2. Financial Performance

3/3 previous

EBIT benefits from synergy effects
In Q1 2008, the EBITA grew significantly by 60 percent to €40.1 million (Q1 2007: €25.0 million). The EBIT was €36.0 million, compared to €25.0 million in Q1 2007, representing an increase of 44 percent. This proves that process efficiency has once again risen according to plan, reinforced by the synergy effects and economies of scale produced by the acquisition of webMethods, Inc. The strong growth in EBIT during the first quarter is also a very good basis for achieving our target operating margin of 24 percent for the entire year. The EBIT margin for the first quarter was 22.6 percent, compared to 20.0 percent in Q1 2007.

At €18.9 million, research and development expenses in the first quarter exceeded expenses in Q1 2007 (€12.2 million) by 55 percent. This can be attributed to the consolidation of the R&D departments of Software AG and webMethods, Inc. Expenses for marketing and sales also saw an acquisition-related increase of 23 percent to €40.1 million (Q1 2007: €32.7 million). They account for approximately 25 percent of revenues, which is in line with the target margin.


in € million



in %

EBIT 36.0 25.0 44
EBITA 40.1 25.0 60
Financial income/expense, net –1.5 3.1
Earnings before taxes 34.6 28.2 23
Net income 22.5 17.8 26
Earnings per share in Euro (basic) 0.79 0.63 25

Segment earnings contributions

The webMethods Division made a segment earnings contribution of €19.9 million in the first quarter of 2008 (Q1 2007: €6,000). Cost of sales rose by 36 percent to €27.1 million (Q1 2007: €19.8 million). The acquisition also caused selling expenses to increase by 31 percent to €21.7 million, from €16.6 million in Q1 2007. These figures are evidence of the previously mentioned increase in process efficiency and the leveraged synergy effects.

The particularly high-margin business in the ETS Division has once again made an important contribution, although it declined slightly compared to Q1 2007 as a result of the selling expenses ahead of the market entry in Brazil. The segment contribution in the first quarter was €51.7 million (Q1 2007: €53.9 million). Because of the expansion of sales, cost of sales increased by 13 percent to €20.7 million (Q1 2007: €18.3 million). Selling expenses grew by 16.1 percent to €18.4 million (14 percent increase).

Net income and EPS set new records
Net income rose 27 percent year-on-year, to €22.5 million as of March 31, 2008 (March 31, 2007: €17.8 million). Earnings per share reached a new record of €0.79 (March 31, 2007: €0.63). As of March 31, 2008, there were 28.6 million shares in circulation (undiluted), an increase of some 300,000 shares year-on-year.