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©2014 Software AG. All rights reserved. 1 |
February 2014
Software AG
Investor Presentation
©2014 Software AG. All rights reserved. 2 |
Safe-Harbor-Statement
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.
©2014 Software AG. All rights reserved. 3 |
Software AG - At a Glance
High performance data management
Process planning, monitoring and
analysis
Middleware to integrate data, applications and
digital workflows
Intelligent Business Operations and Big Data
~ €1bn revenue (FY 2013)
~ 27% operating EBIT margin (FY 2013)
~ 16% free cash flow margin (FY 2013)
> 5,000 Employees worldwide
~ 1,000 R&D
> € 2bn market cap
> 60% free float
~ 29% Software AG Foundation
70 Countries
Global customer base: 80% of Fortune 10,000
Technology leader in system integration,
process automation and data management
©2014 Software AG. All rights reserved. 4 |
Large Enterprise / Public Sector Customers in 70 Countries
Finance Public Sector Telecom Chemicals/Pharma Energy/Utilities
Manufacturing Logistics/ Transport
Healthcare/
Consumer Goods
©2014 Software AG. All rights reserved. 5 |
The Impact of Differentiating Solutions by Software AG
Refreshments
Supply chain transformation in days
10s of millions increase in profit
higher response
rate to marketing
campaigns
reduction in
transfer time
for assets 98%
10x
several million
Average annual benefit of
now emergency-prepared
Employees and contractors
©2014 Software AG. All rights reserved. 6 |
Americas EMEA
Germany Asia Pacific
*Based on group revenue FY 2013
Revenue Split – Well Balanced
Product Revenue by Region* Product Revenue by Industry*
Public Sector Financial Sector IT
Services Associations Manufacturing
Telcos Logistics Retail
Energy Other
22%
19%
38%
36%
17%
8%
©2014 Software AG. All rights reserved. 7 |
Enterprise Transaction Systems ETS
• Manage cash cow
• Adjust cost to
maintain segment
margin > 60%
Business Process Excellence
• Product revenue: growth 10-20% p.a.
(incl. ca 50% growth in Big Data/IBO)
• >50% contribution to group result, mid-term
• Transform technology leadership into
market leadership
• Innovation M&A (cash-only; Cloud/Big Data/Analytics)
• Develop 3rd product line, mid-term
• Increase revenue with new products (non ETS) to € 1bn by 2018
Business Lines & Development
BPE
IT PORTFOLIO
MANAGEMENT
REAL-TIME INTELLIGENCE AND BIG DATA
PROCESS AUTOMATION
AND INTEGRATION
COLLABORATIVE
PROCESS ANALYSIS
DATABASE MANAGEMENT
SYSTEMS
Consulting
APPLICATION DEVELOPMENT &
MODERNIZATION
ENABLER FOR PRODUCT SALES
• Successful Turnaround
• Focus on Systems
Integration and
Business Solutions
• Focus on margin
expansion
44% 28%
28%
Software AG GROUP
S H A R E O F G R O U P R E V E N U E *
*based on revenue 2013: € 973m
©2014 Software AG. All rights reserved. 8 |
0
50
100
150
200
250
300
350
400
2006 2007 2008 2009 2010 2011 2012 2013
Maintenance – High Level of Recurring Revenue and Profits
186 213
267
305
353 362 378
> 90% of Maintenance Revenue is recurring
€m
BPE
ETS
369*
*currency impact: € 16m
©2014 Software AG. All rights reserved. 9 |
Free Cash Flow and Dividend per Share
0.00
0.50
1.00
1.50
2.00
2.50
3.00
2006 2007 2008 2009 2010 2011 2012 2013
FCF per Share Div per Share
EUR
©2014 Software AG. All rights reserved. 10 |
Transforming Software AG Prime Operational Targets 2014
Product
Revenue
60 %
40 %
ETS Enterprise
Transaction
Systems
Preserve
customer
base
BPE Business
Process
Excellence Dynamic
Growth
Minimize decline
Protect maintenance base
Utilize customer access for driving
strategic projects (ETS and BPE)
Increase sales efficiency
• 2013 – hires
• Utilize full market potential
Close strategic - 7/8-digit deals
Broaden customer base
©2014 Software AG. All rights reserved. 11 |
0
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011 2012 2013
License Revenue – Dynamic Growth in BPE Business
166
241
272 270
327
295 319
BPE License with sustainable growth
€m
BPE
ETS /Other
330*
*currency impact: € 17m
©2014 Software AG. All rights reserved. 12 |
Turning Technology Leadership into Market Leadership:
Build Multi Channel Ecosystem and Integrated Portfolio Suite
Aris/web-Methods
webMethods
Apama
JackBe
LongJump
Alfabet, ARIS
Business Process Platform
Integration Platform
TerracottaMychannels
Cloud Suite & on-premise
Big Data/IBO Platform
Growth Multiple
Sales
Channels
Single
Sales
Channel
Growth acceleration
+ 200 sales/+ €50 m Invest.
SI‘s
OEM‘s/ISV‘s
Products
Suite
©2014 Software AG. All rights reserved. 13 | ©2013 Software AG. All rights reserved.
13 |
APPS
SEARCH
ERP
CRM, HR
ADABAS ETC.
ESB / SOA-GOV.
DATA MGMT.
COLLABORATION
EVENT MGMT.
RULES
Process Automation
IntegrationMiddleware
Application Silos HW Infrastructure
Analytics Visualization
REAL-TIME DATA
In-Memory Big Data
STRATEGY: Enabler of the Digital Enterprise
IT 1.0
IT 2.0
IT 3.0
©2014 Software AG. All rights reserved. 14 |
B I G D ATA a n d I N - M E M O RY D ATA M A N A G E M E N T
Software AG Agility Platform
I N T E L L I G E N T B U S I N E S S O P E R AT I O N S
Event Processing Process Mining Historic KPI's Activity Monitoring Data Analytics
Business Process Analysis
PORTFOLIO MANAGEMENT
IT Portfolio Management Enterprise Architecture
COLLABORATIVE PROCESS ANALYSIS
Proactive Alerts Dashboards Real-Time Insight Mobile Anywhere
P R O C E S S A U TO M AT I O N / I N T E G R AT I O N
Application Integration B2B Integration SOA Governance Composite Applications
ERP Custom CRM
Process Automation
Governance, Risk & Compliance
©2014 Software AG. All rights reserved. 15 |
In-memory Data Management
Intelligent Business Operations
Event Processing
Dashboards Real-Time Insight
Integration / SOA
Collaborative Process Analysis / Management
Enterprise Architecture
Event Processing
IT Portfolio Management
Visualization (Presto)
Application Development
Messaging
Organic Growth sparked by Innovations
In Memory Computing
©2014 Software AG. All rights reserved. 16 |
Software AG Suite is a Top-Ranked Technology Leader
Application Integration Suites • • • • •
Application Services Governance • •
Business Process Analysis Tools • • •
Business Process Management Suites • • •
Enterprise Architecture Tools • •
Governance, Risk and Compliance • •
Integrated IT Portfolio Analysis Apps •
Complex Event Processing Platforms • • •
Comprehensive Integration Solutions • • • • •
EA Management Suites •
Elastic Caching Platforms • • •
ESB • • • •
Integrated SOA Governance • •
SOA Service Life-Cycle Management •
©2014 Software AG. All rights reserved. 17 |
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
©2014 Software AG. All rights reserved. 18 |
Best of 2 Worlds - Big Data and AIM merge to IBO
18
slow fast
AIM Big
Data
Apama
Terracotta
Nirvana
BPM
ESB
SOA
IBO
modern traditional
©2014 Software AG. All rights reserved. 19 |
Intelligent Business Operations – Driving growth of AIM Market
Modern
ESB
SOA, B2B
& other
Modern
BPMS
Addressable AIM
Market Segments= $7.1bn
Addressable AIM
Market Segments = $9.2bn
1.1bn
1.6bn
1.2bn
2.1bn
SOA, B2B
& other
2014 2017 Tradit.
ESB Tradit.
BPMS 1.5bn
1.7bn 2.1bn
1.3bn
3.0bn
0.6bn
Modern
ESB
Modern
BPMS
Tradit.
BPMS
Tradit.
ESB
IBO related segments 2.9bn
5.1bn
21% CAGR
9% CAGR
©2014 Software AG. All rights reserved. 20 | December 9, 2011 20
Market Potential - Intelligent Business Operations / Big Data
Solutions
Source: Wikibon (Big Data Application (Analytic & Transactional) Revenue Forecast, in $bn, 2014 – 2017 Δ 113%)
Gartner (estimate for IBO: customer use case oriented solution)
3.5
5.3
6.5
7.4
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017
Wikibon
Gartner
$bn
©2014 Software AG. All rights reserved. 21 |
BPE License Growth vs Market Peers 2010-2013
0%
3%
6%
9%
12%
15%
18%
2011 2012 2013
Peer Group Average
Growth
yoy acc
©2014 Software AG. All rights reserved. 22 |
Outlook FY 2014
Product Revenue BPE
Product Revenue ETS 273.8
+2% to +7%
- 9% to -16%*
422.9 +12% to +18%*
260.7
FY 2013 (in €m)
Outlook FY 2014 (as of March 31, 2014)
Operating Result (Non-IFRS)**
* Revenue growth or decline at constant currency
** Before adjustments for non-operating items (see non-IFRS earnings results)
©2014 Software AG. All rights reserved. 23 |
€1 Billion
>80%
New Products (BPE+)
• Organic Growth
• Integration Technology
• Business Process Mgt.
• IBO / Big Data
• Cloud / Partner / OEM
• M&A/Innovative Technologies
2013 2018
40% Enterprise Transaction
Systems (ETS)
20%
80%
2006
60%
<20%
Revenue Targets 2013 - 2018 (BPE + ETS)
Product Revenue
©2014 Software AG. All rights reserved. 24 |
Revenue and Margin Drivers 2014+
2014 2015 2016 2017 2018
Impact new sales staff
Growing Ø deal size
Platforms / use case packaging
Recurring projects
Cloud based offerings
Partner sales / OEM
Revenue mix
Economies of scale
(R&D, G&A)
Metrics
Channel
sales
Sales
productivity
©2014 Software AG. All rights reserved. 25 |
Key Investment Indicators
1. Footprint: Established global software player with blue chip customer base
2. USP: Unique technology leadership in fast growing IT segments
3. Financials: Strong balance sheet and cash generation
4. Assets: Experienced management team and loyal expert staff
5. Timing: Post ramp-up investments for future growth / leverage ahead
©2014 Software AG. All rights reserved. 26 |
*Source: ThomsonOne, January 2014
Number of total shares: 86,943,945
Freefloat: ~ 62%
Indices: TecDAX, DAX 100, TechAllShare
Codes: SOW, SOW GR, SOWG.DE
ISIN: DE0003304002
ADR U.S. trading symbol: STWRY
Share Data
Major Institutional Investors
Shareholder Structure
Shareholder Structure
Institutional Investors by Region*
Software AG Foundation
Institutional Investors
Private & undisclosed
25% 29%
37%
30%
23%
14%
8%
12% Germany
US
UK
Scandinavia
France
Rest of World
7%
Own Shares**
9%
**as of February, 2014
Fidelity (FMR LLC) 3.5%
Templeton 3.0%
Alken Asset Management 3.0%
Deka 2.9%
Norges Bank 2.9%
BeNeLux 6%
©2013 Software AG. All rights reserved.
Appendix
Financials
©2014 Software AG. All rights reserved. 28 |
Euro 36%
US Dollar 26%
Other 10%
GBP 6%
AUD 5%
ZAR 2%
ILS 4%
CAD 3%
BRL 8%
(in €m; yoy)
Q4
2013
Q4
in %
FY
2013
FY
in %
Licenses -7.5 -6% -16.9 -5%
Maintenance -5.1 -5% -16.4 -4%
Consulting &
Other -1.4 -2% -4.5 -2%
Total -14.0 -5% -37.8 -4%
Currency impact on revenue
Currency impact on revenue
Q4 2013 / FY 2013
36% revenue in Euro
64% revenue in foreign currency
Currency split FY 2013
©2014 Software AG. All rights reserved. 29 |
Revenue Q4 2013 / FY 2013
(in €m) Q4
2013
Q4
2012
Δ% Δ% acc
FY
2013
FY
2012
Δ% Δ% acc
Product 204.4 196.8 4% 10% 705.7 712.2 -1% 4%
Licenses 110.9 97.1 14% 22% 330.1 318.9 4% 9%
Maintenance 93.5 99.7 -6% -1% 375.6 393.3 -5% -
Consulting & services 67.0 79.6 -16% -14% 266.0 333.3 -20% -19%
Other 0.1 0.3 - - 1.0 1.8 - -
Total 271.5 276.7 -2% 3% 972.7 1,047.3 -7% -4%
©2014 Software AG. All rights reserved. 30 |
Segment report Q4 2013 / FY 2013
Business Process Excellence (BPE)
(in €m) Q4
2013
Q4
2012
Δ% Δ% acc
FY
2013
FY
2012
Δ% Δ% acc
Licenses 73.6 63.5 16% 23% 220.1 194.7 13% 18%
Maintenance 53.1 50.2 6% 11% 202.8 190.0 7% 11%
Total revenue 126.7 113.7 11% 18% 422.9 384.7 10% 15%
Cost of sales -6.0 -4.5 33% 41% -22.4 -18.8 19% 23%
Gross profit 120.7 109.2 11% 17% 400.5 365.9 9% 14%
Sales & marketing -56.9 -38.0 50% 57% -201.5 -137.3 47% 53%
R & D -22.9 -19.7 16% 18% -82.5 -74.9 10% 12%
Segment result 40.9 51.5 -21% -13% 116.5 153.7 -24% -19%
©2014 Software AG. All rights reserved. 31 |
Segment report Q4 2013 / FY 2013
Enterprise Transaction Systems (ETS)
(in €m) Q4
2013
Q4
2012
Δ% Δ% acc
FY
2013
FY
2012
Δ% Δ% acc
Licenses 36.0 32.3 11% 21% 107.4 121.3 -11% -6%
Maintenance 39.0 45.7 -15% -9% 166.4 188.3 -12% -7%
Product revenue 75.0 78.0 -4% 3% 273.8 309.6 -12% -7%
Other 0.2 0.2 - - 0.7 0.9 - -
Total revenue 75.2 78.2 -4% 3% 274.5 310.5 -12% -7%
Cost of sales -3.6 -3.5 3% 7% -14.1 -15.6 -10% -6%
Gross profit 71.6 74.7 -4% 3% 260.4 294.9 -12% -7%
Sales & marketing -13.3 -16.8 -21% -16% -50.4 -61.7 -18% -15%
R&D -6.5 -6.6 -2% -1% -25.3 -26.1 -3% -3%
Segment result 51.8 51.3 1% 9% 184.7 207.1 -11% -5%
©2014 Software AG. All rights reserved. 32 |
(in €m) Q4
2013
Q4
2012
Δ% Δ% acc
FY
2013
FY
2012
Δ% Δ% acc
Licenses 1.3 1.4 -7% -10% 2.6 2.9 -10% -9%
Maintenance 1.4 3.8 -63% -63% 6.5 15.0 -57% 57%
Product revenue 2.7 5.2 -48% -48% 9.1 17.9 -49% -49%
Services & other 66.9 79.6 -16% -14% 266.3 334.2 -20% -19%
Total revenue 69.6 84.8 -18% -16% 275.4 352.1 -22% -20%
Cost of sales -57.1 -74.8 -24% -22% -232.6 -320.0 -27% -26%
Gross profit 12.5 10.0 25% 29% 42.8 32.1 33% 37%
Sales & marketing -7.1 -7.2 -1% 4% -33.5 -33.8 -1% 3%
Segment result 5.4 2.8 93% 93% 9.3 -1.7 >100% >100%
Segment report Q4 2013 / FY 2013
Consulting
©2014 Software AG. All rights reserved. 33 |
44
Results Q4 2013 / FY 2013
(in €m) Q4
2013
Q4
2012
Δ% Δ% acc
FY
2013
FY
2012
Δ% Δ% acc
Total revenue 271.5 276.7 -2% 3% 972.7 1,047.3 -7% -4%
Cost of sales -72.7 -88.9 -18% -17% -294.6 -378.4 -22% -21%
Gross profit 198.8 187.8 6% 13% 678.1 668.9 1% 6%
Margin in % 73.2% 67.9% 69.7% 63.9%
R & D -29.4 -26.3 12% 13% -107.9 -101.1 7% 8%
Sales & marketing -80.8 -65.6 23% 30% -300.1 -246.9 22% 26%
Administration -20.7 -21.6 -4% -2% -73.2 -75.8 -3% -2%
Other
income/expense 2.5 1.1 - - 8.6 3.2 - -
EBIT 70.4 75.4 -7% 3% 205.5 248.3 -17% -10%
Margin in % 25.9% 27.2% 21.1% 23.7%
©2014 Software AG. All rights reserved. 34 |
Non-IFRS Earnings (Operating Result) Q4 2013 / FY 2013
* Based on average outstanding shares: Q4 2013: 82.2m / Q4 2012: 86.8m // FY 2013: 83.7m / FY 2012: 86.8m
(in €m) Q4
2013
Q4
2012
FY
2013
FY
2012
EBIT (before all taxes) 70.4 75.4 205.5 248.3
Amortization on acquisition related
intangible assets 9.4 9.7 40.4 38.1
Reduction acquisition related product
revenue by purchase price allocation 0.3 - 1.2 1.0
Other acquisition impacts 0.1 - 1.7 0.6
Share based payment 0.2 3.7 -0.7 7.9
Restructuring/severances 3.4 0.5 12.6 3.0
Operating Result (Non-IFRS) 83.8 89.3 260.7 298.9
in % of revenue (Non-IFRS) 30.8% 32.3% 26.8% 28.5%
Net income (Non-IFRS) 56.6 60.9 172.9 200.7
EPS (Non-IFRS)* 0.69 0.70 2.07 2.31
Net income (IFRS) 46.9 50.7 134.0 164.7
©2014 Software AG. All rights reserved. 35 |
Cash flow Q4 2013 / FY 2013
* Cash flow from investing activities except acquisitions and except investments in debt instruments
** Based on average outstanding shares: Q4 2013: 82.2m / Q4 2012: 86.8m / FY 2013: 83.7m / FY 2012: 86.8m
(in €m) Q4
2013
Q4
2012
Δ% FY
2013
FY
2012
Δ%
Operating cash flow 56.4 50.9 11% 171.8 184.4 -7%
./. CapEx* -2.9 -5.7 -12.7 -13.7
Free cash flow 53.5 45.2 18% 159.1 170.7 -7%
as % of revenue 19.7% 16.3% 16.4% 16.3%
Free cash flow per share** 0.65 0.52 25% 1.90 1.97 -4%
©2014 Software AG. All rights reserved. 36 |
Dec. 31,
2013
Dec. 31,
2013
1,996.9 1,996.9
450.0
323.2
57.3
1,109.9
613.4
309.9
108.0
965.6
1,771.9
315.7
341.3
75.9
1,039.0
1,771.9
266.0
333.9
111.9
1,060.1
Cash and cash
equivalents
Trade receivables
Inventory, other assets
Fixed assets
(goodwill 829.2/756.4)
Total
Financial liabilities
Other liabilities
Deferred income
Shareholders equity
(ratio 48.4%/59.8%)
Total
Assets Liabilities
Balance sheet
(in €m)
Dec. 31,
2012
Dec. 31,
2012
Securities 56.5
©2014 Software AG. All rights reserved. 37 |
Earnings Q4 2013 / FY 2013
* Weighted average shares outstanding (basic) Q4 2013: 82.2m / Q4 2012: 86.8m / FY 2013: 83.7m / FY 2012: 86.8m
(in €m) Q4
2013
Q4
2012
Δ% FY
2013
FY
2012
Δ%
EBIT (before all taxes) 70.4 75.4 -7% 205.5 248.3 -17%
Financial result -3.8 -3.5 9% -8.4 -8.8 -5%
Profit before taxes 66.6 71.9 -7% 197.1 239.5 -18%
Other taxes -2.3 -2.5 -8% -7.1 -8.0 -11%
Income taxes -17.4 -18.7 -7% -56.0 -66.8 -16%
Tax rate in % 29.6% 29.5% 32.0% 31.2%
Net Income 46.9 50.7 -7% 134.0 164.7 -19%
EPS in €* 0.57 0.58 -2% 1.60 1.90 -16%
©2014 Software AG. All rights reserved. 38 |
Earnings Q4 2013 / FY 2013
(in €m) Q4
2013
Q4
2012
Δ%
FY
2013
FY
2012
Δ%
Net Income 46.9 50.7 -7% 134.0 164.7 -19%
Income taxes 17.4 18.7 -7% 56.0 66.8 -16%
Other taxes 2.3 2.5 -8% 7.1 8.0 -11%
Financial result 3.8 3.5 9% 8.4 8.8 -5%
EBIT (before all taxes) 70.4 75.4 -7% 205.5 248.3 -17%
Margin in % 25.9% 27.2% 21.1% 23.7%
Amortization 9.4 9.7 -3% 40.4 38.1 6%
EBITA 79.8 85.1 -6% 245.9 286.4 -14%
Margin in % 29.4% 30.8% 25.3% 27.3%
Depreciation 3.0 3.4 -12% 12.9 12.9 -
EBITDA 82.8 88.5 -6% 258.8 299.3 -14%
Margin in % 30.5% 32.0% 26.6% 28.6%
©2014 Software AG. All rights reserved. 39 |
Amortization / depreciation impact 2013ff
(preliminary)
Q4
2013
2.7
6.7
3.0
FY
2013
FY
2014ff*
* Estimated
Amortization IDS
(in €m)
Amortization other
Depreciation
10.6
29.8
12.9
10.6
28.6
12.6
©2014 Software AG. All rights reserved. 40 |
Headcount by functional areas* and geography
* According to P+L structure
(in FTE) Dec.31,
2013
Sept.30,
2013
Δ% qoq
Dec.31,
2012
Δ% yoy
Total 5,238 5,356 -2% 5 5,419 -3%
Consulting & services 2,347 2,375 -1% 2,658 -12%
R & D 998 1,005 -1% 887 13%
Sales & marketing 1,180 1,261 -6% 1,131 4%
Administration 713 715 - 743 -4%
USA 778 804 -3% 758 3%
Germany 1,711 1,735 -1% 1,768 -3%
Rest of world 2,749 2,817 -2% 2,893 -5%