Factbook - Software AG/media/Files/S/Software-AG-IR... · • Company foundation: May 30, 1969 • IPO at Frankfurt Stock Exchange: April 26, 1999 ( MDax) › Our history: We are

© 2019 Software AG. All rights reserved.

October 2019

by investor relations

›Factbook

2 |

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 aresubject to risks and uncertainties. Actual results may vary materially from those projected here, due tofactors 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 techno-logies and changes in business strategy. Software AG does not intend or assume any obligation to updatethese forward-looking statements.

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


SAFE HARBOR STATEMENT

3 | © 2019 Software AG. All rights reserved.

TABLE OF CONTENT› At a glance ………………………………………… 4

› Strategy, markets, trends ………………………… 9

› GTM, sales execution, partner ecosystem …….. 20

› Financial targets, key performance indicators ….30

› Technology view, portfolio, competition ………… 40

› Progress and financial performance…………... 54

› Shares and ownership …………………………… 64

Shortcut


› At a glance


• Company foundation: May 30, 1969

• IPO at Frankfurt Stock Exchange: April 26, 1999 (MDax)

› Our history: We are data pioneers

› Our mission: We empower our customers to turn data in to value

› Our vision: We unlock the power of data to shape a better future

› Our promise: We offer freedom as a service

› Our mission:

› Our vision:


€m 865+ RevenueFCF margin 20+ %

All figures based on FY 2018 | * yoy at constant currency

Software AG in figures

Revenue by 4700+Employees** by

Region EMEA: 50%

thereof Germany: 14% Americas: 39%

APJ: 9%

Product revenue(65% recurring) Digital Business: 54%

rev. growth*: 5%segment margin: 32%

Adabas & Natural: 25%rev. growth*: 2%segment margin:71%

Function R&D: 28%

S&M: 19%

Professional Services: 40%

Admin: 13%

COMPANY BREAKDOWN

** FTE as of December 31, 2018

Industry Government: 20%

Finance: 20%

IT Services: 15%

Services: 13%

Manufacturing: 10%

Other: 22%

Services revenue Professional Services: 21%

rev. growth*: –6%segment margin: 11%

Country Germany: 26%

India: 19%

USA: 12%

Other: 43%

7 |

Product Units

Digital Business

Business Trans-

formation


BUSINESS LINES

• Data Management• Application

Development• Support 2050+Cloud & IOT

IoT & Analytics

Professional Services

Adabas & Natural

Growth Heritage Enablement

Sales success,Customer and

Partner Solutions

Growth, heritage and enablement as pillars of our success

Integration& API

8 |

John SchweitzerChief Revenue Officer

—since 2018—

Arnd ZinnhardtChief Financial Officer

—since 2002—

Dr. Stefan SiggChief Product Officer

—since 2017—

Software AG believes in data. In 1969, Software AG was founded in the belief that data will change the world. 50 years later, data has become a resource in driving business success. We will never stop exploring the limitless opportunities of the digital future. We are data pioneers.”Sanjay Brahmawar

THE SOFTWARE AG EXECUTIVE BOARD


An experienced and energized leadership team

Sanjay BrahmawarChief Executive Officer

—since 2018—

Dr. Elke FrankChief Human Resources Officer

—since 2019—


›Strategy, markets, trends

10 |

H E L I X

BOLD NEW STRATEGY 2019Our pathway to sustainable, profitable growth



STRATEGIC DIRECTION

Products

GTM

Team & Culture

Hybrid Integration | Vendor Neutrality / Freedom of Choice IoT | Realtime Economy: disruptive business models | Combining IT&OT Adabas+Natural 2050+: modernize and stabilize, lower TCO

Reorganize Direct Sales | Geo Focus | Specialists/Product Experts NEW: Partner | Platforms (white label, OEM: Siemens, Adamos, etc. / IoT) NEW: Reseller | Marketplaces (AWS, Microsoft, etc. / IoT, Hybrid Integration)

Establishing growth mentality Reviving pioneering spirit Fostering talent development

Positioning WE INTEGRATEDevices

Clouds

AppsOn premise

Data

12 |

New Clients


INTEGRATION TRENDS DRIVING OUR STRATEGY

—PAST—

On-premise systemsPerpetual licenses

—FUTURE—

Cloud-enabled systemsSubscription-based

webMethods.iostart 2019

webMethodssince 2007

EXISTING CUSTOMER BASE

Hybrid Integration

iPaas

On premise Cloud

13 |

We will not lock customers into

proprietary systems.

We make all leading databases and application platforms work in synergy

with one another.

FREEDOM AS A SERVICE


We are vendor independent

Our solutions work in harmony with the existing

IT landscape.


IOT TRENDS DRIVING OUR STRATEGY

Security &Governance

IntelligentThings

Open &Extensible

Distributed Architectures

End-to-EndIoT Solutions

OT / ITConvergence


IOT BUSINESS IMPACT

Increase sales• New business models• “Assets-as-a-service”• Staying competitive

Engage customers• New customer services• Better customer experience• Increase customer retention

Reduce costs• Increase efficiencies• Preventative maintenance• Asset optimization

63% of CEOs perceive IoT to have a significant material business impact

42% of organizations have deployed at least oneIoT use case

80% of organizations with implemented IoT have realized greater value than expected

Source: Gartner


USE CASES THAT WILL DRIVE IOT GROWTH

Sources: BCG Internet of Things buyer survey; IDC; expert interviews, BCG analysis

Discrete manufacturing

Process industry

Utilities

Energy & natural resources

Transportation & Logistics

Healthcare

Retail

Most relevant industries

17 |

TARGET MARKETS

$12bn

$18bn

Source: Gartner

2017

2022

+50%Integration PlatformMarket TAM

Integration IoT & Analytics

2018 -2023

$9.5bn

$25.6bn

2017

2023

+18% CAGRIoT PlatformTAM

Source: McKinsey

49%

Of CIOs say their business model has changed or is changing- Gartner CIO Survey 2019

$1.37bn

The total digital transformation market in 2022- IDC forecast

Annual total potential economic impact of IoT by 2025- McKinsey

$3.9tr -$11.1tr pa


18 |

A TRULY CONNECTED WORLDThe future and its impact on our customers

A tsunami of cloud applications is emergingCloud-based applications continue to eat up enterprise apps.

Demand is moving from data acquisition to data integrationIntegration of applications, devices, clouds and data drive operational excellence and superior customer experience.

Innovations will be increasingly based on platformsOpenness and ‘freedom of choice’ is a key requirement.


19 |

Application-drivenCreate new apps

Integration-drivenIntegrate (apps, clouds, devices, data) to drive operational excellence

Innovation-drivenNew business models, new products, Predictive Analytics (AI/ ML)

Valu

e

A typical agile project adoption based on ‘Land & Expand’

SOFTWARE AG: A UNIQUE OFFERING IN AN EARLY MARKETIntegration, IoT and platform-enabled innovations based on distributed architectures


Time


›GTM, sales execution, partner ecosystem

21 |

STATUS QUO 2019

WHAT WORKS WHAT WE MUST WORK ON

ProductStrength Best in ClassIntegral &

Trusted

FinancialStrength

Solid Balance Sheet

Strong Cash Flow

Cultural Strength

Creativity & Flexibility

Diversity & Opportunity

Growth in Growth Markets

Essence & Identity Growth

Product Focus

Silos & Complexity

GTM & Operations

FocusGeographyPartner

Ecosystem


22 |

TEAMEXECUTIONFOCUS

THREE LEVERS TO DELIVER

+ +

• High Growth Products• Right Geographies • Partners to Scale

• Go-to-Market• Shift to Subscription• Sales Incentives

• Operating Model• Employer Brand• Pioneering Spirit


23 |

Increase deal value Upscale into existing customer base

Cross-sell into A&N base Sales efficiency New business / new logos

Sales Execution

Operating Model

Customer driven innovation Deepen product knowledge in sales Strengthen entrepreneurial ownership More customer touchpoints

Subscription

Customer Success Team Realize upsell potential Higher retention rate Higher visibility, reduced volatility

GeographicFocus

Focus on Tier 1 countries Focused sales investments Increased productivityProducts

(R&D)

Focus on key products that drive revenue model

Re-allocation of resources

OEM

IoT Partnerships & White Labelling Scaling through partnerships Driving relevant IoT platforms Available on major cloud market places


ROUTES TO OUR AMBITION

24 |

MARKETIMPACT

EVOLVING SALES AND GO-TO-MARKET

Specialization

SalesCoverage

Geographies

Customer Experience

Alliances and Channels

Sales Operations


25 |

SALES OPERATIONS

SimplificationMetrics Sales Methodology

Quoting tools, approvals, contracts, revenue recognition

Leading and lagging indicators

Planning and continuous enablement

Simpler, faster quote to cash

process

Increase accountability: analyze, plan,

adjust

Drive alignment:

resources and efficiency

Demand Generation

Sales playbook and improved

lead flow

Maximize pipeline: volume,

conversion


26 |

Germany

France

Spain

Italy

BeNeLux

Sweden

USA

Canada

Brazil

UK

Switzerland

South Africa

China

Japan

Korea

Australia

UAE

FOCUSED GEOGRAPHY

Biggest market

opportunity

Best established

footprint

BIGGEST MARKET IMPACT=


27 |

ALLIANCES AND CHANNELS

ISV – extend reach G2000Application Partners

OEM – embed solutionsWhite-Labelling

ISVOEM Market-place

Marketplace – extend reach SMBCloud, Public and Private

SI

SI – expand wallet-shareIncrease Competitiveness



STRATEGIC PARTNERSHIPS

Joint plug-and-play solutions offering scalable, powerful quick start to IoT projects

Connect customer data from across multiple enterprise systems into a centralized and actionable real-time customer profile

Software AG application integration, API management, process design / transformation, analytics, data management available via AWS container marketplace

New solution delivers a connected ecosystem in Microsoft Azure for faster, safer, more manageable migrations while ensuring business continuity

29 |

Alliances and Channels

SALES AND GTM TRANSFORMATION

Sales Operations

Geographies

2019 2020 2021 2022 2023

Rel

ativ

e Im

pact

Specialization

Sales Coverage

Customer Experience



›Financial targets, key performance indicators


STRATEGY GOALSOur financial targets medium term

30%+Operating

Margin

Strong Free

Cash Flow

85% – 90% Recurring Revenue

20% – 30% Partner

Revenue

Digital Business

10%+ CAGR

Accelerated growth Reduced volatility Quality revenue Attractive margins Strong cash generation

32 |

85% – 90% Recurring Revenue


SWITCH TO SUBSCRIPTIONRecurring Revenue share increasing*

2 3 YearYear

Perpetual license 100Subscription 100 0 0

2 3

+33 +33Maintenance 200

10033

200Professional Services 150 150Total Revenue 550 483

2 3

+33 +33

+33…

Until Dec. 2019 As of Jan. 20201 1 4

0 0

00

0 0 0

1 2 3 4 5Perpetual license Model (Single payment)Subscription Model

Subscription ModelRamp-up period: lower stated revenues

Medium term higher revenues

*Example calculation

33 |

30%+Operating

Margin

0

10

20

30

2018 2019 2020 2023

HELIX InvestmentNet 20 – 30 €m• Sales and

Marketing-adjustments

• Change Management

Contractual switch to Subscription Licensing model

31.5%28 – 30%

–200BP

30% +

+ Pay-per-Use

+ Partner sales

+ Sales efficiencyin %


MARGIN DEVELOPMENT (OP. EBITA)Mid-term above 30 percent again


STRONG FREE CASH FLOWM

id te

rm 10%+

FCF

CAG

R

>30% marginDigital Business driving growth Recurring Revenue (85 – 90%)

Growth financing (M&A activities)Share buy back programs

Attractive dividend payments

Strong Free

Cash Flow

35 |

Customer Driven

Customer Benefit

Software AG Benefit

Fastest updates,

latest capabilities

Lower upfront cost

Higher contract values

Higher retention and lifetime value

Lower cost to serve

Lower customer

acquisition cost

By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models

Gartner, 2018Realign our model Extract the benefit over time


ENABLING THE SHIFT TO SUBSCRIPTION

Scale up with demand & experiment

Maintenance as a Service


RECURRING REVENUESubscription accelerates growth

65%

20182014

58%

Share of Recurring Revenue

Product Revenue

4 financial years

2023

85% – 90%

5 financial years

37 |

2019 & MEDIUM-TERM GUIDANCE

2019

DBP

IoT

A&N

EBITAMargin

–6 to 0%*

75 to 125%

–3 to 3%**

28 to 30% Non-IFRS

Medium Term

Bookings15 to 20% CAGR

ARR12 to 17% CAGR

Adjusted (Operational) Free Cash Flow 5 to 10% CAGR

Revenue

Non-IFRS EBITA Margin

Introduction of new subscription licensing model to

reduce volatility

increase predictability

Revenue Recognition –quarterly/annual, not up-front

EBITA margin – technical compression in early phase up to 200bp

2020

* Updated guidance as of July 18, 2019 | ** Updated guidance as of April 11, 2019


38 |

Rel

ativ

e Im

pact

2019 2021 2022 20232020

high

erlo

wer

Sales Execution

Subscription OEM

R&DOperating Model

Geographic Focus


FIRST FINANCIAL IMPACT AND PHASING PER ROUTE

39 |

• Subscription-based revenue including the licenses and maintenance

• Software as a Service (SaaS) revenue

• Maintenance revenue related to license agreements of indefinite duration

• Usage-based revenue from licenses and maintenance


KPIS TO TRACK OUR PROGRESSBookings, Recurring Revenue, Adjusted (Operational) Free Cash Flow

Bookings(normalized across 3 years)

Recurring Revenue(calculation and reporting)

Adjusted (Operational) Free Cash Flow

Licenses of indefinite duration

Total contract value

Maintenance services with newlicenses of indefinite duration

Three years of maintenanceServices

Subscription agreements

Contract value divided by the term of agreement, multiplied by three years

Software as a Service (SaaS)

Contract value divided by the term of agreement, multiplied by three years

Usage-based license modelsincluding maintenance

Difference between usage determined at the end of a quarter and beginning of quarter, multiplied by four (quarters), multiplied bythree years

Net cash flow from operating activities (operating cash flow)Net cash from investing activities (CapEx)Adjusted for:– Proceeds from the sale of current financial assets+ Payments for investments in current financial

assets– Proceeds from the sale of disposal groups+ Net payments for acquisitions– Repayment of leasing obligations (new due to

application of IFRS 16)

Free cash flow+ Payments for share price-based remuneration+ Payments for restructuring/severance/litigation+ Payments of other expenses associated with

M&A activities

Adjusted (operational) free cash flowdivided by total revenue in the period

= Adjusted (op’l) free cash flow as percentage of revenue

divided by the average number of shares outstanding in the period

= Adjusted (op’l) free cash flow per share

Share of recurringrevenue (accruing in the period)

ARR – annual recurring revenue(at quarter end)

Sum of recurring revenue ÷product revenue in the period= percentage of recurring revenue in the period

Total value of recurring revenue from contracts active at quarter end Individual contract duration in months x12

Achieved in the reported period

Forward-looking figure

÷÷


›Technology, portfolio, competition


Focus on well-defined markets

Drive convergence of integration & IoT

Expand cloud andedge scalability

Evolve analytics and solutions

PRODUCT PORTFOLIO STRATEGY

Integrateto

Innovate

Data

Clouds

Devices

Apps iPaasEAIB2B

IoT

AnalyticsDaaS

42 |

TRENDMINERTime-Series Analytics

BUILT.IOCloud Integration

CUMULOCITYInternet of Things

ZEMENTISArtificial Intelligence

APAMAStreaming Analytics

ALFABETIT Architecture Management

TERRACOTTABig Data (In-Memory)

ARISBusiness Process Analysis

WEBMETHODSIntegration Platform and BPM


2007 2009 2011 2013 2017 2018

OUR ACQUISITION STRATEGYBuy innovative technology and fully integrate with existing products

• Built to deliver on strategy direction; e.g. IoT hybrid integration• Tech tuck-ins to augment existing portfolio fit: e.g. real time data analytics• Purchase of expertise resources to leverage capabilities/capacities in growth segments• Prefer tested/partnered technology to reduce time to market

43 |

EAIB2BETL

ESBSOAMessaging

iPaaSAPI MgmtHybrid / EdgeIoTAnalytics

AI/MLDaaSBlockchainIoT Solutions

1990s 2020s

We are here.

Application-driven integration

Services-driven integration

Self-serviceintegration

Securely automated integration of

everything

CONVERGENCE OF INTEGRATION & IOT


Status of maturity

44 |

PRODUCT FOCUS AND R&D SHIFT

IoT & Analytics

Business Transformation

Adabas & Natural

Integration & API

ARIS

CUMOLOCITY IOT APAMA

WEBMETHODS.io

ALFABET

ADABAS & NATURAL

TRENDMINER

BUILT.io


ZEMENTIS


Integration & API

API Lifecycle Management MicroServices

App & Cloud Integration

B2B Integration

API Gateway & Portal

In Memory Data ManagementMessaging

+HYBRID

CLOUD

ONPREMISES

EDGE

EXTEND AND AMPLIFY CAPABILITIES

IoT &Analytics

Machine Learning Edge Services

Device Management

Streaming Analytics

Edge Analytics

Monitoring & Dashboarding

Self-service Industrial Analytics

BusinessTransformation

Business Strategy & Planning

Integrated Portfolio

Management

Design & Analysis

Enterprise Architecture Management

Process Mining

Risk & Compliance Management

StrategySynchronization


Gartner is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and is used herein with permission. All rights reserved.Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designations. Gartner research publications consist of the opinions of Gartner’s research organization and should not e construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.All statements in this report attributable to Gartner represent Software AG interpretation of data, research opinion or viewpoints published as part of a syndicated subscription service by Gartner, Inc., and have not been reviewed by Gartner. Each Gartner publication speaks as of its original publication date (and not as of the date of this Presentation/Factbook). The opinions expressed in Gartner publications are not representations of fact, and are subject to change without notice.

MAGIC QUADRANTS

For further information please follow the link: https://www.softwareag.com/corporate/company/awards_analyst/default.html.

PUT YOUR FAITH IN TECHNOLOGY LEADERSHIPConfirmed by market analyst recognition

The Forrester WaveTM: API Management Solutions, Q4 2018

The Forrester WaveTM: Industrial IOT Software Platforms, Q3 2018

The Forrester WaveTM: Op. Intelligence for B2B Integration, Q1 2018

The Forrester WaveTM: Digital Process Automation, Q3 2017

The Forrester WaveTM: Strategic Portfolio Management, Q3 2017

Integrated IT Portfolio Analysis Applications, November 2018

Enterprise Architecture Tools, October 2018

Full Life Cycle API Management, October 2019

The Forrester WaveTM: Enterprise Architecture Management Suites , Q1 2019

The Forrester WaveTM: iPaas And Hybrid Integration Platform Wave, Q1 2019 Enterprise Integration Platform as a Service (EiPaaS), April 2019

Industrial IOT Platforms, June 2019

The Forrester WaveTM: Streaming Analytics, Q3 2019

https://www.softwareag.com/corporate/company/awards_analyst/default.html

https://www.softwareag.com/corporate/company/awards_analyst/default.html


› Progress and financial performance

48 |

HELIX – EIGHT MONTHS INDelivering against commitments

Improve earnings quality

Enhance product strengths

Improve sales execution

Address issues in NAM

Evolve partner ecosystem

Invest in our team and culture

+12%YoY

DBP incl. IoT bookings as SaaS/subscription

Growth in ARR for DBP incl. IoT

63%

2 New products in recent weeks

83 New logos in Q3 CHRO Dr Elke Frank appointed

Pipeline conversion rate improved

Uplift in AE deal participation rates

NPS Net Promoter Score a record high in Q3

New logos in IoT 17 100 100 IoT specialists in

Consulting by year end

Excellent quarter for Gov Solutions


49 |

HEADLINE NUMBERSFY19 guidance ranges unchanged


Q3 +/- change as % acc

Group Revenue €224.2m +5%

Total Product Revenue €179.2m +5%

DBP Core €108.7m +1%

Cloud and IoT €8.6m –6%

A&N €62m +15%

EBIT (IFRS) €59m +8%*

9M +/- change as % acc

Group Revenue €635.6m +4%

Group Product Revenue €496.9m +5%

EBIT (IFRS) €148.9m +0%*

Non-IFRS EBITA Margin 27.7% –1.7ppt

Leading Indicators

ARR (DBP incl. IoT) +12% YoY

SaaS/Subs as % Bookings (DBP incl. IoT) 63%

*stated

50 |

DBP Total Revenue

Adabas & Natural

Operating Margin Group(EBITA non-IFRS)2)


OUTLOOKFull Year 2019

1) At constant currency rates2) Adjusted for non-operating items (see non-IFRS earnings results)

- DBP Cloud & IoT

- DBP (excl. Cloud & IoT)

FY 2018(in €m)

218.3

464.7

31.5%

30.3434.4

FY 2019 Outlook (*as of April 11, 2019;**as of July 18, 2019)

28% to 30%

–3% to +3%1) *

N/A

+75% to +125%1)

–6% to 0%1) **

FY 2019 Outlook (as of January 31, 2019)

28% to 30%

–5% to –0%1)

N/A

+75% to +125%1)

+3% to +7%1)

51 |

in €m, IFRS 2018 2017 2016 2015 2014

Total Revenue 865.7 879.0 871.8 873.1 857.8

BL Digital Business (DBP) 464.7 456.3 441.4 431.5 394.5

thereof Cloud & IoT 30.3 14.9 n/a n/a n/a

BL A&N 218.3 223.7 234.6 248.0 245.3

BL Professional Services 182.6 198.8 195.8 193.6 218.0

Group License 249.4 250.1 263.0 271.9 270.1

Group Maintenance 415.4 420.2 412.2 406.9 371.3

SaaS / Usage based 17.6 9.1 n/a n/a n/a

EBIT 231.6 222.8 213.9 209.4 176.0

EBITA (non-IFRS) 272.9 279.5 272.0 259.1 239.3

EPS (in €, non-IFRS) 2.64 2.38 2.37 2.22 1.96

Dividend cash out 52.5 44.3 41.9 39.5 39.5

Free cash flow 184.1 161.9 187.0 170.0 132.7

Net cash / (Net debt) 149.0 55.2 73.1 (25.7) (15.1)

Shareholders’ equity 1,239.1 1,118.3 1,196.8 1,089.8 1,013.4

Employees (FTE) 4,763 4,596 4,471 4,337 4,421

FINANCIAL DATA


Key figures

52 |

1. Return on equity: Operating EBIT / Equity2. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital)3. Current assets ./. Cash and Cash Equivalents ./. Current liabilities

4. Current assets ./. Current liabilities / Total revenue5. (Operating Cash flow ./. Capex) / Revenue.

IFRS unless stated different FY 2018 FY 2017 FY 2016 FY 2015 FY 2014Operating margin (EBITA, non-IFRS) 31.5 31.8 31.2 29.7 27.9

EBITDA margin 30.5 30.0 29.1 29.7 26.4EBIT margin 26.8 25.3 24.5 24.0 20.5ROE1 18.7 19.9 17.9 19.2 17.4ROCE2 16.4 18.0 15.2 16.1 12.6Net working capital (€m)3 -€225.8 -€298.1 -€200.2 -€155.9 -€98.1Working capital ratio4 27.3 7.7 20.0 16.6 25.7Free cash flow margin5 21.3 18.4 21.4 19.5 15.5Corporate tax rate (income and other taxes) 30.0 37.3 33.0 32.4 33.7WACC6 5.32 4.95 4.05 4.13 4.35Equity ratio 61.7 58.6 61.2 60.1 54.8DSO (Days Sales Outstanding) 103 103 113 111 115Capex (in €m) €11.0 €27.5 €16.7 €15.5 €10.5Capital employed7 (in €m) €1,408.9 €1,248.4 €1,381.9 €1,282.8 €1,326.0

KEY FINANCIAL RATIOS


in per cent of revenue

6. Pro forma, not applied for corporate management7. Fixed assets + Working capital

53 |

Euro35%

US Dollar25%

Sonstige21%

CURRENCY IMPACT ON REVENUE


Q3 2019 / YTD 2019 (9 months)

GBP 5%

Currency impact on revenue

33% revenue in Euro 67% revenue in foreign currency

Currency split YTD 2019

ILS 5%

(in €m; yoy)Q3

2019Q3

in %YTD2019

YTDin %

Licenses 2.5 4% 2.9 2%

Maintenance 2.3 2% 6.6 2%

SaaS 0.1 1% 0.3 2%

Professional Services & Other 1.0 2% 2.3 2%

Total 5.8 3% 12.2 2%

EUR33%

USD31%

Other26%

54 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

Product revenue 179.2 165.9 8% 5% 496.9 465.8 7% 5%

Licenses 64.1 56.7 13% 9% 156.9 144.4 9% 7%

Maintenance 109.3 104.7 4% 2% 323.9 308.8 5% 3%

SaaS / Usage based 5.8 4.5 28% 26% 16.0 12.6 27% 25%

Services 44.8 42.7 5% 3% 138.2 134.8 3% 1%

Other 0.2 0.2 — — 0.5 0.5 — —

Total 224.2 208.8 7% 5% 635.6 601.2 6% 4%

REVENUE


Q3 2019 / YTD 2019 (9 months)

55 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

DBP (excl. Cloud & IoT) 108.7 104.7 4% 1% 296.6 296.0 0% -2%

- thereof Licenses 37.9 37.1 2% -1% 87.9 96.2 -9% -10%

- thereof Maintenance 70.8 67.7 5% 3% 208.7 199.8 4% 2%

DBP Cloud & IoT 8.6 9.1 -5% -6% 31.0 20.7 50% 47%

Total revenue 117.4 113.8 3% 1% 327.6 316.7 3% 1%

Cost of sales -10.0 -8.5 18% 17% -28.9 -26.2 10% 9%

Gross profit 107.4 105.3 2% -1% 298.7 290.5 3% 0%

Sales & Marketing -46.4 -42.9 8% 6% -141.0 -123.7 14% 12%

Research & Development -25.6 -24.2 6% 3% -77.4 -71.1 9% 8%

Segment result 35.3 38.2 -8% -11% 80.3 95.7 -16% -19%

Margin in % 30.1% 33.6% 24.5% 30.2%

Annual Recurring Revenue as of September 30, 2019 334.0 290.3 15% 12%

DIGITAL BUSINESS PLATFORM (INCLUDING CLOUD & IoT)

Segment report Q3 2019 / YTD 2019 (9 months)


56 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

Licenses 1.2 3.6 -65% -66% 10.0 5.6 80% 78%

Maintenance 1.6 1.0 64% 62% 5.0 2.6 93% 91%

SaaS / Usage based 5.8 4.5 28% 26% 16.0 12.6 27% 25%

Total revenue 8.6 9.1 -5% -6% 31.0 20.7 50% 47%

Annual Recurring Revenue as of September 30, 2019 42.9 27.0 59% 56%

DBP CLOUD & IoT



57 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

Licenses 25.0 16.1 55% 48% 59.0 42.7 38% 36%

Maintenance 36.8 36.0 2% 0% 110.3 106.5 4% 2%

Product revenue 61.8 52.1 19% 15% 169.2 149.1 13% 12%

Other 0.2 0.2 — — 0.5 0.5 — —

Total revenue 62.0 52.3 19% 15% 169.7 149.6 13% 12%

Cost of sales -1.7 -1.9 -12% -14% -5.7 -4.6 24% 22%

Gross profit 60.3 50.4 20% 16% 164.0 145.0 13% 11%

Sales & Marketing -9.8 -8.7 13% 10% -25.4 -23.1 10% 8%


Segment result 43.7 35.8 22% 18% 119.6 104.5 14% 13%

Margin in % 70.5% 68.4% 70.5% 69.8%

ADABAS & NATURAL



58 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

Total revenue 44.8 42.7 5% 3% 138.2 134.8 3% 1%

Cost of sales -35.8 -33.3 7% 5% -107.2 -106.8 0% -1%

Gross profit 9.0 9.4 -4% -6% 31.0 28.0 11% 9%

Sales & Marketing -4.3 -4.0 7% 4% -12.9 -12.7 2% 0%

Segment result 4.7 5.4 -12% -10% 18.1 15.3 18% 20%

Margin in % 10.6% 12.5% 13.1% 11.4%

PROFESSIONAL SERVICES



59 |

(in €m) Q3 2019

Q32018

∆% ∆%acc

YTD2019

YTD2018

∆% ∆%acc

Total revenue 224.2 208.8 7% 5% 635.6 601.2 6% 4%

Cost of sales -49.5 -45.8 8% 6% -148.1 -143.7 3% 1%

Gross profit 174.7 163.0 7% 4% 487.5 457.4 7% 4%

Margin in % 77.9% 78.0% 76.7% 76.1%


Sales & Marketing -63.9 -58.9 9% 7% -189.5 -169.4 12% 10%

Administration -19.1 -19.2 0% -2% -54.3 -54.2 0% -1%

Other income / expense -0.2 -0.2 — — 1.6 3.5 — —

EBIT 59.0 54.5 8% 6% 148.9 148.8 0% -1%

Margin in % 26.3% 26.1% 23.4% 24.7%

RESULTS


Q3 2019 / YTD 2019 (9 months)

60 |

(in €m) Q32019

Q32018 ∆% YTD

2019YTD2018 ∆%

EBIT (before all taxes) 59.0 54.5 8% 148.9 148.8 0%

Amortization on acquisition related intangible assets 5.4 5.5 0% 16.4 16.0 3%

Share based payments 3.5 2.9 21% 8.3 8.9 -7%

Restructuring / severances / legal case 0.4 0.6 -38% 2.2 2.1 3%

Other impacts / impacts from M&A activities 0.1 0.3 -69% 0.3 0.7 -58%

EBITA (Non-IFRS) 68.4 63.8 7% 176.1 176.5 0%

in % of revenue (Non-IFRS) 30.5% 30.5% 27.7% 29.4%

Net income (Non-IFRS) 51.0 44.7 14% 126.6 123.4 3%

EPS in € (Non-IFRS)* €0.69 €0.60 14% €1.71 €1.67 3%

NON-IFRS EARNINGS


Q3 2019 / YTD 2019 (9 months)

* Weighted average shares outstanding (basic) Q3 2019: 74.0m / Q3 2018: 74.0m, YTD 2019: 74.0m / YTD 2018: 74.0m

61 |

(in €m) Q32019

Q32018 ∆% YTD

2019YTD2018 ∆%

Operating cash flow 33.4 38.6 -13% 124.0 133.7 -7%

./. CapEx* (long-term, non-current) -3.5 -2.2 -9.5 -8.7

./. Repayment of lease liabilities** -3.9 — -11.6 —

Free cash flow 26.0 36.4 -29% 102.9 125.0 -18%

Payment adjustments for

- Share based compensation 0.0 0.5 7.8 18.9

- Restructuring/ severances/ legal cases 0.3 0.9 8.2 3.9

- Payments of other expenses associated with M&Aactivities 0.0 0.3 0.0 0.3

Adjusted operational Free Cash flow 26.3 38.1 -31% 118.9 148.1 -20%

in % of revenue 11.7% 18.2% 18.7% 24.6%

Adjusted operational Free Cash flow per share*** €0.36 €0.51 -31% 1.61€ €2.00 -20%

CASH FLOW


Q3 2019 / YTD 2019 (9 months)

* 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) Q3 2019: 74.0m / Q3 2018: 74.0m; YTD 2019: 74.0m / YTD 2018: 74.0m

62 |

34.9

Sep 30,2019

Sep, 302019

Assets Liabilities

BALANCE SHEET


(in €m)

Dec 31,2018

Dec 31,2018

462.3

276.262.1

1,172.4

2,007.9

Cash and cash equivalents

Financial assetsTrade and other receivables

Fixed assets(Goodwill 992.4 / 964.4)

Total

Non-financial assets

313.3

316.0

139.5

1,239.1

2,007.9

Financial liabilities

Other liabilities

Deferred income

Shareholders’ equity (ratio 63.9% / 61.7%)

Total

518.9

263.578.1

1,220.1

2,103.9

23.3

340.5

265.8154.2

1,343.4

2,103.9

63 |

(in FTE) Sep 30,2019

Dec 31,2018

∆% Sep 30,2018

∆%yoy

Total 4,883 4,763 3% 4,714 4%

Professional Services 1,890 1,901 -1% 1,903 -1%

Research & Development 1,391 1,310 6% 1,269 10%

Sales & Marketing 963 926 4% 932 3%

Administration 640 626 2% 610 5%

Germany 1,269 1,243 2% 1,229 3%

USA 579 580 0% 581 0%

India 953 895 6% 859 11%

Rest of world 2,083 2,044 2% 2,045 2%

HEADCOUNT


By functional areas* and geography

* According to P+L structure

64 |

›Shares & ownership


65 |

34.0%

24.1%

34.5%

5.9%0.3%

Germany

North America

Continental Europe(excl. Germany)UK and Ireland

Rest of World

33.7%59.9%

Software AGFoundation

Own Shares (0.03%)

InstitutionalInvestors

Private Investors

Share DataSOW, SOW:GR, SOWGn.DE

ISIN: DE000A2GS401

ADR symbol: STWRY

Indices: MDAX, TecDAX, DAX100

Share InfoNumber of total shares: 74,000,000

Thereof Free Float: ~ 66%

Number of shares outstanding: ~ 74m

Registered shares since Oct. 2, 2017

Major Institutional Shareholders**BlackRock, Inc. 4.52%

Allianz Global Investors 3.06%

Axxion S.A. 2.97%

Norges Bank 2.87%

SHAREHOLDER STRUCTURE


Ownership* Regional Split**

**Institutional shareholders based on public files, October 2019

* shareholder structure based on share register, October 2019

66 |

0.37* 0.38*0.43* 0.46 0.46 0.46 0.50

0.550.60

0.650.71

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DIVIDEND POLICY


Focus on continuityDividend by fiscal year(in € per share)

*According to the 1:3 stock split, rounded

67 |

SOFTWARE AG FOUNDATION


Anchor Shareholder

One of Germany’s ten largest foundations(capital stock: €1bn+, Software AG shares and other assets)

Founded by Dr. h.c. Peter M. Schnell in 1992

Disburses financial support amounting to approx. €30 million annually

Imparts aid on principle of “self-help grant” (support of non-profit organizations)

Focuses on many projects in different areas, including:• science and research, environment• support for the elderly and disabled, support for children and young people• education and training


Code of Business Conduct and EthicsValues such as trust, respect, sincerity and transparency shape our international collaboration and business.

Promoting EmployeeEngagementWe foster our employees' personal and professional development.

Corporate University & University RelationsHelping universities and their students excel through grants and collaboration.

Software AGWe believe that moral principles and economic rewards not only go together, they belong together.

CORPORATE SOCIAL RESPONSIBILITY

Software AGFoundationOne of Germany’s largest charities & major shareholder of Software AG

Creating sustainable value

69 |

ANALYST COVERAGE


Baader Helvea E.R.Barclays CapitalBryan, Garnier & CoCommerzbankCrédit SuisseDeutsche BankDZ Bank

Pareto Securities ASGoldman SachsHauck & AufhäuserHSBCIndependent ResearchJ.P. Morgan CazenoveKepler Cheuvreux

LBBW MainFirst Bank AGMetzlerMorgan StanleySociété GénéraleUBS I.R.Warburg Research

For the latest consensus of analysts‘ financial estimates please visit our IR website

Banks / Broker who cover Software AG on a regular base

https://investors.softwareag.com/en

70 |

INVESTOR RELATIONS


Uhlandstrasse 1264297 DarmstadtGermany

phone: +49 (0) 6151 / 92 1900fax: +49 (0) 6151 / 9234 1900 softwareag.come-mail: [email protected]

mailto:[email protected]


Documents

Factbook - Software AG/media/Files/S/Software-AG-IR... · • Company foundation: May 30, 1969 • IPO at Frankfurt Stock Exchange: April 26, 1999 ( MDax) › Our history: We are