Software AG Investor Presentation

Transcription

1 Software AG Investor Presentation March

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 presentations 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 Software AG A Leader in Digital Business IT CUSTOMER BASE More than 70 % of the Fortune 1, m+ users 15 x Gartner and Forrester leader 850+ million in revenue 4,400+ employees worldwide Committed to helping our customers succeed for more than 40 years 3

4 Digital Business - Disruption is Everywhere Connected Customers Large number and variety of data sources needed to derive context Unable to combine customer insights, inventory and competitor data on-the-fly Extreme speed and scale needed to act on customer context Internet of Things Integration with countless things disrupting enterprise architectures Unable to automate maintenance scheduling, procurement and other core business services Challenged to combine historical and streaming big data on-the-fly Resurgent Risk Managers Regulation causing significant and continuous change Controls are slow to respond to changing business risks Controls rooted in analysis of the past and slow to respond 4

5 Paradigm Shift every Business will become Digital Packaged Applications e.g. Salesforce.com Front Office Standardization begins Adaptive Applications Marketing Support Commerce C U S T O M E R S Agile Development BPM/Apps Space Business of differentiation and IT Streaming & Innovation Transformation (Processes, Applications) Analytics Integration & Connectivity (Internet of Things, Big Data, Cloud) Custom Software Adabas - Natural Packaged Applications Back Office Standardization happened SAP Oracle 5

6 Focus Market Area to become Digital Application infrastructure and middleware Develop, deploy and integrate applications Manage business and IT transformation 6

7 Application Integration Middleware Marketsize & Growth 7

8 Business Software on the Road Map Own Innovation IT enabled processes Custom applications D e p a r t m e n t a l Acquired Innovation Standardizing processes Packaged applications C r o s s d e p a r t m e n t Co-Innovation Agility Adaptive applications C u s t o m e r E n g a g e m e n t

9 IT-Spending Trend Share by Market Segment % % Systems of record investment Systems of engagement spending Mobile/tablet front-end app budgets 9 Source: Forrester Research

10 Accelerate deployment of Adaptive Apps (with Solutions) Customer engagement systems Marketing IoT Predicitve Maintenance Sales igrc Adaptive Applications Agility, Speed, Innovation, Differentiation DIGITAL BUSINESS PLATFORM Customer Experience Management Front office Pre-built by Software AG The benefits of Adaptive Apps Accelerated Deployment Agile & Customizable Finance & Controlling Order Management Customer Management Procurement Supply Chain Management Back office Stable Reliable Industry Focused Core operational systems (ERP, SCM, ) Efficient Standardization Includes CEM, IoT, igrc The digital business platform enables me to build Adaptive Applications. Prebuilt solutions accelerate the deployment of my Adaptive Applications. 10

11 Solutions to Digitize and Differentiate Connected Customer Intelligent Governance, Risk & Compliance Market Surveillance Internet of Things Logistics & Supply Control FX ecommerce 11

12 Partnering with Software AG Credit Suisse Saved several million in six months Coca-Cola Has doubled their efficiency and profit margins ING Produced a faster solution delivery in 3 months instead of 18. Statoil has emergency-prepared over 40,000 employess and contractors Electrolux saw a supply chain transformation in just days Fujitsu Customer onboarding became 30% faster 12

13 Go-to-Market: 2015 Key Success Factors Improve BPE Sales Productivity & Excellence New GTM Model Standard & effective supporting processes (Sales Enablement, Account & Territory, etc ) From Product to Industry Use Cases driven Go to Market Cross-board areas strategic initiative Eco System expansion to get ready for scale Strategic initiative and major KPI Maximize Maintenance Revenue New dedicated Line of Business GCS Value Creation & Knowledge Multiplier Co-Innovation with Customers Partner Enablement 13

14 Partner Added Value for the Digital Enterprise Complementing Software AG s capabilities with a partner ecosystem focused on customer value Innovation Global Strategic Alliance Partner Industry Specialization Global Coverage Referral Partner Services Partner Sales Partner Reseller & VAR Technology OEM Partner Partner Horizontal Expertise Joint Solutions Technology Partner Operational Support 14

15 Leading Global Partners 15

16 Revenue and Margin Drivers Mid Term Sales efficiency Platforms / use case packaging Recurring projects Cloud based offerings Partner sales / OEM Sales productivity Channel sales Revenue mix Economies of scale (R&D, G&A) Metrics 16

17 Outlook FY 2015 (as of January 28, 2015) FY 2014 (in m) Outlook FY 2015 Scenario 2015 Product Revenue BPE % to +12% 1) +10% to +16% 2) Product Revenue ETS % to -14% 1) -4% to -10% 2) Operating Margin (Non-IFRS) 3) 27.9% 27.5% to 28.5% IFRS EBIT Margin +100 bp to +200 bp 1) At constant currency rates 2) Assuming current (January 2015) exchange rates would apply throughout FY 2015; translated into projected stated results 3) Before adjustments for non-operating items (see non-ifrs earnings results) 17

18 Mid-Term Scenario until 2020 (as of February 4, 2015) BPE ETS Group Maintenance Operating Margin (Non-IFRS) High single digit to low double digit license growth Continuous focus on sales efficiency Loyal customer base Maintenance proportion increases steadily, thus having a higher impact on revenue development Sustainable single digit growth 32% to 35% 18

19 Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation 40+ percent of revenue is recurring maintenance 75 percent of license revenue from growing IT market segments High operating margin (2014: 28%) Continuous dividend payments (current yield 2%+) 19

20 Risk Balanced Revenue by Industry and Geography Product Revenue by Region Product Revenue by Industry 14% 10% 31% 45% 10% 11% 17% 21% 20% EMEA Germany Americas Asia Pacific Government IT Services Manufacturing Financial Services Services Telco & Media Transport & Logistics Other Based on Group product revenue - FY

21 Blue Chip Customer Base Built Over 40+ years Finance Public Sector Chemicals/Pharma Energy/Utilities Telecom Manufacturing Logistic/Transport Consumer Goods 21

22 Experienced Management Team and Loyal Expert Staff Karl-Heinz Streibich Eric Duffaut Dr. Wolfram Jost Arnd Zinnhardt Chief Executive Officer - since Chief Customer Officer - since Chief Technology Officer - since Chief Financial Officer - since Corporate Communications, Global Legal, Global Audit, Corporate Office and Top Management Development, Global Information Services, Corporate University Global Sales Global Consulting Services Marketing Partner Management Research & Development Finance, Controlling, Taxes, Treasury, Mergers & Acquisitions, Business Operations, Investor Relations, Global Purchasing, Human Resources 22

23 Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation 40+ percent of revenue is recurring maintenance 75 percent of license revenue from growing IT market segments High operating margin (2014: 28%) Continuous dividend payments (current yield 2%+) 23

24 Technology Leadership by Gartner and Forrester Application Integration Suites Application Services Governance Business Process Analysis Tools Business Process Management Suites Enterprise Architecture Tools Governance, Risk and Compliance Integrated IT Portfolio Analysis Apps Big Data Streaming Analytics Platforms EA Management Suites Elastic Caching Platforms Hybrid Integration Integrated SOA Governance SOA Service Life-Cycle Management 24

25 Gartner has positioned webmethods products in their Application Integration Magic Quadrant 13 times since 2000 Source: Gartner, Inc., Magic Quadrant for On-Premises Application Integration Suites, Jess Thompson, et al., July 29, 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. 25

26 Innovator for competitive differentiation First ever Digital Business Platform First high-performance transactional database One of the first 4GL (4th-gen programming languages) introduced First B2B server and SOA integration platform First business process analysis and design platform First Big Data and Streaming Analytics platform 26

27 Neutral - because we are vendor independent Our solutions work in harmony with your existing IT landscape We make all leading databases and application platforms work in synergy with one another. We won t lock you into proprietary systems 27

28 Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Innovator: First Digital Business Platform Neutral vendor to integrate systems from large brands 3. Financials: Solid profit base and high cash generation 40+ percent of revenue is recurring maintenance 75 percent of license revenue from growing IT market segments High operating margin (2014: 28%) Continuous dividend payments (current yield 2%+) 28

29 40%+ of Revenue is Recurring Maintenance m * ETS BPE 0 * Analyst consensus (as of Jan. 2015) e* > 40% of Group Revenue from Maintenance > 90% of Maintenance Revenue is recurring 32% License 24% Consulting 44% Maintenance 29 FY 2014 Group revenue, adjusted for divestments

30 License Revenue: 3/4 from Growing IT Market Segments 100% 80% 60% 40% 20% 76% 24% 63% 37% 58% 42% 56% 49% 42% 38% 33% 34% 67% 66% 58% 62% 44% 51% 25% 75% ETS BPE 0% e* * Analyst consensus (as of Jan. 2015) BPE offering focused on growing IT-market segments, like AIM 32% License 24% Consulting 44% Maintenance 30 FY 2014 Group revenue, adjusted for divestments

31 Continuous Improvement of Operating Result 40% Non IFRS EBITA in % of revenue 28% 27% (FY 2014) Non IFRS EBITA in million (FY 2013) 70 30% % Q1 Q2 Q3 Q4 40 Q1 Q2 Q3 Q4 31

32 Continuous Dividend Payments Ordered by fiscal year/in Dividend policy reflects profit, cash flow and financing requirements for growth 32

33 Financials 33 For internal use only

34 Currency impact on revenue - Q / FY % revenue in Euro 61% revenue in foreign currency Currency impact on revenue CAD 4% AUD 4% ILS 4% BRL 5% GBP 7% Other 11% US Dollar 26% Euro 39% (in m; yoy) Q Q4 in % FY 2014 FY in % Licenses 2.9 3% Maintenance 2.6 3% % Consulting & Other 0.8 2% Total 6.3 3% % Currency split FY

35 Business Process Excellence (BPE) Segment report Q / FY 2014 (in m) Q Q Δ% Δ% acc FY 2014 FY 2013 Δ% Δ% acc Licenses % -21% % -19% Maintenance % 6% % 8% Total revenue % -10% % -6% Cost of sales % 2% % 4% Gross profit % -10% % -7% Sales & marketing % -20% % -8% R & D % -7% % 2% Segment result % 1% % -10% 35

36 Enterprise Transaction Systems (ETS) Segment report Q / FY 2014 (in m) Q Q Δ% Δ% acc FY 2014 FY 2013 Δ% Δ% acc Licenses % 4% % -15% Maintenance % -3% % -5% Product revenue % % -9% Other % -14% Total revenue % % -9% Cost of sales % -10% % -9% Gross profit % 1% % -9% Sales & marketing % 14% % -18% R&D % -8% % -4% Segment result % -2% % -8% 36

37 Revenue Q / FY 2014 (in m) Q Q Δ% Δ% acc FY 2014 FY 2013 Δ% Δ% acc Product Revenue % -7% % -8% License % -13% % -17% Maintenance % 2% % Product IDS (SAP) % -76% Consulting BPE/ETS % -3% % -1% Consulting IDS (SAP) % -70% Other % -40% Total % -11% % -11% 37

38 Results Q / FY 2014 (in m) Q Q Δ% Δ% acc FY 2014 FY 2013 Δ% Δ% acc Total revenue % -11% % -11% Cost of sales % -27% % -19% Gross profit % -6% % -7% Margin in % 78.2% 73.2% 72.5% 69.7% R & D % -7% % 1% Sales & marketing % -13% % -11% Administration % -5% % 2% Other income/expense EBIT % -4% % -14% Margin in % 28.9% 25.9% 20.5% 21.1% 38

39 Non-IFRS Earnings Q / FY 2014 (in m) EBIT (before all taxes) Amortization on acquisition related intangible assets Reduction acquisition related product revenue by purchase price allocation Q Q FY 2014 FY Other impacts from M&A activities Share based payment Restructuring/severances Result from sold operations EBITA (Non-IFRS) in % of revenue (Non-IFRS) 35.7% 30.8% 27.9% 26.8% Net income (Non-IFRS) EPS (Non-IFRS)* * Weighted average shares outstanding (basic) Q4 2014: 78.9m / Q4 2013: 82.2m // FY 2014: 79.2m / FY 2013: 83.7m 39

40 Headcount by functional areas* and geography (in FTE) Dec. 31, 2014 Sept. 30, 2014 Δ% qoq Dec. 31, 2013 Δ% yoy Total 4,421 4,553-3% 5,238-16% Consulting & services 1,821 1,884-3% 2,347-22% R & D % 998-3% Sales & marketing 993 1,026-3% 1,180-16% Administration % % USA % % Germany 1,216 1,237-2% 1,711-29% Rest of world 2,551 2,621-3% 2,749-7% * According to P+L structure 40

41 Cash flow Q / FY 2014 (in m) Q Q Δ% FY 2014 FY 2013 Δ% Operating cash flow % %./. CapEx* Free cash flow % % as % of revenue 19.0% 19.7% 15.5% 16.4% Free cash flow per share** % % * Cash flow from investing activities except acquisitions and except investments in debt instruments ** Based on average outstanding shares: Q4 2014: 78.9m / Q4 2013: 82.2m // FY 2014: 79.2m / FY 2013: 83.7m 41

42 Balance Sheet (in m) Dec. 31, 2014 Assets Dec. 31, 2013 Dec. 31, 2014 Liabilities Dec. 31, Cash and cash equivalents/securities Financial liabilities Trade receivables Inventory, other assets Other liabilities Deferred income ,105.7 Fixed assets (goodwill 857.3/829.2) 1, ,013.4 Shareholders equity (ratio 54.8%/48.4%) ,848.9 Total 1, ,848.9 Total 1,

43 Solid Shareholder Structure 43 24% 9% 38% Shareholder Structure 29% Software AG Foundation Institutional Investors Private & undisclosed Own Shares** **as of February 2015 Institutional Investors by Region* Rest of World 11% 35% Germany France 6% United 10% Kingdom Scandinavia 14% 24% United States *Source: Ipreo (Factset), February 2015 Major Institutional Investors* Fidelity (FMR LLC) 3.5% Templeton 2.9% Deutsche Asset & Wealth 2.9% Deka 2.9% Norges Bank 2.9% Shareholder Value 2.1% Share Data Number of total shares: 86,943,945 Freefloat: ~ 62% Indices: TecDAX, DAX 100, TechAllShare Codes: SOW, SOW GR, SOWG.DE ISIN: DE , ADR symbol: STWRY

44 Investor Relations Uhlandstrasse Darmstadt Germany phone: +49 (0) 6151 / fax: +49 (0) 6151 / softwareag.com 44

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