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MarketScreener Homepage  >  Equities  >  Xetra  >  Software    SOW   DE000A2GS401

SOFTWARE

(SOW)
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Software : Results Q3 2020 Webcast Presentation

11/18/2020 | 03:31am EST

Software AG

Q3 2020 Results

© 2020 Software AG. All rights reserved.

SAFE HARBOR

This presentation includes forward-looking statements based on the 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.

This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities' Act of 1933 in its currently valid form.

2 © 2020 Software AG. All rights reserved.

AGENDA

1

Sanjay Brahmawar, CEO

Q3 Financial and Transformation Progress

John Schweitzer, CRO

2020 Outlook

2

Customer and Partner Momentum

Dr. Matthias Heiden, CFO

Pipeline

3

Detailed Financials

4

Bookings-to-Revenue Relationship

Your Questions

3 © 2020 Software AG. All rights reserved.

CONFIRMING OUR MOMENTUM

9 MONTHS OF TRANSFORMATION SUCCESS

Continued

digital

business bookings growth

+23%

Innovation

driving record

high NPS

+57 NPS

Subscription

Recurring

shift pushing

forward

revenue focus

Subscription and

10% YoY ARR

SaaS 78% of Q3

growth

Digital bookings

Strong and predictable NAM business

3 consecutive quarters of strong performance

4 © 2020 Software AG. All rights reserved.

FINANCIAL HIGHLIGHTS Q3 RESULTS

Q3 +5%

bookings €101.6m

Group

YTD 2020

+20%

bookings

€301.5m

Group

+17%

+73%

+2%

€82.6 €25.0m €57.6m

Digital Business

Cloud & IoT

Digital Business

excl. Cloud & IoT

+23%

+58%

+11%

€222.3m

€73.3m

€149.0m

Digital Business

Cloud & IoT

Digital Business

excl. Cloud & IoT

-26%

€19.0m

18%

Q3 non-IFRS

A&N

EBITA Margin

19.2%

YTD 2020

non-IFRS

+13%

EBITA Margin

€79.2m

A&N

5 © 2020 Software AG. All rights reserved.

OUTLOOK FULL YEAR 2020

FY 2019

(in €m)

DBP excl. Cloud & IoT Product Bookings

€241.1m

DBP Cloud & IoT Product Bookings

€65.9m

A&N Product Bookings

€100.8m

Operating Margin (EBITA, non-IFRS)²

29.2%

FY 2020 ¦ Outlook

Status Nov 17, 2020

(in %)

+3% to +10%¹

+30% to +50%¹

+5% to +15%¹

20% to 22%

Medium-term ambitions

unchanged

2023

€1bn

Revenue

25-30%

Operating

Margin

85-90%

Recurring

Product Revenue

1 At constant currency

2 Adjusted for non-operating factors (see non-IFRS earnings definition AR 2019 p.50f)

6 © 2020 Software AG. All rights reserved.

CONTINUING OUR TRANSFORMATION

FURTHER EVIDENCE THAT CHANGE IS TAKING HOLD

Focus

Execution

Team

Product

Further product

innovation

recognition

continues

ahead of peers

Winning in the

Regional

market

success: NAM

transformation

delivering

results

Partner

Focused on

ecosystem

employee

flourishing

wellness and

support

7 © 2020 Software AG. All rights reserved.

John Schweitzer

CRO

© 2020 Software AG. All rights reserved.

CRO PERSPECTIVE

CONFIDENT IN OUR ABILITY TO DELIVER

SOLID EXECUTION

5% overall bookings growth in Q3

Digital Business Bookings +23% ytd

Customers demanding subscription

NEW CUSTOMER WINS

  • 47 new logos

Significant competitive wins

PERFORMING ACROSS GEOGRAPHIES

  • NAM momentum continues
  • DACH growth is key contributor

PARTNER CHANNEL IMPACT

  • 28% of total bookings
  • Tech Alliances are key contributor

9 © 2020 Software AG. All rights reserved.

CRO PERSPECTIVES STRONG START TO Q4

  • First nine-months trends to continue
  • Early deal closures improve linearity
  • Pipeline coverage is solid
  • Largest customer event ever - conXion

PredictableResilient

Reliable

10 © 2020 Software AG. All rights reserved.

Dr. Matthias Heiden

CFO

© 2020 Software AG. All rights reserved.

BOOKINGS AND REVENUE (GROUP)

Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Bookings

101.6

101.9

0%

5%

301.5

255.8

18%

20%

Licenses

38.9

64.1

-39%

-36%

130.0

156.9

-17%

-16%

Maintenance

103.4

109.3

-5%

-1%

317.9

323.9

-2%

0%

SaaS / Usage based

7.9

5.8

38%

42%

22.2

16.0

38%

40%

Product revenue

150.2

179.2

-16%

-12%

470.1

496.9

-5%

-4%

Services

35.2

44.8

-22%

-19%

126.7

138.2

-8%

-8%

Other

0.0

0.2

0.2

0.5

Total revenue

185.4

224.2

-17%

-14%

597.0

635.6

-6%

-5%

Annual Recurring Revenue

504.3

485.0

4%

10%

as of Sep 30, 2020

12 © 2020 Software AG. All rights reserved.

NON-IFRS EARNINGS Q3 2020 / 9 MONTHS

(in €m)

EBIT (before all taxes)

Amortization on acquisition-related intangible assets

Share based payments

Restructuring / severances / legal case Other impacts / impacts from M&A activities

Q3

Q3

∆%

9M

9M

∆%

2020

2019

2020

2019

24.9

59.0

-58%

85.6

148.9

-43%

3.5

5.4

-35%

10.8

16.4

-34%

3.1

3.5

-11%

8.4

8.3

1%

1.7

0.4

335%

6.7

2.2

205%

0.2

0.1

119%

3.2

0.3

954%

EBITA (Non-IFRS)

33.4

68.4

-51%

114.6

176.1

-35%

in % of revenue (Non-IFRS)

18.0%

30.5%

19.2%

27.7%

Net income (Non-IFRS)

18.7

51.0

-63%

74.8

126.6

-41%

EPS in € (Non-IFRS)*

€0.25

€0.69

-63%

€1.01

€1.71

-41%

* Weighted average shares outstanding (basic): 74.0m

13 © 2020 Software AG. All rights reserved.

RESULTS

Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Total revenue

185.4

224.2

-17%

-14%

597.0

635.6

-6%

-5%

Cost of sales

-43.2

-49.5

-13%

-11%

-150.0

-148.1

1%

2%

Gross profit

142.2

174.7

-19%

-14%

447.0

487.5

-8%

-6%

Margin in %

76.7%

77.9%

74.9%

76.7%

Research & Development

-34.9

-32.4

8%

9%

-108.7

-96.4

13%

13%

Sales & Marketing

-63.9

-63.9

0%

4%

-194.3

-189.5

3%

4%

Administration

-17.9

-19.1

-6%

-4%

-56.7

-54.3

4%

5%

Other income / expense

-0.6

-0.2

-1.7

1.6

EBIT

24.9

59.0

-58%

-50%

85.6

148.9

-43%

-38%

Margin in %

13.4%

26.3%

14.3%

23.4%

14 © 2020 Software AG. All rights reserved.

CASH FLOW

Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

2020

2019

Operating Cash Flow

11.2

33.3

./. CapEx* (long-term,non-current)

-3.3

-3.4

./. Repayment of lease liabilities**

-3.8

-3.9

Free Cash Flow

4.1

26.0

in % of revenue

2.2%

11.6%

Free Cash Flow per share***

€0.06

€0.35

  • Cash flow from investing activities except acquisitions and except investments in debt instruments
  • New reporting line due to IFRS 16
  • Based on weighted average shares outstanding (basic): 74.0m

∆% -66%

-84%

-84%

9M

9M

∆%

2020

2019

98.9

123.9

-20%

-11.7

-9.4

-11.7

-11.6

75.5

102.9

-27%

12.6%

16.2%

€1.02

€1.39

-27%

15 © 2020 Software AG. All rights reserved.

TRANSFORMATION PATH - FROM BOOKINGS TO REVENUE DIGITAL BUSINESS (DBP INCL. COULD & IOT)

Bookings to license revenue (€m)

Timing of revenue recognition*

In 1Q

in1Q

in 1Q

Total across 11 Qtrs

Bookings

License Revenue

% of Bookings

Q1

58.1

25.1

43%

Q2

81.6

27.7

34%

36%

Q3

82.6

26.4

32%

100%

YTD

222.3

79.3

36%

Q4e

~120-135

~55-65

~45-50%

>60%

FY 2020e

~340-360

~135-145

~40%

Bookings License Maint. & SaaS Deferred Revenue

*YTD transformation ratios as the basis

16 © 2020 Software AG. All rights reserved.

ARR - STEADY GROWTH WITH MINOR QUARTERLY DEVIATIONS GROUP

Group Quarterly ARR - Stated (€m)

530

510

490

470

450

430

508

504

Quarterly ARR growth rates (yoy acc.)

A&N

Group

14%

12%

10%

8%

6%

410

485 491 488

457 461

4%

390

370

350

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

2%

0%

-2%

Q12019 Q2 2019

Q3 2019

Q4 2019

Q1 2020 Q2 2020

Q3 2020

17 © 2020 Software AG. All rights reserved.

ARR - CONSTANT DOUBLE DIGIT GROWTH WITH FX VARIANCE DIGITAL BUSINESS (DBP INCL. COULD & IOT)

Quartely ARR - Stated (€m)

390

370

350

330

310

355

355

290

334

340

341

309

315

270

250

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

Stated ARR

ARR Growth at Constant Currency (€m)

390

370

4

17

2.4%

9

350

11.2%

13.7%

330

310

355

355

355

355

290

334

315

270

250

Q2

Q2

Q3

Q3

Q2

Q3

2019

2020

2019

2020

2020

2020

Stated ARR

FX Effect

18 © 2020 Software AG. All rights reserved.

BALANCE SHEET

(in €m)

Assets

Sep 30,

Dec 31,

2020

2019

531.5

Cash and cash equivalents

513.6

38.8

Financial assets

22.8

Trade and other receivables

255.3

303.1

77.4

Non-financial assets

75.9

1,159.1

Fixed assets

1,200.7

(Goodwill 960.6 / 980.1)

2,062.1Total 2,116.1

* Incl. assets/liabilities held for disposal

Sep 30,

2020

311.0

287.9

154.7

1,308.5

2,062.1

Liabilities

Financial liabilities

Other liabilities* Deferred income

Shareholders' equity (Quote 63.5% / 64.2%)

Total

Dec 31,

2019

296.6

300.9

161.1

1,357.5

2,116.1

19 © 2020 Software AG. All rights reserved.

OUTLOOK FULL YEAR 2020

FY 2019

(in €m)

DBP excl. Cloud & IoT Product Bookings

€241.1m

DBP Cloud & IoT Product Bookings

€65.9m

A&N Product Bookings

€100.8m

Operating Margin (EBITA, non-IFRS)²

29.2%

FY 2020 ¦ Outlook

Status Nov 17, 2020

(in %)

+3% to +10%¹

+30% to +50%¹

+5% to +15%¹

20% to 22%

Medium-term ambitions

unchanged

2023

€1bn

Revenue

25-30%

Operating

Margin

85-90%

Recurring

Product Revenue

1 At constant currency

2 Adjusted for non-operating factors (see non-IFRS earnings definition AR 2019 p.50f)

20 © 2020 Software AG. All rights reserved.

Q&A

© 2020 Software AG. All rights reserved.

APPENDIX

22 © 2020 Software AG. All rights reserved.

DIGITAL BUSINESS PLATFORM (INCL. DBP CLOUD & IOT) SEGMENT REPORT Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Bookings

82.6

73.6

12%

17%

222.3

184.2

21%

23%

Licenses

26.5

39.2

-32%

-29%

79.3

97.9

-19%

-18%

Maintenance

68.7

72.4

-5%

-1%

211.8

213.7

-1%

0%

SaaS

7.9

5.8

38%

42%

22.2

16.0

38%

40%

Total revenue

103.1

117.4

-12%

-9%

313.3

327.6

-4%

-3%

Cost of sales

-12.5

-10.0

25%

26%

-36.2

-28.9

25%

26%

Gross profit

90.6

107.4

-16%

-12%

277.1

298.7

-7%

-6%

Sales & Marketing

-52.2

-46.4

12%

17%

-152.8

-141.0

8%

10%

Research & Development

-27.6

-25.6

8%

8%

-85.1

-77.4

10%

9%

Segment result

10.8

35.3

-69%

-64%

39.2

80.3

-51%

-48%

Margin in %

10.5%

30.1%

12.5%

24.5%

Annual Recurring Revenue

355.1

334.0

6%

11%

as of Sep 30, 2020

23 © 2020 Software AG. All rights reserved.

DIGITAL BUSINESS PLATFORM (EXCL. DBP CLOUD & IOT) SEGMENT REPORT Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Bookings

57.6

58.8

-2%

2%

149.0

137.4

8%

11%

Licenses

25.0

37.9

-34%

-31%

70.2

87.9

-20%

-18%

Maintenance

66.3

70.8

-6%

-3%

205.4

208.7

-2%

0%

Total revenue

91.3

108.7

-16%

-13%

275.6

296.6

-7%

-6%

Annual Recurring Revenue

302.1

291.1

4%

9%

as of Sep 30, 2020

24 © 2020 Software AG. All rights reserved.

DBP CLOUD & IOT

SEGMENT REPORT Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Bookings

25.0

14.8

69%

73%

73.3

46.8

57%

58%

Licenses

1.5

1.2

21%

22%

9.1

10.0

-9%

-11%

Maintenance

2.4

1.6

49%

50%

6.4

5.0

29%

28%

SaaS / Usage based

7.9

5.8

38%

42%

22.2

16.0

38%

40%

Total revenue

11.9

8.6

37%

40%

37.7

31.0

22%

22%

Annual Recurring Revenue

53.0

42.9

24%

27%

as of Sep 30, 2020

25 © 2020 Software AG. All rights reserved.

ADABAS & NATURAL

SEGMENT REPORT Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Bookings

19.0

28.3

-33%

-26%

79.2

71.6

11%

13%

Licenses

12.4

25.0

-50%

-46%

50.7

59.0

-14%

-12%

Maintenance

34.7

36.8

-6%

0%

106.1

110.3

-4%

-1%

Product revenue

47.1

61.8

-24%

-19%

156.8

169.2

-7%

-5%

Other

0.0

0.2

0.2

0.5

Total revenue

47.1

62.0

-24%

-19%

157.0

169.7

-7%

-5%

Cost of sales

-1.9

-1.7

11%

17%

-6.6

-5.7

16%

18%

Gross profit

45.2

60.3

-25%

-20%

150.4

164.0

-8%

-6%

Sales & Marketing

-6.8

-9.8

-30%

-27%

-25.0

-25.4

-2%

0%

Research & Development

-7.4

-6.8

8%

9%

-23.6

-19.0

24%

24%

Segment result

31.0

43.7

-29%

-23%

101.8

119.6

-15%

-12%

Margin in %

65.8%

70.5%

64.8%

70.5%

Annual Recurring Revenue

149.2

151.0

-1%

6%

as of Sep 30, 2020

26 © 2020 Software AG. All rights reserved.

PROFESSIONAL SERVICES

SEGMENT REPORT Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

∆%

9M

9M

∆%

∆%

2020

2019

acc

2020

2019

acc

Total revenue

35.2

44.8

-21%

-19%

126.7

138.2

-8%

-8%

Cost of sales

-26.8

-35.8

-25%

-23%

-101.2

-107.2

-6%

-6%

Gross profit

8.4

9.0

-7%

-2%

25.6

31.0

-18%

-16%

Sales & Marketing

-3.3

-4.3

-23%

-20%

-11.8

-12.9

-9%

-8%

Segment result

5.1

4.7

8%

14%

13.8

18.1

-24%

-22%

Margin in %

14.5%

10.6%

10.9%

13.1%

27 © 2020 Software AG. All rights reserved.

CURRENCY IMPACT ON REVENUE Q3 2020 / 9 MONTHS

  • 30% revenue in Euro
  • 70% revenue in foreign currency

Sonstige

Other

21% Euro

28% 35% EUR

30%

ILS 5%

GBP 5%

USD

US Dollar

25%32%

Currency split 9M 2020

Currency impact on revenue

Q3

Q3

9M

9M

(in €m; yoy)

2020

in %

2020

in %

Licenses

-2.2

-5%

-2.6

-2%

Maintenance

-4.9

-5%

-5.9

-2%

SaaS

-0.2

-3%

-0.2

-1%

Professional

-1.2

-3%

-0.5

0%

Services & other

Total

-8.5

-4%

-9.2

-2%

28 © 2020 Software AG. All rights reserved.

HEADCOUNT

BY FUNCTIONAL AREAS* AND GEOGRAPHY

(in FTE)

Sep 30,

Dec 31,

∆%

Sep 30,

∆%

2020

2019

2019

yoy

Total

4,642

4,948

-6%

4,883

-5%

Professional Services

1,471

**

1,915

-23%

1,890

-22%

Research & Development

1,479

1,419

4%

1,391

6%

Sales & Marketing

1,025

961

7%

963

6%

Administration

667

653

2%

640

4%

Germany

1,287

1,278

1%

1,269

1%

USA

626

584

7%

579

8%

India

1,022

1,004

2%

953

7%

Rest of World

1,706

**

2,082

-18%

2,083

-18%

* According to P&L structure

**excl. 438 FTE of sold Professional Service unit in Spain

29 © 2020 Software AG. All rights reserved.

EARNINGS

Q3 2020 / 9 MONTHS

(in €m)

Q3

Q3

∆%

9M

9M

∆%

2020

2019

2020

2019

EBIT (before all taxes)

24.9

59.0

-58%

85.6

148.9

-43%

Financial result

0.7

2.0

2.8

4.9

Profit before taxes

25.6

61.0

-58%

88.4

153.8

-43%

Other taxes

-1.1

-1.2

-3%

-3.7

-4.1

-11%

Income taxes

-10.6

-15.8

-33%

-29.0

-42.6

-32%

Tax rate in %

-45.8%

-27.8%

-36.9%

-30.4%

Net income

13.9

44.0

-68%

55.8

107.1

-48%

EPS in €*

€0.19

€0.59

-68%

€0.75

€1.45

-48%

*Weighted average shares outstanding (basic): 74.0m

30 © 2020 Software AG. All rights reserved.

AMORTISATION / DEPRECIATION IMPACT (PRELIMINARY)

(in €m)

Q1

Q2

Q3

FY

FY

FY

FY

2020

2020

2020

2019

2020*

2021*

2022*

Amortisation

-3.6

-3.6

-3.5

-21.9

-14.3

-14.0

-13.4

Depreciation

-6.7

-6.4

-6.3

-25.6

-25.7

-25.2

-25.2

  • Estimated

31 © 2020 Software AG. All rights reserved.

Investor Relations

Uhlandstrasse 12

64297 Darmstadt

Deutschland

  1. +49 (0) 6151 / 92 1900
  1. +49 (0) 6151 / 9234 1900
  1. softwareag.com
  1. investor.relations@softwareag.com

© 2020 Software AG. All rights reserved.

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Software AG published this content on 18 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 November 2020 08:30:07 UTC


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All news about SOFTWARE
01/22PTA-PVR : Software AG: Release according to Article 40, Section 1 of the WpHG
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01/19SOFTWARE AG : Deutsche Bank reiterates its Neutral rating
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01/18SOFTWARE AG : Receives a Buy rating from Goldman Sachs
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01/15SOFTWARE : announces change in the Executive Board
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01/13SOFTWARE AG : Baader Bank reiterates its Buy rating
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01/13SOFTWARE AG : Warburg Research sticks Neutral
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01/13SOFTWARE AG : Gets a Neutral rating from JP Morgan
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01/07SOFTWARE AG : Goldman Sachs reiterates its Buy rating
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01/04SOFTWARE AG : UBS reaffirms its Buy rating
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2020SOFTWARE AG : Credit Suisse sticks Neutral
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More news
Financials
Sales 2020 833 M 1 013 M 1 013 M
Net income 2020 95,5 M 116 M 116 M
Net cash 2020 268 M 326 M 326 M
P/E ratio 2020 25,3x
Yield 2020 2,09%
Capitalization 2 453 M 2 975 M 2 983 M
EV / Sales 2020 2,62x
EV / Sales 2021 2,57x
Nbr of Employees 4 642
Free-Float 66,2%
Chart SOFTWARE
Duration : Period :
Software Technical Analysis Chart | SOW | DE000A2GS401 | MarketScreener
Technical analysis trends SOFTWARE
Short TermMid-TermLong Term
TrendsNeutralBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 14
Average target price 36,71 €
Last Close Price 33,16 €
Spread / Highest target 35,7%
Spread / Average Target 10,7%
Spread / Lowest Target -9,53%
EPS Revisions
Managers and Directors
NameTitle
Sanjay Brahmawar Chairman-Management Board & CEO
Andreas Bereczky Chairman-Supervisory Board
Matthias Heiden Chief Financial Officer
Bernd Groß Chief Technology Officer
Alf Henryk Wulf Independent Member-Supervisory Board
Sector and Competitors
1st jan.Capitalization (M$)
SOFTWARE-0.54%2 975
ORACLE CORPORATION-5.86%179 292
SAP SE-1.59%152 384
SERVICENOW INC.-2.28%104 913
INTUIT INC.-1.43%103 360
DOCUSIGN, INC.9.94%45 595