Software : Results Q3 2020 Webcast Presentation
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
€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.
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
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.
© 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
• 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.
© 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
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
Quarterly ARR growth rates (yoy acc.)
A&N
Group
14%
12%
10%
8%
6%
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.
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.
© 2020 Software AG. All rights reserved.
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
31 © 2020 Software AG. All rights reserved.
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Disclaimer
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
© Publicnow 2020
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%
Duration :
Auto.
2 months
3 months
6 months
9 months
1 year
2 years
5 years
10 years
Max.
Period :
Day
Week
Technical analysis trends SOFTWARE
Short Term Mid-Term Long Term Trends Neutral Bearish Neutral
Income Statement Evolution
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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%
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