Software AG: Software AG Significantly Increases Revenue and Earnings in Q3
DGAP-News: Software AG / Key word(s): 9-month figures
Software AG Significantly Increases Revenue and Earnings in Q3
– Group licenses +29 percent, revenue +7 percent
– Cloud & IoT revenue +144 percent, ARR +111 percent
– Digital Business Platform licenses +15 percent, product revenue +8 percent
– Adabas & Natural licenses +48 percent, product revenue +11 percent
– EBIT +8 percent, operating profit margin (non-IFRS) 30.5 percent, net income +13 percent
– 2018 outlook confirmed
[Unless otherwise stated, all percentages are rounded at constant currency to reflect year-on-year comparisons.]
Darmstadt, Germany, October 19, 2018 – Software AG (Frankfurt MDAX: SOW) today released its financial results (IFRS, preliminary) for the third quarter of 2018. A growing number of large corporations worldwide chose Software AG’s leading technology to implement their digitalization strategies. Demand for the Germany based company’s solutions is especially high in the rapidly growing, global Internet of Things (IoT) market. The company’s new Cloud & IoT business continued its dynamic growth in the third quarter with EUR9.1 million in total revenue, an increase of 144 percent. Fueled by high demand for independent, open and cloud-based platforms, annual recurring revenue (ARR) in the Cloud & IoT business increased by 111 percent. Furthermore, license revenue from Software AG’s Digital Business Platform (excl. Cloud & IoT) rose by 15 percent to total EUR37.1 million. The Adabas & Natural (A&N) database business also continued on a positive course. Thanks to above-average license growth at 48 percent, total revenue in this business line rose 11 percent to EUR52.3 million (2017: 48.9 million) in the quarter under review. In addition to revenue growth in all product business lines, Software AG also increased its profitability. Earnings before interest and taxes (EBIT) improved to EUR54.5 million (2017: EUR50.4 million). Operating earnings (EBITA, non-IFRS) increased to EUR63.8 million (2017: EUR63.6 million). This resulted in an operating margin (EBITA, non-IFRS) of 30.5 percent (2017: 32.2 percent). At EUR38.1 million (2017: EUR33.8 million) income after taxes also increased by 13 percent year-on-year.
Sanjay Brahmawar, CEO of Software AG, commented, “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.”
Software AG’s CFO Arnd Zinnhardt added, “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.”
Up 144 percent year-on-year, DBP Cloud & IoT revenue demonstrated robust growth to total EUR9.1 million (2017: EUR3.7 million). ARR in the Cloud & IoT business grew more than 100 percent. The growth trend in the IoT business line was fueled by ever greater customer demand and strengthened by Software AG’s extensive partner network. The company recently expanded its IoT partnership with Dell. DBP (excl. Cloud & IoT) license revenue climbed 15 percent to EUR37.1 million (2017: EUR32.5 million) in the third quarter. Maintenance revenue was EUR67.7 million (2017: EUR64.9 million), which reflects 5 percent growth over the previous year. Accordingly, DBP product revenue totaled EUR104.7 million (2017: EUR97.5 million) in the third quarter of 2018, an increase of about 8 percent. The Digital Business Platform (DBP) business line including Cloud & IoT generated EUR113.8 million (2017: EUR101.2 million) in total revenue in the third quarter of 2018, reflecting 13 percent growth.
The Adabas & Natural (A&N) business line continued to perform extremely well. Of particular note was the 48 percent increase in license revenue totaling EUR16.1 million (2017: EUR11.3 million) in the third quarter. Maintenance revenue was EUR36.0 million (2017: EUR37.4 million). A&N product revenue grew 11 percent to total EUR52.1 million (2017: EUR48.7 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. Based on A&N’s highly stable pipeline and the associated predictability, the outlook for 2018 was confirmed.
Third-quarter revenue in the Consulting business line was EUR42.7 million (2017: EUR47.2 million).
Total Revenue and Earnings Performance
Despite negative currency translation effects totaling -EUR3.2million, Software AG booked EUR208.8 million (2017: EUR197.3 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 30 percent to EUR56.7 million (2017: EUR44.5 million). Group maintenance revenue totaled EUR104.7 million (2017: EUR103.0 million), that is 3 percent growth. Accordingly, Software AG’s total third-quarter product revenue (licenses + maintenance) rose 13 percent to EUR165.9 million (2017: EUR149.9 million).
The company’s third-quarter EBIT was EUR54.5 million (2017: EUR50.4 million). This reflects an EBIT margin of 26.1 percent (2017: 25.5 percent). At EUR63.8 million (2017: EUR63.6 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).
Software AG has confirmed its April 13 outlook for fiscal 2018. Based on the expectations of 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:
1 At constant currency, including hosting services
Key Group Figures
About Software AG
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 EUR879 million in 2017.
To learn more, visit 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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|End of News||DGAP News Service|
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