Annual Report 2007
3. Business trend and economic situation
1/2 forward
3.1 Summary of business trends
2007 was a very successful and important fiscal year for Software AG. We clearly increased all key indicators and had the best fiscal year in the history of our Company. In addition to the organic growth, the acquisition of webMethods, Inc., USA in particular contributed to this result.
In the past fiscal year, we exceeded our high target for Group revenues. After we had forecast a currency-adjusted increase in operating Group revenues of 30 to 35 percent, we actually realized 36 percent. A significant growth driver for this was the licensing business. Its 53 percent operating* growth at year-end exceeded the predicted increase of 45 to 50 percent. Both the maintenance and Professional Services businesses were within the range of our expectations.
The ETS business division also exceeded our expectations. Our guidance had predicted growth of 8 to 10 percent. A particularly strong fourth quarter brought delivered operating* growth of 12 percent. Excluding a single large order closed in Q4, the rate of increase was 10 percent and within our guidance range.
The performance of the webMethods business division was positive and within the range of our expectations. After being acquired by Software AG, the webMethods organization exhibited rising revenues for the first time. The acquisition-related growth of the webMethods business division was 104 percent (operating* and currency-adjusted).
On the earnings side, our business figures are fully on track. We achieved our predicted EBIT margin of 22 percent. At US$19 million, the synergy potentials obtained from the acquisition of webMethods, Inc. even exceeded the anticipated US$15 million. Earnings per share came to €3.11 and therefore were also in line with our expectations. In addition, we made preparations for acquiring a software division from the firm Jacada based in Israel, which was completed on January 1, 2008.
Important steps in 2007
In the past fiscal year, Software AG took many important steps.
We completed two acquisitions: SPL in Israel and webMethods, Inc. in the U.S. The acquisition of webMethods, Inc. was one of the largest transactions in the history of the European software industry in the U.S. Based on its size and significance, its impact on our business trend is unique (please refer to webMethods, Inc. in the Acquisitions section).
We meaningfully complemented and expanded our product portfolio with the successful introduction of webMethods Suite 7.1 and SOA Governance. As a result, we offer our customers increased added value. In addition, we are increasing our presence in new markets with high growth potential: Asia, the Middle East, Eastern Europe, and Latin America. In 2007, we successfully continued our business activities in Japan and prepared the way for a direct market presence in Brazil.
We are making continuous investments in marketing and sales activities. A high point in this connection was our new global brand identity including a new logo, intranet and new brand strategy.
The product brands Adabas, Natural, CentraSite and webMethods constitute the enterprise IT infrastructure solutions of Software AG, which are characterized by seamless data management, the possibility of developing and modernizing applications, the implementation of a Service-Oriented Architecture and fast process optimization. This advanced software suite helps companies to free their data, systems, applications, processes and services from everyday limitations and control them in such a way that a completely new dimension of business automation and transparency is opened up. By combining this proven IT technology with almost 40 years of industry experience, we assist our customers in differentiating their businesses and achieving their goals—faster.
* operating values not including recognition of effects from the purchase price allocation
