Factbook by investor relations - May 2020 - Software AG
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›Factbook by investor relations May 2020 © Copyright 2020 Software AG. All rights reserved.
SAFE HARBOR STATEMENT 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 techno- logies 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 | © Copyright 2020 Software AG. All rights reserved.
TABLE OF CONTENT Go directly
to chapter ¦
› At a glance ………………………………………… 4
› Strategy, markets, trends ………………………… 9
› GTM, sales execution, partner ecosystem …….. 20
› Financial targets, key performance indicators … 27
› Technology view, portfolio, competition ………... 39
› Progress 2019 and financial performance …….. 48
› Shares, ownership and CSR ……………………. 65
3 | © Copyright 2020 Software AG. All rights reserved.
› At a glance
Back to ToC ¦
4 | © Copyright 2020 Software AG. All rights reserved.
+ • Company foundation:
May 30, 1969
• IPO at Frankfurt Stock Exchange:
April 26, 1999 (MDax)
Our History
Our Vision
We are data pioneers
We unlock the power of data
to shape a better future
Our Promise
We offer freedom as a Our Mission
service
We empower customers to
turn data into value
Our Purpose
We connect technology and
people for a smarter tomorrow
5 | © Copyright 2020 Software AG. All rights reserved.
COMPANY BREAKDOWN
Software AG in figures
€m 890+ Revenue 4900+
€m 488 Annual Recurring Revenue Revenue by Employees** by
Product revenue Region Function
(76% recurring) EMEA: 53% R&D: 29%
thereof Germany: 13% S&M: 19%
Digital Business: 53%
recurring rev. growth*: 10% Americas: 38%
Professional Services: 39%
segment margin: 28% APJ: 9%
Admin: 13%
Adabas & Natural: 26%
recurring rev. growth*: 5%
segment margin:70%
Industry Country
Services revenue
Government: 20% Germany: 26%
Professional Services: 21%
rev. growth*: 1% Finance: 20% India: 20%
segment margin: 12%
IT Services: 16% USA: 12%
Manufacturing: 12% Other: 42%
Services 11%
Other: 21%
All figures based on FY 2019 | * yoy at constant currency ** FTE as of December 31, 2019
6 | © Copyright 2020 Software AG. All rights reserved.
BUSINESS LINES
Growth, heritage and enablement as pillars of our success
Product Units Professional
Services
Growth Heritage Enablement
Business
Trans- Sales success,
formation
Adabas
IoT & & Natural Customer and
Analytics Partner Solutions
Integration
& API
• Data Management
• Application
Digital Development
Business Cloud & IOT • Support 2050+
7 | © Copyright 2020 Software AG. All rights reserved.
THE SOFTWARE AG EXECUTIVE BOARD
An experienced and energized leadership team
Sanjay Brahmawar Dr. Elke Frank Dr. Matthias Heiden John Schweitzer Dr. Stefan Sigg
Chief Executive Officer Chief Human Resources Officer Chief Financial Officer Chief Revenue Officer Chief Product Officer
—since 2018— —since 2019— —as of July 2020— —since 2018— —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
8 | © Copyright 2020 Software AG. All rights reserved.
› Strategy, markets, trends
Back to ToC ¦
9 | © Copyright 2020 Software AG. All rights reserved.
STRATEGIC DIRECTION
On Apps
premise
Positioning WE INTEGRATE Data Clouds
Devices
Hybrid Integration | Vendor Neutrality / Freedom of Choice
Products 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
GTM NEW: Partner | Platforms (white label, OEM: Siemens, Adamos, etc. / IoT)
NEW: Reseller | Marketplaces (AWS, Microsoft, etc. / IoT, Hybrid Integration)
Establishing growth mentality
Team &
Reviving pioneering spirit
Culture Fostering talent development
10 | © Copyright 2020 Software AG. All rights reserved.STATUS 2019 – WHERE WE STARTED
WHAT WORKS WHAT WE MUST WORK ON
Integral & Product Essence & Growth in
Best in Class Growth
Trusted Strength Identity Growth Markets
Strong Financial Solid Silos & GTM & Product
Cash Flow Strength Balance Sheet Complexity Operations Focus
Diversity & Cultural Creativity & Partner
Geography Focus
Opportunity Strength Flexibility Ecosystem
11 | © Copyright 2020 Software AG. All rights reserved.THREE LEVERS TO DELIVER
+ +
FOCUS EXECUTION TEAM
• High Growth Products • Go-to-Market • Operating Model
• Right Geographies • Shift to Subscription • Employer Brand
• Partners to Scale • Sales Incentives • Pioneering Spirit
12 | © Copyright 2020 Software AG. All rights reserved.EVOLVING OUR HELIX JOURNEY
Investing in momentum and impact
Lay Foundation Build Momentum Accelerate toward €1bn
2019 2020 2021 – 23
Sub-
Product
scription
Focus
Shift
People & Market
Culture Focus
Partner-
Sales
ships to
Excellence
Scale
13 | © Copyright 2020 Software AG. All rights reserved.ROUTES TO OUR AMBITION
Focus on key products that Focus on Tier 1 countries
drive revenue model Focused sales investments
Products Re-allocation of resources Geographic
Increased productivity
(R&D) Focus
Increase deal value IoT Partnerships & White Labelling
Upscale into existing customer base Scaling through partnerships
Sales Cross-sell into A&N base
OEM Driving relevant IoT platforms
Execution Sales efficiency
Available on major cloud market places
New business / new logos
Customer driven innovation Customer Success Team
Deepen product knowledge in sales Realize upsell potential
Operating Strengthen entrepreneurial ownership Higher retention rate
Subscription
Model Higher visibility, reduced volatility
More customer touchpoints
14 | © Copyright 2020 Software AG. All rights reserved.TARGET MARKETS
Of CIOs say their
Integration IoT & Analytics
business model
49% has changed or is
changing 2022 2023
- Gartner CIO Survey 2019
Annual total $18bn $25.6bn
$3.9tr - potential
$11.1tr pa economic impact
of IoT by 2025
- McKinsey 2017 2017
+50% +18% CAGR
The total digital $12bn Integration Platform $9.5bn IoT Platform
transformation Market TAM 2018TAM
-
$1.37bn
market in 2022 2023
- IDC forecast Source: Gartner Source: McKinsey
15 | © Copyright 2020 Software AG. All rights reserved.INTEGRATION TRENDS DRIVING OUR STRATEGY
EXISTING CUSTOMER BASE
—PAST— —FUTURE—
On-premise systems Cloud-enabled systems
Perpetual licenses Hybrid Subscription-based
Integration
On
Cloud
premise
iPaas
New Clients
webMethods webMethods.io
since 2007 start 2019
16 | © Copyright 2020 Software AG. All rights reserved.IOT TRENDS DRIVING OUR STRATEGY
Security & Distributed
Governance Architectures
Intelligent End-to-End
Things IoT Solutions
Open & OT / IT
Extensible Convergence
17 | © Copyright 2020 Software AG. All rights reserved.IOT BUSINESS IMPACT
63%
Reduce costs of CEOs perceive IoT
• Increase efficiencies to have a significant
• Preventative maintenance material business impact
• Asset optimization
42%
of organizations have
Engage customers deployed at least one
• New customer services IoT use case
• Better customer experience
• Increase customer retention
80%
of organizations with
implemented IoT have
Increase sales realized greater value than
• New business models expected
• “Assets-as-a-service”
• Staying competitive
Source: Gartner
18 | © Copyright 2020 Software AG. All rights reserved.USE CASES THAT WILL DRIVE IOT GROWTH
Most relevant industries
Discrete manufacturing
Process industry
Utilities
Energy & natural resources
Transportation & Logistics
Healthcare
Retail
Sources: BCG Internet of Things buyer
survey; IDC; expert interviews, BCG analysis
19 | © Copyright 2020 Software AG. All rights reserved.› GTM, sales execution,
partner ecosystem
Back to ToC ¦
20 | © Copyright 2020 Software AG. All rights reserved.EVOLVING SALES AND GO-TO-MARKET
Customer
Specialization
Experience
MARKET Alliances and
Geographies
IMPACT Channels
Sales Sales
Coverage Operations
21 | © Copyright 2020 Software AG. All rights reserved.FOCUSED GEOGRAPHY
Germany NAM China
Biggest Best
market established France UK Japan
opportunity footprint
Spain Brazil Korea
Italy Switzerland Australia
= BIGGEST MARKET IMPACT BeNeLux South Africa UAE
Sweden
22 | © Copyright 2020 Software AG. All rights reserved.STRATEGIC PARTNERSHIPS
New solution delivers a Software AG application Connect customer data Joint plug-and-play
connected ecosystem in integration, API from across multiple solutions offering scalable,
Microsoft Azure for faster, management, process enterprise systems into a powerful quick start to IoT
safer, more manageable design / transformation, centralized and actionable projects
migrations while ensuring analytics, data real-time customer profile
business continuity management available via
AWS container
marketplace
23 | © Copyright 2020 Software AG. All rights reserved.ALLIANCES AND CHANNELS
Building for growth: mid-term CAGR 40%+
SYSTEM INTEGRATORS RESELLERS AND DISTRIBUTORS
INDEPENDENT SOFTWARE TECHNOLOGY
OEMs
VENDORS ALLIANCES
24 | © Copyright 2020 Software AG. All rights reserved.SALES OPERATIONS
Metrics Demand Generation Sales Methodology Simplification
Sales playbook Planning and Quoting tools,
Leading and
and improved continuous approvals, contracts,
lagging indicators
lead flow enablement revenue recognition
Increase Drive
Maximize pipeline: Simpler, faster
accountability: alignment:
volume, quote to cash
analyze, plan, resources and
conversion process
adjust efficiency
25 | © Copyright 2020 Software AG. All rights reserved.SALES AND GTM TRANSFORMATION
Specialization
Geographies
Relative Impact
Sales Coverage
Customer Experience
Alliances and Channels
Sales Operations
2019 2020 2021 2022 2023
26 | © Copyright 2020 Software AG. All rights reserved.› Financial targets,
key performance indicators
Back to ToC ¦
27 | © Copyright 2020 Software AG. All rights reserved.FINANCIAL YEAR 2020
Outlook adjusted for Corona impacts
Medium-term
FY 2020 Outlook FY 2020 Outlook ambitions unchanged
(as of January 29, 2020) (as of April 23, 2020)
2023
€1bn
DBP excl. Cloud & IoT – Product Bookings +10% to +15%1 +0% to +10%1 Revenue
DBP Cloud & IoT – Product Bookings +40% to +60%1 +20% to +40%1 25–30%
Operating
Margin
A&N – Product Bookings -3% to +3%1 -3% to +3%1
85–90%
Recurring
Operating Margin (EBITA, non-IFRS)2 20% to 22% 20% to 22% Product
Revenue
1 Growth at constant currency
2 Adjusted for non-operating factors (see non-IFRS earnings definition in the 2019 annual report on p. 50f)
28 | © Copyright 2020 Software AG. All rights reserved.STRATEGY GOALS
Our medium term financial targets
Group 85% – 90%
Revenue Recurring
€1B+ Product
Accelerated growth Revenue
Reduced volatility
Quality revenue 2023
Attractive margins
Strong cash generation 25 – 30% Digital
Operating Business
Margin ~15% CAGR
29 | © Copyright 2020 Software AG. All rights reserved.SWITCH TO SUBSCRIPTION – New KPI Bookings to track customer adoption and sales success
KPI BOOKINGS Definition per Deployment Model
DEPLOYMENT CONSIDERED FOR BOOKING
SALES EVENT
MODEL BOOKINGS CALCULATION
Bookings defined
Total License Value
NEW plus 3 Years annual Maintenance1
as … the normalized
PERPETUAL 3-years’ commitment of
RENEWALS
(MAINTENANCE) No impact on Bookings a customer for our
products. It does not
NEW Annual Contract value make any difference
SUBSCRIPTION times 3 years2 whether the customer
(ACV x 3)
RENEWALS consumes the products
as a perpetual license,
NEW Annual Contract value a subscription or as
SAAS times 3 years2 a service.
(ACV x 3)
RENEWALS
DEPLOYMENT MODEL REVENUE RECOGNITION
PERPETUAL Licenses: upfront Maintenance: pro-rata
Licenses: upfront
SUBSCRIPTION Maintenance: pro-rata
for period of commitment
1 Only new Maintenance is considered for Bookings. In case of License without Maintenance contracts, only License value is considered for Bookings
2 Annual Contract Value (ACV) equals Total Contract Value (TCV) divided by contract duration; For contracts with a duration of 90 - 365 days, the TCV is considered for Bookings;
Contracts with a duration smaller 90 days are not considered for Bookings
30 | © Copyright 2020 Software AG. All rights reserved.FROM BOOKINGS TO REVENUE
Revenue recognition differs per deployment model
BOOKINGS REVENUE
FACTORS*
VALUE RECOGNIZED for YEAR 1
YEAR 2
Deployment Model PERPETUAL
~ 0,7 ~0,1
1€ Booking = ~0,7€ Revenue
~50% of subscription contracts
with annual termination rights
SUBSCRIPTION ~ 0,7 ~0,1
Normalized Seasonality*
SUBSCRIPTION
with annual termination right
~ 0,3 ~0,3
SAAS ~ 0,2 ~0,3
REVENUE FACTOR * Pro-Rata components (applicable for Maintenance & SaaS) are considered with
an assumed contract start date July 1st. Therefore 50% of 1st year amount is
per Deployment Model considered in Factor for Year 1
31 | © Copyright 2020 Software AG. All rights reserved.FROM BOOKINGS TO REVENUE: DETAILED CALCULATIONS
Product Bookings
EXAMPLES YEAR 1 YEAR 2
LICENSE: 1000 / 1600 = 0.625
PERPETUAL / MAINTENANCE: (200 / 2) * (1 / 1600) = 0.063 200 / 1,600 = 0.125
SUBSCRIPTION
without annual
cancellation TOTAL: 0.625 + 0.063 = 0.688
= ~ 0.7 = ~ 0.1
LICENSE: 333 / 1600 = 0.208 333 / 1600 = 0.208
SUBSCRIPTION MAINTENANCE: (200 / 2) * (1 / 1600) = 0.063 200 / 1,600 = 0.125
with annual
cancellation TOTAL: 0.208 + 0.063 0.208 + 0.125 = 0.333
= 0.271
= ~ 0.3
= ~ 0.3
32 | © Copyright 2020 Software AG. All rights reserved.FROM BOOKINGS TO REVENUE – MID-TERM
Recurring Revenue share increasing*
DEPLOYMENT MODEL PRODUCT BOOKINGS PRODUCT REVENUE
YEAR 1 Y2 Y3 Y4 YEAR 1 Y2 Y3 sum Y1-Y3 Y4 Y5 Y6 sum Y4-Y6
PERPETUAL 1.600 - - - 1.200 200 200 1.600 200 200 200 600
SUBSCRIPTION 1.600 - - 1.600 + 1.200 200 200 1.600 1.200 + 200 + 200 + 1.600 +
SUBSCRIPTION 1.600 - - 1.600 + 533 533 533 1.600 533 + 533 + 533 + 1.600 +
with annual termination right
SAAS 1.600 - - 1.600 + 533 533 533 1.600 533 + 533 + 533 + 1.600 +
TOTAL 6.400
* Example calculation per deployment model. (Contract start date Jan 1st)
33 | © Copyright 2020 Software AG. All rights reserved.EXPECTED DEPLOYMENT MIX 2020*
SEGMENT
Digital Business TOTAL
Adabas &
Platform Cloud & IoT PRODUCT
DEPLOYMENT Natural BUSINESS
(excl. Cloud & IoT)
MODEL
PERPETUAL 40 - 50 % 5 - 10 % 90 - 100 % 50%
SUBSCRIPTION 50 - 60 % 40 - 50 % 0 - 10 % 40%
SAAS 50 - 55 % 10%
* Based on FY 2020 bookings / not applicable per quarter
34 | © Copyright 2020 Software AG. All rights reserved.BOOKINGS 2019
TOTAL
Q1 Q2 Q3 Q4
YEAR
Digital Business Platform
34.9 43.7 58.8 103.7 241.1
(excluding Cloud & IoT)
IoT & Cloud 14.1 17.9 14.8 19.1 65.9
Adabas & Natural 21.4 21.9 28.3 29.2 100.8
* Applies to Subscription & SaaS contracts: Annual Contract Value (ACV) equals Total Contract Value (TCV) divided by contract duration; For contracts with a duration of
90 - 365 days, the TCV is considered for Bookings; Contracts with a duration smaller 90 days are not considered for Bookings.
35 | © Copyright 2020 Software AG. All rights reserved.RECURRING REVENUE
Subscription accelerates growth
Product Revenue
2023
2019
2014
5 financial years 4 financial years
58%
85% – 90%
76%
Share of Recurring Revenue Group
36 | © Copyright 2020 Software AG. All rights reserved.FIRST FINANCIAL IMPACT AND PHASING PER ROUTE
higher
Sales Subscription OEM
Execution
Relative Impact
Operating
R&D
Model
Geographic Focus
lower
2019 2020 2021 2022 2023
37 | © Copyright 2020 Software AG. All rights reserved.LEADING INDICATORS TO TRACK OUR PROGRESS
Bookings and Recurring Revenue
Bookings Recurring Revenue
(normalized across 3 years) (calculation and reporting)
Licenses of indefinite Total contract value
• Subscription-based revenue including the licenses and maintenance
duration
• Software as a Service (SaaS) revenue
Maintenance services Three years of maintenance
with new Services • Maintenance revenue related to license agreements of indefinite
licenses of indefinite duration
duration • Usage-based revenue from licenses and maintenance
Subscription Contract value divided by the
agreements term of agreement, multiplied by
three years
Share of recurring revenue ARR – annual recurring revenue
Software as a Service Contract value divided by the (accruing in the period) (at quarter end)
(SaaS) term of agreement, multiplied by
three years Sum of recurring revenue Total value of recurring revenue
divided by from contracts active at quarter end
Usage-based license Difference between usage product revenue in the period divided by
models determined at the end of a equals Individual contract duration in
including maintenance quarter and beginning of quarter, percentage of recurring revenue months times12
multiplied by four (quarters), in the period
multiplied by three years
Achieved in the reported period Forward-looking figure
38 | © Copyright 2020 Software AG. All rights reserved.› Technology, portfolio,
competition
Back to ToC ¦
39 | © Copyright 2020 Software AG. All rights reserved.PRODUCT PORTFOLIO STRATEGY
Focus on well- IoT
defined markets
Drive convergence of Devices
integration & IoT
Expand cloud and EAI
Integrate
Apps to Clouds iPaas
edge scalability B2B
Innovate
Evolve analytics
and solutions
Data
Analytics
DaaS
40 | © Copyright 2020 Software AG. All rights reserved.UNIQUELY POSITIONED TO COVER THE WHOLE STACK
Focus on self-service & fast time-to-market
Enterprise / Cloud
Real-time data
B2B
Integration &
Messaging
Integration & Historical data
Historical
Messaging
Device Mgmt &
Connectivity
Data Hub
41 | © Copyright 2020 Software AG. All rights reserved.CONVERGENCE OF INTEGRATION & IOT
Status of maturity
AI/ML
DaaS
Blockchain
iPaaS
IoT Solutions
API Mgmt
Hybrid / Edge
ESB
IoT
SOA
Analytics
Messaging
EAI
B2B
ETL
We are here.
Securely automated
Application-driven Services-driven Self-service
integration of
integration integration integration
everything
1990s 2020s
42 | © Copyright 2020 Software AG. All rights reserved.OUR ACQUISITION STRATEGY
Buy innovative technology and fully integrate with existing products
WEBMETHODS ARIS TERRACOTTA APAMA CUMULOCITY TRENDMINER
Integration Platform Business Process Big Data (In-Memory) Streaming Analytics Internet of Things Time-Series
and BPM Analysis Analytics
ALFABET ZEMENTIS
IT Architecture Artificial Intelligence BUILT.IO
Management Cloud Integration
2007 2009 2011 2013 2017 2018
• 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 | © Copyright 2020 Software AG. All rights reserved.PRODUCT FOCUS AND R&D SHIFT
WEBMETHODS.io
Integration & API
BUILT.io
TRENDMINER ZEMENTIS
IoT & Analytics
CUMOLOCITY IOT APAMA
Business Transformation ARIS ALFABET
Adabas & Natural ADABAS & NATURAL
44 | © Copyright 2020 Software AG. All rights reserved.EXTEND AND AMPLIFY CAPABILITIES
Integration IoT & Business
& API Analytics Transformation
EDGE
App & Cloud Integration Device Management Design & Analysis
API Gateway & Portal Edge Analytics Process Mining CLOUD
B2B Integration Streaming Analytics Enterprise Architecture Management
+
HYBRID
Business Integrated
API Lifecycle Machine
MicroServices Edge Services Strategy & Portfolio
Management Learning
Planning Management
Self-service Risk & ON
In Memory Data Monitoring & Strategy PREMISES
Messaging Industrial Compliance
Management Dashboarding Synchronization
Analytics Management
45 | © Copyright 2020 Software AG. All rights reserved.KEY INNOVATIONS
DELIVERED IN 2019 PRIORITIES FOR 2020 AND BEYOND
webMethods.io API webMethods.io App Mesh
Full lifecycle API Gateway and Closing the semantic gap between
Portal applications and the Service Mesh
webMethods.io Cumulocity IoT Solution
Self-service Hybrid Integration Accelerators
and Integration-as-a-Service
Ready-to-run IoT solutions
Thought
TrendMiner ContextHub Focus drives webMethods.io Data Hub leadership and
Self-service root cause analytics ability to Scalable Big Data layer for integration data
excellence
for time-series data execute
delivery
Cumulocity IoT Data Hub Cumulocity IoT Security
Scalable and cost-effective Certificate lifecycle management
Cloud Big Data solution
webMethods.io B2B Cumulocity IoT and TrendMiner
Next generation business-to- End-to-end integrated analytics and AI/ML
business integration based on IoT data
46 | © Copyright 2020 Software AG. All rights reserved.PUT YOUR FAITH IN TECHNOLOGY LEADERSHIP
Confirmed by market analyst recognition
MAGIC QUADRANTS
The Forrester WaveTM: Strategic Portfolio Management, Q4 2019 Enterprise Architecture Tools, October 2019
The Forrester WaveTM: Streaming Analytics, Q3 2019 Full Life Cycle API Management, October 2019
The Forrester WaveTM: Enterprise Architecture Management Suites , Q1 2019 Industrial IOT Platforms, June 2019
The Forrester WaveTM: iPaas And Hybrid Integration Platform Wave, Q1 2019 Enterprise Integration Platform as a Service (EiPaaS), April 2019
The Forrester WaveTM: API Management Solutions, Q4 2018 Integrated IT Portfolio Analysis Applications, November 2018
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.
The Forrester WaveTM: Industrial IOT Software Platforms, Q3 2018
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.
The Forrester WaveTM: Op. Intelligence for B2B Integration, Q1 2018 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
The Forrester WaveTM: Digital Process Automation, Q3 2017 Presentation/Factbook). The opinions expressed in Gartner publications are not representations of fact, and are subject
to change without notice.
For further information please follow the link: https://www.softwareag.com/corporate/company/awards_analyst/default.html.
47 | © Copyright 2020 Software AG. All rights reserved.› Progress 2019 and
financial performance
Back to ToC ¦
48 | © Copyright 2020 Software AG. All rights reserved.HELIX – YEAR ONE (2019)
OUR TRANSFORMATION IS WORKING
Helix foundations laid Subscription transition advanced
4 Major focus areas +10% Growth in ARR for DBP
YoY inc. IoT
95% Year one workstreams 51.5% DBP inc. IoT bookings
completed as SaaS/Subscription
Brought clarity to product set Partner ecosystem evolving
40 SKUs, streamlined from Blue-chip partnerships secured
900+
NPS Q4 and FY product NPS First Adobe OEM deals closed
both at record highs in Q4, contributing revenue
Sales effectiveness improved
Fitter
342
New Logos in 2019 2020 Sharper
Beating competition & taking
Hungrier for growth
share
49 | © Copyright 2020 Software AG. All rights reserved.HEADLINE NUMBERS
EXECUTING TO DELIVER STRONG RESULTS
Q1 2020 +/- change as % acc FY 2019 +/- change as % acc
Group Revenue € 207.0m +2% Group Revenue €890.6m +1.0%
Group Product Revenue € 160.9m +4% Group Product Revenue €702.7m +1.0%
DBP incl. IoT € 103.5m +3% EBIT (IFRS) €214.8m -10%
A&N € 57.5m +5% Non-IFRS EBITA Margin 29.2%
EBIT (IFRS) € 28.7m -32%
Non-IFRS EBITA Margin 19.2%
Bookings KPIs – Q1
DBP incl. IoT € 58.1m +19% YoY
Leading Indicators – Q1
IoT Bookings € 23.5m +65% YoY
ARR (DBP incl. IoT) +11% YoY DBP Core Bookings € 34.6m +1% YoY
A&N Bookings € 32.0m +47% YoY
SaaS/Subs as % Bookings (DBP incl. IoT) 69%
50 | © Copyright 2020 Software AG. All rights reserved.CURRENCY IMPACT ON REVENUE
Q1 2020 / FY 2019
33% revenue in Euro
67% revenue in foreign currency
Currency impact on revenue
Sonstige Q1 Q1 FY FY
Other
21% Euro (in €m; yoy) 2020 in % 2019 in %
25% 35%
EUR
33% Licenses 0.1 0% 4.8 2%
GBP 5% Maintenance 0.5 1% 8.1 2%
ILS 6% SaaS 0.0 1% 0.4 2%
US USD
Dollar
25%
31% Professional Services
0.6 1% 3.2 2%
& Other
Total 1.3 1% 16.5 2%
Currency split FY 2019
51 | © Copyright 2020 Software AG. All rights reserved.GROUP REVENUE GROWTH IN SPITE OF TRANSFORMATION
Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% FY FY ∆% ∆%
2020 2019 2019 2018 acc
Bookings 90.1 70.3 28% 407.8 - - -
Product revenue 160.9 154.5 4% 702.7 682.3 3% 1%
Licenses 46.7 42.6 10% 245.1 249.4 -2% -4%
Maintenance 107.3 107.1 0% 435.0 415.4 5% 3%
SaaS / Usage based 6.9 4.7 42% 22.7 17.6 29% 27%
Services 46.0 46.7 -2% 187.2 182.5 3% 1%
Other 0.1 0.2 -20% 0.7 0.9 - -
Total 207 201.4 2% 890.6 865.7 3% 1%
52 | © Copyright 2020 Software AG. All rights reserved.DIGITAL BUSINESS PLATFORM (INCLUDING CLOUD & IoT)
Segment report Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% ∆% FY FY ∆% ∆%
2020 2019 acc 2019 2018 acc
Bookings 58.1 48.9 19% 19% 307 - - -
Licenses 25.1 24.8 1% 2% 151.3 166.2 -9% -11%
Maintenance 71.4 70.3 2% 1% 280.9 268.2 5% 3%
SaaS 6.9 4.9 42% 41% 42.3 30.3 39% 38%
Total revenue 103.5 100.0 4% 3% 474.5 464.7 2% 0%
Cost of sales -11.5 -9.3 23% 23% -40.6 -35.9 13% 12%
Gross profit 92.0 90.6 2% 1% 433.9 428.8 1% -1%
Sales & Marketing -50.7 -45.8 11% 10% -198.2 -181.2 9% 7%
Research & Development -28.0 -27.4 2% 0% -105.1 -100.6 4% 4%
Segment result 13.4 17.5 -23% -21% 130.6 147.0 -11% -14%
Margin in % 12.9% 17.5% 27.5% 31.6%
Annual Recurring Revenue
341.0 308.6 11% 11%
as of March 31, 2020
53 | © Copyright 2020 Software AG. All rights reserved.DBP CLOUD & IoT
Segment report Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% ∆% FY FY ∆% ∆%
2020 2019 acc 2019 2018 acc
Bookings 23.5 14.1 67% 65% 65.9 - - -
Licenses 6.5 3.1 112% 107% 6.5 8.7 45% 44%
Maintenance 2.0 1.6 28% 27% 2.0 4.1 72% 71%
SaaS / Usage based 6.9 4.9 42% 41% 6.9 17.6 29% 27%
Total revenue 15.4 9.5 62% 60% 15.4 30.3 39% 38%
Annual Recurring Revenue
45.8 36.2 26% 27%
as of March 31
54 | © Copyright 2020 Software AG. All rights reserved.ADABAS & NATURAL
Segment report Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% ∆% FY FY ∆% ∆%
2020 2019 acc 2019 2018 acc
Bookings 32.0 21.4 49% 47% 100.8 - - -
Licenses 21.5 17.8 21% 20% 81.2 74.4 9% 7%
Maintenance 35.9 36.8 -3% -2% 147.0 143.2 3% 1%
Product revenue 57.4 54.6 5% 5% 228.2 217.6 5% 3%
Other 0.1 0.2 - - 0.7 0.7 — —
Total revenue 57.5 54.7 5% 5% 228.9 218.3 5% 3%
Cost of sales -2.6 -2.2 16% 17% -8.1 -6.3 29% 27%
Gross profit 55.0 52.5 5% 4% 220.9 212.1 4% 2%
Sales & Marketing -9.3 -7.4 26% 26% -34.9 -32.8 6% 5%
Research & Development -8.5 -5.9 44% 43% -26.2 -23.8 10% 7%
Segment result 37.2 39.3 -5% -5% 159.8 155.4 3% 1%
Margin in % 64.6% 71.7% 69.8% 71.2%
55 | © Copyright 2020 Software AG. All rights reserved.PROFESSIONAL SERVICES
Segment report Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% ∆% FY FY ∆% ∆%
2020 2019 acc 2019 2018 acc
Total revenue 46.0 46.7 -2% -3% 187.2 182.6 2% 1%
Cost of sales -39.2 -35.7 10% 8% -146.2 -144.9 1% -1%
Gross profit 6.8 11.0 -39% -39% 41.0 37.8 9% 7%
Sales & Marketing -4.4 -4.3 3% 2% -18.2 -17.4 5% 3%
Segment result 2.4 6.7 -65% -65% 22.7 20.3 12% 11%
Margin in % 5.1% 14.4% 12.1% 11.1%
56 | © Copyright 2020 Software AG. All rights reserved.RESULTS
Q1 2020 / FY 2019
(in €m) Q1 Q1 ∆% ∆% FY FY ∆% ∆%
2020 2019 acc 2019 2018 acc
Total revenue 207.0 201.4 3% 207.0 890.6 865.7 3% 1%
Cost of sales -55.3 -49.5 12% -55.3 -203.1 -195.0 4% 3%
Gross profit 151.8 152.0 0% 151.8 687.5 670.7 2% 0%
Margin in % 73.3% 75.4% 73.3% 77.2% 77.5% — —
Research & Development -36.5 -33.3 10% -36.5 -131.3 -124.4 6% 4%
Sales & Marketing -66.0 -60.8 8% -66.0 -265.0 -244.7 8% 6%
Administration -21.4 -17.6 22% -21.4 -74.8 -74.0 1% 0%
Other income / expense 0.9 2.0 - 0.9 -1.6 3.9 — —
EBIT 28.7 42.2 -32% 28.7 214.8 231.6 -7% -10%
Margin in % 13.9% 21.0% 13.9% 24.1% 26.8%
57 | © Copyright 2020 Software AG. All rights reserved.NON-IFRS EARNINGS
Q1 2020 / FY 2019
(in €m) Q1 Q1 FY FY
∆% ∆%
2020 2019 2019 2018
EBIT (before all taxes) 28.7 42.2 -32% 214.8 231.6 -7%
Amortization on acquisition related intangible assets 3.6 5.6 -35% 21.9 21.1 4%
Share based payments 3.2 2.5 28% 11.3 11.0 3%
Restructuring / severances / legal case 3.8 1.1 233% 9.0 6.9 31%
Other impacts / impacts from M&A activities 0.4 0.2 108% 3.2 2.3 35%
EBITA (Non-IFRS) 39.7 51.6 -23% 260.3 272.9 -5%
in % of revenue (Non-IFRS) 19.2% 25.6% 29.2% 31.5%
Net income (Non-IFRS) 27.9 36.3 -23% 188.1 195.0 -4%
EPS in € (Non-IFRS)* 0.38€ 0.49€ -23% 2.54€ 2.64€ -4%
* Weighted average shares outstanding (basic) Q1 2020: 74.0m / Q1 2019: 74.0m; FY 2019: 74.0m / FY 2018: 74.0m
58 | © Copyright 2020 Software AG. All rights reserved.CASH FLOW
Q1 2020 / FY 2019
(in €m) Q1 Q1 FY FY
∆% ∆%
2020 2019 2019 2018
Operating cash flow 61.5 60.0 2% 172.0 195.1 -12%
./. CapEx* (long-term, non-current) -5.5 -2.2 -10.0 -11.0
./. Repayment of lease liabilities** -4.0 -3.3 -16.2 —
Free cash flow 52.0 54.5 -5% 145.8 184.1 -21%
Payment adjustments for
- Share based compensation 7.5 22.3
- Restructuring/ severances/ legal cases 8.4 8.6
- Payments of other expenses associated with M&A
0.2 0.3
activities
Adjusted operational Free Cash flow 161.9 215.3 -25%
in % of revenue 18.2% 24.9%
Free Cash flow per share*** €0.70 €0.74 -5% €2.19 €2.91 -25%
* 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) Q1 2020: 74.0m / Q1 2019: 74.0m; FY 2019: 74.0m / FY 2018: 74.0m (FY adjusted operational)
59 | © Copyright 2020 Software AG. All rights reserved.FINANCIAL DATA Key figures in €m, IFRS 2019 2018 2017 2016 2015 Total Revenue 890.6 865.7 879.0 871.8 873.1 BL Digital Business (DBP) 474.5 464.7 456.3 441.4 431.5 thereof Cloud & IoT 42.3 30.3 14.9 n/a n/a BL A&N 228.9 218.3 223.7 234.6 248.0 BL Professional Services 187.2 182.6 198.8 195.8 193.6 Group License 245.1 249.4 250.1 263.0 271.9 Group Maintenance 435.0 415.4 420.2 412.2 406.9 SaaS / Usage based 22.7 17.6 9.1 n/a n/a EBIT 214.8 231.6 222.8 213.9 209.4 EBITA (non-IFRS) 260.3 272.9 279.5 272.0 259.1 EPS (in €, non-IFRS) 2.54 2.64 2.38 2.37 2.22 Dividend cash out 52.8 52.5 44.3 41.9 39.5 Free cash flow 145.8 184.1 161.9 187.0 170.0 Net cash / (Net debt) 217.0 149.0 55.2 73.1 (25.7) Shareholders’ equity 1,357.5 1,239.1 1,118.3 1,196.8 1,089.8 Employees (FTE) 4,948 4,763 4,596 4,471 4,337 60 | © Copyright 2020 Software AG. All rights reserved.
KEY FINANCIAL RATIOS in percent of revenue IFRS unless stated different FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 Operating margin (EBITA, non-IFRS) 29.2 31.5 31.8 31.2 29.7 EBITDA margin 29.5 30.5 30.0 29.1 29.7 EBIT margin 24.2 26.8 25.3 24.5 24.0 ROE1 15.8 18.7 19.9 17.9 19.2 ROCE2 14.1 16.4 18.0 15.2 16.1 Net working capital (€m)3 -€205.8 -€225.8 -€298.1 -€200.2 -€155.9 Working capital ratio4 34.6 27.3 7.7 20.0 16.6 Free cash flow margin5 16.4 21.3 18.4 21.4 19.5 Corporate tax rate (income and other taxes) 30.01 30.0 37.3 33.0 32.4 WACC6 5.71 5.32 4.95 4.05 4.13 Equity ratio 64.2 61.7 58.6 61.2 60.1 DSO (Days Sales Outstanding) 110 103 103 113 111 Capex (in €m) €10 €11.0 €27.5 €16.7 €15.5 Capital employed7 (in €m) €1,525.5 €1,408.9 €1,248.4 €1,381.9 €1,282.8 1. Return on equity: Operating EBIT / Equity 4. Current assets ./. Current liabilities / Total revenue 6. Pro forma, not applied for corporate management 2. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital) 5. (Operating Cash flow ./. Capex) / Revenue. 7. Fixed assets + Working capital 3. Current assets ./. Cash and Cash Equivalents ./. Current liabilities 61 | © Copyright 2020 Software AG. All rights reserved.
BALANCE SHEET
(in €m)
Assets Liabilities
Mar 31, Dec 31, Mar 31, Dec 31,
2020 2019 2020 2019
510.0 Cash and cash equivalents 513.6 244.2 Financial liabilities 296.6
271.1
22.3 Financial assets 22.8 Other liabilities* 300.9
279.8 Trade and other receivables 303.1 203.3 161.1
Deferred income
79.6 Non-financial assets* 75.9
1,203.2 Fixed assets Shareholders’ equity
1,200.7 1,376.3 1,357.5
(Goodwill 986.9 / 980.1) (ratio 65.7% / 64.2%)
2,094.9 Total 2,116.1 2,094.9 Total 2,116.1
* Incl. assets/liabilities hold for disposal
62 | © Copyright 2020 Software AG. All rights reserved.AMORTIZATION / DEPRECIATION IMPACT
(PRELIMINARY)
(in €m) Q1 FY FY FY FY
2020 2019 2020* 2021* 2022*
Amortization -3.6 -21.9 -14.4 -14.0 -13.4
Depreciation -6.7 -25.6 -26.7 -26.7 -26.7
* Estimated
63 | © Copyright 2020 Software AG. All rights reserved.HEADCOUNT
BY FUNCTIONAL AREAS* AND GEOGRAPHY
(in FTE) Dec 31, Sep 30, ∆% Dec 31, ∆%
2019 2019 2018 yoy
Total 4,948 4,883 1% 4,763 4%
Professional Services 1,915 1,890 1% 1,901 1%
Research & Development 1,419 1,391 2% 1,310 8%
Sales & Marketing 961 963 0% 926 4%
Administration 653 640 2% 626 4%
Germany 1,278 1,269 1% 1,243 3%
USA 584 579 1% 580 1%
India 1,004 953 5% 895 12%
Rest of world 2,082 2,083 0% 2,044 2%
* According to P+L structure
64 | © Copyright 2020 Software AG. All rights reserved.› Shares, ownership & CSR
Back to ToC ¦
65 | © Copyright 2020 Software AG. All rights reserved.SHAREHOLDER STRUCTURE
Ownership* Institutional Investors by Region*
0.03%
Software AG 1.8%
Foundation
17.4%
Own Shares (0.03%)
20.3% Continental Europe
Institutional
Investors
59.9% (excl. Germany)
Germany
33.7%
Private Investors 29.7% UK & Ireland
North America
30.8%
Rest of World
6.4%
* Shareholder structure based on SID, May 2020
Share Info Share Data Major Institutional Shareholders**
Number of total shares: 74,000,000 SOW, SOW:GR, SOWGn.DE Schroder Investment Management, LTD 4.91%
Thereof Free Float: ~ 66% ISIN: DE000A2GS401 FIL Investment Services (U.K.), LTD 3.01%
Number of shares outstanding: ~ 74m ADR symbol: STWRY Allianz Global Investors GmbH 2.98%
Registered shares since Oct. 2, 2017 Indices: MDAX, TecDAX, DAX100 Norges Bank Investment Management (Norway). 2.32%
**Institutional shareholders based on public files, May 2020
66 | © Copyright 2020 Software AG. All rights reserved.DIVIDEND POLICY
Focus on continuity
Dividend by fiscal year 0.76**
(in € per share) 0.71
0.65
0.60
0.55
0.50
0.43* 0.46 0.46 0.46
0.38*
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
* According to the 1:3 stock split, rounded
**Dividend proposal, subject to shareholder approval in June 2020
67 | © Copyright 2020 Software AG. All rights reserved.ANALYST COVERAGE
Banks / Broker who cover Software AG on a regular basis
Baader Helvea E.R. DZ Bank MainFirst Bank AG
Barclays Capital Goldman Sachs Metzler Capital Markets
Bryan, Garnier & Co Independent Research Morgan Stanley
Commerzbank J.P. Morgan Cazenove Société Générale
Crédit Suisse Kepler Cheuvreux UBS I.R.
Deutsche Bank LBBW Warburg Research
For the latest consensus of analysts‘ financial estimates
please visit our IR website
68 | © Copyright 2020 Software AG. All rights reserved.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
69 | © Copyright 2020 Software AG. All rights reserved.CORPORATE SOCIAL RESPONSIBILITY
Software AG Software AG
We believe that moral
principles and economic Foundation
rewards not only go together, One of Germany’s largest
they belong together. charities & major shareholder of
Software AG
Creating sustainable value
Code of Business Promoting Employee Corporate University
Conduct and Ethics Engagement & University Relations
Values such as trust, respect, We foster our employees' Helping universities and their
sincerity and transparency shape personal and professional students excel through grants
our international collaboration development. and collaboration.
and business.
70 | © Copyright 2020 Software AG. All rights reserved.INVESTOR RELATIONS Uhlandstrasse 12 64297 Darmstadt Germany phone: +49 (0) 6151 / 92 1900 fax: +49 (0) 6151 / 9234 1900 softwareag.com e-mail: investor.relations@softwareag.com 71 | © Copyright 2020 Software AG. All rights reserved.
72 | © Copyright 2020 Software AG. All rights reserved.
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