- Total license growth by +31 percent
- Product revenue +11 percent
- Total revenue up +9 percent
- Adabas & Natural business +20 percent
- Digital Business Platform grows +6 percent
- Cloud order entry +155 percent
- Profitability increased substantially: EBIT +55 percent
- Operating earnings (EBITA, non-IFRS) +23 percent
- Operating earnings margin at 29 percent
- Outlook 2016 confirmed
“The Q1 financial results underline our total customer focus, our high operational efficiency standards and the success of our value strategy. Our commitment to support our A&N client base beyond 2050, announced in Q4 last year, is perceived very well in the market. Additionally, our leading position with our digital product portfolio results in organic growth and a strong project pipeline,” said Karl-Heinz Streibich, CEO of Software AG. “Our value-oriented strategy for the hybrid software market - on premise and in the cloud - shows stunning results”.
“We are smoothly continuing the journey in Q1 that we ended in Q4 last year: Organic growth, process optimization and financial discipline”, said CFO Arnd Zinnhardt. “The financial figures display only once a quarter what we constantly execute in our everyday operations: We drive profitable growth in the long-term interest of our employees, customers and shareholders”.
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.
Additionally, Software AG’s cloud order entry increased by +155 percent in the reporting period. Including the substantial growth in the cloud business area, total DBP licenses showed double-digit growth.
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).
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. The operating earnings (EBITA, non-IFRS) increased strongly due to a higher product revenue, improved sales mix, higher efficiency and active cost management 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).
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 and -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.