Commerzbank Sector Conference. Arnd Zinnhardt CFO. August 28, Software AG. All rights reserved.

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1 Commerzbank 2013 Sector Conference Arnd Zinnhardt CFO August 28, 2013

2 Safe-Harbor-Statement This presentation contains forward-looking statements based on 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. 2

3 Software AG - At a Glance Technology leader in systems integration, process automation and data management Middleware to integrate data applications and digital workflows ~ 1bn revenue (FY) ~ 24% EBITDA margin (H1 2013) ~ 55% equity ratio (H1 2013) ~ 16% free cash flow margin (H1 2013) ~ 5,400 Employees worldwide Big-data and In-memory technology Process Planning, monitoring and analysis 2bn market cap 66% free float 29% Software AG Foundation High performance database 70 Countries Global customer base: 80% of Fortune 10,000 3

4 Revenue Split Well Balanced Product Revenue by Region* Product Revenue by Industry* Asia Pacific 8% Americas 48% EMEA 44% GER 15% PIIGS < 4% Telcos Associations Manufacturing Retail Other Logistics Services IT 20% Financial Sector 20% Public Sector *Based on product revenue FY

5 Large Enterprise Customers in 70 Countries Finance Public Sector Chemicals/Pharma Energy/Utilities Telecom Manufacturing Logistics/ Transport Healthcare/ Consumer Goods 5

6 Product Suite Powering The Digital Enterprise Business Process Excellence (BPE) Business Process Integration Big Data Transaction BPE - Business characteristics Technology leader (Gartner, Forrester) Worldwide biggest independent specialized vendor of Business Process Excellence (BPE) Market growth perspective (CAGR 10% + p.a.) License revenue growth: +20% to +30% in 2013 Growth driver: market, portfolio, deal size, sales staff BPE - Product revenue development in m

7 Powering The Digital Enterprise - BPE Product Suite Business Process and IT Management Integration and Automation Big Data ALFABET IT Portfolio Management & Planning ALFABET Enterprise Architecture Management Suite ARIS Business Process Analysis ARIS Governance, Risk and Compliance Management WEBMETHODS Integration WEBMETHODS Business Process Management Suite WEBMETHODS Intelligent Business Operations APAMA Complex Event Processing TERRACOTTA In-Memory Data Management TERRACOTTA In-Memory Intelligent Action SOFTWARE AG Live Process Live AgileApps Live Integration Live 7

8 Software AG Suite is a Top-Ranked Leader 8 Application Integration Suites Business Process Analysis Tools Business Process Management Suites Enterprise Architecture Tools Governance, Risk and Compliance Integrated IT Portfolio Analysis Apps Application Services Governance Complex Event Processing Platforms Comprehensive Integration Solutions EA Management Suites Elastic Caching Platforms ESB Integrated SOA Governance SOA Service Life-cycle Management

9 Highest Position in Leaders Quadrant of Gartner s Magic Quadrant for Application Integration Suites Leaders in infrastructure that supports systematic application integration provide a comprehensive ESB suite offering as well as the ability to integrate that offering with other relevant technologies (including community management, data integration, SOA and integration governance, and BPM). This is combined with a strong commitment to this market, which is expressed through focused value propositions and go-tomarket strategies (for example, by packaging platforms and/or by providing integrated product and service offerings specific for this market). Source: Gartner, Inc., Magic Quadrant for On-Premises Application Integration Suites, Jess Thompson, et al., June 27, 2013 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. 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. 9

10 Product Suite Powering The Digital Enterprise Enterprise Transaction Systems (ETS) Business Process Integration Big Data Transaction ETS - Business characteristics ETS - Product revenue development Enterprise Transaction Systems (ETS): ADABAS (fastest transactional database) NATURAL (rapid application development) Mature market (cash-cow) Revenue decline, stable margins and strong recurring cash flow Cost management focus Annual maintenance renewal rate: > 90% (average) in m

11 Transition Towards Growth Increasing Relevance of BPE Division BPE Product Revenue in m % 80% 60% 40% 20% 0% e Relative share of product revenue 68% 61% 57% 53% 48% 45% ~ 39% 81% 32% 39% 43% 47% 52% 55% ~ 61% 19% e BPE ETS BPE 11

12 Strategy

13 Growth Strategy G R O W T H B A S E D O N T H R E E P I L L A R S O R G A N I C G R O W T H leveraging technology leadership in enterprise infrastructure software investing into Sales and Marketing S E L E C T I V E M & A in key strategic areas: Drive current offering Complementary technology I N N O VAT I O N addressing Mega Trends for enterprise IT Cloud Big Data Mobile Collaboration 13

14 Strengthen Software AG s Sales Organization - Worldwide % of product revenue 60% 50% 40% 30% 20% 10% 0% 44.9% 42.2% 23.0% 21.6% 39.2% 20.7% 37.1% 39.1% 21.3% 20.9% 17.7% 54.0% +200 s a l e s i n B P E d i v i s i o n BPE S&M costs ETS S&M costs 14

15 Innovation through own R&D as well as Acquisitions % of product revenue 30% 25% 20% 15% 22.2% 25.8% 21.6% 25.8% 18.7% 24.2% 24.3% 25.8% 18.1% 19.5% 10% 5% 0% % % 8.9% % % 2012 BPE R&D costs (incl. IPR amortization) BPE R&D costs ETS R&D costs 15

16 Acquisitions Support Technology Leadership (Big Data) (Cloud) (Business Process) (Integration) (Mobile) 2007 (Mobile) 16

17 Outlook

18 Revenue Targets Product Revenue 1 Billion ~80% New Products (BPE) Organic Growth Integration Technology Business Process Mgt. Terracotta / Big Data 20% 55% Cloud Partner / OEM M&A/Innovative Technologies 80% 45% ~20% Enterprise Transaction Systems (ETS)

19 Business Targets (2018, base: 2012) BPE Business Process Excellence ETS Enterprise Transaction Systems Software AG Group Product revenue: growth ca % p.a. (incl. a % contribution from Terracotta) > 50% contribution to group result Expand Big Data offering by Real Time BI platform Product revenue in structural decline (single digit % p.a.) Manage cost to maintain operating margin > 60% Increase BPE product revenue to 1bn Strategic acquisitions (cash-only; Cloud/ Big Data) EPS growth 10-20% p.a. ( ) S H A R E O F P R O D U C T R E V E N U E * * According to mid-term business goals 19

20 Investor Relations Uhlandstrasse Darmstadt Germany phone: +49 (0) 6151 / fax: +49 (0) 6151 / softwareag.com investor.relations@softwareag.com Follow us on

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