). This overall positive performance underlines the stability of this segment and the high degree of loyalty of the A&N customer base. Software AG's Adabas & Natural 2050+ innovation program provides customers with long-term investment protection and plays a strategic role in modernizing their IT landscapes.
In the first nine months 2018, A&N revenue reached €149.6 million (2017: €149.2 million), an increase of 6 percent at constant currency. Based on A&N's highly predictable pipeline, the 2018 outlook was also confirmed for this business line.
Third-quarter revenue in the Consulting business line was €42.7 million (2017: €47.2 million).
Despite continuous negative currency translation effects totaling -€3.2million, Software AG booked €208.8 million (2017: €197.3 million) in total revenue in the period under review, a rise of 7 percent at constant currency. This growth is due primarily to the strong performance of Group license revenue, which increased 29 percent to €56.7 million (2017: €44.5 million). Group maintenance revenue totaled €104.7 million (2017: €103.0 million), which is 3 percent growth. Accordingly, Software AG's total third-quarter product revenue (licenses + maintenance) rose 13 percent to €165.9 million (2017: €149.9 million).
The company's third-quarter EBIT was €54.5 million (2017: €50.4 million). This reflects an EBIT margin of 26.1 percent (2017: 25.5 percent). At €63.8 million (2017: €63.6 million), operating earnings (EBITA, non-IFRS) also performed well in the quarter. Accordingly, the operating profit margin (non-IFRS) was 30.5 percent (2017: 32.2 percent). Earnings per share (EPS, non-IFRS) grew 3 percent to €0.60 (2017: €0.58).
In the first nine months 2018, the operating profit margin (EBITA, non-IFRS) reached 29.4 percent (2017: 29.7 percent). Earnings per share (EPS, non-IFRS) grew 4 percent to €1.67 (2017: €1.61).
As of September 30, 2018, Software AG employed a total of 4,714 (2017: 4,600) employees (full-time equivalents). Of that number, 1,903 (2017: 1,945) worked in Consulting and Services, 1,269 (2017: 1,179) in Research and Development, 932 (2017: 865) in Sales and Marketing and 610 (2017: 611) in Administration.
Software AG has confirmed its outlook for fiscal 2018. Based on expectations for business performance in the next three months, Software AG's Management Board continues to anticipate an operating profit margin (EBITA, non-IFRS) between 30.0 and 32.0 percent for the 2018 fiscal year. Digital Business Platform revenue, excl. DBP Cloud & IoT, is expected to increase between 3 and 7 percent. DBP Cloud & IoT revenue is expected to increase between 100 and 135 percent. The revenue growth target for the Adabas & Natural database business line remains unchanged between -6 and -2 percent. Software AG assumes earnings per share (EPS, non-IFRS) will increase between 5 and 15 percent.
The table below shows the full forecast for the 2018 fiscal year:
| FY 2017 in € millions |
FY 2018 Outlook as of April 13, 2018 as % |
|
|---|---|---|
| DBP revenue1 | 456.4 | — |
| DBP excl. DBP Cloud & IoT2 | 441.5 | +3 to +72 |
| DBP Cloud & IoT1 | 14.9 | +100 to +1351 |
| A&N revenue2 | 223.7 | −6 to −22 |
| Operating margin (EBITA, non-IFRS)3 | 31.8% | 30.0 to 32.0 |
| Earnings per Share (EPS, non-IFRS)4 | €2.38 | +5 to +15 |
1 At constant currency, including hosting services
2 At constant currency
3 Before adjusting for non-operating factors (see non-IFRS results)
4 Weighted average shares outstanding (basic/acc. to IAS 33.19) FY 2017: 74.6m / FY 2018: 74.0m; Based on new US-Federal-Tax and Euro/US-Dollar exchange rate of 1/1.18
| in € millions (unless otherwise stated) |
9M 2018 | 9M 2017 | +/- as % | +/- as % acc1 |
Q3 2018 | Q3 2017 | +/- as % | +/- as % acc1 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 601.2 | 610.6 | -2 | +3 | 208.8 | 197.3 | +6 | +7 |
| Digital Business Platform (DBP) business line (incl. DBP Cloud & IoT) |
316.7 | 311.5 | +2 | +6 | 113.8 | 101.2 | +12 | +13 |
| thereof DBP excl. DBP Cloud & IoT | 296.0 | 301.3 | -2 | +3 | 104.7 | 97.5 | +7 | +8 |
| thereof DBP Cloud & IoT | 20.7 | 10.2 | +104 | +108 | 9.1 | 3.7 | +144 | +144 |
| Adabas & Natural (A&N) business line | 149.6 | 149.2 | 0 | +6 | 52.3 | 48.9 | +7 | +11 |
| Licenses | 144.4 | 136.7 | +6 | +10 | 56.7 | 44.5 | +28 | +29 |
| Maintenance | 308.8 | 316.9 | -3 | +3 | 104.7 | 103.0 | +2 | +3 |
| SaaS | 12.6 | 6.5 | +95 | +101 | 4.5 | 2.4 | +88 | +89 |
| ARR DBP incl. DBP Cloud & IoT2 | 290.3 | 264.5 | — | — | — | — | — | — |
| thereof ARR DBP Cloud & IoT2 | 27.0 | 12.8 | — | — | — | — | — | — |
| Operating EBITA (non-IFRS) |
176.5 | 181.2 | -3 | — | 63.8 | 63.6 | 0 | — |
| as % of revenue | 29.4 | 29.7 | — | — | 30.5 | 32.2 | — | — |
| DBP segment earnings | 95.7 | 93.5 | +2 | — | 38.2 | 32.9 | +16 | — |
| Segment margin as % | 30.2 | 30.0 | — | — | 33.6 | 32.5 | — | — |
| A&N segment earnings | 104.5 | 100.8 | +4 | — | 35.8 | 33.4 | +7 | — |
| Segment margin as % | 69.8 | 67.6 | — | — | 68.4 | 68.3 | — | — |
| Net income (non-IFRS) | 123.5 | 120.6 | +2 | — | 44.7 | 43.1 | +4 | — |
| Earnings per share (non-IFRS)3 | 1.67 | 1.61 | +4 | — | 0.60 | 0.58 | +3 | — |
| Operating cash flow | 133.7 | 146.0 | -8 | — | 38.6 | 37.6 | +3 | — |
| CapEx4 | 8.7 | 24.7 | — | — | 2.2 | 2.1 | — | — |
| Free cash flow | 125.0 | 121.3 | +3 | — | 36.4 | 35.5 | +3 | — |
| Balance sheet | Sept. 30, 2018 |
Dec. 31, 2017 |
||||||
| Total assets | 1,942.5 | 1,907.5 | +2 | |||||
| Cash and cash equivalents | 406.9 | 365.8 | +11 | |||||
| Net cash | 91.5 | 55.2 | +66 | |||||
| Employees (FTE) | 4,714 | 4,596 | +3 |
1 acc = At constant currency
2 ARR = Annual recurring revenue. Internal planned rates were used to calculate acc.
3 Based on weighted average shares outstanding (basic) Q3 2018: 74.0m / Q3 2017: 74.0m / 9M 2018: 74.0m / 9M 2017: 74.9m
4 Cash flow from investing activities adjusted for acquisitions and investments in debt instruments
As the indicators in this report are stated in accordance with commercial rounding principles, totals and percentages may not always be exact.
| in € thousands | 9M 2018 | 9M 2017 | +/- as % | Q3 2018 | Q3 2017 | +/- as % |
|---|---|---|---|---|---|---|
| Licenses | 144,378 | 136,700 | +6 | 56,743 | 44,487 | +28 |
| Maintenance | 308,848 | 316,927 | -3 | 104,680 | 102,976 | +2 |
| SaaS | 12,577 | 6,465 | +95 | 4,515 | 2,400 | +88 |
| Services | 134,814 | 149,944 | -10 | 42,714 | 47,236 | -10 |
| Other | 534 | 568 | -6 | 165 | 184 | -10 |
| Total revenue | 601,151 | 610,604 | -2 | 208,817 | 197,283 | +6 |
| Cost of sales | -143,721 | -155,340 | -7 | -45,845 | -48,677 | -6 |
| Gross profit | 457,430 | 455,264 | 0 | 162,972 | 148,606 | +10 |
| Research & development expenses | -88,545 | -88,849 | 0 | -30,167 | -28,194 | +7 |
| Sales, marketing and distribution expenses | -169,356 | -175,341 | -3 | -58,894 | -53,638 | +10 |
| General and administrative expenses | -54,248 | -55,007 | -1 | -19,218 | -17,000 | +13 |
| Other taxes | -4,813 | -5,327 | -10 | -1,602 | -1,589 | +1 |
| Operating earnings | 140,468 | 130,740 | +7 | 53,091 | 48,185 | +10 |
| Other income/expenses, net | 3,477 | 3,959 | — | -208 | 635 | — |
| Financing expenses, net | 3,444 | -357 | — | 1,357 | -334 | — |
| Earnings before income taxes | 147,389 | 134,342 | +10 | 54,240 | 48,486 | +12 |
| Income taxes | -43,488 | -41,977 | +4 | -16,113 | -14,707 | +10 |
| Net income | 103,901 | 92,365 | +12 | 38,127 | 33,779 | +13 |
| thereof attributable to shareholders of Software AG |
103,709 | 92,172 | +13 | 38,044 | 33,706 | +13 |
| thereof attributable to non-controlling interests |
192 | 193 | — | 83 | 73 | — |
| Earnings per share in € (basic) | 1.40 | 1.23 | +14 | 0.51 | 0.46 | +11 |
| Earnings per share in € (diluted) | 1.40 | 1.23 | +14 | 0.51 | 0.46 | +11 |
| Weighted average number of shares outstanding (basic) |
73,978,064 | 74,870,803 | — | 73,979,889 | 73,959,889 | — |
| Weighted average number of shares outstanding (diluted) |
73,980,545 | 74,881,101 | — | 73,982,289 | 73,970,271 | — |
In order to provide more relevant information and to improve the value of its financial statements, in particular the financial performance, Software AG made changes to the presentation/structure of the Income Statement by introducing a new revenue line. As of January 1st, 2018 revenues from Software as a Service contracts are shown in a separate line. Prior year's figures have been adjusted accordingly.
| ASSETS | ||
|---|---|---|
| in € thousands | Sept. 30, 2018 | Dec. 31, 2017 |
| Current assets | 661,263 | 650,292 |
| Cash and cash equivalents | 406,892 | 365,815 |
| Other financial assets | 6,174 | 26,165 |
| Trade and other receivables | 207,379 | 226,314 |
| Other non-financial assets | 19,902 | 17,366 |
| Income tax receivables | 20,916 | 14,632 |
| Non-current assets | 1,281,216 | 1,257,178 |
| Intangible assets | 137,139 | 131,664 |
| Goodwill | 968,719 | 921,415 |
| Property, plant and equipment | 71,060 | 72,815 |
| Other financial assets | 41,525 | 54,730 |
| Trade and other receivables | 36,766 | 53,273 |
| Other non-financial assets | 2,819 | 199 |
| Income tax receivables | 8,559 | 8,575 |
| Deferred tax receivables | 14,629 | 14,507 |
| Total Assets | 1,942,479 | 1,907,470 |
| Current liabilities 457,004 582,557 Financial liabilities 115,169 210,347 Trade and other payables 27,117 37,617 Other non-financial liabilities 104,530 150,416 Other provisions 34,824 43,708 Income tax liabilities 34,517 27,505 Deferred income 140,847 112,964 Non-current liabilities 316,695 206,631 Financial liabilities 200,217 100,250 Trade and other payables 3,316 3,677 Other non-financial liabilities 706 640 Other provisions 33,347 34,297 Provisions for pensions and similar obligations 44,422 43,869 Income tax liabilities 4,229 4,509 Deferred tax liabilities 14,594 11,599 Deferred income 15,864 7,790 Equity 1,168,780 1,118,282 Share capital 74,000 76,400 Capital reserves 22,612 22,715 Retained earnings 1,140,523 1,176,722 Other reserves -68,126 -66,905 Treasury shares -757 -91,249 Attributable to shareholders of Software AG 1,168,252 1,117,683 Non-controlling interests 528 599 |
in € thousands | Sept. 30, 2018 | Dec. 31, 2017 |
|---|---|---|---|
| Total Equity and Liabilities 1,942,479 1,907,470 |
| in € thousands | 9M 2018 | 9M 2017 | Q3 2018 | Q3 2017 |
|---|---|---|---|---|
| Net income | 103,901 | 92,365 | 38,127 | 33,779 |
| Income taxes | 43,488 | 41,977 | 16,113 | 14,707 |
| Net financial income/expense | -3,444 | 357 | -1,357 | 334 |
| Amortization/depreciation of non-current assets | 24,174 | 31,575 | 8,203 | 9,553 |
| Payments for the settlement of share based payment rights with a choice of settlement |
-53 | 0 | -53 | 0 |
| Other non-cash income/expense | -1,925 | 1,353 | -4 | 1,587 |
| Changes in receivables and other assets | 54,165 | 67,999 | -16,165 | 6,973 |
| Changes in payables and other liabilities | -46,152 | -32,958 | -501 | -16,862 |
| Income taxes paid/received | -43,385 | -55,216 | -7,039 | -10,548 |
| Interest paid | -4,923 | -8,100 | -1,381 | -3,948 |
| Interest received | 7,835 | 6,679 | 2,665 | 2,068 |
| Net cash provided by operating activities | 133,681 | 146,031 | 38,608 | 37,643 |
| Proceeds from the sale of property, plant and equipment/ intangible assets |
268 | 290 | 48 | 34 |
| Purchase of property, plant and equipment/intangible assets | -6,337 | -22,673 | -2,078 | -2,074 |
| Proceeds from the sale of non-current financial assets | 250 | 101 | 0 | 0 |
| Purchase of non-current financial assets | -2,835 | -2,486 | -161 | -110 |
| Proceeds from the sale of current financial assets | 271 | 4,179 | 83 | 51 |
| Purchase of current financial assets | -885 | -622 | -351 | -102 |
| Payment for acquisitions, net | -46,800 | -49,420 | -17,191 | 0 |
| Net cash used in investing activities | -56,068 | -70,631 | -19,650 | -2,201 |
| Repurchase of treasury shares | 0 | -89,587 | 0 | 0 |
| Sale of treasury stock | 88 | 1,330 | 0 | 0 |
| Dividends paid | -48,348 | -44,553 | 0 | -210 |
| Proceeds and payments from current financial liabilities | 12,441 | 96,052 | 626 | 54,157 |
| Proceeds from non-current financial liabilities | 100,028 | 0 | 15 | 0 |
| Repayment of non-current financial liabilities | -100,011 | -70,894 | 0 | -60,320 |
| Net cash provided by/used in financing activities | -35,802 | -107,652 | 641 | -6,373 |
| Change in cash and cash equivalents from cash relevant transactions |
41,811 | -32,252 | 19,599 | 29,069 |
| Currency translation adjustment | -734 | -15,678 | -679 | -6,235 |
| Net change in cash and cash equivalents | 41,077 | -47,930 | 18,920 | 22,834 |
| Cash and cash equivalents at the beginning of the period | 365,815 | 374,611 | 387,972 | 303,847 |
| Cash and cash equivalents at the end of the period | 406,892 | 326,681 | 406,892 | 326,681 |
| Free cash flow | 125,027 | 121,263 | 36,417 | 35,493 |
SEGMENT REPORT
| DBP incl. DBP Cloud & IoT | Adabas & Natural | Consulting | Reconciliation | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in € thousands | 9M 2018 | 9M 2018 acc | 9M 2017 | 9M 2018 9M 2018 acc | 9M 2017 | 9M 2018 9M 2018 acc | 9M 2017 | 9M 2018 | 9M 2017 | 9M 2018 9M 2018 acc | 9M 2017 | |||
| Licenses | 101,728 | 105,791 | 104,371 | 42,650 | 44,539 | 32,329 | 0 | 0 | 0 | 0 | 0 | 144,378 | 150,330 | 136,700 |
| Maintenance | 202,352 | 211,887 | 200,595 | 106,496 | 113,709 | 116,332 | 0 | 0 | 0 | 0 | 0 | 308,848 | 325,596 | 316,927 |
| SaaS | 12,577 | 12,971 | 6,465 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 12,577 | 12,971 | 6,465 |
| Product revenue | 316,657 | 330,649 | 311,431 | 149,146 | 158,248 | 148,661 | 0 | 0 | 0 | 0 | 0 | 465,803 | 488,897 | 460,092 |
| Services | 0 | 0 | 0 | 0 | 0 | 0 | 134,814 | 138,805 | 149,944 | 0 | 0 | 134,814 | 138,805 | 149,944 |
| Other | 41 | 46 | 52 | 489 | 490 | 506 | 4 | 4 | 10 | 0 | 0 | 534 | 540 | 568 |
| Total revenue | 316,698 | 330,695 | 311,483 | 149,635 | 158,738 | 149,167 | 134,818 | 138,809 | 149,954 | 0 | 0 | 601,151 | 628,242 | 610,604 |
| Cost of sales | -26,175 | -27,031 | -22,124 | -4,628 | -4,887 | -7,337 | -106,837 | -109,842 | -115,926 | -6,081 | -9,953 | -143,721 | -155,340 | |
| Gross profit | 290,523 | 303,664 | 289,359 | 145,007 | 153,851 | 141,830 | 27,981 | 28,967 | 34,028 | -6,081 | -9,953 | 457,430 | 455,264 | |
| Sales, marketing and distribution expenses | -123,700 | -129,019 | -124,678 | -23,109 | -24,192 | -23,358 | -12,661 | -13,174 | -14,272 | -9,886 | -13,033 | -169,356 | -175,341 | |
| Segment contribution | 166,823 | 174,645 | 164,681 | 121,898 | 129,659 | 118,472 | 15,320 | 15,793 | 19,756 | -15,967 | -22,986 | 288,074 | 279,923 | |
| Research and development expenses | -71,115 | -73,124 | -71,191 | -17,430 | -17,376 | -17,658 | 0 | 0 | 0 | 0 | 0 | -88,545 | -88,849 | |
| Segment earnings | 95,708 | 101,521 | 93,490 | 104,468 | 112,283 | 100,814 | 15,320 | 15,793 | 19,756 | -15,967 | -22,986 | 199,529 | 191,074 | |
| General and administrative expenses | -54,248 | -55,007 | ||||||||||||
| Other taxes | -4,813 | -5,327 | ||||||||||||
| Operating earnings | 140,468 | 130,740 | ||||||||||||
| Other income / expenses, net | 3,477 | 3,959 | ||||||||||||
| Net financial income / expenses | 3,444 | -357 | ||||||||||||
| Earnings before income taxes | 147,389 | 134,342 | ||||||||||||
| Income Taxes | -43,488 | -41,977 | ||||||||||||
| Net income | 103,901 | 92,365 |
SEGMENT REPORT
| DBP incl. Cloud & IoT | Adabas & Natural | Consulting | Reconciliation | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in € thousands | Q3 2018 | Q3 2018 acc | Q3 2017 | Q3 2018 | Q3 2018 acc | Q3 2017 | Q3 2018 | Q3 2018 acc | Q3 2017 | Q3 2018 | Q3 2017 | Q3 2018 | Q3 2018 acc | Q3 2017 |
| Licenses | 40,630 | 40,914 | 33,221 | 16,113 | 16,677 | 11,266 | 0 | 0 | 0 | 0 | 0 | 56,743 | 57,591 | 44,487 |
| Maintenance | 68,656 | 69,319 | 65,591 | 36,024 | 37,250 | 37,385 | 0 | 0 | 0 | 0 | 0 | 104,680 | 106,569 | 102,976 |
| SaaS | 4,515 | 4,537 | 2,400 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,515 | 4,537 | 2,400 |
| Product revenue | 113,801 | 114,770 | 101,212 | 52,137 | 53,927 | 48,651 | 0 | 0 | 0 | 0 | 0 | 165,938 | 168,697 | 149,863 |
| Services | 0 | 0 | 0 | 0 | 0 | 0 | 42,714 | 43,135 | 47,236 | 0 | 0 | 42,714 | 43,135 | 47,236 |
| Other | 0 | 0 | 22 | 165 | 165 | 173 | 0 | 0 | -11 | 0 | 0 | 165 | 165 | 184 |
| Total revenue | 113,801 | 114,770 | 101,234 | 52,302 | 54,092 | 48,824 | 42,714 | 43,135 | 47,225 | 0 | 0 | 208,817 | 211,997 | 197,283 |
| Cost of sales | -8,471 | -8,491 | -7,764 | -1,949 | -1,970 | -2,518 | -33,331 | -33,560 | -35,627 | -2,094 | -2,768 | -45,845 | -48,677 | |
| Gross profit | 105,330 | 106,279 | 93,470 | 50,353 | 52,122 | 46,306 | 9,383 | 9,575 | 11,598 | -2,094 | -2,768 | 162,972 | 148,606 | |
| Sales, marketing and distribution expenses | -42,854 | -43,158 | -38,007 | -8,651 | -8,971 | -7,283 | -4,023 | -4,070 | -4,381 | -3,366 | -3,967 | -58,894 | -53,638 | |
| Segment contribution | 62,476 | 63,121 | 55,463 | 41,702 | 43,151 | 39,023 | 5,360 | 5,505 | 7,217 | -5,460 | -6,735 | 104,078 | 94,968 | |
| Research and development expenses | -24,248 | -24,313 | -22,537 | -5,919 | -5,776 | -5,657 | 0 | 0 | 0 | 0 | 0 | -30,167 | -28,194 | |
| Segment earnings | 38,228 | 38,808 | 32,926 | 35,783 | 37,375 | 33,366 | 5,360 | 5,505 | 7,217 | -5,460 | -6,735 | 73,911 | 66,774 | |
| General and administrative expenses | -19,218 | -17,000 | ||||||||||||
| Other taxes | -1,602 | -1,589 | ||||||||||||
| Operating earnings | 53,091 | 48,185 | ||||||||||||
| Other income / expenses, net | -208 | 635 | ||||||||||||
| Net financial income / expenses | 1,357 | -334 | ||||||||||||
| Earnings before income taxes | 54,240 | 48,486 | ||||||||||||
| Income Taxes | -16,113 | -14,707 | ||||||||||||
| Net income | 38,127 | 33,779 |
| DBP Cloud & IoT | DBP excl. DBP Cloud & IoT | DBP incl. DBP Cloud & IoT | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in € thousands | 9M 2018 | 9M 2018 acc | 9M 2017 | 9M 2018 | 9M 2018 acc | 9M 2017 | 9M 2018 | 9M 2018 acc | 9M 2017 | |
| Licenses | 5,558 | 5,593 | 2,007 | 96,170 | 100,198 | 102,364 | 101,728 | 105,791 | 104,371 | |
| Maintenance | 2,571 | 2,608 | 1,690 | 199,781 | 209,279 | 198,905 | 202,352 | 211,887 | 200,595 | |
| SaaS | 12,577 | 12,971 | 6,465 | 0 | 0 | 0 | 12,577 | 12,971 | 6,465 | |
| Product revenue | 20,706 | 21,172 | 10,162 | 295,951 | 309,477 | 301,269 | 316,657 | 330,649 | 311,431 | |
| Services | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Other | 0 | 0 | 0 | 41 | 46 | 52 | 41 | 46 | 52 | |
| Total revenue | 20,706 | 21,172 | 10,162 | 295,992 | 309,523 | 301,321 | 316,698 | 330,695 | 311,483 | |
| Cost of sales | -26,175 | -27,031 | -22,124 | |||||||
| Gross profit | 290,523 | 303,664 | 289,359 | |||||||
| Sales, marketing and distribution expenses | -123,700 | -129,019 | -124,678 | |||||||
| Segment contribution | 166,823 | 174,645 | 164,681 | |||||||
| Research & development expenses | -71,115 | -73,124 | -71,191 | |||||||
| Segment earnings | 95,708 | 101,521 | 93,490 |
| DBP Cloud & IoT | DBP excl. DBP Cloud & IoT | DBP incl. DBP Cloud & IoT | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in € thousands | Q3 2018 | Q3 2018 acc | Q3 2017 | Q3 2018 | Q3 2018 acc | Q3 2017 | Q3 2018 | Q3 2018 acc | Q3 2017 | |
| Licenses | 3,565 | 3,559 | 673 | 37,065 | 37,355 | 32,548 | 40,630 | 40,914 | 33,221 | |
| Maintenance | 996 | 998 | 652 | 67,660 | 68,321 | 64,939 | 68,656 | 69,319 | 65,591 | |
| SaaS | 4,515 | 4,537 | 2,400 | 0 | 0 | 0 | 4,515 | 4,537 | 2,400 | |
| Product revenue | 9,076 | 9,094 | 3,725 | 104,725 | 105,676 | 97,487 | 113,801 | 114,770 | 101,212 | |
| Services | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Other | 0 | 0 | 0 | 0 | 0 | 22 | 0 | 0 | 22 | |
| Total revenue | 9,076 | 9,094 | 3,725 | 104,725 | 105,676 | 97,509 | 113,801 | 114,770 | 101,234 | |
| Cost of sales | -8,471 | -8,491 | -7,764 | |||||||
| Gross profit | 105,330 | 106,279 | 93,470 | |||||||
| Sales, marketing and distribution expenses | -42,854 | -43,158 | -38,007 | |||||||
| Segment contribution | 62,476 | 63,121 | 55,463 | |||||||
| Research & development expenses | -24,248 | -24,313 | -22,537 | |||||||
| Segment earnings | 38,228 | 38,808 | 32,926 |
| in € thousands | 9M 2018 | 9M 2017 | Q3 2018 | Q3 2017 |
|---|---|---|---|---|
| Net income | 103,901 | 92,365 | 38,127 | 33,779 |
| Currency translation differences from foreign operations |
7,275 | -67,517 | 2,990 | -23,636 |
| Net gain/loss on remeasuring financial assets | -9,883 | -119 | -553 | -312 |
| Currency translation gain/loss from net investments in foreign operations |
1,343 | -4,544 | 272 | -1,308 |
| Items to be reclassified to the income statement if certain conditions are met |
-1,265 | -72,180 | 2,709 | -25,256 |
| Net actuarial gain/loss on pension obligations | 44 | 615 | 78 | -10 |
| Items not to be reclassified to the income statement |
44 | 615 | 78 | -10 |
| Other comprehensive income | -1,221 | -71,565 | 2,787 | -25,266 |
| Total comprehensive income | 102,680 | 20,800 | 40,914 | 8,513 |
| thereof attributable to shareholders of Software AG | 102,488 | 20,607 | 40,831 | 8,440 |
| thereof attributable to non-controlling interests | 192 | 193 | 83 | 73 |
This document includes forward-looking statements based on the beliefs of Software AG management. Such statements reflect current views of Software AG with respect to future events and results and are subject to risks and uncertainties. Actual results may vary materially from those projected here, due to factors including changes in general economic and business conditions, changes in currency exchange, the introduction of competing products, lack of market acceptance of new products, services or technologies and changes in business strategy. Software AG does not intend or assume any obligation to update these forward-looking statements.
This document constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities' Act of 1933 in its currently valid form.
Software AG Corporate Communications Uhlandstraße 12 | 64297 Darmstadt | Germany
Tel. +49 6151 92-0 Fax +49 6151 92-1191
[email protected] SoftwareAG.com
Software AG Investor Relations Uhlandstraße 12 | 64297 Darmstadt | Germany
Tel. +49 6151 92-1900 Fax +49 6151 9234-1900
[email protected] SoftwareAG.com
Concept Akima Media, Munich | Akima.net
Software AG (Frankfurt MDAX: SOW) helps companies with their digital transformation. With Software AG's Digital Business Platform, companies can better interact with their customers and bring them on new 'digital' journeys, promote unique value propositions, and create new business opportunities. In the Internet of Things (IoT) market, Software AG enables enterprises to integrate, connect and manage IoT components as well as analyze data and predict future events based on Artificial Intelligence (AI). The Digital Business Platform is built on decades of uncompromising software development, IT experience and technological leadership. Software AG has more than 4,500 employees, is active in 70 countries and had revenues of € 879 million in 2017.
To learn more, visit SoftwareAG.com.
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