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© 2019 Software AG. All rights reserved.
September 2019
by investor relations
›Factbook
2 |
This presentation includes forward-looking statements based on the beliefs of Software AG management. Such statements reflect current views of Software AG with respect to future events and results and are subject to risks and uncertainties. Actual results may vary materially from those projected here, due to factors including changes in general economic and business conditions, changes in currency exchange, the introduction of competing products, lack of market acceptance of new products, services or techno-logies and changes in business strategy. Software AG does not intend or assume any obligation to update these forward-looking statements.
This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities‘ Act of 1933 in its currently valid form.
© 2019 Software AG. All rights reserved.
SAFE HARBOR STATEMENT
3 | © 2019 Software AG. All rights reserved.
TABLE OF CONTENT
› At a glance ………………………………………… 4
› Strategy, markets, trends ………………………… 9
› GTM, sales execution, partner ecosystem …….. 20
› Financial targets, key performance indicators …. 30
› Technology view, portfolio, competition ………… 40
› Financial figures …………………………………... 47
› Shares and ownership …………………………… 62
4 | © 2019 Software AG. All rights reserved.
› At a glance
5 | © 2019 Software AG. All rights reserved.
• Company foundation: May 30, 1969
• IPO at Frankfurt Stock Exchange: April 26, 1999 (MDax)
› Our history: We are data pioneers
› Our mission: We empower our customers to turn data in to value
› Our vision: We unlock the power of data to shape a better future
› Our promise: We offer freedom as a service
› Our mission:
› Our vision:
6 | © 2019 Software AG. All rights reserved.
€m 865+ Revenue FCF margin 20+ %
All figures based on FY 2018 | * yoy at constant currency
Software AG in figures
Revenue by 4700+ Employees** by
Region EMEA: 50%
thereof Germany: 14% Americas: 39%
APJ: 9%
Product revenue (65% recurring) Digital Business: 54% rev. growth*: 5% segment margin: 32% Adabas & Natural: 25% rev. growth*: 2% segment margin:71%
Function R&D: 28%
S&M: 19%
Professional Services: 40%
Admin: 13%
COMPANY BREAKDOWN
** FTE as of December 31, 2018
Industry Government: 20%
Finance: 20%
IT Services: 15%
Services: 13%
Manufacturing: 10%
Other: 22%
Services revenue Professional Services: 21%
rev. growth*: –6% segment margin: 11%
Country Germany: 26%
India: 19%
USA: 12%
Other: 43%
7 |
Product Units
Digital Business
Business Trans-
formation
© 2019 Software AG. All rights reserved.
BUSINESS LINES
• Data Management • Application
Development • Support 2050+ Cloud & IOT
IoT & Analytics
Professional Services
Adabas & Natural
Growth Heritage Enablement
Sales success, Customer and
Partner Solutions
Growth, heritage and enablement as pillars of our success
Integration & API
8 |
John Schweitzer Chief Revenue Officer
—since 2018—
Arnd Zinnhardt Chief Financial Officer
—since 2002—
Dr. Stefan Sigg Chief Product Officer
—since 2017—
Software AG believes in data. In 1969, Software AG was founded in the belief that data will change the world. 50 years later, data has become a resource in driving business success. We will never stop exploring the limitless opportunities of the digital future. We are data pioneers.” Sanjay Brahmawar
THE SOFTWARE AG EXECUTIVE BOARD
© 2019 Software AG. All rights reserved.
An experienced and energized leadership team
Sanjay Brahmawar Chief Executive Officer
—since 2018—
Dr. Elke Frank Chief Human Resources Officer
—since 2019—
9 | © 2019 Software AG. All rights reserved.
› Strategy, markets, trends
10 |
H E L I X
BOLD NEW STRATEGY 2019 Our pathway to sustainable, profitable growth
© 2019 Software AG. All rights reserved.
11 | © 2019 Software AG. All rights reserved.
STRATEGIC DIRECTION
Products
GTM
Team & Culture
Hybrid Integration | Vendor Neutrality / Freedom of Choice IoT | Realtime Economy: disruptive business models | Combining IT&OT Adabas+Natural 2050+: modernize and stabilize, lower TCO
Reorganize Direct Sales | Geo Focus | Specialists/Product Experts NEW: Partner | Platforms (white label, OEM: Siemens, Adamos, etc. / IoT) NEW: Reseller | Marketplaces (AWS, Microsoft, etc. / IoT, Hybrid Integration)
Establishing growth mentality Reviving pioneering spirit Fostering talent development
Positioning WE INTEGRATE Devices
Clouds
Apps On premise
Data
12 |
New Clients
© 2019 Software AG. All rights reserved.
INTEGRATION TRENDS DRIVING OUR STRATEGY
—PAST—
On-premise systems Perpetual licenses
—FUTURE—
Cloud-enabled systems Subscription-based
webMethods.io start 2019
webMethods since 2007
EXISTING CUSTOMER BASE
Hybrid Integration
iPaas
On premise Cloud
13 |
We will not lock customers into
proprietary systems.
We make all leading databases and application platforms work in synergy
with one another.
FREEDOM AS A SERVICE
© 2019 Software AG. All rights reserved.
We are vendor independent
Our solutions work in harmony with the existing
IT landscape.
14 | © 2019 Software AG. All rights reserved.
IOT TRENDS DRIVING OUR STRATEGY
Security & Governance
Intelligent Things
Open & Extensible
Distributed Architectures
End-to-End IoT Solutions
OT / IT Convergence
15 | © 2019 Software AG. All rights reserved.
IOT BUSINESS IMPACT
Increase sales • New business models • “Assets-as-a-service” • Staying competitive
Engage customers • New customer services • Better customer experience • Increase customer retention
Reduce costs • Increase efficiencies • Preventative maintenance • Asset optimization
63% of CEOs perceive IoT to have a significant material business impact
42% of organizations have deployed at least one IoT use case
80% of organizations with implemented IoT have realized greater value than expected
Source: Gartner
16 | © 2019 Software AG. All rights reserved.
USE CASES THAT WILL DRIVE IOT GROWTH
Sources: BCG Internet of Things buyer survey; IDC; expert interviews, BCG analysis
Discrete manufacturing
Process industry
Utilities
Energy & natural resources
Transportation & Logistics
Healthcare
Retail
Most relevant industries
17 |
TARGET MARKETS
$12bn
$18bn
Source: Gartner
2017
2022
+50% Integration Platform Market TAM
Integration IoT & Analytics
2018 - 2023
$9.5bn
$25.6bn
2017
2023
+18% CAGR IoT Platform TAM
Source: McKinsey
49%
Of CIOs say their business model has changed or is changing - Gartner CIO Survey 2019
$1.37bn
The total digital transformation market in 2022 - IDC forecast
Annual total potential economic impact of IoT by 2025 - McKinsey
$3.9tr - $11.1tr pa
© 2019 Software AG. All rights reserved.
18 |
A TRULY CONNECTED WORLD The future and its impact on our customers
A tsunami of cloud applications is emerging Cloud-based applications continue to eat up enterprise apps.
Demand is moving from data acquisition to data integration Integration of applications, devices, clouds and data drive operational excellence and superior customer experience.
Innovations will be increasingly based on platforms Openness and ‘freedom of choice’ is a key requirement.
© 2019 Software AG. All rights reserved.
19 |
Application-driven Create new apps
Integration-driven Integrate (apps, clouds, devices, data) to drive operational excellence
Innovation-driven New business models, new products, Predictive Analytics (AI/ ML)
Valu
e
A typical agile project adoption based on ‘Land & Expand’
SOFTWARE AG: A UNIQUE OFFERING IN AN EARLY MARKET Integration, IoT and platform-enabled innovations based on distributed architectures
© 2019 Software AG. All rights reserved.
Time
20 | © 2019 Software AG. All rights reserved.
› GTM, sales execution, partner ecosystem
21 |
STATUS QUO 2019
WHAT WORKS WHAT WE MUST WORK ON
Product Strength Best in Class Integral &
Trusted
Financial Strength
Solid Balance Sheet
Strong Cash Flow
Cultural Strength
Creativity & Flexibility
Diversity & Opportunity
Growth in Growth Markets
Essence & Identity Growth
Product Focus
Silos & Complexity
GTM & Operations
Focus Geography Partner
Ecosystem
© 2019 Software AG. All rights reserved.
22 |
TEAM EXECUTION FOCUS
THREE LEVERS TO DELIVER
+ +
• High Growth Products • Right Geographies • Partners to Scale
• Go-to-Market • Shift to Subscription • Sales Incentives
• Operating Model • Employer Brand • Pioneering Spirit
© 2019 Software AG. All rights reserved.
23 |
Increase deal value Upscale into existing customer base
Cross-sell into A&N base Sales efficiency New business / new logos
Sales Execution
Operating Model
Customer driven innovation Deepen product knowledge in sales Strengthen entrepreneurial ownership More customer touchpoints
Subscription
Customer Success Team Realize upsell potential Higher retention rate Higher visibility, reduced volatility
Geographic Focus
Focus on Tier 1 countries Focused sales investments Increased productivity
Products (R&D)
Focus on key products that drive revenue model
Re-allocation of resources
OEM
IoT Partnerships & White Labelling Scaling through partnerships Driving relevant IoT platforms Available on major cloud market places
© 2019 Software AG. All rights reserved.
ROUTES TO OUR AMBITION
24 |
MARKET IMPACT
EVOLVING SALES AND GO-TO-MARKET
Specialization
Sales Coverage
Geographies
Customer Experience
Alliances and Channels
Sales Operations
© 2019 Software AG. All rights reserved.
25 |
SALES OPERATIONS
Simplification Metrics Sales Methodology
Quoting tools, approvals, contracts, revenue recognition
Leading and lagging indicators
Planning and continuous enablement
Simpler, faster quote to cash
process
Increase accountability: analyze, plan,
adjust
Drive alignment:
resources and efficiency
Demand Generation
Sales playbook and improved
lead flow
Maximize pipeline: volume,
conversion
© 2019 Software AG. All rights reserved.
26 |
Germany France Spain Italy BeNeLux Sweden
USA Canada Brazil UK Switzerland South Africa
China Japan Korea Australia UAE
FOCUSED GEOGRAPHY
Biggest market
opportunity
Best established
footprint
BIGGEST MARKET IMPACT =
© 2019 Software AG. All rights reserved.
27 |
ALLIANCES AND CHANNELS
ISV – extend reach G2000 Application Partners
OEM – embed solutions White-Labelling
ISV OEM Market-place
Marketplace – extend reach SMB Cloud, Public and Private
SI
SI – expand wallet-share Increase Competitiveness
© 2019 Software AG. All rights reserved.
28 | © 2019 Software AG. All rights reserved.
STRATEGIC PARTNERSHIPS
Joint plug-and-play solutions offering scalable, powerful quick start to IoT projects
Connect customer data from across multiple enterprise systems into a centralized and actionable real-time customer profile
Software AG application integration, API management, process design / transformation, analytics, data management available via AWS container marketplace
New solution delivers a connected ecosystem in Microsoft Azure for faster, safer, more manageable migrations while ensuring business continuity
29 |
Alliances and Channels
SALES AND GTM TRANSFORMATION
Sales Operations
Geographies
2019 2020 2021 2022 2023
Rel
ativ
e Im
pact
Specialization
Sales Coverage
Customer Experience
© 2019 Software AG. All rights reserved.
30 | © 2019 Software AG. All rights reserved.
› Financial targets, key performance indicators
31 | © 2019 Software AG. All rights reserved.
STRATEGY GOALS Our financial targets medium term
30%+ Operating
Margin
Strong Free
Cash Flow
85% – 90% Recurring Revenue
20% – 30% Partner
Revenue
Digital Business
10%+ CAGR
Accelerated growth Reduced volatility Quality revenue Attractive margins Strong cash generation
32 |
85% – 90% Recurring Revenue
© 2019 Software AG. All rights reserved.
SWITCH TO SUBSCRIPTION Recurring Revenue share increasing*
2 3 Year Year
Perpetual license 100 Subscription 100 0 0
2 3
+33 +33 Maintenance 200
100 33
200 Professional Services 150 150 Total Revenue 550 483
2 3
+33 +33
+33…
Until Dec. 2019 As of Jan. 2020 1 1 4
0 0
0 0
0 0 0
1 2 3 4 5 Perpetual license Model (Single payment) Subscription Model
Subscription Model Ramp-up period: lower stated revenues
Medium term higher revenues
*Example calculation
33 |
30%+ Operating
Margin
0
10
20
30
2018 2019 2020 2023
HELIX Investment Net 20 – 30 €m • Sales and
Marketing-adjustments
• Change Management
Contractual switch to Subscription Licensing model
31.5% 28 – 30%
–200BP
30% +
+ Pay-per-Use
+ Partner sales
+ Sales efficiency in %
© 2019 Software AG. All rights reserved.
MARGIN DEVELOPMENT (OP. EBITA) Mid-term above 30 percent again
34 | © 2019 Software AG. All rights reserved.
STRONG FREE CASH FLOW M
id te
rm
10%+
FCF
CAG
R
>30% margin Digital Business driving growth Recurring Revenue (85 – 90%)
Growth financing (M&A activities) Share buy back programs
Attractive dividend payments
Strong Free
Cash Flow
35 |
Customer Driven
Customer Benefit
Software AG Benefit
Fastest updates,
latest capabilities
Lower upfront cost
Higher contract values
Higher retention and lifetime value
Lower cost to serve
Lower customer
acquisition cost
By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models Gartner, 2018
Realign our model Extract the benefit over time
© 2019 Software AG. All rights reserved.
ENABLING THE SHIFT TO SUBSCRIPTION
Scale up with demand & experiment
Maintenance as a Service
36 | © 2019 Software AG. All rights reserved.
RECURRING REVENUE Subscription accelerates growth
65%
2018 2014
58%
Share of Recurring Revenue
Product Revenue
4 financial years
2023
85% – 90%
5 financial years
37 |
2019 & MEDIUM-TERM GUIDANCE
2019
DBP
IoT
A&N
EBITA Margin
–6 to 0%*
75 to 125%
–3 to 3%**
28 to 30% Non-IFRS
Medium Term
Bookings 15 to 20% CAGR
ARR 12 to 17% CAGR
Adjusted (Operational) Free Cash Flow 5 to 10% CAGR
Revenue
Non-IFRS EBITA Margin
Introduction of new subscription licensing model to
reduce volatility
increase predictability
Revenue Recognition – quarterly/annual, not up-front
EBITA margin – technical compression in
early phase up to 200bp
2020
* Updated guidance as of July 18, 2019 | ** Updated guidance as of April 11, 2019
© 2019 Software AG. All rights reserved.
38 |
Rel
ativ
e Im
pact
2019 2021 2022 2023 2020
high
er
low
er
Sales Execution
Subscription OEM
R&D Operating Model
Geographic Focus
© 2019 Software AG. All rights reserved.
FIRST FINANCIAL IMPACT AND PHASING PER ROUTE
39 |
• Subscription-based revenue including the licenses and maintenance
• Software as a Service (SaaS) revenue
• Maintenance revenue related to license agreements of indefinite duration
• Usage-based revenue from licenses and maintenance
© 2019 Software AG. All rights reserved.
KPIS TO TRACK OUR PROGRESS Bookings, Recurring Revenue, Adjusted (Operational) Free Cash Flow
Bookings (normalized across 3 years)
Recurring Revenue (calculation and reporting)
Adjusted (Operational) Free Cash Flow
Licenses of indefinite duration
Total contract value
Maintenance services with new licenses of indefinite duration
Three years of maintenance Services
Subscription agreements
Contract value divided by the term of agreement, multiplied by three years
Software as a Service (SaaS)
Contract value divided by the term of agreement, multiplied by three years
Usage-based license models including maintenance
Difference between usage determined at the end of a quarter and beginning of quarter, multiplied by four (quarters), multiplied by three years
Net cash flow from operating activities (operating cash flow) Net cash from investing activities (CapEx) Adjusted for: – Proceeds from the sale of current financial assets + Payments for investments in current financial
assets – Proceeds from the sale of disposal groups + Net payments for acquisitions – Repayment of leasing obligations (new due to
application of IFRS 16)
Free cash flow + Payments for share price-based remuneration + Payments for restructuring/severance/litigation + Payments of other expenses associated with
M&A activities
Adjusted (operational) free cash flow divided by total revenue in the period
= Adjusted (op’l) free cash flow as percentage of revenue
divided by the average number of shares outstanding in the period
= Adjusted (op’l) free cash flow per share
Share of recurring revenue (accruing in the period)
ARR – annual recurring revenue (at quarter end)
Sum of recurring revenue ÷ product revenue in the period = percentage of recurring revenue in the period
Total value of recurring revenue from contracts active at quarter end Individual contract duration in months x12
Achieved in the reported period
Forward-looking figure
÷ ÷
40 | © 2019 Software AG. All rights reserved.
› Technology, portfolio, competition
41 | © 2019 Software AG. All rights reserved.
Focus on well- defined markets
Drive convergence of integration & IoT
Expand cloud and edge scalability
Evolve analytics and solutions
PRODUCT PORTFOLIO STRATEGY
Integrate
to Innovate
Data
Clouds
Devices
Apps iPaas EAI B2B
IoT
Analytics DaaS
42 |
TRENDMINER Time-Series Analytics BUILT.IO Cloud Integration
CUMULOCITY Internet of Things ZEMENTIS Artificial Intelligence
APAMA Streaming Analytics ALFABET IT Architecture Management
TERRACOTTA Big Data (In-Memory)
ARIS Business Process Analysis
WEBMETHODS Integration Platform and BPM
© 2019 Software AG. All rights reserved.
2007 2009 2011 2013 2017 2018
OUR ACQUISITION STRATEGY Buy innovative technology and fully integrate with existing products
• Built to deliver on strategy direction; e.g. IoT hybrid integration • Tech tuck-ins to augment existing portfolio fit: e.g. real time data analytics • Purchase of expertise resources to leverage capabilities/capacities in growth segments • Prefer tested/partnered technology to reduce time to market
43 |
EAI B2B ETL
ESB SOA Messaging
iPaaS API Mgmt Hybrid / Edge IoT Analytics
AI/ML DaaS Blockchain IoT Solutions
1990s 2020s
We are here.
Application-driven integration
Services-driven integration
Self-service integration
Securely automated integration of
everything
CONVERGENCE OF INTEGRATION & IOT
© 2019 Software AG. All rights reserved.
Status of maturity
44 |
PRODUCT FOCUS AND R&D SHIFT
IoT & Analytics
Business Transformation
Adabas & Natural
Integration & API
ARIS
CUMOLOCITY IOT APAMA
WEBMETHODS.io
ALFABET
ADABAS & NATURAL
TRENDMINER
BUILT.io
© 2019 Software AG. All rights reserved.
ZEMENTIS
45 | © 2019 Software AG. All rights reserved.
Integration & API
API Lifecycle Management MicroServices
App & Cloud Integration
B2B Integration
API Gateway & Portal
In Memory Data Management Messaging
+ HYBRID
CLOUD
ON PREMISES
EDGE
EXTEND AND AMPLIFY CAPABILITIES
IoT & Analytics
Machine Learning Edge Services
Device Management
Streaming Analytics
Edge Analytics
Monitoring & Dashboarding
Self-service Industrial Analytics
Business Transformation
Business Strategy & Planning
Integrated Portfolio
Management
Design & Analysis
Enterprise Architecture Management
Process Mining
Risk & Compliance Management
Strategy Synchronization
46 | © 2019 Software AG. All rights reserved.
Gartner is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and is used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designations. Gartner research publications consist of the opinions of Gartner’s research organization and should not e construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. All statements in this report attributable to Gartner represent Software AG interpretation of data, research opinion or viewpoints published as part of a syndicated subscription service by Gartner, Inc., and have not been reviewed by Gartner. Each Gartner publication speaks as of its original publication date (and not as of the date of this Presentation/Factbook). The opinions expressed in Gartner publications are not representations of fact, and are subject to change without notice.
MAGIC QUADRANTS
For further information please follow the link: https://www.softwareag.com/corporate/company/awards_analyst/default.html.
PUT YOUR FAITH IN TECHNOLOGY LEADERSHIP Confirmed by market analyst recognition
The Forrester WaveTM: API Management Solutions, Q4 2018
The Forrester WaveTM: Industrial IOT Software Platforms, Q3 2018
The Forrester WaveTM: Op. Intelligence for B2B Integration, Q1 2018
The Forrester WaveTM: Streaming Analytics, Q3 2017
The Forrester WaveTM: Digital Process Automation, Q3 2017
The Forrester WaveTM: Strategic Portfolio Management, Q3 2017
Integrated IT Portfolio Analysis Applications, November 2018
Enterprise Architecture Tools, October 2018
Full Life Cycle API Management, April 2018
The Forrester WaveTM: Enterprise Architecture Management Suites , Q1 2019
The Forrester WaveTM: iPaas And Hybrid Integration Platform Wave, Q1 2019 Enterprise Integration Platform as a Service (EiPaaS), April 2019
Industrial IOT Platforms, June 2019
47 | © 2019 Software AG. All rights reserved.
› Financial figures
48 |
DBP Total Revenue
Adabas & Natural
Operating Margin Group (EBITA non-IFRS)2)
© 2019 Software AG. All rights reserved.
OUTLOOK Full Year 2019
1) At constant currency rates 2) Adjusted for non-operating items (see non-IFRS earnings results)
- DBP Cloud & IoT
- DBP (excl. Cloud & IoT)
FY 2018 (in €m)
218.3
464.7
31.5%
30.3 434.4
FY 2019 Outlook (*as of April 11, 2019; **as of July 18, 2019)
28% to 30%
–3% to +3%1) *
N/A
+75% to +125%1)
–6% to 0%1) **
FY 2019 Outlook (as of January 31, 2019)
28% to 30%
–5% to –0%1)
N/A
+75% to +125%1)
+3% to +7%1)
49 |
in €m, IFRS 2018 2017 2016 2015 2014
Total Revenue 865.7 879.0 871.8 873.1 857.8 BL Digital Business (DBP) 464.7 456.3 441.4 431.5 394.5 thereof Cloud & IoT 30.3 14.9 n/a n/a n/a
BL A&N 218.3 223.7 234.6 248.0 245.3 BL Professional Services 182.6 198.8 195.8 193.6 218.0 Group License 249.4 250.1 263.0 271.9 270.1
Group Maintenance 415.4 420.2 412.2 406.9 371.3
SaaS / Usage based 17.6 9.1 n/a n/a n/a
EBIT 231.6 222.8 213.9 209.4 176.0
EBITA (non-IFRS) 272.9 279.5 272.0 259.1 239.3
EPS (in €, non-IFRS) 2.64 2.38 2.37 2.22 1.96
Dividend cash out 52.5 44.3 41.9 39.5 39.5
Free cash flow 184.1 161.9 187.0 170.0 132.7
Net cash / (Net debt) 149.0 55.2 73.1 (25.7) (15.1)
Shareholders’ equity 1,239.1 1,118.3 1,196.8 1,089.8 1,013.4
Employees (FTE) 4,763 4,596 4,471 4,337 4,421
FINANCIAL DATA
© 2019 Software AG. All rights reserved.
Key figures
50 |
1. Return on equity: Operating EBIT / Equity 2. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital) 3. Current assets ./. Cash and Cash Equivalents ./. Current liabilities
4. Current assets ./. Current liabilities / Total revenue 5. (Operating Cash flow ./. Capex) / Revenue.
IFRS unless stated different FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Operating margin (EBITA, non-IFRS) 31.5 31.8 31.2 29.7 27.9
EBITDA margin 30.5 30.0 29.1 29.7 26.4 EBIT margin 26.8 25.3 24.5 24.0 20.5 ROE1 18.7 19.9 17.9 19.2 17.4 ROCE2 16.4 18.0 15.2 16.1 12.6 Net working capital (€m)3 -€225.8 -€298.1 -€200.2 -€155.9 -€98.1 Working capital ratio4 27.3 7.7 20.0 16.6 25.7 Free cash flow margin5 21.3 18.4 21.4 19.5 15.5 Corporate tax rate (income and other taxes) 30.0 37.3 33.0 32.4 33.7 WACC6 5.32 4.95 4.05 4.13 4.35 Equity ratio 61.7 58.6 61.2 60.1 54.8 DSO (Days Sales Outstanding) 103 103 113 111 115 Capex (in €m) €11.0 €27.5 €16.7 €15.5 €10.5 Capital employed7 (in €m) €1,408.9 €1,248.4 €1,381.9 €1,282.8 €1,326.0
KEY FINANCIAL RATIOS
© 2019 Software AG. All rights reserved.
in per cent of revenue
6. Pro forma, not applied for corporate management 7. Fixed assets + Working capital
51 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
DBP (excl. Cloud & IoT) 97.5 101.8 -4% -6% 187.9 191.2 -2% -4%
- thereof Licenses 28.3 35.7 -21% -21% 50.0 59.1 -15% -16%
- thereof Maintenance 69.2 66.1 5% 2% 137.9 132.1 4% 2%
DBP Cloud & IoT 12.8 5.3 144% 141% 22.3 11.6 92% 89%
Total revenue 110.3 107.1 3% 1% 210.3 202.9 4% 2%
Cost of sales -9.6 -9.1 5% 4% -18.9 -17.7 7% 6%
Gross profit 100.7 98.0 3% 1% 191.3 185.2 3% 1%
Sales & Marketing -48.7 -43.1 13% 11% -94.5 -80.8 17% 14%
Research & Development -24.4 -24.1 1% 3% -51.8 -46.9 11% 11%
Segment result 27.5 30.8 -11% -14% 45.0 57.7 -22% -25%
Margin in % 25.0% 28.8% 21.4% 28.3%
Annual Recurring Revenue as of June 30, 2019 315.3 287.5 10% 9%
© 2019 Software AG. All rights reserved.
DIGITAL BUSINESS PLATFORM (INCLUDING CLOUD & IoT) Segment Report Q2 2019 / YTD 2019 (6 months)
52 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
Licenses 5.7 0.2 2662% 2638% 8.7 2.0 339% 335%
Maintenance 1.8 0.8 135% 132% 3.3 1.6 112% 109%
SaaS / Usage based 5.4 4.3 25% 23% 10.3 8.1 27% 25%
Total revenue 12.8 5.3 144% 141% 22.3 11.6 92% 89%
Annual Recurring Revenue as of June 30, 2019 39.6 24.8 60% 59%
© 2019 Software AG. All rights reserved.
DBP CLOUD & IOT Segment Report Q2 2019 / YTD 2019 (6 months)
53 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
Licenses 16.2 17.6 -8% -8% 34.0 26.5 28% 29%
Maintenance 36.6 34.8 5% 4% 73.4 70.5 4% 3%
Product revenue 52.8 52.4 1% 0% 107.4 97.0 11% 10%
Other 0.1 0.2 — — 0.3 0.3 — —
Total revenue 53.0 52.6 1% 0% 107.7 97.3 11% 10%
Cost of sales -1.8 -1.3 45% 43% -4.0 -2.7 50% 49%
Gross profit 51.2 51.3 0% -1% 103.7 94.7 10% 9%
Sales & Marketing -8.3 -7.8 5% 4% -15.6 -14.5 8% 8%
Research & Development -6.3 -6.0 5% 1% -12.2 -11.5 6% 4%
Segment result 36.6 37.5 -2% -3% 75.9 68.7 11% 10%
Margin in % 69.1% 71.3% 70.4% 70.6%
© 2019 Software AG. All rights reserved.
ADABAS & NATURAL Segment Report Q2 2019 / YTD 2019 (6 months)
54 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
Total revenue 46.7 46.0 2% 0% 93.4 92.1 1% 0%
Cost of sales -35.7 -36.0 -1% -2% -71.4 -73.5 -3% -4%
Gross profit 11.0 10.1 9% 8% 22.0 18.6 18% 17%
Sales & Marketing -4.3 -4.3 2% 0% -8.6 -8.6 0% -2%
Segment result 6.7 5.8 15% 18% 13.4 10.0 34% 36%
Margin in % 14.3% 12.6% 14.3% 10.8%
© 2019 Software AG. All rights reserved.
PROFESSIONAL SERVICES Segment Report Q2 2019 / YTD 2019 (6 months)
55 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
Product revenue 163.1 159.5 2% 1% 317.7 299.9 6% 4%
Licenses 50.2 53.5 -6% -7% 92.8 87.6 6% 5%
Maintenance 107.6 101.7 6% 4% 214.7 204.2 5% 3%
SaaS / Usage based 5.4 4.3 25% 23% 10.3 8.1 27% 25%
Services 46.7 46.0 2% 0% 93.4 92.1 1% 0%
Other 0.1 0.2 — — 0.3 0.4 — —
Total 210.0 205.7 2% 1% 411.4 392.3 5% 3%
© 2019 Software AG. All rights reserved.
REVENUE Q2 2019 / YTD 2019 (6 months)
56 | © 2019 Software AG. All rights reserved.
Euro 35%
US Dollar 25%
Sonstige 21%
CURRENCY IMPACT ON REVENUE Q2 2019 / YTD 2019 (6 months)
AUD 4%
GBP 5%
Currency impact on revenue
35% revenue in Euro 65% revenue in foreign currency
Currency split YTD 2019
ILS 5%
(in €m; yoy)
Q2 2019
Q2 in %
YTD 2019
YTD in %
Licenses 0.4 1% 0.4 0%
Maintenance 2.0 2% 4.4 2%
SaaS 0.1 2% 0.2 2%
Professional Services & Other 0.7 2% 1.3 1%
Total 3.2 2% 6.3 2%
EUR 35%
USD 27%
Other 24%
57 |
(in €m) Q2 2019
Q2 2018
∆% ∆% acc
YTD 2019
YTD 2018
∆% ∆% acc
Total revenue 210.0 205.7 2% 1% 411.4 392.3 5% 3%
Cost of sales -49.1 -48.4 2% 0% -98.6 -97.9 1% -1%
Gross profit 160.9 157.3 2% 1% 312.8 294.5 6% 5%
Margin in % 76.6% 76.5% 76.0% 75.1%
Research & Development -30.7 -30.0 2% 0% -64.0 -58.4 10% 7%
Sales & Marketing -64.7 -58.4 11% 9% -125.6 -110.5 14% 12%
Administration -17.6 -18.0 -2% -3% -35.2 -35.0 1% 0%
Other income / expense -0.1 1.3 — — 1.9 3.7 — —
EBIT 47.7 52.2 -9% -9% 89.9 94.3 -5% -5%
Margin in % 22.7% 25.4% 21.9% 24.0%
© 2019 Software AG. All rights reserved.
RESULTS Q2 2019 / YTD 2019 (6 months)
58 |
(in €m) Q2 2019
Q2 2018 ∆% YTD
2019 YTD 2018 ∆%
EBIT (before all taxes) 47.7 52.2 -9% 89.9 94.3 -5%
Amortization on acquisition related intangible assets 5.4 5.2 3% 11.0 10.5 5%
Share based payments 2.3 3.1 -27% 4.8 6.0 -21%
Restructuring / severances / legal case 0.7 0.6 9% 1.8 1.5 19%
Other impacts / impacts from M&A activities 0.0 0.3 -91% 0.2 0.4 -48%
EBITA (Non-IFRS) 56.1 61.5 -9% 107.7 112.7 -4%
in % of revenue (Non-IFRS) 26.7% 29.9% 26.2% 28.7%
Net income (Non-IFRS) 39.3 42.2 -7% 75.6 78.7 -4%
EPS in € (Non-IFRS)* 0.53€ 0.57€ -7% 1.02€ 1.06€ -4%
© 2019 Software AG. All rights reserved.
NON-IFRS EARNINGS Q2 2019 / YTD 2019 (6 months)
* Weighted average shares outstanding (basic) Q2 2019: 74.0m/ Q2 2018: 74.0m, YTD 2019: 74.0m / YTD 2018: 74.0m
59 |
(in €m) Q2 2019
Q2 2018 ∆% YTD
2019 YTD 2018 ∆%
Operating cash flow 30.6 33.5 -9% 90.6 95.1 -5%
./. CapEx* (long-term, non-current) -3.7 -5.0 -6.0 -6.5
./. Repayment of lease liabilities** -4.5 — -7.7 —
Free cash flow 22.4 28.5 -21% 76.9 88.6 -13%
Payment adjustments for
- Share based compensation 3.9 2.9 7.8 18.4
- Restructuring/ severances/ legal cases 0.7 0.8 7.9 3.0
Adjusted operational Free Cash flow 27.0 32.2 -16% 92.6 110.0 -16%
in % of revenue 12.9% 15.7% 22.5% 28.0%
Adjusted operational Free Cash flow per share*** 0.36€ 0.44€ -16% 1.25€ 1.49€ -16%
© 2019 Software AG. All rights reserved.
CASH FLOW Q2 2019 / YTD 2019 (6 months)
* Cash flow from investing activities except acquisitions and except investments in debt instruments ** New reporting line due to IFRS 16 *** Based on weighted average shares outstanding (basic) Q2 2019: 74.0m / Q2 2018: 74.0m; YTD 2019: 74.0m / YTD 2018: 74.0m
60 |
34.9
June 30, 2019
June,30 2019
Assets Liabilities
© 2019 Software AG. All rights reserved.
BALANCE SHEET (in €m)
Dec 31, 2018
Dec 31, 2018
462.3
276.2 62.1
1,172.4
2,007.9
Cash and cash equivalents
Financial assets Trade and other receivables
Fixed assets (Goodwill 970.9 / 964.6)
Total
Non-financial assets
313.3
316.0
139.5
1,239.1
2,007.9
Financial liabilities
Other liabilities
Deferred income
Shareholders’ equity (ratio 61.5% / 61.7%)
Total
509.9
231.4 77.4
1,204.1
2,048.0
25.2
373.6
241.0 173.1
1,260.3
2,048.0
61 |
(in FTE) June 30, 2019
Dec 31, 2018
∆%
June 30, 2018
∆% yoy
Total 4,740 4,763 0% 4,655 2%
Professional Services 1,828 1,901 -4% 1,910 -4%
Research & Development 1,348 1,310 3% 1,205 12%
Sales & Marketing 943 926 2% 936 1%
Administration 620 626 -1% 604 3%
Germany 1,248 1,243 0% 1,218 2%
USA 571 580 -2% 574 0%
India 894 895 0% 803 11%
Rest of world 2,027 2,044 -1% 2,060 -2%
© 2019 Software AG. All rights reserved.
HEADCOUNT By functional areas* and geography
* According to P+L structure
62 |
› Shares & ownership
© 2019 Software AG. All rights reserved.
63 |
33.6%
23.6%
36.0%
6.2% 0.5%
Germany
North America
Continental Europe(excl. Germany)UK and Ireland
Rest of World
33.7% 60.1%
Software AGFoundation
Own Shares (0.03%)
InstitutionalInvestors
Private Investors
Share Data SOW, SOW:GR, SOWGn.DE
ISIN: DE000A2GS401
ADR symbol: STWRY
Indices: MDAX, TecDAX, DAX100
Share Info Number of total shares: 74,000,000
Thereof Free Float: ~ 66%
Number of shares outstanding: ~ 74m
Registered shares since Oct. 2, 2017
Major Institutional Shareholders** BlackRock, Inc. 4.52%
Axxion S.A. 2.97%
DWS Investment GmbH 2.84%
Norges Bank 2.79%
SHAREHOLDER STRUCTURE
© 2019 Software AG. All rights reserved.
Ownership* Regional Split**
**Institutional shareholders based on public files, August 2019
* shareholder structure based on share register, August 2019
64 |
0.37* 0.38* 0.43* 0.46 0.46 0.46 0.50
0.55 0.60
0.65 0.71
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
DIVIDEND POLICY
© 2019 Software AG. All rights reserved.
Focus on continuity Dividend by fiscal year (in € per share)
*According to the 1:3 stock split, rounded
65 |
SOFTWARE AG FOUNDATION
© 2019 Software AG. All rights reserved.
Anchor Shareholder
One of Germany’s ten largest foundations (capital stock: €1bn+, Software AG shares and other assets)
Founded by Dr. h.c. Peter M. Schnell in 1992
Disburses financial support amounting to approx. €30 million annually
Imparts aid on principle of “self-help grant” (support of non-profit organizations)
Focuses on many projects in different areas, including: • science and research, environment • support for the elderly and disabled, support for children and young people • education and training
66 | © 2019 Software AG. All rights reserved.
Code of Business Conduct and Ethics Values such as trust, respect, sincerity and transparency shape our international collaboration and business.
Promoting Employee Engagement We foster our employees' personal and professional development.
Corporate University & University Relations Helping universities and their students excel through grants and collaboration.
Software AG We believe that moral principles and economic rewards not only go together, they belong together.
CORPORATE SOCIAL RESPONSIBILITY
Software AG Foundation One of Germany’s largest charities & major shareholder of Software AG
Creating sustainable value
67 |
ANALYST COVERAGE
© 2019 Software AG. All rights reserved.
Baader Helvea E.R. Barclays Capital Bryan, Garnier & Co Commerzbank Crédit Suisse Deutsche Bank DZ Bank
Pareto Securities AS Goldman Sachs Hauck & Aufhäuser HSBC Independent Research J.P. Morgan Cazenove Kepler Cheuvreux LBBW
MainFirst Bank AG Metzler Morgan Stanley Oddo BHF Société Générale UBS I.R. Warburg Research
For the latest consensus of analysts‘ financial estimates please visit our IR website
Banks / Broker who cover Software AG on a regular base
68 |
INVESTOR RELATIONS
© 2019 Software AG. All rights reserved.
Uhlandstrasse 12 64297 Darmstadt Germany phone: +49 (0) 6151 / 92 1900 fax: +49 (0) 6151 / 9234 1900 softwareag.com e-mail: [email protected]
69 | © 2019 Software AG. All rights reserved.