Significant Events during the Reporting Period

Software AG continued the dynamic growth of the previous quarters also in the third quarter. In addition to reaching the quarterly targets, activities were focused on the further integration of webMethods, Inc., which was acquired on May 25, 2007.

Organizational structures modified

The acquisitions of SPL in Israel and webMethods in the United States have made it possible to make changes in the Company to achieve higher customer orientation. In September 2007, the regional structure was replaced by a business division organization. Following that, the Professional Services division was established in addition to the two globally active business divisions, ETS and webMethods. This new structure will lead to an improved customer orientation. In this regard, the Executive Board was reorganized in late July. David Mitchell, the former CEO of webMethods, Inc., now has global responsibility for the sales of the webMethods business division. Former Executive Board member Alfred Pfaff left from the Board by mutual agreement.

Integration of webMethods pays off quickly

The possibilities of IT systems based on serviceoriented architecture (SOA) are changing the world of IT infrastructure. Integration, modernization and automation are our customers’ issues. In September 2007, Software AG’s webMethods 7.1 SOA Suite was the first release within the integrated product line to satisfy these needs even better. The product line combines the technologies for SOA governance, business integration and business process management. As a fully integrated solution, it offers customers significant added value through simple usability and fast implementation. We presented the new Version 7.1 at our customer conference “Integration World” in early November in Orlando, Florida.

The integration of webMethods continues to proceed very smoothly. Sales activities in the EMEA (Europe, Middle East, Africa) and APJ (Asia, Pacific, Japan) regions were merged in the third quarter. Professional Services was also combined into one unit. In addition, the consolidation of the R&D divisions was started as planned. Furthermore, the first major joint sales success has already occurred in the quarter just ended. “The Power of Two” made it possible for Software AG to conclude a large seven figure order for process automation with the Raiffeisen Group/Uniqa Group. Neither Software AG nor webMethods, Inc. would have been able to obtain the order alone.

More than 250 new business transactions

In the third quarter, more than 250 new business transactions were closed, twelve of them with a business volume of more than one million euros. Software AG did not detect a softening of demand due to the U.S. mortgage crisis in the quarter just ended. Furthermore, various market research institutions including AMR Research, Forrester Research, Yphise and Current Analysis gave the company’s products high marks.

Software AG celebrated 30 years of market presence in Israel where SPL has represented the Company since 1977. In March 2007, Software AG acquired 80 percent of the shares of SPL, from which we expect revenue of approximately €22 million for the entire year. The market entry in Japan has also been very successful where 150 customers use our products. We expect revenue for 2007 to total €17 million.

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