GEC NEWS WIREEquity ratio improving to 56 %; 2015 outlook confirmed based on positive market resonance
Software AG’s first quarter in 2015 has ended on a positive note, going by the recently released financial results (IFRS, preliminary). The Group successfully expanded its operating margin by an improved revenue mix and by leveraging efficiencies. Accordingly, the recurring business grew by 12 percent to €99.7 million (Q1 2014: €89.2 million), which marks a new all-time-high of maintenance revenue in a first quarter. At the same time, Software AG managed to increase its profitability: With total product revenue of €146.2 (Q1 2014: 146.2), operating earnings (EBITA, non-IFRS) jumped to €48.1 million (Q1 2014: €43.0 million), which is a12-percent increase year-on-year. This equals an operating margin of 24.8 percent (Q1 2014: 20.6 percent) – an improvement of more than four percentage points. Moreover, Software AG recorded positive developments on the balance sheet, which turned cash positive again. Based on solid product revenue, a higher maintenance stream and increasing profitability, as well as initial sales improvements in core markets, and a strong project pipeline, Software AG confirms its outlook for fiscal 2015.
As part of its strategic positioning, Software AG renamed its product-related business lines. The former Business Process Excellence (BPE) business line will now be known as “Digital Business Platform” (DBP). The Enterprise Transaction Systems (ETS) database business will operate as “Adabas & Natural” (A&N). The Consulting business line will keep its name. Software AG introduced its new Digital Business Platform including new cloud offerings at the CeBIT international IT fair in March 2015. This product platform allows customers to significantly accelerate their transformation to a digital enterprise.
Software AG’s CEO Karl-Heinz Streibich commented, “Our Q1 business performance shows that our focus on value through recurring revenue growth and profitability, as announced last year, is successful. Optimizing our Go-to-Market hasled to initial positive impacts in key markets, now we will transfer those successes intomore countries.” He continued, “Renaming our business lines is a further contribution to clearer market communication and strategic positioning.”
According to Software AG’s CFO Arnd Zinnhardt, “Achieving an operating margin of almost 25 percent right at the beginning of the year marks an excellent outcome. That result is a product of dedicated structural changes over the past months as well as consistent financial discipline. We will continue to focus on profitability, as it provides the foundation for future innovation, and thus growing earnings per share.”
