.
"In 2016, Software AG successfully expanded its market relevance: A record quarter in Q4 and new strategic partnerships underscore this development," says Karl-Heinz Streibich, CEO of Software AG. “For 2017 we are better positioned than ever to capture the growing demand of digital transformation across all industries including huge growth potential in the IoT market, where many industrial corporations increasingly cooperate with software companies," Streibich continued.
"Our operating margin in 2016 is not only the best figure since we started to manage Software AG based on this key performance indicator, but it is also among the best rates in the entire software industry. Software AG has a strong financial base and is therefore financially very well positioned for the future. In 2017 we will continue to follow our successful path of profitable growth," commented Arnd Zinnhardt, Chief Financial Officer.
Q4 2016 Development
The Digital Business Platform continued to develop very positively in the fourth quarter. With revenue of €144.4 million (2015: €137.6 million), the digital unit recorded growth of 5 percent. Compared to the previous year, licensing revenues rose by 6 percent to €78.1 million (2015: €74.0 million). Maintenance revenues in the fourth quarter amounted to €66.3 million (2015: €63.6 million), an increase of 4 percent compared to the previous year.
In the fourth quarter, Adabas & Natural delivered a very positive performance. As a result of the new customer and innovation program "Adabas & Natural 2050", license revenue grew to €29.4 million (2015: €28.9 million). At the same time, maintenance revenues rose to €39.9 million (2015: €39.1 million). Total revenue of A&N amounted to €69.5 million (2015: €68.2 million).
Sales in the Consulting division amounted to €50.0 million (2015: €51.8 million) in the reporting period.
In the fourth quarter, total revenues grew to €263.9 million (2015: €257.5 million). This represents an increase of 3 percent. Maintenance revenues also rose by 4 percent in the fourth quarter, at €106.2 million (2015: €102.6 million). In the quarter under review, the Group was able to increase license sales by 4 percent to €107.5 million (2015: €103.0 million).
Total Year 2016 Development (currency-adjusted figures)
For the 2016, Digital Business Platform achieved currency-adjusted growth of 3 percent to €441.4 million (2015: €431.5 million). The digital division contributed more than 50 percent of the Group’s overall revenue.
Adabas & Natural showed a robust performance with total revenue of €234.6 million (2015: €248.0 million). This result beat market consensus and was above the mid-point of the targeted outlook, which had been raised in the course of the year 2016.
Consulting also developed positively and achieved sales of €195.9 million (2015: €193.6 million) with a currency-adjusted growth of 3 percent. At 11 percent, the segment margin remains at a very high level. This result underscores the increasing relevance of the strategic consulting services provided by Software AG to its customers.
In 2016, Software AG generated total revenues of €871.8 million (2015: €873.1 million), at the previous year's level, a currency-adjusted increase of 1 percent. The development of the maintenance revenues for the full year 2016 was also very positive. At €412.2 million (2015: €406.9 million), the company recorded a currency-adjusted increase of 3 percent compared to the previous year's level. For the full year, the company's license revenue declined slightly, reaching a value of €263.0 million (2015: €271.9 million).
Earnings Development
The 2016 operating earnings (EBITA, non-IFRS) reached €272.0 million (2015: €259.1 million). The corresponding operating margin reached 31.2 percent (2015: 29.7 percent) hitting the upper half of the target corridor, which had been raised in the course of the year and is a company historic record. The company's earnings before interest and taxes EBIT (IFRS) were charged by one-off effects and amounted to €75.1 million (2015: €80.1 million) in the fourth quarter. In the year as a whole, EBIT rose to €213.9 million (2015: 209.4 million).
On a year-on-year comparison, free cash flow rose to €187.0 million (2015: €170.0 million), representing a 10 percent increase or more than 21 percent of sales. This percentage is the best revenue-cash-conversion in recent years. In the fourth quarter, the figure was €41.6 million (2015: €41.2 million).
Employees
As of December 31, 2016, Software AG employed a total of 4,471 (2015: 4,337) employees (full-time equivalents), 1,914 (2015: 1,866) in consulting and services, 842 (2015: 862) in sales and marketing, 1,110 (2015: 992) in research and development as well as 605 (2015: 617) in administration.
2017 Outlook
On the basis of the market-leading product portfolio, the growing demand for Software AG technologies and the company’s excellent financial position, the Group expects a currency-adjusted increase in DBP revenue of between 5 and 10 percent in 2017. In the A&N segment, the company expects a currency-adjusted revenue decline of 2 and 6 percent compared to 2016. In addition, the Group again expects a high operating profit margin (EBITA, non-IFRS) from 30.5 to 31.5 percent.
A telephone conference for investors, analysts and the media will take place on Thursday, January 26, 2017 at 09:30 h CET (08:30 h GMT). Dial-in information can be found on the company's website under "Investor Relations".
- Most successful quarter in the company’s history for the growth driver Digital Business Platform
- Adabas & Natural revenue increased in Q4, beating market consensus, and for the full year, was above the mid-point of the raised 2016 outlook
- Profitability further increased in 2016: Operating margin at all-time high and well above mid-point of the raised 2016 outlook
- Based on successful Go-to-Market transformation and increasing relevance, company confident of continuing its profitable growth track in 2017
"In 2016, Software AG successfully expanded its market relevance: A record quarter in Q4 and new strategic partnerships underscore this development," says Karl-Heinz Streibich, CEO of Software AG. “For 2017 we are better positioned than ever to capture the growing demand of digital transformation across all industries including huge growth potential in the IoT market, where many industrial corporations increasingly cooperate with software companies," Streibich continued.
"Our operating margin in 2016 is not only the best figure since we started to manage Software AG based on this key performance indicator, but it is also among the best rates in the entire software industry. Software AG has a strong financial base and is therefore financially very well positioned for the future. In 2017 we will continue to follow our successful path of profitable growth," commented Arnd Zinnhardt, Chief Financial Officer.
Q4 2016 Development
The Digital Business Platform continued to develop very positively in the fourth quarter. With revenue of €144.4 million (2015: €137.6 million), the digital unit recorded growth of 5 percent. Compared to the previous year, licensing revenues rose by 6 percent to €78.1 million (2015: €74.0 million). Maintenance revenues in the fourth quarter amounted to €66.3 million (2015: €63.6 million), an increase of 4 percent compared to the previous year.
In the fourth quarter, Adabas & Natural delivered a very positive performance. As a result of the new customer and innovation program "Adabas & Natural 2050", license revenue grew to €29.4 million (2015: €28.9 million). At the same time, maintenance revenues rose to €39.9 million (2015: €39.1 million). Total revenue of A&N amounted to €69.5 million (2015: €68.2 million).
Sales in the Consulting division amounted to €50.0 million (2015: €51.8 million) in the reporting period.
In the fourth quarter, total revenues grew to €263.9 million (2015: €257.5 million). This represents an increase of 3 percent. Maintenance revenues also rose by 4 percent in the fourth quarter, at €106.2 million (2015: €102.6 million). In the quarter under review, the Group was able to increase license sales by 4 percent to €107.5 million (2015: €103.0 million).
Total Year 2016 Development (currency-adjusted figures)
For the 2016, Digital Business Platform achieved currency-adjusted growth of 3 percent to €441.4 million (2015: €431.5 million). The digital division contributed more than 50 percent of the Group’s overall revenue.
Adabas & Natural showed a robust performance with total revenue of €234.6 million (2015: €248.0 million). This result beat market consensus and was above the mid-point of the targeted outlook, which had been raised in the course of the year 2016.
Consulting also developed positively and achieved sales of €195.9 million (2015: €193.6 million) with a currency-adjusted growth of 3 percent. At 11 percent, the segment margin remains at a very high level. This result underscores the increasing relevance of the strategic consulting services provided by Software AG to its customers.
In 2016, Software AG generated total revenues of €871.8 million (2015: €873.1 million), at the previous year's level, a currency-adjusted increase of 1 percent. The development of the maintenance revenues for the full year 2016 was also very positive. At €412.2 million (2015: €406.9 million), the company recorded a currency-adjusted increase of 3 percent compared to the previous year's level. For the full year, the company's license revenue declined slightly, reaching a value of €263.0 million (2015: €271.9 million).
Earnings Development
The 2016 operating earnings (EBITA, non-IFRS) reached €272.0 million (2015: €259.1 million). The corresponding operating margin reached 31.2 percent (2015: 29.7 percent) hitting the upper half of the target corridor, which had been raised in the course of the year and is a company historic record. The company's earnings before interest and taxes EBIT (IFRS) were charged by one-off effects and amounted to €75.1 million (2015: €80.1 million) in the fourth quarter. In the year as a whole, EBIT rose to €213.9 million (2015: 209.4 million).
On a year-on-year comparison, free cash flow rose to €187.0 million (2015: €170.0 million), representing a 10 percent increase or more than 21 percent of sales. This percentage is the best revenue-cash-conversion in recent years. In the fourth quarter, the figure was €41.6 million (2015: €41.2 million).
Employees
As of December 31, 2016, Software AG employed a total of 4,471 (2015: 4,337) employees (full-time equivalents), 1,914 (2015: 1,866) in consulting and services, 842 (2015: 862) in sales and marketing, 1,110 (2015: 992) in research and development as well as 605 (2015: 617) in administration.
2017 Outlook
On the basis of the market-leading product portfolio, the growing demand for Software AG technologies and the company’s excellent financial position, the Group expects a currency-adjusted increase in DBP revenue of between 5 and 10 percent in 2017. In the A&N segment, the company expects a currency-adjusted revenue decline of 2 and 6 percent compared to 2016. In addition, the Group again expects a high operating profit margin (EBITA, non-IFRS) from 30.5 to 31.5 percent.
A telephone conference for investors, analysts and the media will take place on Thursday, January 26, 2017 at 09:30 h CET (08:30 h GMT). Dial-in information can be found on the company's website under "Investor Relations".
