Software AG demonstrated stable development at the beginning of the new fiscal year in light of the global economic crisis. Our revenue and profit increased further, and we confirmed our revenue forecast of 4 to 8 percent growth for the full year 2009. Integration software from the webMethods business division continued to drive the company’s growth. In these economically challenging times in particular, liquidity and a solid financial basis are crucial. Against this backdrop, the sharp rise in free cash flow during the first quarter (up 26 percent) and an additional reduction in net debt were particularly positive.
Highlights of Q1 2009 from an operational point of view included: new products and awards for existing ones, the conclusion of important agreements for customer and partner projects, our acquisition of a majority interest in Leipzig-based itCampus Software- und Systemhaus GmbH and our successful appearance at CeBIT 2009.
Fiscal year 2009 is being marked by Software AG's 40th anniversary, which we will report on in the coming quarters.
Product innovation and partners are two of the four growth drivers found in Software AG's corporate strategy. We achieved success in both areas in the first quarter of 2009. We developed a new version of Tamino XML Server and launched it in January. It features enhancements such as flexible access protection, quicker data access, and the inclusion of interfaces to other systems based on a serviceoriented architecture (SOA).
With the launch of AlignSpace, we announced the establishment of the first social network for BPM (business process management) experts. This new product is a platform through which all parties involved in a BPM environment can collaborate. The data, documents, and services generated in such an environment are provided across company boundaries and can continue to be used in this manner. It will be available as an SaaS (software-as-a-service) offering. As a social network, functionality includes the identification and modeling of collaborative processes as well as a marketplace for systems integrators, consultants, and application developers.
Our existing products were again praised by well-known industry analysts during the first quarter. Software AG was ranked as a technology leader in the areas of SOA governance and ESB (enterprise service bus), in direct comparison with the competition, continuing our technological leadership. In the last year alone, we won awards in eight technology categories.
We strengthened our research and development activities with our majority interest of 51 percent in Leipzig-based itCampus Softwareund Systemhaus GmbH (itCampus). With this acquisition, Software AG further expanded its German research and development capacity in the realm of process automation. With 120 employees and enormous potential for innovation, ItCampus is a supplier of software and communication solutions for the call center, energy, medical, and public administration industries.
In January, Germany's three largest software companies – SAP AG, Software AG , and IDS Scheer along with other partners – initiated the ADiWa research project (an alliance for the digital flow of goods). The aim of the project is to use all process-relevant information from the Internet of Things to make corporate processes more flexible and adapt them dynamically. By examining certain methods and tools, the ADiWa intends to compile a structured record of all events that occur during a single process for analysis. This will enable automated planning, monitoring, and optimization of the entire business flow of products and information from an economic and environmental point of view. ADiWa is supported by a €17.7 million grant from the Federal Ministry of Education and Research (BMBF).
As indicated in press releases, we were able to announce some significant customer deals during the quarter under review. For example, Chinese insurance group Ping An began implementing our webMethods product suite to support their ambitious expansion plans. Israel's largest mortgage bank, Mizrahi-Tefahot, raised its market share by seven percent with the help of a new mortgage management system by Software AG. In addition, we entered into a strategic partnership with Braintribe IT Technologies GmbH to expand our webMethods product suite. With the joint solution, documents can be integrated seamlessly into automated workflows. In cooperation with U.S.-based software company Proginet, we unveiled webMethods ActiveTransfer, a solution which enables the secure transfer of data between IT systems in a service-oriented architecture.
Once again, our participation in CeBIT was a resounding success, and we were able to increase the number of customer contacts and press appearances once more. One of this year's highlights was the visit of Federal Chancellor Angela Merkel and California Governor Arnold Schwarzenegger to our stand. The state of California has been a customer of Software AG for many years. We conducted a total of more than 600 intensive discussions with customers, partners, analysts, and politicians. And the response from the media – after 12 press events and more than 30 interviews and meetings with journalists from 15 countries in which Software AG operates – was remarkable.
CeBIT is an important instrument for Software AG to demonstrate its market presence and come into direct contact with various stakeholders. Another important event during the quarter under review that strengthened customer contacts and our market presence was the Business Innovation Forum (BIF) held in France on March 17, with 300 participants.
We conducted a survey on the subject of IT among top executives from German companies with at least €50 million in revenue. Among other things, the results showed that financial service providers are far ahead of other industries when it comes to implementing SOA and BPM.
We continued sustainable development of our company in line with our business strategy. The following important events took place in the first quarter of 2009: On March 16, 2009, former Chief Marketing Officer Ivo Totev was appointed to the Executive Board, where he assumed global responsibility for the Professional Services unit. His predecessor, Holger Friedrich, left Software AG for personal reasons at the same time. With the appointment of Ivo Totev, we are pursuing the strategic objective of strengthening and developing our Professional Services unit, building it into our company's third major pillar. During the quarter under review, we incorporated the Product Marketing department into the Research and Development department in an effort to secure closer collaboration and increased efficiency, as well as customer-oriented product development.
Process optimization is a hot topic for us as well as for our customers. At Software AG, we continually optimize our most important end-to-end processes – increasingly on the basis of our own SOA/BPM technology. For instance, the Audit, Processes, and Quality (AP&Q) department optimized the product lifecycle process to ensure total readiness of the entire Software AG organization for new products and major releases. In addition, the Human Resources department established a library of e-learning courses within the scope of the Corporate University. This library gives all Software AG employees around the world – at any time of the day – convenient access via e-learning to individualized training programs in the areas of management, communication, and customer service.
In the last few months, Software AG has demonstrated that it is well positioned to deal with crises, such as the ongoing global recession. We can fall back on a globally leading, innovative product portfolio that helps our customers cut costs and make their IT systems more efficient. In addition, we possess a robust business model that includes a high percentage of recurring revenue. At the same time, our global corporate structure is scalable and can compensate for regional differences.
Our 10-point plan outlines our proactive measures to mitigate the further effects of the crisis as best we can and even emerge from the crisis stronger than before. Our priorities lie in precisely analyzing the situation and acting decisively based on that analysis. We are protecting our cash flow and liquidity – through measures such as stringent cost management – and are focusing on what is really important to our business. Our reliable management information systems are very helpful in this regard. Furthermore, we have developed plans to deal with various crisis scenarios and their effects.