Strong start into 2016 for Software AG

Software AG releases financial results for Q1 showing signs of continued success

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Strong start into 2016 for Software AG Software AG CEO Karl-Heinz Streibich: "The Q1 financial results underline our total customer focus, our high operational efficiency standards and the success of our value strategy."
By  Aasha Bodhani Published  April 25, 2016

Software AG announced its preliminary financial figures for the first quarter of 2016, revealing the company improved on all key performance parameters.

It said total revenue improved by 9%, which was driven by strong license sales of 32%, plus product revenue (licenses and maintenance) increased by 11%, while services improved by +2%.

The company's database business Adabas & Natural (A&N) grew by 20% due to early contract closings and driven by Software AG's announcement in Q4 last year to support its A&N customer base with innovative product developments beyond 2050.

The Digital Business Platform (DBP) improved by 6% with licenses increasing by 7% and maintenance by 5%. Along with a positive revenue development, the company also managed to materially increase its profitability again, also due to operational efficiency improvements: the earnings before interest and taxes (EBIT) increased by 55% and operating earnings (EBITA, non-IFRS) by 23%.

Accordingly, the operating earnings margin (EBITA, non-IFRS) was at 29%. Based on the positive business development in the first quarter, Software AG confirmed its outlook for the full year 2016.

"The Q1 financial results underline our total customer focus, our high operational efficiency standards and the success of our value strategy. Our commitment to support our A&N client base beyond 2050, announced in Q4 last year, is perceived very well in the market. Additionally, our leading position with our digital product portfolio results in organic growth and a strong project pipeline," said Karl-Heinz Streibich, CEO of Software AG. "Our value-oriented strategy for the hybrid software market - on premise and in the cloud - shows stunning results."

Software AG's CFO Arnd Zinnhardt added: "We are smoothly continuing the journey in Q1 that we ended in Q4 last year: Organic growth, process optimisation and financial discipline. The financial figures display only once a quarter what we constantly execute in our everyday operations: We drive profitable growth in the long-term interest of our employees, customers and shareholders."

Software AG shared that total revenue in the quarter under review was EUR 206.2m, an increase of 9%. The company's product revenue (licenses and maintenance) was up 11% at EUR 158.0m. The license revenue for the reporting quarter was EUR 59.1m, representing a 31% rise. The company's maintenance revenue reached EUR 98.9m in Q1.

Software AG confirmed its full year outlook 2016 which foresees a currency-adjusted increase of DBP product revenue between 5-10% for 2016. For A&N, it expects currency-adjusted sales to decline between 4-8% over the previous year. Moreover, the company expects further improvement of its operating profit margin (EBITA, non-IFRS) reaching 10-31%.

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