Software AG

Earnings Release • Jan 19, 2016

News Details

Corporate | 19 January 2016 00:59

Software AG: Software AG Closes 2015 with a Record Quarter – Digital Business Platform license revenue up 23 percent in Q4

DGAP-News: Software AG / Key word(s): Final Results/Forecast

2016-01-19 / 00:59
The issuer is solely responsible for the content of this announcement.

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* 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, 19 January 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 EUR74.0
million (Q4 2014: EUR60.2 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
EUR63.6 million (Q4 2014: EUR57.9 million), approximately 10 percent over
the same period and also setting a new record. Accordingly, total product
revenue (licenses and maintenance) amounted to EUR137.6 million in the
fourth quarter (Q4 2014: EUR118.1 million) up 17 percent. For full year
2015, DBP revenue was at EUR431.5 million (FY 2014: EUR394.5 million), up
by 9 percent.

The Adabas & Natural (A&N) business line recorded revenue of EUR68.2
million (Q4 2014: EUR77.0 million). License sales were EUR28.9 million (Q4
2014: EUR38.4 million) and maintenance EUR39.1 million (Q4 2014: EUR38.4
million). For the full year 2015, A&N revenue of EUR248.0 million (FY 2014:
EUR245.3 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 EUR51.8 million (Q4 2015:
EUR 52.2 million). For the full year 2015, revenue was EUR193.6 million (FY
2014: EUR195.8 million, adjusted for revenue from the divested SAP
consulting business unit). At the same time the segment contribution
improved to EUR21.8 million (FY 2014: EUR16.9 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 EUR257.5
million (Q4 2014: EUR247.3 million), an increase of 4 percent. For the full
year, total revenue was EUR873.1 million (FY 2014: EUR857.8 million), up 2
percent.

The company's product revenue was up 5 percent for the quarter at EUR205.6
million (Q4 2014: EUR195.0 million). For the full year 2015, product
revenue was up 6 percent to EUR678.8 million (FY 2014: EUR641.4 million).

The maintenance revenue reached EUR102.6 million (Q4 2014: EUR96.4
million), up 6 percent in the quarter marking a new quarterly record. For
the full year, Software AG booked EUR406.9 million (FY 2014: EUR371.3
million), a 10 percent rise and also a new record high.

The license revenue for the fourth quarter was EUR103.0 (Q4 2014: EUR98.6
million), representing a 4 per¬cent rise. For the full year 2015, license
reached EUR271.9 million (FY 2014: EUR270.1 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
EUR92.2 million (Q4 2014: EUR88.4 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 EUR295.1 million (FY 2014: EUR239.3 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 EUR80.1 million (Q4 2014: EUR71.4 million), a plus of 12 percent. EBIT
in fiscal 2015 was EUR209.4 million (FY 2014: EUR176.0 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.

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

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Language: English
Company: Software AG
Uhlandstraße 12
64297 Darmstadt
Germany
Phone: +49 (0)6151 92-1900
Fax: +49 (0)6151 92-34 1899
E-mail: Investor.Relations@softwareag.com
Internet: www.softwareag.com
ISIN: DE0003304002
WKN: 330400
Indices: TecDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
Stuttgart

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