Development of the business divisions
The Digital Business Platform (DBP) achieved license revenue of EUR 32.7 million (Q1 2015: EUR 31.1 million) in the first quarter – a plus of 7 percent over the previous year. Maintenance revenues amounted to EUR 61.9 million (Q1 2015: EUR 59.9 million), approximately 5 percent over the same period. Accordingly, total DBP product revenue (Licenses + Maintenance) amounted to EUR 94.6 million in the first quarter (Q1 2015: EUR 91.0 million), up 6 percent.
The Adabas & Natural (A&N) business line recorded revenue of EUR 63.6 million (Q1 2015: EUR 55.4 million) – a plus of 20 percent. License sales increased to EUR 26.4 million (Q1 2015: EUR 15.5 million) which equals a significant improvement of 79 percent, reflecting early closing of deals and the strong commitment of the A&N customer base to continue to run their critical business applications on Software AG’s proven technology. A&N maintenance reached EUR 37.0 million (Q1 2015: EUR 39.8 million).
Revenues in the Consulting line of business were EUR 48.0 million (Q1 2015: EUR 47.7 million) which equals an improvement of 2 percent.
Total revenue and earnings development
Software AG’s total revenue in the quarter under review was EUR 206.2 million (Q1 2015: EUR 194.1 million), an increase of 9 percent. The company’s product revenue (Licenses + Maintenance) was up 11 percent for the quarter at EUR 158.0 million (Q1 2015: EUR 146.2 million). The license revenue for the reporting quarter was EUR 59.1 (Q1 2015: EUR 46.5 million), representing a 31 percent rise. The Group’s maintenance revenue reached EUR 98.9 million (Q1 2015: EUR 99.7 million) – a growth of 2 percent at constant currency.
The company’s earnings before interest and taxes EBIT in the first quarter was EUR 45.3 million (Q1 2015: EUR 29.3 million), a plus of 55 percent. This corresponds an EBIT margin of 22 percent (Q1 2015: 15 percent). The operating earnings (EBITA, non-IFRS) increased strongly due to higher product revenue, an improved sales mix as well as higher efficiencies, reaching EUR 59.1 million (Q1 2015: EUR 48.1 million) in the quarter reported – an improvement by 23 percent. Accordingly, the operating earnings margin (non-IFRS) reached 29 percent (Q1 2015: 25 percent).
In the first quarter 2016 the net income increased by +57 percent to EUR 29.5 (Q1 2015: EUR 18.7) million, meanwhile earnings per share rose to EUR 0.39 (Q1 2015: EUR 0.24).
Software AG’s equity ratio was 59 percent (Q1 2015: 60 percent).
Free Cash Flow reached with EUR 60.5 million (Q1 2015: EUR 60.3 million) previous year’s level.
Employees
As of March 31, 2016 Software AG had 4,299 (Q1 2015: 4,367) employees worldwide. Of that total, 1,853 (Q1 2015: 1,861) worked in Consulting and Service, 833 (Q1 2015: 967) in Sales and Marketing, 1,011 (Q1 2015: 962) in Research and Development and 602 (Q1 2015: 622) in Administration.
Outlook 2016
Based on the positive Q1 business development, Software AG confirmed its full year outlook 2016. The company expects a currency-adjusted increase of DBP product revenue between 5 and 10 percent for 2016. For A&N, the Group expects currency-adjusted sales to decline between -4 to -8 percent over the previous year. Moreover, the company expects further improvement of its operating profit margin (EBITA, non-IFRS) reaching 30 to 31 percent.
[Please note: All revenue-related percentage figures in the text are net of currency]