INVESTOR RELATIONS FACTBOOK. February Software AG. All rights reserved.

Transcription

1 INVESTOR RELATIONS FACTBOOK February 2018

2 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 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

3 A DAY IN THE LIFE OF SOFTWARE AG

4 A DAY IN THE LIFE OF SOFTWARE AG

5 A DAY IN THE LIFE OF SOFTWARE AG

6 A DAY IN THE LIFE OF SOFTWARE AG

7 A DAY IN THE LIFE OF SOFTWARE AG

8 A DAY IN THE LIFE OF SOFTWARE AG

9 A DAY IN THE LIFE OF SOFTWARE AG

10 A DAY IN THE LIFE OF SOFTWARE AG

11 A DAY IN THE LIFE OF SOFTWARE AG

12 SOFTWARE AG AT A GLANCE Technology leader for more than 40 years in data management and application development platforms 870+ MILLION IN REVENUE 45%+ recurring 77% product revenue 41% Americas 51% EMEA BY REGION* REVENUE 26% A&N 23% Services 51% DBP BY BUSINESS LINES* 4,500+ EMPLOYEES** Consulting &Services 42% Admin 13% R&D 26% S&M 19% ~ 3,3bn MARKETCAP ~ 64% Free Float * Based on Group product revenue FY 2017 **P&L as of December 31,

13 BUSINESS LINES IoT and Industry 4.0 Platforms Integration & Automation Analytics & Decisions In-Memory Data Business & IT Transformation Application Development Data Management System Modernization System Support Strategy & Design Product Implementation & Customized Solutions Education & Cloud Services Global Delivery (on-/offshore) Growing Revenue Growing Stability Growing Margin Share of Revenue* 52% Share of Revenue* Share of 25% 23% Revenue* *Group revenue split FY

14 PROFITABLE GROWTH STRATEGY EXECUTION 31.8% Operating margin EBITA, non-ifrs EBITDA 24.7% Revenue in m: DBP Product revenue A&N Product revenue Adabas & Natural Extending Lifecycle Stable core + profitable (program 2050+)

15 INFLECTION POINTS WHEN DIGITAL BUSINESS PLATFORM TAKES THE LEAD 100% 80% 60% License Revenue 100% Maintenance Revenue % % 40% 20% 0% 40% 20% 0% 100% Business Segment Result 80% 60% 40% 20% 0% 2018e Adabas & Natural Digital Business Platform 6

16 INDEX 1. Key Investment Indicators 8 2. Business Model, Characteristics & GTM Markets, Positioning & Competition Digital Business Platform Core Capabilities IoT Platform Offering and Core Capabilities Customers References & Use Cases Financials Shares & Ownership 81 7

17 1. KEY INVESTMENT INDICATORS 8

18 KEY INVESTMENT INDICATORS 1. Footprint: Established global player in enterprise software Blue Chip customer base built over 40+ years Risk balanced revenue by industry and geography Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in relevant product categories by industry analysts Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation ⅔ of license revenue from growing market segments 45+ percent of revenue is recurring (maintenance) High operating margin (2017: 31.8%) Continuous return to shareholders (Dividend + SBB ¾ of free cash flow on average) 9

19 BLUE CHIP CUSTOMER BASE BUILT OVER 40+ YEARS (SAMPLES) Chemicals/Pharma IoT Finance Chemicals/Pharma Energy/Utilities Telecom Manufacturing Public Sector Logistic/Transport Consumer/Retail 10

20 BALANCED RISK REVENUE BY GEOGRAPHY AND INDUSTRY Product Revenue by Region* Product Revenue by Industry* (14%) 8% 41% 10% 20% 19% 51% 12% 18% Americas EMEA (14% Germany) Asia Pacific *Based on Group product revenue FY 2017 Government IT Services Services Transport & Logistics Financial Services Manufacturing Telco & Media Other 11

21 EXPERIENCED MANAGEMENT TEAM AND LOYAL EXPERT STAFF Karl-Heinz Streibich Chief Executive Officer - since Eric Duffaut Chief Customer Officer - since Dr. Wolfram Jost Chief Technology Officer - since Dr. Stefan Sigg Chief R&D Officer - since Arnd Zinnhardt Chief Financial Officer - since Corporate Office, Human Resources, Legal, Information Services (IT), Corporate Communications, Processes, Audits & Quality, Environmental, Social and Governance (ESG) Sales, Marketing, Partner Ecosystem, Global Consulting Services & Support Product Management, Product Marketing, Industry Analyst Relations Product Innovations Global R&D Operations, R&D Quality Assurance, Research Programs, Product Innovations Finance, Controlling, Taxes, Treasury, Business Operations, Mergers & Acquisitions, Investor Relations, Global Purchasing 12

22 KEY INVESTMENT INDICATORS 1. Footprint: Established global player in enterprise software Blue Chip customer base built over 40+ years Risk balanced revenue by industry and geography Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in relevant product categories by industry analysts Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation ⅔ of license revenue from growing market segments 45+ percent of revenue is recurring (maintenance) High operating margin (2017: 31.8%) Continuous return to shareholders (Dividend + SBB ¾ of free cash flow on average) 13

23 TECHNOLOGY LEADERSHIP SOFTWARE AG IS A LEADER IN 8 MARKETS The Forrester Wave TM : Streaming Analytics, Q The Forrester Wave TM : Digital Process Automation, Q The Forrester Wave TM : Strategic Portfolio Management, Q The Forrester Wave TM : Enterprise Architecture Management, Q The Forrester Wave TM : Hybrid Integration For Enterprises, Q4 2016, The Forrester Wave TM : In-Memory Data Grids, Q Magic Quadrants Enterprise Architecture Tools, May 2017* Integrated IT Portfolio Analysis Applications, November 2017 * The Gartner document is available upon request from Software AG. 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. 14

24 INNOVATOR FOR COMPETITIVE DIFFERENTIATION WORLD S 1st THE FIRST THE FIRST THE FIRST THE FIRST THE FIRST high-performance transactional database B2B server and SOA integration platform business process analysis and design platform Big data & streaming analytics platform True IoT cloud platform ADABAS & NATURAL WEBMETHODS ARIS TERRACOTTA APAMA CUMULOCITY IoT 15

25 NEUTRAL BECAUSE WE ARE VENDOR INDEPENDENT Our solutions work in harmony with the existing IT landscape. We make all leading databases and application platforms work in synergy with one another. We won t lock customers into proprietary systems. 16

26 KEY INVESTMENT INDICATORS 1. Footprint: Established global player in enterprise software Blue Chip customer base built over 40+ years Risk balanced revenue by industry and geography Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in relevant product categories by industry analysts Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation ⅔ of license revenue from growing market segments 45+ percent of revenue is recurring (maintenance) High operating margin (2017: 31.8%) Continuous return to shareholders (Dividend + SBB ¾ of free cash flow on average) 17

27 LICENSE REVENUE: ⅔ FROM GROWING IT MARKETS 100% 80% 60% 40% A&N DBP 20% 0% DBP offering focused on IT digitization segments, like IoT, streaming analytics etc. 18

28 RECURRING MAINTENANCE REVENUE in m A&N DBP 48% maintenance >90% recurring >45% of Group revenue from maintenance 19

29 MAINTENANCE REVENUE SHOWS COMPOUND GROWTH 600 m 800 m m 500 A B 600 A B 200 *renewal rate ca % Model assumptions: DBP license growth: A) +10% CAGR B) flat DBP maintenance: Renewal rate: 93% ( ), 94% ( ), 95% ( ) Net new maintenance 18% of license p.y. A&N maintenance: Stable churn rate: - 4% CAGR (regardless of license revenue) 20

30 SOFTWARE AG INVESTMENT KPI Growing share of product and recurring revenues 32% license 44% maintenance 24% consulting 29% license 21% consulting 48% maintenance Operating margin* expansion 26.8% 27.9% 31.2% 29.7% FY2015 FY2014 FY % FY % (2020 target) FY 2014 FY 2017 FY2013 * non IFRS EBITA in % of revenue Dividend increase 180% Free Cash Flow yield: 1.7% % conversion rate cash-out ratio: around 115% of 100% % Net profit. 60% 20%

31 2. BUSINESS MODEL, CHARACTERISTICS & GTM 22

32 BUSINESS MODEL REVENUE STRUCTURE & LICENSE VOLATILITY 50% 40% 30% 20% 10% 0% Ø quarterly share of respective FY revenue Q1 Q2 Q3 Q4 License Maintenance Services License Direct sales force & Partners One-time payment for perpetual license Additional payment for capacity upgrades, extended usage and add-on products Price: Capacity/MIPS or CPU based Maintenance: Annual payment (renewal rate >90%) Price based on license volume: DBP: up to 22% (new); ( 20% installed) A&N: 15% (mainframe); 20% (other) Consulting Services Implementing own products Cost plus or fixed price projects Own staff + freelance and partners 23

33 ACQUISITIONS SUPPORT TECHNOLOGY LEADERSHIP Integration and BPM Business Process Analysis Big Data (In Memory) Streaming Analytics Artificial Intelligence Internet of Things * * Application PaaS *A&N Portfolio (all other DBP) 24

34 OUR PARTNER ECOSYSTEM A FORCE MULTIPLIER FOR SUCCESS Increase value: Increase implementation success rate by extended partner service capabilities Reduce time-to-value through broad industry and vertical footprint Accelerating innovation & solutions to provide systems of differentiation Effective sales and service delivery due to local coverage Successfully manage the transformation into a true DIGITAL business Sample of Strategic Global Alliance Partners 25

35 ADABAS & NATURAL TRANSACTION PROCESSING ADABAS Data Management System Capabilities Data management for high-performance transaction processing Multi-platform availability Benefits Faster and more reliable data processing Easily share data with other systems Data management on platform of choice NATURAL Application Development Platform for developing and operating enterprise applications Eclipse -based tool environment Cross-platform deployment Rapid delivery of applications Meet business demands faster Retain business logic independent from platform decision ADABAS & NATURAL Application Modernization Improve end-user experience and interoperability of applications Leverage new technologies the Web, mobile, SOA or big data Retain investments without risk Increase end-user productivity Innovate faster 26

36 3. MARKETS, POSITIONING & COMPETITION 27

37 DIGITIZATION WEDGE SEPARATES CUSTOMERS FROM ESTABLISHED COMPANIES Retail Pharma Manufacturing Insurance... Any industry Digital Disruption Internet of Things Smart Business DIGITAL DISRUPTION Connected Customers 28

38 DISRUPT YOURSELF IF NOT, OTHERS WILL OUTSTANDING CUSTOMER EXPERIENCE ENABLED BY DIGITAL PLATFORMS Retail Pharma Manufacturing Insurance Mobility any Industry! Consumer centric supply chains Platform as a retailer Personalized medicine Health card as a medical service platform Individualized production Smart products (I 4.0, MES, IoT) Predictive solutions Platform as a broker Personalized insurance contract Connected cars Platform as a broker PROCESS PRODUCT ORGANIZATIONAL SERVICE MOBILITY DIGITAL INNOVATION INNOVATION INNOVATION INNOVATION INNOVATION INNOVATION! 29

39 CHANGING THE GAME PLATFORM VERSUS PRODUCT BASED INNOVATIONS PRE-DIGITAL WORLD Innovation only through vendor Product Based DIGITAL WORLD Co-innovation through customers and vendors Platform Based Application n Application 2 Application 1 (Use case 1) Monolithic Complex Inflexible/slow Digital Business Logic (Innovation Layer) Use case 1 Use case 2 Use case n Digital Application 1 Digital Application 2 Digital Application n DIGITAL PLATFORM Microservices Agile Flexible/fast 30

40 SIMPLIFY & ACCELERATE YOUR JOURNEY TO BECOMING A DIGITAL BUSINESS Marketing Sales Customer engagement systems Service Support Digital Business Applications Agility, Speed, Innovation, Differentiation Sales DIGITAL BUSINESS PLATFORM Front office Agile Innovative Dynamic Differentiating Finance & Controlling Order Management Customer Management Procurement Core operational systems (ERP, SCM, ) Supply Chain Management Back office Stable Reliable Efficient Standardized 31

41 SOFTWARE AG RANKED AS A LEADER THE FORRESTER WAVE : STREAMING ANALYTICS, Q Software AG s Apama continues to be a broadly applicable and perennially capable streaming analytics platform. With its recent acquisition of Cumulocity, Apama deeply extends its reach deeper into industrial IoT use cases by providing device management, digital twin, and other connectivity-oriented services. There is no stopping Apama to become the realtime engine for digital transformation that extends all the way from the factory floor to direct customer interactions. Source: The Forrester Wave : Streaming Analytics, Q3 2017, Forrester Research, Inc., September 7, 2017 The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 32

42 SOFTWARE AG RANKED AS A LEADER THE FORRESTER WAVE : DIGITAL PROCESS AUTOMATION SOFTWARE (FORMERLY BPM PLATFORMS FOR DIGITAL BUSINESS ), Q Software AG, a longtime player in the traditional BPM space, with its webmethods BPMS offers strong support for dynamic case management, integrated RPA {Robotic Process Automation}, extensive document support, and process modeling. Source: The Forrester Wave : Digital Process Automation Software, Q3 2017, Forrester Research, Inc., July 5, 2017 The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 33

43 SOFTWARE AG RANKED AS A LEADER THE FORRESTER WAVE : HYBRID INTEGRATION FOR ENTERPRISES, Q Software AG's DBP Integration Platform provides typical integration capabilities, including orchestration, transformation, messaging, advanced routing, and wizard-based tooling. Its platform supports multiple integration patterns, including data integration and long-running transactions. Source: The Forrester Wave Hybrid Integration For Enterprises, Q4 2016, Forrester Research, Inc., November 18, 2016 The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 34

44 SOFTWARE AG POSITIONED IN LEADERS QUADRANT GARTNER S 2017 MAGIC QUADRANT FOR ENTERPRISE ARCHITECTURE TOOLS Figure 1. Magic Quadrant for Enterprise Architecture Tools The Leaders in [the] 2017 Magic Quadrant demonstrate clear support for delivering businessoutcome-driven EA, modeling and analysis. The Leaders also demonstrate a clear vision of the direction and maturation of the EA discipline, as well as its relevance for digital business today and in the future. The Leaders are responding to the needs of leading EA practitioners that Gartner highlights in its research Source: Gartner, Inc., Magic Quadrant for Enterprise Architecture Tools, Samantha Searle, Marc Kerremans, May 24, 2017 This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Software AG. 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 designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be 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. 35

45 BLOOR RESEARCH, STREAMING ANALYTICS 2016 Software AG s comprehensive combination of performance and scalability, streaming analytics operators, graphical tools and solution accelerators for application development puts it at the top of the class 36

46 4. DIGITAL BUSINESS PLATFORM CORE CAPABILITIES 37

47 THE NEW DIGITAL IT ARCHITECTURE BIMODAL AND INTEGRATION CENTRIC SaaS PaaS Big Data Mobile Apps Partners CLOUD DIGITAL BUSINESS PLATFORM (PaaS Suite) Systems of Differentiation (Digital Applications) + HYBRID Core ERP (SOR) Legacy BI Things ON PREMISE Modular, Agile, Flexible, Fast, Differentiating 38

48 YOUR DIGITAL BUSINESS PLATFORM YOUR DIGITAL FUTURE WITHOUT COMPROMISE BUSINESS & IT TRANSFORMATION ANALYTICS & DECISIONS Streaming Analytics & Artificial Intelligence In-memory Data powered by TERRACOTTA & APAMA Process Transformation & Management Governance, Risk & Compliance Portfolio Management Enterprise Architecture Management powered by ARIS & ALFABET PROCESS & APPLICATIONS Dynamic Process Automation Low Code Applications INTEGRATION & API Hybrid Integration API Management DEVICES Device Connectivity Device Management powered by WEBMETHODS powered by WEBMETHODS powered by CUMULOCITY INTERNET OF THINGS CLOUD + HYBRID ON PREMISES 39

49 DIGITAL BUSINESS PLATFORM YOUR DIGITAL CAPABILITIES BUSINESS & IT TRANSFORMATION ANALYTICS & DECISIONS Streaming analytics Machine learning Predictive analytics Edge analytics Business strategy & planning Visual analytics In-Memory store & compute Distributed caching Alerts & actions Event routing & persistence Customer journeys Design & analysis Risk & compliance management Portfolio management Enterprise architecture Process analytics PROCESS & APPLICATIONS INTEGRATION & API API gateway DEVICES Low code app development Dynamic orchestration Mobile enablement Application integration API portal Device management Process automation Task & work management Cloud & Big Data integration API & service catalog Device agents Case management Rules management Messaging Master data management Device connectivity Robotic process automation Content management Mainframe & data integration B2B & managed file transfer Edge services INTERNET OF THINGS 40

50 5. IOT PLATFORM OFFERING AND CORE CAPABILITIES 41

51 SOFTWARE AG USP AND SUCCESS FACTORS Technology leadership Heritage of being a software platform company Neutrality G2M model of direct customer ownership Mid-size company culture Home base in highly industrialized Germany 42

52 HYBRID INTEGRATION DRIVING PERVASIVE CONNECTIVITY SaaS/Cloud Services Things Subsidiaries Hybrid Integration Mobile Apps Business Partners EDW MDM Mart Business Process Networks On-Premises Applications and Data Sources Social Networks 43

53 COMPONENTS OF AN END-TO-END IOT SOLUTION IoT Endpoints IoT Edge Platform IoT Cloud Platform Enterprise Applications ERP Local Communication Gateway Edge Server Long-range Communication Integration SaaS CRM Business challenges Create IoT solutions for smarter products and higher-value services Deliver value of IoT solutions quickly: start small & scale in iterations Balance risk & innovation: leverage new technologies, but stay open and flexible Benefit from best practice, IoT methodology and proven tools 44

54 CUMULOCITY IOT - A NEW IOT PLATFORM COMBINING THE POWER OF CUMULOCITY WITH THE DIGITAL BUSINESS PLATFORM 45

55 Flexibility & Sophistication DIFFERENT USER LEVELS FOR DIFFERENT CUSTOMER NEEDS IoT SaaS Fast Entry Self-service, out-of-the-box Pre-defined solution accelerators IoT PaaS Fan Out (Departmental) High productivity, fast go-to-market Smart rules Focus on business users IoT Framework Scale Out (Enterprise Level) Cross divisional end-to-end company processes Coding, professional developers Existing and new IoT applications fully interwoven Growing Maturity Level over Time 46

56 USE OF MACHINE LEARNING Predictive Analytics Streaming Analytics uses machine learning to allow organizations build models that represent patterns of behavior. operationalizes these models to enable organizations to respond intelligently. 47

57 SOFTWARE AG IOT PLATFORM SERVICES IoT Integration IoT Development Enterprise & Cloud Integration Device Integration IoT Analytics IoT Modeling & Portfolio Mgmt Digital Business Platform Container 48

58 SOFTWARE AG MAIN ACQUISITIONS FOR IOT EXTENDS OUR TECHNOLOGY LEADERSHIP Follows a common technology vision Is already integrated in Digital Business Platform Enables smarter applications across all industry verticals Important capability for IoT use cases Key customer wins AI, machine learning & predictive analytics Strong telco experience (Nokia spin-off) Development of IoT platform since 2010 Integration Visualization and Templates Real-time Analytics Device Management Connectivity: Multi protocol / machine languages (300+ industrial protocols) IoT PaaS End-to-End Cloud Platform 49

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60 5 PARTNERS 5 PROMISES JOINT VENTURE 51

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62 ADAMOS TOTAL VIEW PARTNER ECO SYSTEMS APP FACTORY ALLIANCE App App NEW App App App App App App NEW APP INNOVATION & CERTIFICATION COUNCIL ADAMOS JV APP MARKET PLACE ADAMOS IoT SUITE Device Connectivity & Management App App App Real-time Analytics & Visualization App Enterprise & Cloud Integration App Workflow Automation App App App App App GOVERNANCE (Standards, Interfaces, ) NEW ADAMOS.COM 53

63 ADAMOS JV (ADAMOS GMBH) PARTNER ECO SYSTEMS Supervisory Board Pricing Committee Technology App Council General Management ADAMOS JV App APP MARKET PLACE ADAMOS IoT SUITE App App App App App App Device Connectivity & Management App App App Real-time Analytics & Visualization App Enterprise & Cloud Integration App Workflow Automation App NEW App ADAMOS JV, is responsible to provide state-of-the-art software and solutions, independent of specific software vendors (no lock in) ADAMOS JV is IaaS/PaaS operation NEW unit with no direct access to customers, but responsible for partner management APP INNOVATION & CERTIFICATION COUNCIL Shareholders of ADAMOS will be the founders and further leading mechanical engineering companies App App App at equal share (Premium Partner, max 10) Additional Partners (noneshareholders) are users of the ADAMOS platform with minimum commitment ADAMOS.COM 54

64 ADAMOS APP FACTORY ALLIANCE The App Factory Alliance is a strategic cooperation of the partners software divisions APP FACTORY ALLIANCE Each App Factory develops primarily apps for its eco-system owner and has also direct access to customers. NEW Core activities within the App Factory Alliance: app development App App best practices App App App App common standards and procedures common app certification rules and processes common market place for shared apps (op. by ADAMOS) common I4.0 solutions cross partners for customers Benefits for members are: App App App App App App App APP MARKET PLACE 1. App development network ADAMOS Device Real-time 2. Large variety IoT SUITE Connectivity of applications Workflow & Analytics & Automation 3. Cost efficiency: Management shared innovation Visualization & development 4. Reselling: own applications Enterprise to & Cloud other Integration partners 5. Time-to-market: joint roadmaps, re-usability and sharing. App App App NEW APP INNOVATION & CERTIFICATION COUNCIL GOVERNANCE (Standards, Interfaces, ) NEW ADAMOS.COM 55

65 ADAMOS MARKETPLACES (ECO SYSTEMS) PARTNER ECO SYSTEMS NEW App App App App App App App App Eco systems provide Apps for the the digital market places, which are built in the App Factory Alliance Each partner keeps their own digital innovation identity to the market NEW Digital market places are operated on the ADAMOS IoT Platform APP INNOVATION & CERTIFICATION COUNCIL Partners can use a market place blue-print to get started faster ADAMOS JV APP MARKET PLACE ADAMOS IoT SUITE Device Connectivity & Management App App App Real-time Analytics & Visualization App Enterprise & Cloud Integration App Workflow Automation App App App App App Market places are cloud based and have a pricing model pay per use for risk sharing Small partners without an own market place can use the ADAMOS market place ADAMOS.COM 56

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67 6. CUSTOMER REFERENCES & USE CASES 58

68 SOFTWARE AG: EXAMPLE CUSTOMERS & USE CASES Efficiency & Optimizations Increase operational efficiency Optimize use of assets Improve product quality Better reliability of equipment New Business Models Assets as a service instead of owned assets Offer higher-value services with new revenue models Better customer experience & new engagements Staying competitive 59

69 FULLY TAILORED DEVICE & APPLICATION MANAGEMENT IoT PLATFORM ADOPTION About Deutsche Telekom Deutsche Telekom is one of the world's leading telecommunications companies, with 143 million mobile customers, 31 million fixed-network lines, and over 17 million broadband lines. Business Need Deutsche Telekom desired to expand its offering from its managed connectivity foundations to provide a suite of capabilities to solve its customers business problems, in particular those encountered through digital transformation, limit the impact of connectivity price erosion. Solution Private Edition of Cumulocity IoT Platform Deployment in Deutsche Telekom Data Centre Fully rebranded Deutsche Telekom Dashboard, business rule and user interface customisation for solution business Fault detection, automated resolution management and SLA monitoring for operations Documentation, technical forum and support for developers Rapid low cost Proof-of-Concept (PoC) package for end customer projects The Deutsche Telekom Cloud of Things [has] removed many concerns about the perceived overheads for IoT deployment and allows our customer s equipment to be connected in minutes. - Alexander Lautz, Senior Vice President M2M, Deutsche Telekom Benefits Innovative Flexible Offering Leveraging ready made software Additional M2M / IoT Solution Revenue Trusted solution partner Local Deployment Ensuring data security and service management 60

70 SUPPLY CHAIN AUTOMATION & AUTOMATED BILLING FOR DISTRIBUTORS (ERP INTEGRATION) About Lyreco Lyreco is one of the leading global distributors of office and work supplies, delivering 235,000 boxes every day at a 99.4% service rate from 400,000 m2 of distribution centres using 1,750 vans and drivers. Business Need Nespresso customers expect the highest quality from the product, the machine and the service. Lyreco sought to ensure that every Nespresso customer would always be served the highest quality whenever they desired, and in the most ecological way. Solution Cumulocity VendMe vending machine, stock and operations management application Dedicated Edition of the Cumulocity IoT Platform Vending machine telemetry devices and cellular connectivity Fully integrated to Lyreco SAP Enterprise Resource Planning (ERP) system Formulation and deployment of vending operations specific business rules Android and iphone smartphone vending operator app Set up and available in 2 weeks The Cumulocity solution for our Nespresso Capsule Dispensers helped us to reduce out-of-order and out-of-stock situations to a minimum. Raoul Marechal, Technics and Operations Manager, Lyreco Benefits Cost-Effective Service Assurance Avoid out-of-stock / out-of-order Operational Cost Savings Fully automated supply chain Future Proof Open APIs ensure easy extensions and no lock-in 61

71 ABOUT WINORA Winora manufactures bicycles in Germany since 95 years, with highest standards of quality, functionality and safety. Technology and design have significantly changed. BUSINESS NEED: With the ongoing digitalization and need for constant innovation, Winora wanted to provide digital connected Smart ebikes to their customers. SOLUTION: Deutsche Telekom connected the Bikes to the IoT platform, enabling Winora customers to see online view of routes/sports activities, theft alerts with GPS monitoring as well as crashdetection with emergency notifications to friends/relatives. BENEFITS: The project is ongoing, commercial launch was in Spring Presentation of the system in EuroBike event resulted in extremely positive market and consumer feedback, as well as an increase in ordering numbers for Sduro ebikes. 62

72 SOFTWARE TRANSFORMS ROYAL DIRKZWAGER Customer Profile Royal Dirkzwager tracks nearly 2 trillion ship locations a year for 800 maritime organizations in real time. New Challenges Overwhelming data volumes Growing demand for precision ship tracking Increasing customer functionality requests Software AG Solutions Digital Business Platform: Real-Time Analytics powered by Apama Application Integration powered by webmethods Key Benefits Increased real-time message handling from 500 to 1,500 per second Extended live ship tracking from 40km off-coast to global capture Enabled accurate, customer-accessible ship ETAs Reduced new service turnaround time From data overload to data advantage with IoT For Royal Dirkzwager and their clients, knowing where a vessel is at sea is paramount. But the world s oceans are large and tricky to monitor. To cope with the continuous stream of information and to exploit it for added functionality and reduced costs Royal Dirkzwager turned to Apama Analytics & Decisions and webmethods Integration, part of the Software AG Digital Business Platform. And just like that, the liability of overload turned into a strategic advantage by sifting through and utilizing information to help Royal Dirkzwager s clients make better maritime logistics decisions. The ability to respond quickly to client requests and roll out completely new service offerings in two months gave us a huge strategic advantage. Our team, working with Software AG s IoT platform, made it happen. Ton de Jong CIO, Royal Dirkzwager 63

73 7. FINANCIALS 64

74 FINANCIAL DATA KEY FIGURES in m, IFRS Total Revenue , , , BL DBP BL A&N BL Consulting Group License Group Maintenance EBIT EBITA (non-ifrs) n/a n/a n/a n/a n/a EPS (in, non-ifrs)* n/a n/a n/a n/a n/a Dividend cash out Free cash flow Net cash / Net debt Shareholders equity 1, , , , , Employees (FTE) 4,596 4,471 4,337 4,421 5,238 5,419 5,535 5,644 6,013 3,526 3,479 * EPS basic, pro-forma, adjusted for share split (2011) 65

75 KEY FINANCIAL RATIOS IN % OF REVENUE IFRS unless stated different Operating margin (EBITA, non-ifrs) FY 2017 FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY n.a. n.a. n.a. n.a. n.a. EBITDA margin EBIT margin ROE ROCE Net Working Capital ( m) Working Capital ratio Free Cash Flow margin Corporate tax rate WACC Equity ratio DSO (Days Sales Outstanding) Capex ( m) Capital Employed 7 ( m) 1, , , , , , , , FY Return on equity: Operating EBIT / Equity 2. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital) 3. Current assets./. Cash and Cash Equivalents./. Current liabilities Software AG. All rights reserved. 4. Current assets./. Current liabilities / Total revenue 5. (Operating Cash flow./. Capex) / Revenue. 6. Pro forma, not applied for corporate management 7. Fixed assets + Working capital

76 OUTLOOK FULL YEAR 2018 Current Reporting New Reporting FY 2017 (in m) FY 2017 (in m) FY 2018 Outlook (as of January 25, 2018) DBP Total Revenue DBP excl. IoT / Cloud N/A % to +7% 1) - IoT / Cloud N/A % to +100% 1) N/A Adabas & Natural % to -2% 1) Operating Margin Group (EBITA non-ifrs) 2) 31.8% 31.8% 30% to 32% EPS non-ifrs 3) % to +15% 1) At constant currency rates 2) Adjusted for non-operating items (see non-ifrs earnings results) 3) Weighted average shares outstanding (basic/ias 33.19) FY 2017: 74.6m / FY 2018: 74.0m; based on new US-Federal-Tax and Euro/US-Dollar exchange rate of 1/

77 KEY REVENUE METRICS FY 500 m FY FY % 31.80% 30% % % 0 DBP Revenue A&N Revenue EBITA (non-ifrs) in % of Group Revenue 0% 68

78 CURRENCY IMPACT ON REVENUE Q / FY % revenue in Euro 66% revenue in foreign currency AUD 3% ZAR 3% BRL 4% ILS 4% GBP 6% Other 15% US Dollar 31% Euro 34% Currency impact on revenue (in m; yoy) Q Q4 in % FY 2017 FY in % Licenses % % Maintenance % % Consulting & Other % % Total % % Currency split FY

79 REVENUE Q / FY 2017 (in m) Q Q % % acc FY 2017 FY 2016 % % acc Product revenue % 8% % 2% Licenses % 14% % 0% Maintenance % 2% % 3% Consulting % 0% % 2% Other Total % 7% % 2% Segment result 6.2 7%

80 DIGITAL BUSINESS PLATFORM SEGMENT REPORT Q / FY 2017 (in m) Q Q % % acc FY 2017 FY 2016 % % acc Licenses % 6% % 3% Maintenance % 6% % 6% Total revenue % 6% % 5% Cost of sales % 34% % 8% Gross profit % 4% % 5% Sales & Marketing % 0% % 2% Research & Development % 9% % 6% Segment result % 5% % 7% Margin in % 39.7% 41.1% 33.1% 33.5% 71

81 ADABAS & NATURAL SEGMENT REPORT Q / FY 2017 (in m) Q Q % % acc FY 2017 FY 2016 % % acc Licenses % 37% % -6% Maintenance % -3% % -3% Product revenue % 14% % -4% Other % 5% % -1% Total revenue % 14% % -4% Cost of sales % -7% % -12% Gross profit % 15% % -3% Sales & Marketing % -24% % -11% Research & Development % 1% % 5% Segment result % 28% % -3% Margin in % 74.6% 66.9% 70.0% 69.2% 72

82 CONSULTING SEGMENT REPORT Q / FY 2017 (in m) Q Q % % acc FY 2017 FY 2016 % % acc Total revenue % 1% % 2% Cost of sales % 5% % 0% Gross profit % -15% % 14% Sales & Marketing % 6% % 10% Segment result % -31% % 17% Margin in % 8.3% 12.4% 11.9% 10.6% 73

83 RESULTS Q / FY 2017 (in m) Q Q % % acc FY 2017 FY 2016 % % acc Total revenue % 7% % 2% Cost of sales % 9% % 1% Gross profit % 6% % 2% Margin in % 78.4% 79.4% 75.7% 75.7% Research & Development % 10% % 8% Sales & Marketing % -5% % 0% Administration % -6% % -4% Other income / expense EBIT % % - Margin in % 30.8% 28.5% 25.3% 24.5% 74

84 EARNINGS Q / FY 2017 (in m) Q Q % FY 2017 FY 2016 % EBIT (before all taxes) % % Financial result Profit before taxes % % Other taxes % % Income taxes % % Tax rate in % 43.0% 31.5% 37.3% 33.0% Net income % % EPS in * % % * Weighted average shares outstanding (basic) Q4 2017: 74.0m / Q4 2016: 76.2m / FY 2017: 74.6m / FY 2016: 76.2m 75

85 NON-IFRS EARNINGS Q / FY 2017 (in m) Q Q % FY 2017 FY 2016 % EBIT (before all taxes) % % Amortization on acquisition related intangible assets % % Share based payments % % Restructuring / severances / legal case % % Other impacts / impacts from M&A activities % % EBITA (non-ifrs) % % in % of revenue (Non-IFRS) 36.7% 34.2% 31.8% 31.2% Net income (non-ifrs) % % EPS in (non-ifrs)* % % * Weighted average shares outstanding (basic) Q4 2017: 74.0m / Q4 2016: 76.2m / FY 2017: 74.6m / FY 2016: 76.2m 76

86 AMORTIZATION / DEPRECIATION IMPACT (PRELIMINARY) (in m) Q1 Q Q2 Q Q Q FY 2017 FY 2018* FY 2019* Amortization Depreciation * Estimated 77

87 CASH FLOW Q / FY 2017 (in m) Q Q % FY 2017 FY 2016 % Operating cash flow % %./. CapEx* ** Free cash flow % % in % of revenue 15.1% 15.8% 18.4% 21.4% Free cash flow per share*** % % * Cash flow from investing activities except acquisitions and except investments in debt instruments ** yoy change because of one time property investment at Darmstadt *** Based on weighted average shares outstanding (basic) Q4 2017: 74.0m / Q4 2016: 76.2m / FY 2017: 74.6m / FY 2016: 76.2m 78

88 BALANCE SHEET (in m) Dec. 31, 2017 Assets Dec. 31, 2016 Dec. 31, 2017 Liabilities Dec. 31, Cash and cash equivalents Financial liabilities Financial assets Trade and other receivables Non-financial assets Other liabilities Deferred income ,125.9 Fixed assets (Goodwill / 936.6) 1, ,118.3 Shareholders equity (ratio 58.6% / 61.1%) 1, ,907.5 Total 1, ,907.5 Total 1,

89 HEADCOUNT BY FUNCTIONAL AREAS* AND GEOGRAPHY Research & Development Sales & Marketing Administration Consulting & Services 42% 1,935 (+1%) 26% 1,176 (+6%) 19% 862 (+2%) 13% 623 (+3%) 43% 1,997 (+2%) 26% 1,201 (+5%) 18% 823 (-4%) 13% 823 (+7%) Germany India USA Rest of World Total: 4,596 (FTE) * According to P+L structure as of December 31,

90 8. SHARES & OWNERSHIP 81

91 SHAREHOLDER STRUCTURE OWNERSHIP REGIONAL SPLIT(FREE FLOAT) Software AG Foundation Germany Own Shares Institutional Investors Private Investors 32.7% 59.3% 16.3% 35.3% 21.6% 26.2% North America Continental Europe (excl. Germany) UK & Ireland Rest of World Share Info Number of total shares: 76,400,000 Thereof Free Float: ~ 64% Number of shares outstanding: ~ 74m Share Data Major Free Float Shareholders 1) SOW, SOW:GR, SOWGn.DE Deutsche Asset Mgt. Investment 4.91% ISIN: DE000A2GS401 ADR symbol: STWRY Registered shares since Oct. 2, 2017 Indices: TecDAX, DAX100, TechAllShare 1) according to notification of voting rights above 3% threshold 82

92 DIVIDEND POLICY FOCUS ON CONTINUITY Dividend by fiscal year (in per share) 0.30* 0.33* 0.37* 0.38* 0.43* * According to the 1:3 stock split, rounded 83

93 CASH USE: SHARE BUY-BACK Buy-back own shares Cancellation of treasury shares April 30, 2015 Buy-back own shares 2015 Sept. 8, Dec. 4, 2015 Cancellation of treasury shares March 14, 2017 Own shares Position after cancellation March 15, 2017 Buy-back own shares 2017 March 13, May 11, 2017 m % m % -3.29% 0.38% 3.266% Until cancellation / capital reduction: Share capital: 86,943, Number of shares: 86,943, % Until cancellation / capital reduction: Share capital: 79,000, Number of shares: 79,000,000 Since cancellation / capital reduction: Share capital: 76,400, Number of shares: 76,400,000 84

94 CASH RETURN TO SHAREHOLDERS Ø ¾ FREE CASH FLOW TURNS INTO DIVIDENDS AND SBB 250 m 200 Share Buy-Back + Dividends Free Cash Flow

95 SOFTWARE AG FOUNDATION ANCHOR SHAREHOLDER The Software AG Foundation is one of Germany s ten largest foundations (capital stock 1bn+, Software AG shares and other assets) Founded by Dr. hc. Peter M. Schnell in 1992 Disburses financial support amounting to approx. 30 million annually Principle of a self-help grant (supports nonprofit organizations) The Foundation focuses on many different projects in areas including: science and research, environment support for the elderly and disabled, support for children and young people education and training 86

96 CORPORATE SOCIAL RESPONSIBILITY Software AG We believe that moral principles and economic rewards not only go together, they belong together. Software AG Foundation one of Germany s largest charities is the major shareholder Creating sustainable value Code of Business Conduct and Ethics Values such as trust, respect, sincerity and transparency shape our international collaboration and business Promoting Employee Engagement We foster our employees' personal and professional development Corporate University & University Relations Helping universities and their students excel through grants and collaboration 87

97 ANALYST COVERAGE Banks / Broker who cover Software AG on a regular base Baader Helvea E.R. Barclays Capital Bryan, Garnier & Co Commerzbank Crédit Suisse Deutsche Bank DZ Bank Equinet Goldman Sachs Hauck & Aufhäuser HSBC Independent Research J.P. Morgan Cazenove Kepler Cheuvreux LBBW MainFirst Bank AG Metzler Morgan Stanley Oddo BHF Société Générale UBS I.R. Warburg Research For latest consensus of analysts financial estimates visit our IR website on: 88

98 INVESTOR RELATIONS Uhlandstrasse Darmstadt Germany phone: +49 (0) 6151 / fax: +49 (0) 6151 / softwareag.com investor.relations@softwareag.com 89

99 90