|By Business Wire||
|January 29, 2013 10:46 AM EST||
Software AG (Frankfurt TecDAX: SOW) today released its financial results (IFRS, preliminary) for fiscal year 2012. The company reported €1.05 billion (2011: €1.1 billion) in total group revenue thereby achieving its target for the year. Product revenue (licenses and maintenance) increased 5.7 percent to reach €712.2 million (2011: €673.9 million) in the period under review. Software AG implemented a number of operational and strategic measures in 2012 to set the course for further growth, including intensifying investments by €40 million in sales as well as research and development for the high-growth Business Process Excellence (BPE) division. The implemented growth-generating initiatives began bearing the first fruits during the year. The largest business line achieved a dynamic 15.5 percent growth in license sales. At the same time, the high-margin Enterprise Transaction Systems (ETS) business line developed more solidly than had been projected at the start of 2012. Group EBIT was €248.3 million (2011: €269.2 million) due to targeted investment expenses and lower revenue in the IDS Scheer Consulting (IDSC) line. The company's EBIT margin climbed steadily over the course of the year from 21.5 to 27.2 percent due to better-than-expected ETS performance, continuously increasing BPE license revenues and effective cost management. Software AG plans to make more dedicated investments in the high-growth BPE business and thus lay the foundation for further dynamic growth.
Karl-Heinz Streibich, CEO of Software AG, states, "2012 was a successful year of transformation for Software AG. We consolidated traditional areas of business and strengthened new areas of growth with increased investments. Our financial results, for example our dynamic revenue growth of more than 400 percent with the big data products, are a clear confirmation that we are right on track. Based on these positive experiences, we have developed a new growth strategy with the goal of reaching more than one billion euros in product revenue in the BPE business line in 2018."
Business Line Development
Software AG was able to increase group product revenue by 5.7 percent to €712.2 million (2011: €673.9 million) in fiscal 2012. It represents about 68 percent of total revenue, which was €1.05 billion (2011: €1.1 billion). The distribution of revenue thus shifted in favor of the company's growth-driving, high-margin license and maintenance revenue.
The BPE business line made the largest contribution with product revenue growth of 13.9 percent to total €384.7 million (2011: €337.8 million). License revenue growth reached 15.5 percent. This dynamic growth was propelled by sales of the big data products by Terracotta, a U.S.-based Software AG subsidiary. Revenue from these products more than quadrupled in 2012, totaling €16.5 million (2011: €3.6 million). About 54 percent of total product revenue was attributable to integration and process software or to innovative in-memory/big data solutions. Software AG's revenue is driven primarily by the BPE business line. This trend confirms the forward-looking direction of the company. Software AG set the course for further long-term, dynamic growth with an additional investment of €40 million in sales and marketing as well as in research and development.
The profitable ETS business line surpassed expectations considerably in the period under review. The traditional database business produced fairly stable results year on year with product revenue at €309.6 million (2011: €312.9 million). Total ETS revenue was €375.3 million (2011: €381.3 million) in fiscal 2012, down just 1.6 percent from last year.
Reorganization of the IDSC business line continued in 2012. The focal points were the withdrawal from unprofitable markets and an emphasis on the process side of SAP application consulting —particularly in German-speaking countries. These measures led to a decrease in revenue to €125.1 million (2011: €189.2 million). The sale of North American SAP-related service activities in January 2013 was a successful step forward in the realignment of IDSC.
Due to expenses associated with the expansion of sales in order to access new high-growth business areas, intensified investments in research and development, and expenses from the consolidation of the SAP consulting business, EBIT (earnings before interest and taxes) was down about 8 percent year on year to €248.3 million (2011: €269.2 million). At the same time, the EBIT margin improved steadily over the course of the year due to stable ETS performance and continuously increasing BPE revenues (Q1 2012: 21.5 percent; Q2 2012: 22.1 percent; Q3 2012: 23.7 percent; Q4 2012: 27.2 percent). With respect to the full fiscal year, the EBIT margin was 23.7 percent (2011: 24.5 percent) and thus in the top half of the forecast range. Net income after taxes totaled €164.7 million (2011: €177.2 million). Based on Software AG's total assets of approximately €1.8 billion as of December 31, 2012, the company's equity ratio was about 60 percent. Software AG reported net liquidity as of December 31, 2012 with a cash surplus (cash less financial liabilities) of €49.6 million.
According to CFO Arnd Zinnhardt, "Our bold investments, which began paying off in part during the year, enabled us to significantly strengthen the operational side of business in 2012. At the same time, our financial discipline allowed us to increase our EBIT margin over the course of the year and further optimize our balance sheet structure. This positions us ideally for further dynamic growth."
Software AG increased its product revenue by 4.0 percent to €196.8 million (2011: €189.2 million) in the fourth quarter of 2012. The BPE business line made the largest contribution to growth with a 12.2 percent increase in product revenue year-on-year at €113.7 million (2011: €101.3 million). ETS product revenue performed according to expectations with a slight decline of 4.3 percent to total €78.0 million (€81.5 million). As a result of the previously mentioned revenue reduction in SAP consulting (IDSC), total revenue for the Software AG group was down 5.9 percent year on year to €276.7 million (2011: €294.0 million) in the fourth quarter of 2012. Due to increased investments and expenses from the IDSC consolidation, fourth-quarter EBIT was €75.4 million (2011: €78.0 million).
As of December 31, 2012 Software AG had 5,419 (2011: 5,535) employees, of which 1,131 (2011: 1,023) worked in Sales and Marketing and 887 (2011: 887) in Research and Development. The total number of employees in Germany was 1,768 (2011: 1,881). The total number of employees working in Darmstadt as of December 31, 2012 was 733 (2011: 719).
Outlook for 2013
Software AG's outlook continues to be positive. For fiscal year 2013, it anticipates BPE product revenue growth between 16 and 22 percent (at constant currency) and a revenue decline in the traditional ETS database business between 4 and 9 percent (at constant currency). In light of the average growth forecast of about 10 percent in the promising BPE market, Software AG plans to gain market share and therefore continues investing in sales and marketing in the current fiscal year.
Through the additional investments in sustainable, dynamic growth for the high-potential BPE business, the BPE revenue contribution will account for about 80 percent of the company’s total revenue in the year 2018. BPE product revenue is expected to reach €1 billion by that time. The company’s early entrance into the future-oriented integration and process software market space as well as the big data market is paying off strategically and thus securing the company's long-term success.
About Software AG
Software AG (FRA: SOW) helps organizations achieve their business objectives faster. The company's big data, integration and business process technologies enable customers to drive operational efficiency, modernize their systems and optimize processes for smarter decisions and better service. Building on over 40 years of customer-centric innovation, the company is ranked as a "leader" in fifteen market categories, fueled by core product families Adabas and Natural, ARIS, Terracotta and webMethods. Software AG has more than 5,400 employees in 70 countries and had revenues of €1.05 billion in 2012 (IFRS, unaudited). Learn more at www.softwareag.com.
Software AG - Get There Faster
Detailed press information about Software AG including a picture and multimedia database are available at: www.softwareag.com/press
SYS-CON Events announced today that G2G3 will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based on a collective appreciation for user experience, design, and technology, G2G3 is uniquely qualified and motivated to redefine how organizations and people engage in an increasingly digital world.
Oct. 6, 2015 06:30 AM EDT Reads: 247
In his session at @ThingsExpo, Tony Shan, Chief Architect at CTS, will explore the synergy of Big Data and IoT. First he will take a closer look at the Internet of Things and Big Data individually, in terms of what, which, why, where, when, who, how and how much. Then he will explore the relationship between IoT and Big Data. Specifically, he will drill down to how the 4Vs aspects intersect with IoT: Volume, Variety, Velocity and Value. In turn, Tony will analyze how the key components of IoT ...
Oct. 6, 2015 06:00 AM EDT Reads: 248
Data loss happens, even in the cloud. In fact, if your company has adopted a cloud application in the past three years, data loss has probably happened, whether you know it or not. In his session at 17th Cloud Expo, Bryan Forrester, Senior Vice President of Sales at eFolder, will present how common and costly cloud application data loss is and what measures you can take to protect your organization from data loss.
Oct. 6, 2015 06:00 AM EDT Reads: 475
Scott Guthrie's keynote presentation "Journey to the intelligent cloud" is a must view video. This is from AzureCon 2015, September 29, 2015 I have reproduced some screen shots in case you are unable to view this long video for one reason or another. One of the highlights is 3 datacenters coming on line in India.
Oct. 6, 2015 05:45 AM EDT Reads: 157
According to Forrester, public cloud platforms are evolving, blurring the lines between Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS) in order to satisfy the needs of enterprises and widen their appeal to developers. In The Forrester Wave™: Enterprise Public Cloud Platforms, Q4 2014, Forrester evaluates the 16 most significant Enterprise Public Cloud Platforms and details how each vendor fulfills the 19 evaluation criteria points.
Oct. 6, 2015 05:00 AM EDT Reads: 791
The broad selection of hardware, the rapid evolution of operating systems and the time-to-market for mobile apps has been so rapid that new challenges for developers and engineers arise every day. Security, testing, hosting, and other metrics have to be considered through the process. In his session at Big Data Expo, Walter Maguire, Chief Field Technologist, HP Big Data Group, at Hewlett-Packard, will discuss the challenges faced by developers and a composite Big Data applications builder, foc...
Oct. 6, 2015 04:00 AM EDT Reads: 407
Recently announced Azure Data Lake addresses the big data 3V challenges; volume, velocity and variety. It is one more storage feature in addition to blobs and SQL Azure database. Azure Data Lake (should have been Azure Data Ocean IMHO) is really omnipotent. Just look at the key capabilities of Azure Data Lake:
Oct. 6, 2015 03:30 AM EDT Reads: 155
The cloud has reached mainstream IT. Those 18.7 million data centers out there (server closets to corporate data centers to colocation deployments) are moving to the cloud. In his session at 17th Cloud Expo, Achim Weiss, CEO & co-founder of ProfitBricks, will share how two companies – one in the U.S. and one in Germany – are achieving their goals with cloud infrastructure. More than a case study, he will share the details of how they prioritized their cloud computing infrastructure deployments ...
Oct. 6, 2015 03:00 AM EDT Reads: 668
Interested in leveraging automation technologies and a cloud architecture to make developers more productive? Learn how PaaS can benefit your organization to help you streamline your application development, allow you to use existing infrastructure and improve operational efficiencies. Begin charting your path to PaaS with OpenShift Enterprise.
Oct. 6, 2015 02:00 AM EDT Reads: 422
Decisions about budgets and resources are often made without IT even having a seat at the table. As technologist we understand the value of DevOps - but do your business counterparts? If they don't, your DevOps initiatives could lose funding before they start. In her session at DevOps Summit, Jeanne Morain, Strategist / Author at iSpeak Cloud, LLC, will provide insights on how to bridge the gap between business and technology leaders. Attendees will learn prescriptive guidance on balancing wor...
Oct. 6, 2015 02:00 AM EDT Reads: 564
The modern software development landscape consists of best practices and tools that allow teams to deliver software in a near-continuous manner. By adopting a culture of automation, measurement and sharing, the time to ship code has been greatly reduced, allowing for shorter release cycles and quicker feedback from customers and users. Still, with all of these tools and methods, how can teams stay on top of what is taking place across their infrastructure and codebase? Hopping between services a...
Oct. 6, 2015 02:00 AM EDT Reads: 353
SYS-CON Events announced today that Secure Infrastructure & Services will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Secure Infrastructure & Services (SIAS) is a managed services provider of cloud computing solutions for the IBM Power Systems market. The company helps mid-market firms built on IBM hardware platforms to deploy new levels of reliable and cost-effective computing and hig...
Oct. 5, 2015 11:45 PM EDT Reads: 765
When it comes to IoT in the enterprise, namely the commercial building and hospitality markets, a benefit not getting the attention it deserves is energy efficiency, and IoT’s direct impact on a cleaner, greener environment when installed in smart buildings. Until now clean technology was offered piecemeal and led with point solutions that require significant systems integration to orchestrate and deploy. There didn't exist a 'top down' approach that can manage and monitor the way a Smart Buildi...
Oct. 5, 2015 11:45 PM EDT Reads: 200
SYS-CON Events announced today that IBM Cloud Data Services has been named “Bronze Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. IBM Cloud Data Services offers a portfolio of integrated, best-of-breed cloud data services for developers focused on mobile computing and analytics use cases.
Oct. 5, 2015 11:00 PM EDT Reads: 608
Today, we are in the middle of a paradigm shift as we move from managing applications on VMs and containers to embracing everything that the cloud and XaaS (Everything as a Service) has to offer. In his session at 17th Cloud Expo, Kevin Hoffman, Advisory Solutions Architect at Pivotal Cloud Foundry, will provide an overview of 12-factor apps and migrating enterprise apps to the cloud. Kevin Hoffman is an Advisory Solutions Architect for Pivotal Cloud Foundry, and has spent the past 20 years b...
Oct. 5, 2015 10:45 PM EDT Reads: 691