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©2013 Software AG. All rights reserved.

Investor Presentation

Promissory Note Arnd Zinnhardt, CFO

Frankfurt, 7 June 2013


2 |

This presentation contains forward-looking statements based on 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 technologies and changes in

business strategy. Software AG does not intend or assume any obligation to

update these forward-looking statements.

Safe-Harbor-Statement


3 |

Executive Summary 4

Product Portfolio 13

Market Positioning 22

Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2

Agenda


4 |

Software AG - At a Glance

High performance database

Process Planning,

monitoring and analysis

Middleware to integrate data applications and

digital workflows

Big-data and In-memory technology

> € 1bn Revenue

> 28% Operating EBITDA margin

> 56% Equity ratio (Q1 2012)

> 16% Free Cash flow margin (FY12)

Net cash positive

~ 5,300 Employees worldwide

~ € 2.3bn Market capitalization

~ 66% Free float, 29% Software AG Foundation

70 Countries

Global customer base: 80% of Fortune 10,000

Technology leader in systems integration,

process automation and data management


5 |

Software AG - Management

Karl-Heinz Streibich Arnd Zinnhardt Dr. Wolfram Jost

Corporate Communications, Global

Legal, Global Audit, Processes &

Quality, Global Partner Management,

Corporate Office and Top

Management Development

Chief Executive Officer (CEO)

- since 2003 -

Finance, Controlling, Taxes,

Treasury, Mergers & Acquisitions,

Business Operations, Investor

Relations, Global Purchasing,

Human Resources

Chief Financial Officer (CFO)

- since 2002 -

Research & Development

Chief Technology Officer (CTO)

- since 2000 (incl. IDS Scheer AG) -


6 |

1,098

Software AG‘s Track Record

411

721

1,046

0

200

400

600

800

1,000

2004 2008 2012

Revenue in €m

87

116

171

0

30

60

90

120

150

180

2004 2008 2012

Net profit in €m

2,438

3,526

5,417

0

1,000

2,000

3,000

4,000

5,000

2004 2008 2012

Employees

108

181

248

0

50

100

150

200

250

2004 2008 2012

EBIT in €m


7 |

New Product

Business

52%

BPE (incl.

Consulting)

36%

ETS (incl.

Consulting)

Revenue by Business Line (Segment, FY 2012)

Traditional Product

Business

Implementation of own

and SAP products

Integration & Process

Automation / SOA / Cloud

Started in 2004

Market share: ca. 10%

In-Memory / Big Data

Data Management,

Application Modernization

Started in 1970

High operating margin >50%

Consulting

12%

IDSC


8 |

Maintenance Revenue - High Level of Recurring Revenue and Profits

0

50

100

150

200

250

300

350

400

2006 2007 2008 2009 2010 2011 2012

187 213

267

311

369 379 393

BPE

ETS

> 90% OF MAINTENANCE REVENUE

€m

CAGR: +13%

(2006 – 2012)

„RECURRING“


9 |

35% 35%

30%

• Direct sales force & partners

• One-time payment for perpetual license

• Additional payment for capacity upgrades, extended usage and add-on products

• Price: Capacity/MIPS or CPU based

• Renewal rate > 90%

• Annual payment: - BPE: ca. 18% of license - ETS: ca. 15% of license

• Implementing products

• Cost plus or fixed price projects

• Own staff + partnership

Revenue Structure and recognition (FY 2012)

License

Maintenance

Consulting

€ 547m

32% 50%

18%

€ 375m

Business Process Excellence

Enterprise Transaction Systems


10 |

Financial Sector

Public Sector

IT

Associ-ations

Services

Manu-facturing

Telcos

Logistics Retail

Other

Product Revenue by Industry

*Based on product revenue FY 2012

Product Revenue by Region*

Product Revenue by Industry*

Revenue Split – Well Balanced

20%

20%

EMEA

44%

Asia Pacific

8% Americas

48%

GER 15%

PIIGS < 4%


11 |

Large Enterprise Customers in 70 Countries Worldwide

Finance Public Sector Telecom Chemicals/Pharma Energy/Utilities

Manufacturing Logistics/Transport

Healthcare/

Consumer Goods


12 |

Agenda

Executive Summary 4



Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2


13 |

• Application Development

• Database Management System

• Application Modernization

Transaction PLATFORMS

• Business Process Analysis

• Enterprise Architecture

• Governance, Risk and Compliance Management

Business Process PLATFORMS

• In-Memory Data Management

• In-Memory Intelligent Action

Big Data PLATFORMS

• Integration

• Business Process Management

Integration PLATFORMS


14 |

Business Process Excellence (BPE)



Big Data PLATFORMS


Software AG Product Suite – Powering The Digital Enterprise

0

100

200

300

400

2004 2005 2006 2007 2008 2009 2010 2011 2012

in €m

BPE - Business characteristics BPE - Product revenue development

Technology leader (Gartner, Forrester)

Worldwide biggest independent specialized

vendor of Business Process Excellence (BPE)

Market growth perspective (CAGR 10% + p.a.)

License revenue growth: +20% to +30% in 2013

Growth driver: market, portfolio, deal size, sales

staff


15 |

Embedding a Process Methodology

for Retail Loan Origination

• Consumer experience through “in seconds” mobile and online solutions

• 320,000 new customers

• Less time spent on

auditing and

compliance

• Identify redundancies

and operational risks

• Real time credit processing information

Added Value BEFORE AFTER

• Aggressive growth plan

• BUT: IT department was

not agile enough to

accommodate this

growth by assisting

business

• Lack in automation of

processes

• No real time process

information

• Limited scaling

capabilities

• IT was limiting factor for

acquisition targets and

mid-term plan

• Much faster credit

processing

• Harmonized and

standardized process

landscape

• Capability to grow

the business


16 |

Integration – Harmonizing Complex IT Infrastructure

as a value adding investment

BEFORE AFTER

• Increased IT flexibility

has reduced time to

market for new

products

• Improved reporting

increased service

levels up to 20%

• Enterprise-wide

visibility has

streamlined

communication

Added Value

BEFORE BEFORE

In-house developed

service catalog to

store services

Manage the entire

IT architecture

from one place


17 |

• Fraud Detection drives

profit up

• Response times

reduced from 600ms to

less than 100ms

• Cost savings, e.g. for

database clustering

• Currently 4 TB Data in-

memory, growth plans

to 150 TBs+

Big Data - Terracotta @ Work Immediate analysis of large data sets for real-time fraud detection

Database Cluster

Application

BEFORE

Database Cluster

Application

AFTER

Business Logic

Added Value

In-Memory Data

Business Logic


18 |

19% 32% 39% 43% 47% 52% 55% 61%

81% 68% 61% 57% 53% 48% 45% 39%

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009 2010 2011 2012 2013e

69 146

209 244 319

385

0

100

200

300

400

500

2006 2007 2008 2009 2010 2011 2012 2013e

447-470

~

338

~

Increasing Product Revenue from the High-Growth BPE Division

BPE Product Revenue in €m

Relative share of product revenue

BPE

BPE

ETS


19 |

BPE - Future Growth is driven by New Products

(BPE licenses in €m)

35.7

45.6 50.0

63.5

41.9

0

10

20

30

40

50

60

70

80

90

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2e 2013 Q3e 2013 Q4e 2013

+19% y-o-y*

*at constant currency rates


20 |

0

100

200

300

400

2004 2005 2006 2007 2008 2009 2010 2011 2012

in €m

ETS - Business characteristics ETS - Product revenue development

Enterprise Transaction Systems (ETS):

ADABAS (fastest transactional database)

NATURAL (rapid application development)

Mature market (cash-cow)

Revenue decline, stable margins and strong

recurring cash flow

Cost management focus

Annual maintenance renewal rate: > 90%

(average)



Big Data PLATFORMS


Software AG Product Suite – Powering The Digital Enterprise

Enterprise Transaction

Systems (ETS)


21 |

Agenda

Executive Summary 4



Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2


22 |

Software AG BPE Suite is Top-Ranked Technology Leader

Application Integration

Business Process Analysis

Enterprise Architecture Tools

Governance, Risk and Compliance

SOA Infrastructure

SOA Governance

Comprehensive Integration Solutions

EA Management Suites

Elastic Caching Platforms

ESB

Integrated SOA Governance

SOA Service Life-cycle Management


23 |

IBM 29%

Oracle 8%

Pegasystems 8%

Software AG 7%

Open Text 4%

Tibco 4%

Others 40%

IBM 31%

Oracle 24%

Microsoft 13%

Software AG

11%

Tibco 9%

Others 12%

Business Process Management Suite Enterprise Service Bus Suite

Source: Gartner, Inc., Market Share: All Software Markets, Worldwide, 2012, Colleen Graham et al, March 2013

Market Share in Main Markets: BPM and ESB


24 |

Market Trends – Four Forces


25 |

Agenda

Executive Summary 4



Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2


26 |


ETS

• Product revenue in

structural decline

(single digit % p.a.)

• Manage cost to

maintain operating

margin > 50%


• Product revenue:

growth ca.

15-20% p.a.

• > 50% contribution

to group result

BPE

Terracotta/Big Data:

• Product revenue:

growth ca.

50-100% p.a.

• Expand Big Data

offering by Real Time

BI platform

• Increase BPE product

revenue to € 1bn

• Strategic acquisitions

(cash-only; Cloud/

Big Data)

• EPS growth

10-20% p.a.

(2013-2018)

Software AG Group

S H A R E O F P R O D U C T R E V E N U E *

Business Targets 2012 - 2018 (2018, base: 2012)

* According to mid-term business goals


27 |

~80%

Enterprise Transaction

Systems (ETS)

New Products (BPE)

• Organic Growth

• Integration Technology

• Business Process Mgt.

• Terracotta / Big Data

• Cloud

• Partner / OEM

• M&A/Innovative Technologies

2012 2018

45%

€1 Billion

20%

80%

2006

55%

~20%

Revenue Targets 2012 - 2018

Product Revenue


28 |

Growth Strategy

G R O W T H B A S E D O N T H R E E P I L L A R S

…leveraging technology

leadership in enterprise

infrastructure software

O R G A N I C G R O W T H …

…in key strategic areas:

S E L E C T I V E M & A …

…addressing Mega Trends

for enterprise IT

I N N O VAT I O N …

• Integration

middleware

• Process analysis and

automation

• High performance

data management

• to drive current

offering

• complementary

technology

• Cloud

• Big Data

• Mobile

• Collaboration


29 |

Acquisitions Support Technology Leadership

2007

2008

2009

2010

2011 2012 2013

(Integration)

(Business Process)

(Big Data)

(Cloud)


30 |

Outlook FY 2013

* Net of currency, delta ** before share -buyback

Product Revenue BPE

Product Revenue ETS 310

€ 1.70 to € 1.80

-9% to -4%*

384 +16% to +22%*

€ 1.90

FY 2012 (in €m)

Outlook FY 2013 (as of Jan. 29, 2013)

EPS**


31 |

Agenda

Executive Summary 4



Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2


32 |

Solid Business and Cash Flow generate Growth Opportunities

Acquisition webMethods

(USD 560m)

Acquisition

IDS Scheer AG (€ 480m)

Net Cash Net Debt

n/a

0.88

0.34

1.06

0.53

0.19

n/a

n/a 60.8

49.6

60.9

137.3

271.8

70.3

133.0

182.9

-300 -200 -100 0 100 200 300

Q1 2013

2012

2011

2010

2009

2008

2007

2006

Net debt/EBITDA

€ 480m

$ 560m


33 |

Loan-Liquidity Structure (Q1 2013)

Financing

0 100 200 300 400 500

Liquidity

Loans

Software AG Foundation

Bank loan & other

Promissory note

European Investment Bank

Liquidity

423

362

due 2013 et seq.

2014 2018

Net cash € 61m

200 100

in €m

17 45


34 |

Promissory Note – Offering / Terms & Conditions

Issuer Software AG, Darmstadt

Format Schuldscheindarlehen

Status Senior, unsecured

Use of proceeds General corporate purposes and financing of external growth

Currency EUR and USD

Volume EUR 150m (demand driven increase is possible)

Minimum Transfer Amount /

Denomination

EUR / USD 500.000,- and multiples thereof

Maturities 2, 3 and 4 years

Interest rate convention Floating: act / 360 adjusted modified following

Fix: actual / actual, unadjusted following

Reoffer spreads 2 years: EUR Mid-Swap / 6-Months-EURIBOR + 80-100 bps

3 years: EUR Mid-Swap / 6-Months-EURIBOR + 95-115 bps

4 years: EUR Mid-Swap / 6-Months-EURIBOR + 105-125 bps

4 years: USD Mid-Swap / 3-Months-US Libor + 135-155 bps

Issue price 100%

Redemption Bullet

Joint Bookrunner / Joint Lead Manager Helaba, HSBC Trinkaus & Burkhardt AG and IKB Deutsche Industriebank AG

Paying Agent / First Lender Helaba

Documentation Schuldscheindarlehen including cross-default, pari-passu, change of

control, asset disposal and negative pledge

ECB eligibility Confirmed (DES000000069986)

Law / Jurisdiction German Law (Frankfurt am Main)


35 |

Promissory Note – Timetable

Investor conference call 06.06.2013 at 11:00 CET

Investor presentation, Frankfurt 07.06.2013 at 11:30 CET

Orderbook closing 26.06.2013

Allocation and pricing of the fixed tranches 27.06.2013

First fixing of floating rate tranches -

4 yrs. USD & 2 yrs. EUR

01.07.2013

First fixing of floating rate tranches -

3 yrs. & 4 yrs. EUR

02.07.2013

Settlement/Value date -

4 yrs. USD & 2 yrs. EUR tranches

03.07.2013

Settlement/Value date -

3 yrs. & 4 yrs. EUR tranches

03.07.2013

Amendment of the timetable is possible in coordination with the issuer


36 |

Why invest in Software AG?

Key Credit Highlights

• Technology Leadership: ranked as a leader in 15 market categories

• Attractive opportunity – investment in TOP 5 IT vendor in Europe

• High margin business with strong and stable cash flow generation

• Low financial leverage

• Broad geographic and industry diversification

• High level of recurring revenue based on growing maintenance stream

• Strong equity ratio and conservative balance sheet structure

• Excellent track record as borrower (3rd promissory loan after 2009 & 2011)


37 |

Agenda

Executive Summary 4



Growth Targets 26

Financing 32

Appendix 38

1

3

4

5

6

2


38 |

Terracotta – Top Ranked in a Growing Market

The Forrester Wave™: Elastic Caching Platforms, Q2 2010

“Terracotta joined the Leaders on the

strength of its topology and runtime

operating features, administration and

management tools, distributed object and

backing database support, and performance

references. (…)”

“Terracotta’s unique network-attached

memory architecture also makes it an easy

fit with a variety of Java development

frameworks.”


39 |

Software AG Ranked as a Leader in the

EA Management Suites Market

“Recently, the product received

a facelift, as large investments

integrated the company’s

many offerings and renewed

the product’s ability to tackle

a broader set of EA practices.”

Source: The Forrester Wave™: Enterprise Architecture

Management Suites, Q2 2013, Forrester Research, Inc., April 2,

2013

Latest acquisition /

announced June 3rd 2013


40 |

Forrester Wave™: Platform-As-A-Service, ISV Scenario,

Q2 ’11; May 2011 “The Forrester Wave™: Platform-As-

A-Service For Vendor Strategy Professionals, Q2 2011”

LongJump – Acquisition with Top Market Ranking

Key benefits of LongJump include:

• End-User Development: Self-service

development is key to overcoming

resource constraints

• Cloud: Deployment of solutions on

the public or private cloud, on-

premise or within hybrid

environments

• Deployment to any mobile device is

supported with utmost ease, since

applications are automatically

mobile-ready


41 |

Historical Financial Data - Key Figures

in €m, IFRS 2008 2009 2010 2011 2012

Product Revenue 539.1 580.5 696.8 673.9 712.2

- License 272.0 269.9 327.4 295.2 318.9

- Maintenance 267.1 310.6 369.4 378.7 393.3

Consulting Revenue,

Services & Other 181.5 266.9 422.7 424.4 335.1

Total Revenue 720.6 847.4 1,119.5 1,098.3 1,047.3

EBIT 180.5 218.2 268.6 269.2 248.3

Net income 115.9 140.8 175.6 177.2 164.7

Dividend 31.5 32.6 37.0 39.9 38.2

Free cashflow 133.4 188.4 217.8 187.7 170.7

Net debt (-)/cash(+) -70.3 -271.8 -167.2 -60.9 +49.7

Shareholders‘ equity 549.1 647.2 769.3 951.5 1,060.1

Employees (FTE) 3,526 6,013 5,644 5,535 5,419

* Dividend proposal for fiscal year 2012 to be announced


42 |

Cost Ratios & Profitability - 2011/2012

(in €m)

Total

Revenue

Gross

Profit R&D

Sales & Marketing

Profitability

FY 2012

FY 2011

668.6

-100.8 -246.9

Margin 23.7%

1,098.3

1,047.3

Margin 24.5% 656.2

-88.0

-75.1

10%* 24%*

8%* 21%*

*as % of total revenue

64%*

269.2

248.3

60%*

-230.2

+6.4

-75.8 +2.7

Admin Other

7%*

7%*

(in €m)


43 |

(in €m; yoy)

FY

2012

FY

in %

Licenses +8.2 2.7%

Maintenance +12.1 3.2%

Consulting & other +5.0 1.5%

Total +25.3 2.5%

Currency impact on revenue

37% revenue in Euro

63% revenue in foreign currency

Euro 37%

US Dollar 26%

Others 11%

AUD 4%

CAD 4%

ZAR 4%

BRL 4%

GBP 4%

ILS 6%

Currency impact on revenue


44 |

Segment report FY 2012


(in €m) FY

2012

FY

2011 Δ%

Licenses 194.7 168.6 +15%

Maintenance 190.0 169.2 +12%

Product Revenue 384.7 337.8 +14%

Other 162.3 190.1 -15%

Total revenue 547.0 527.9 +4%

Cost of sales -163.3 -187.1 -13%

Gross profit 383.7 340.8 +13%

Sales & marketing -150.3 -125.3 +20%

R & D -75.0 -61.3 +22%

Segment result 158.4 154.2 +3%


45 |



(in €m) FY

2012

FY

2011 Δ%

Licenses 121.3 120.1 +1%

Maintenance 188.3 192.8 -2%

Product Revenue 309.6 312.9 -1%

Other 65.7 68.4 -4%

Total revenue 375.3 381.3 -2%

Cost of sales -70.8 -72.3 -2%

Gross profit 304.5 309.0 -1%

Sales & marketing -64.8 -66.8 -3%

R & D -26.1 -26.4 -1%

Segment result 213.6 215.8 -1%


46 |


Consulting

(in €m) FY

2012

FY

2011 Δ%

External product revenue 17.9 23.2 -23%

Services & Other 107.2 166.0 -35%

Total Revenue 125.1 189.2 -34%

Cost of sales -120.3 -162.3 -31%

Gross profit 4.8 26.9 -82

Sales & marketing -17.7 -25.7 -31

R&D 0 -0.4 -

Segment result -12.9 0.8 -


47 |

Result FY 2012

(in €m) FY

2012

FY

2011

Δ%

Total revenue 1,047.3 1,098.3 -5%

Cost of sales -378.4 -442.1 -14%

Gross profit 668.9 656.2 +2%

Margin in % 63.9% 59.7%

R & D -101.1 -88.0 +15%

Sales & marketing -246.9 -230.2 +7%

Administration -75.8 -75.1 +1%

Other income/expense +3.2 +6.3 -

EBIT 248.3 269.2 -8%

Margin in % 23.7% 24.5%


48 |

Net income FY 2012

(in €m) FY

2012

FY

2011 Δ%

EBIT 248.3 269.2 -8%

Financial income -8.8 -9.9 -11%

Profit before taxes 239.5 259.3 -8%

Other taxes -8.0 -11.0 -27%

Income taxes -66.8 -71.1 -6%

Tax rate in % 31.2% 31.7%

Net Income 164.7 177.2 -7%

EPS in €* €1.90 €2.05 -7%

* Weighted average shares outstanding (basic) Q1 2013: 85.8m / Q1 2012: 86.8m


49 |

Cash flow FY 2012

(in €m) FY

2012

FY

2011 Δ%

Operating cash flow 184.4 198.6 -7%

./. CapEx* -13.7 -10.9

Free cash flow 170.7 187.7 -9%

as % of revenue 16.3% 17.1%

Free cash flow per share 1.97 €2.18 -10%

* Cash flow from investing activities except acquisitions


50 |

Balance sheet

Assets Liabilities

Cash and cash

equivalents

Trade receivables

Inventory, other assets

Fixed assets

(goodwill 756.4/

752.2)

Financial liabilities

Other liabilities

Deferred income

Shareholders equity

(ratio 59.8%/56.6%)

Total Total

(in €m)

December 31,

2012

December 31,

2011

December 31,

2012

December 31,

2011

1,771.9

315.7

341.3

75.9

1,039.0

266.0

333.9

111.9

1,060.1

1,680.7

216.5

317.9

77.1

1,069.2

1,680.7

277.4

345.9

105.9

951.5

1,771.9


51 |

Financial Calendar 2013*

June 4-5 Bank of America ML, Global Technology Conference

San Francisco, USA

Ivo Totev

Investor Relations

June 20 Berenberg Technology Conference

Paris, France Investor Relations

July 25 Financial figures Q2 2013 and H1 2013

(IFRS, unaudited)

August 28 Commerzbank, Sector Conference

Frankfurt, Germany

Arnd Zinnhardt

Investor Relations

September 10-12 Deutsche Bank, dbAccess Conference

Las Vegas, USA

Investor Relations

September 17-18 UBS Conference

New York, USA

Arnd Zinnhardt

Investor Relations

September 23-25 Berenberg/GoldmanSachs, Unicredit, Baader

Munich, Germany

Investor Relations

October 24 Financial figures Q3 2013

(IFRS, unaudited)

*as of May 28, 2013


Follow us on Twitter:

@SoftwareAG_IR

Investor Relations

Uhlandstrasse 12

64297 Darmstadt

Germany

phone: +49 (0) 6151 / 92 1900

fax: +49 (0) 6151 / 9234 1900

softwareag.com

e-mail: [email protected]

mailto:[email protected]

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Investor Presentation Promissory Note/media/Files/S/Software-AG-IR/... · Investor Presentation Promissory Note Arnd Zinnhardt, ... market acceptance of new products, ... •Governance,