Archive of Quarterly Reports 2009

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Software AG shows strong growth in fiscal 2009

Software AG reported a significant increase in revenue and net income for fiscal year 2009. In doing so, Germany’s second largest software company beat market expectations. Group revenues amounted to €847.4 million, up 18 percent in 2009 (2008: €720.6 million). EBIT increased by 21 percent to €218,2 million for the same period, delivering an EBIT margin of 25.8 percent. License revenues were at €269.9 million reflecting the difficult market conditions in 2009 (2008: €272.0 million). Maintenance was up by 16 percent to €310.6 million (2008: €267.1 million). The acquisition of IDS Scheer drove Services & Consulting revenues up by 48 percent to €262.5 million (€177.8 million). Net income rose by 22 percent to €140.8 million from €115.9 million in 2008. Earnings per share rose 21 percent to €4.92 (€4.05 in 2008). For 2010, Software AG forecasts revenue growth of 25 to 30 percent at constant currency rates and net income up 8 to 12 percent.

Record results in 2009

Most importantly for a software company, total product revenue (license & maintenance) rose by 8 percent to €580.5 million (€539.1 million in 2008). Services & Consulting revenue rose by 48 percent to €262.5 million (€177.8 million in 2008). 

Forecast for 2010

Software AG is forecasting for fiscal year 2010, at constant currency rates, total revenue growth of 25 to 30 percent with product revenue growth of 12 to 15 percent. The company also forecasts growth in net income of 8 to 12 percent. 
         
     

3Q2009: Software AG reports further profitable growth in the third quarter 2009

Software AG (Frankfurt TecDAX: SOW) again reported an increase in revenue and earnings for the third quarter of 2009. Group revenue grew during the quarter by 19 percent year-on-year to €214 million. In the same period, product revenue increased by 4 percent to €143 million and Consulting by 66 percent to €70 million. Operating results (EBIT) grew by 16 percent to €56 million and net income to €38 million, up 23 percent. The EBIT margin for the third quarter at 26.4 percent closely matched the record 27 percent reported in Q3, 2008. Earnings per share in the quarter rose 25 percent to €1.35 (€1.08 in 2008). The consolidation of IDS Scheer, as of August 20 2009, had a positive net impact on revenue; €39 million and net income; €0.4 million.

Revenue
Software AG continued its stable performance despite the persistently difficult economic environment. The third quarter did however show the normal business development seasonal effects and this indicates an overall improvement in market outlook.

Total revenue for Software AG rose 19 percent to €214 million in the third quarter of 2009 over the same period in 2008 (€180 million). Total product revenue was up 4 percent to €143 million (€138 million in 2008) and Consulting at €70 million (€42 million in 2008) up 66%, reflecting a significant contribution from IDS Scheer.
       
     

2Q2009: Stable Performance Continues in Q2 2009

Software AG (Frankfurt TecDAX: SOW) continued to deliver a solid performance in the second quarter of 2009. Group revenue was €176.4 million, a 5 percent rise year on year (Q2 2008: €168.8 million). The high-margin product revenue (licenses and maintenance) increased by a total of 9 percent to €133.7 million (Q2 2008: €123.2 million), more than offsetting the weaker performance of the service business (down 7 percent from Q2 2008). These figures demonstrate that the company is continuing its profitable growth. Operating earnings (EBIT) improved by 8 percent to €44.2 million (Q2 2008: €40.9 million). Free cash flow rose 30 percent in the second quarter, up from €23.0 million to €29.8 million. In connection with the takeover bid for IDS Scheer AG, Software AG has already acquired more than 10 percent of IDS Scheer AG’s stock on the open market. Subject to antitrust approval, this means that including the 48 percent stake contracted with the principal shareholders, Software AG will become the majority shareholder. As a consequence, the proposed acquisition will alter the existing forecast for the current fiscal year.

In the second quarter of 2009, Software AG continued its stable performance despite the persistently difficult economic environment. Unlike many competitors, the company maintained its solid growth due to its robust business model and broad global presence. In particular, this growth resulted from the continuous expansion of the maintenance business with Software AG’s stable customer base. This area improved by 20 percent to €73.9 million in the reporting period (Q2 2008: €61.8 million). However, the acquisition of new projects from new customers remained difficult in the second quarter. Nonetheless, licensing revenues were nearly at the same level as in the prior year at €59.8 million. At €41.7 million, revenue from Professional Services was down 7 percent year on year (Q2 2008: €44.8 million). This reflects the trend in the IT services industry, but had only a marginal effect on Software AG’s earnings.
      
     

1Q2009 - A stable start into fiscal year 2009 for Software AG

In spite of the on-going economic recession, Software AG concluded a satisfactory first quarter 2009. Solid growth in product sales underscored the company’s robust business model and broad global presence. This growth was primarily a result of expansion of the company’s sustainable maintenance business, which increased by 23 percent to €73.2 million. Services in contrast dropped 4 percent from first quarter last year to €42.3 million. This is in line with the current trend in the IT services sector.

The webMethods business division with 9 percent revenue growth was the company’s highest growth area, performing well in spite of the difficult market climate and in comparison to competitors. This division’s success depends greatly on new projects and accounts, which are ever more difficult to win in the current market environment. However, webMethods software enables process optimization and cost savings which are vital to customers’ business performance. For this reason, there was no discernable decline in demand in this division. The webMethods division generated €74.6 million (Q1 2008: €68.7 million) in revenues and accounted for 46 percent (Q1 2008: 40 percent) of first-quarter 2009 group license revenues. This result confirms the company’s strategy of establishing webMethods as a strong second business division which will drive sustainable growth in the high-potential integration software market (SOA/BPM).

ETS, Software AG’s traditional business division, reaffirmed its stability with revenue equaling that of the first quarter last year at €90.7 million (Q1 2008: €90.7 million). As expected, maintenance revenue again increased sharply and accounted for more than half of this division’s Q1 2009 revenue. In contrast, license revenue was affected by three orders, which were in the pipeline for Q1, but could not be closed by quarter’s end.
     
     

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