Software AG: Software AG’s Major Q3 Successes in the Internet of Things (IoT) Market Accelerate Transition to Cloud
DGAP-News: Software AG / Key word(s): 9-month figures/Quarter Results
Software AG’s Major Q3 Successes in the Internet of Things (IoT) Market Accelerate Transition to Cloud
– Major new IoT partnerships with key industry leaders successfully closed
– IoT cloud lays the foundation for scalable and dynamic future growth through recurring revenue
– IoT cloud to become a separate fast growing business line in 2018
– Financial results after nine months in line with market guidance
– Raised 2017 outlook confirmed
[Please note: Unless otherwise stated, all figures are at constant currency and rounded.]
Software AG CEO Karl-Heinz Streibich said, “We have continuously expanded our technology leadership in the Internet of Things and Industry 4.0 markets. As a result, Software AG’s relevance in the global IoT market has increased significantly. New strategic partnerships with global industrial enterprises highlight this positive trend. Establishing IoT as our fourth business line as of 2018 is an acknowledgment of this extraordinary market success.”
Software AG CFO Arnd Zinnhardt added, “IoT has become a strategic element of our customers’ new business models. To reflect this, we have established a licensing model based on the actual usage of our products significantly reducing IoT market entry barriers. This recurring, sustainable revenue stream gives us the opportunity to easily scale with the rapidly increasing numbers of connected machines and devices and to maximize our business potential to its full and true value.”
Business Line Performance
The Digital Business Platform (DBP) business line stayed on course for further growth. Maintenance revenue showed a 7 percent increase to total EUR201.6 million (2016: EUR188.8 million) in the first nine months of the year. License revenue was up 1 percent at EUR109.1 million (2016: EUR108.2 million) in the period. DBP product revenue (licenses and maintenance) thus grew 5 percent to EUR310.7 million (2016: EUR297.0 million), which is within the forecast range for the fiscal year. DBP revenue for the third quarter was EUR100.9 million (2016: EUR101.9 million), which reflects 2 percent growth at constant currency. Maintenance revenue posted 5 percent growth at EUR66.0 million (2016: EUR64.4 million). In regard to Software AG’s new IoT partnerships with major corporations, cloud has become the customer business model of choice. Consequently, the Group has taken the strategic decision to forgo a traditional licensing model with short-term income in favor of long-term revenue based on increased usage and market demand. Due to the increasing importance of Software AG’s scalable IoT business with recurring revenue, the company has decided to consolidate revenue from the IoT segment into a fourth business line as of January 2018.
Adabas & Natural (A&N) posted EUR48.8 million (2016: EUR49.1 million) in revenue in the third quarter, which reflects a 2 percent increase year-on-year at constant currency. Up 26 percent, A&N license revenue demonstrated above-average growth to total EUR11.3 million (2016: EUR9.3 million). Overall A&N revenue for the nine-month period was EUR149.2 million (2016: EUR165.1 million). Software AG anticipates an uptick in A&N contract renewals in the last quarter of the year and, therefore, expects revenue in the upper half of the market guidance corridor.
The Consulting business line continued its robust performance, fueled by the ever greater relevance of Software AG’s product portfolio in the high-growth IoT and Industry 4.0 markets. Revenue in this line went up in the third quarter to EUR47.2 million (2016: EUR47.1 million), which reflects 2 percent growth at constant currency. In the nine-month period Consulting revenue grew 3 percent to reach EUR150.0 million (2016: EUR145.3 million).
Total Revenue and Earnings Performance
Software AG’s third-quarter total revenue rose 2 percent at constant currency to EUR197.3 million (2016: EUR198.3 million). Product revenue (licenses + maintenance) also grew 2 percent at constant currency totaling EUR149.6 million (2016: EUR150.9 million). License revenue improved with 2 percent growth at constant currency to EUR46.2 million (2016: EUR46.9 million). Maintenance revenue likewise rose 2 percent in the period under review to EUR103.3 million (2016: EUR104.0 million). At EUR50.4 million (2016: EUR50.1 million), Software AG’s EBIT (IFRS) was up 1 percent in the third quarter of 2017. EBITA (non-IFRS) was EUR63.6 million (2016: EUR66.8 million). Software AG’s operating profit margin (EBITA, non-IFRS) remained very high in the third quarter at 32.2 percent (2016: 33.7 percent).
Based on current business development, Software AG confirms the raised forecast published with its results for the first half of the year. Software AG expects its operating profit margin (EBITA, non-IFRS) for fiscal 2017 to be between 31.0 and 32.0 percent. The forecast for product revenue growth in the Digital Business Platform (DBP) line remains unchanged at +5 to +10 percent at constant currency. Based on deals expected to close in the Adabas & Natural database business late in the year, Software AG anticipates a product revenue development between -2 and -6 percent at constant currency and year-on-year.
* At constant currency
A conference call for financial analysts, investors and media representatives will take place on Friday, October 20, at 9:00 a.m. CEST (8:00 a.m. BST). Local dial-in numbers for Germany: +49 69 566 03 7000, U.K.: +44 203 059 5869 and USA: +1 760 294 1674. The webcast presentation will be available from 7:00 a.m. CEST at www.SoftwareAG.com/investors.
Complete Q3 results will be published on October 20, 2017 from 4:00 p.m. on Software AG’s website.
Key Group Figures
* acc = at constant currency
* acc = at constant currency
About Software AG
Software AG (Frankfurt TecDAX: 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 EUR872 million in 2016.
To learn more, visit www.softwareag.com.
Detailed press information about Software AG including a picture and multimedia database are available under: www.softwareag.com/press
Contact:Byung-Hun Park <firstname.lastname@example.org>
Senior Vice President Global Corporate Communications
T: +49 (0) 6151 92 2070
M: +49 (0) 151 64 911 317
|Phone:||+49 (0)6151 92-1900|
|Fax:||+49 (0)6151 92-34 1899|
|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|
4 April 2022
Software Aktiengesellschaft: Bekanntmachung der Einberufung zur Hauptversammlung am 17.05.2022 in Darmstadt mit dem Ziel der europaweiten Verbreitung gemäß §121 AktG
26 Juni 2020
13 Mai 2020
Software AG kündigt virtuelle Hauptversammlung für den 26. Juni 2020 an
30 April 2020
Q1 Mitteilung / Q1 Finanzbericht 2020
Q1 statement / Q1 financial report 2020
30 März 2020
30 Oktober 2019
Q3 Mitteilung / Q3 Finanzbericht 2019