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  Key figures
  Introduction by the Executive Board
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  Overview of business development
  Progress on the strategic front
  Interim statement
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  Positive start to the year – annual targets within reach  
  Business development in the first quarter was strongly influenced by the positive impact of restructuring. Operating profit (EBIT) rose by 89 percent to €15.1 million; pre-tax profit rose to €15.8 million; net profit improved to €9.8 million.


Consolidated revenues for the first quarter totaled €95.7 million, €103.1 million in the same period of 2003. More than 28 percent of revenues were posted in US dollars. As a result, the weak dollar had a significant impact on reported figures. Adjusted for currency translation effects, quarterly revenues were 2 percent lower than in 2003.

Product sales remain stable
Product revenue, compromising of both license and maintenance services, remained the main source of revenue. Product revenues totaled €67.4 million (€69.2 million in Q1 2003). Adjusted for currency translation effects, this represents an increase of 3 percent.

Licensing revenues developed particularly positively. Adjusted for currency translation effects, sales increased by 11 percent to €23.3 million. This growth was primarily attributable to the Enterprise Transaction Systems (ETS) Business Line, which contributed more than 76 percent of all licensing revenues.

ETS revenues exceed forecasts
The business line ETS Modernization generated licensing sales of €17.8 million, an increase of 31 percent. This reflects both the slightly improved willingness of customers to invest in IT, but also the impact of our intensified marketing efforts. The new strategic focus takes into account the importance of ETS products. Moreover, this clear long-term commitment provided a boost to the morale of the ETS sales force.

Nevertheless, customers remain cautious with regard to investment in new technologies. XML Business Integration license sales fell to €3.8 million (€6.1 million in Q1 2003) in the first quarter. However, the launch of our new XML Integration Packages in the second quarter is expected to lead to improvement over the remainder of the year.

Breakdown of revenues by segment

Fall in revenues from professional services
Before currency translation effects, revenues from maintenance services remained unchanged year-on- year, contributing €44.1 million to product sales. Project services contributed revenues of €28.0 million, with market oversupply playing a significant role in this lower figure. In addition, Software AG has deliberately focused professional services on high-margin areas since 2003. The fall in revenues for this segment is a direct result of the reduction in the consultant headcount. IT consultant utilization was unchanged in comparison to 2003.

Increased revenues from licensing in the regions
Three of Software AG’s regional subsidiaries posted increased revenues from licensing. In northern Europe, Asia/Pacific, and South Africa, license sales from new software increased by almost a third to €7.4 million. In Central and Eastern Europe, the increase was 21 percent. In Southern and Western Europe, revenues from licensing rose 19 percent to €5.3 million. In the Americas, the weak dollar led to a drop in revenues from licensing to €5.2 million in comparison to €7.4 million over the same period of 2003.

Breakdown of revenues by segment

  Interim Report Q1/04 (PDF)
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