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Software AG
Earnings Release • Jan 26, 2017
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Earnings Release
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News Details
Corporate | 26 January 2017 07:02
Software AG Closes 2016 with a Record Quarter
DGAP-News: Software AG / Key word(s): Final Results
26.01.2017 / 07:02
The issuer is solely responsible for the content of this announcement.
PRESS RELEASE
**Software AG Closes 2016 with a Record Quarter
**
– Most successful quarter in the company’s history for the growth driver Digital Business Platform
– Adabas & Natural revenue increased in Q4, beating market consensus, and for the full year, was above the mid-point of the raised 2016 outlook
– Profitability further increased in 2016: Operating margin at all-time high and well above mid-point of the raised 2016 outlook
– Based on successful Go-to-Market transformation and increasing relevance, company confident of continuing its profitable growth track in 2017
[If not stated otherwise, all figures rounded.]*
Darmstadt, January 26, 2017 – Software AG (Frankfurt TecDAX: SOW) today announced its financial figures (IFRS, preliminary) for the fourth quarter and the full year 2016. The company set multiple new records in the final quarter of 2016: Software AG’s digital growth division, the Digital Business Platform, achieved historic quarterly records for license and maintenance revenues. These results and the growing adoption of the company’s leading technology by key industry players across the globe underline the increasing relevance of Software AG-also driven by the megatrend Internet of Things (IoT). On top of these achievements, the Group significantly improved its profitability in 2016. The full year operating profit margin (EBITA, non-IFRS) rose by 150 basis points to 31.2 percent which equals an all-time high for this strategic KPI. This development demonstrates that the efficiency and effectiveness of Software AG’s new customer-centric go-to-market transformation is continuously bearing fruit. Based on this positive momentum, Software AG is confident that it will successfully continue on its profitable growth track in 2017.
“In 2016, Software AG successfully expanded its market relevance: A record quarter in Q4 and new strategic partnerships underscore this development,” says Karl-Heinz Streibich, CEO of Software AG. “For 2017 we are better positioned than ever to capture the growing demand of digital transformation across all industries including huge growth potential in the IoT market, where many industrial corporations increasingly cooperate with software companies,” Streibich continued.
“Our operating margin in 2016 is not only the best figure since we started to manage Software AG based on this key performance indicator, but it is also among the best rates in the entire software industry. Software AG has a strong financial base and is therefore financially very well positioned for the future. In 2017 we will continue to follow our successful path of profitable growth,” commented Arnd Zinnhardt, Chief Financial Officer.
Q4 2016 Development
The Digital Business Platform continued to develop very positively in the fourth quarter. With revenue of EUR144.4 million (2015: EUR137.6 million), the digital unit recorded growth of 5 percent. Compared to the previous year, licensing revenues rose by 6 percent to EUR78.1 million (2015: EUR74.0 million). Maintenance revenues in the fourth quarter amounted to EUR66.3 million (2015: EUR63.6 million), an increase of 4 percent compared to the previous year.
In the fourth quarter, Adabas & Natural delivered a very positive performance. As a result of the new customer and innovation program “Adabas & Natural 2050”, license revenue grew to EUR29.4 million (2015: EUR28.9 million). At the same time, maintenance revenues rose to EUR39.9 million (2015: EUR39.1 million). Total revenue of A&N amounted to EUR69.5 million (2015: EUR68.2 million).
Sales in the Consulting division amounted to EUR50.0 million (2015: EUR51.8 million) in the reporting period.
In the fourth quarter, total revenues grew to EUR263.9 million (2015: EUR257.5 million). This represents an increase of 3 percent. Maintenance revenues also rose by 4 percent in the fourth quarter, at EUR106.2 million (2015: EUR102.6 million). In the quarter under review, the Group was able to increase license sales by 4 percent to EUR107.5 million (2015: EUR103.0 million).
Total Year 2016 Development (currency-adjusted figures)
For the 2016, Digital Business Platform achieved currency-adjusted growth of 3 percent to EUR441.4 million (2015: EUR431.5 million). The digital division contributed more than 50 percent of the Group’s overall revenue.
Adabas & Natural showed a robust performance with total revenue of EUR234.6 million (2015: EUR248.0 million). This result beat market consensus and was above the mid-point of the targeted outlook, which had been raised in the course of the year 2016.
Consulting also developed positively and achieved sales of EUR195.9 million (2015: EUR193.6 million) with a currency-adjusted growth of 3 percent. At 11 percent, the segment margin remains at a very high level. This result underscores the increasing relevance of the strategic consulting services provided by Software AG to its customers.
In 2016, Software AG generated total revenues of EUR871.8 million (2015: EUR873.1 million), at the previous year’s level, a currency-adjusted increase of 1 percent. The development of the maintenance revenues for the full year 2016 was also very positive. At EUR412.2 million (2015: EUR406.9 million), the company recorded a currency-adjusted increase of 3 percent compared to the previous year’s level. For the full year, the company’s license revenue declined slightly, reaching a value of EUR263.0 million (2015: EUR271.9 million).
Earnings Development
The 2016 operating earnings (EBITA, non-IFRS) reached EUR272.0 million (2015: EUR259.1 million). The corresponding operating margin reached 31.2 percent (2015: 29.7 percent) hitting the upper half of the target corridor, which had been raised in the course of the year and is a company historic record. The company’s earnings before interest and taxes EBIT (IFRS) were charged by one-off effects and amounted to EUR75.1 million (2015: EUR80.1 million) in the fourth quarter. In the year as a whole, EBIT rose to EUR213.9 million (2015: 209.4 million).
On a year-on-year comparison, free cash flow rose to EUR187.0 million (2015: EUR170.0 million), representing a 10 percent increase or more than 21 percent of sales. This percentage is the best revenue-cash-conversion in recent years. In the fourth quarter, the figure was EUR41.6 million (2015: EUR41.2 million).
Employees
As of December 31, 2016, Software AG employed a total of 4,471 (2015: 4,337) employees (full-time equivalents), 1,914 (2015: 1,866) in consulting and services, 842 (2015: 862) in sales and marketing, 1,110 (2015: 992) in research and development as well as 605 (2015: 617) in administration.
2017 Outlook
On the basis of the market-leading product portfolio, the growing demand for Software AG technologies and the company’s excellent financial position, the Group expects a currency-adjusted increase in DBP revenue of between 5 and 10 percent in 2017. In the A&N segment, the company expects a currency-adjusted revenue decline of 2 and 6 percent compared to 2016. In addition, the Group again expects a high operating profit margin (EBITA, non-IFRS) from 30.5 to 31.5 percent.
A telephone conference for investors, analysts and the media will take place on Thursday, January 26, 2017 at 09:30 h CET (08:30 h GMT). Dial-in information can be found on the company’s website under “ Investor Relations “.
Key Figures
2017 Outloo k
| Outlook 2017 as of January 26, 2017 | |
| DBP revenue | +5% to +10%* |
| A&N revenue | -2% to -6%* |
| Operating margin (EBITA, Non-IFRS) |
30.5% to 31.5% |
* Net of currency
Q4 2016 Key Figures (IFRS, unaudited)
| in EUR millions | Q4/2016 | Q4/2015 | ∆ as % | ∆ as % net of currency |
| Digital Business Platform | 144.4 | 137.6 | +5% | +4% |
| as % of total revenue | 55% | 53% | ||
| DBP licenses | 78.1 | 74.0 | +6% | +3% |
| DBP maintenance | 66.3 | 63.6 | +4% | +5% |
| Adabas & Natural | 69.5 | 68.2 | +2% | +0% |
| as % of total revenue | 26% | 26% | ||
| A&N licenses | 29.4 | 28.9 | +2% | -1% |
| A&N maintenance | 39.9 | 39.1 | +2% | +1% |
| Total revenue Group | 263.9 | 257.5 | +3% | +2% |
| License revenue | 107.5 | 103.0 | +4% | +2% |
| Maintenance revenue | 106.2 | 102.6 | +4% | +3% |
| Consulting & other revenue | 50.2 | 51.9 | -3% | -2% |
| Sales & marketing expenses | -75.0 | -71.3 | +5% | +5% |
| Research & development expenses | -29.9 | -27.1 | +10% | +11% |
| EBIT* | 75.1 | 80.1 | -6% | |
| as % of total revenue | 28.5% | 31.1% | ||
| Operating Earnings (EBITA, non-IFRS)** | 90.2 | 92.2 | -2% | |
| as % of total revenue | 34.2% | 35.9% | ||
| EPS (non-IFRS, in EUR ) | 0.66 | 0.84 | -21% | |
| Net income (IFRS) | 50.2 | 56.2 | -11% | |
| Free Cash Flow | 41.6 | 41.2 | +1% |
** = 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*
FY 2016 Key Figures (IFRS, unaudited)
| in EUR millions | 2016 | 2015 | ∆ as % | ∆ as % net of currency |
| Digital Business Platform | 441.4 | 431.5 | +2% | +3% |
| as % of total revenue | 51% | 49% | ||
| DBP licenses | 186.3 | 183.5 | +2% | +1% |
| DBP maintenance | 255.1 | 248.0 | +3% | +5% |
| Adabas & Natural | 234.6 | 248.0 | -5% | -4% |
| as % of total revenue | 27% | 28% | ||
| A&N licenses | 76.8 | 88.4 | -13% | -12% |
| A&N maintenance | 157.1 | 158.9 | -1% | +1% |
| Total revenue Group | 871.8 | 873.1 | +0% | +1% |
| Licenses revenue | 263.0 | 271.9 | -3% | -3% |
| Maintenance revenue | 412.2 | 406.9 | +1% | +3% |
| Consulting & other | 195.9 | 193.6 | +1% | +3% |
| Sales & marketing expenses | -245.7 | -268.8 | -9% | -7% |
| Research & development expenses | -112.5 | -106.4 | +6% | +6% |
| EBIT* | 213.9 | 209.4 | +2% | |
| as % of total revenue | 24.5% | 24.0% | ||
| Operating earnings (EBITA, non-IFRS) | 272.0 | 259.1 | +5% | |
| as % of total revenue | 31.2% | 29.7% | ||
| EPS (non-IFRS, in EUR) | 2.37 | 2.22 | +7% | |
| Net income (IFRS) | 140.4 | 139.6 | +1% | |
| Free cash flow | 187.0 | 170.0 | +10% | |
| December 31, 2016 | December 31, 2015 | |||
| Net cash / Net debt (IFRS) | 73.1 | -25.7 | ||
| Equity ratio (as %) | 61% | 60% | ||
| Employees (FTE) | 4,471 | 4,337 |
** = 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
*###
About Software AG
The digital transformation is changing enterprise IT landscapes from inflexible application silos to modern software platform-driven IT architectures which deliver the openness, speed and agility needed to enable the digital real-time enterprise.
Software AG offers the first end-to-end Digital Business Platform, based on open standards, with integration, process management, in-memory data, adaptive application development, real-time analytics and enterprise architecture management as core building blocks. The modular platform allows users to develop the next generation of application systems to build their digital future, today.
With over 45 years of customer-centric innovation, Software AG is ranked as a leader in many innovative and digital technology categories. Software AG has more than 4,300 employees, is active in 70 countries and had revenues of EUR872 million in 2016.
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:
| Byung-Hun Park Senior Vice President Corporate Communications Phone: +49 (0) 6151 92 2070 Mobile: +49 (0) 64 911 317 E-Mail: [email protected] |
Contact:
Person making the notification:
Antje Kelbert
Senior Manager Investor Relations
Email: [email protected]
Tel: +49 6151 92 1899
26.01.2017 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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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: | [email protected] |
| Internet: | www.softwareag.com |
| ISIN: | DE0003304002 |
| WKN: | 330400 |
| Indices: | TecDAX |
| Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange |
| End of News | DGAP News Service |