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SAW QB2 2014, englisch

Revenue and earnings by business line (segment report) ­Software AG's total Group revenue in the second quarter of 2014 was €196.0 million and was distributed among the three business lines as follows: • BPE's share of total revenue rose 4.7 percentage points to 43.1 percent (2013: 38.4 percent). • The share of ETS revenue fell as expected to 28.5 percent (2013: 31.9 percent). • The share of Consulting revenue decreased to 28.3 percent (2013: 29.7 percent) due to the sale of SAP consulting operations. The BPE business line again accounted for the largest share of Group revenue and strengthened its role as ­Software AG's key source of revenue. Business Process Excellence (BPE) The BPE business line posted €84.6 million (2013: €91.4 million) in second-quarter revenue. License revenue was down year on year at €32.7 million (2013: €42.8 million). Maintenance revenue however was up 7 percent at €51.9 million (2013: €48.6 million), which at constant currency is an increase of 11 percent. Maintenance revenue also increas­ed for the half-year period from €97.1 million to €103.3 million. This strong performance reflects the ongoing growth of the Group-wide maintenance business, which ensures long-term, highly profitable revenues. Licenses in the BPE business line were below expectations for the quarter due to a surprising reluctance by customers to commit to major infrastructure projects. ­Software AG's strategic realignment included an intensified focus on large­- scale deals of at least one million euros. Due to the high level of complexity and the multitude of involved decision makers at large multinational companies, deals of that size require significantly more time than the average sales effort between six and nine months. The cost of sales in the BPE business line rose to €5.5 million (2013: €4.9 million) in the second quarter of 2014. Expenses for sales and marketing, in contrast, were 6 percent lower at €45.4 million (2013: €48.1 million). Research and de- velopment expenses increased slightly due to technology acquisitions in the past fiscal year from €19.8 million to €20.4 million. Because of lower revenues and the rise in the cost of sales and in R&D expenses, segment earnings were down at €13.3 million (2013: €18.6 million). Enterprise Transaction Systems (ETS) The traditional ETS database business posted €55.5 million (2013: €75.8 million) in revenue from licenses and main- tenance for the Adabas and Natural product families in the period under review. This performance is in line with expec- tations for the business line. ETS license revenue was €17.4 million (2013: €32.6 million). Maintenance revenue was €38.3 million (2013: €43.1 million), which is an 11-percent drop or 6 percent at constant currency. Based on the assumption that ETS will decline, ­Software AG reduced costs in this division. The cost of sales for this seg- ment in the second quarter of 2014 fell 6 percent to €2.9 million (2013: €3.1 million). Sales and marketing expenses were down 35 percent to €8.8 million (2013: €13.5 million). R&D expenses for the same period saw a slight decrease to €6.3 million (2013: €6.4 million). Segment earnings were down 25 percent (at constant currency) from last year at €37.9 million (2013: €52.8 million). The segment margin remained high at 68 percent. Consulting The Consulting business line generated €55.5 million (2013: €70.5 million) in revenue the second quarter of 2014. The primary reason for the decline was the deconsolidation of the company's SAP service activities. As part of ­Software AG's efforts to focus on the high-margin product business, the company downscaled its SAP consulting operations in three stages: In January 2013 the company divested its SAP oper­ ations in Canada and the USA. This was followed by Eastern Software AG | Interim Report 2 | 2014 12