Factbook/media/files/s/software-ag-ir... · • Company foundation: May 30, 1969 • IPO at...

© 2019 Software AG. All rights reserved.

August-September 2019

by investor relations

›Factbook

2 |

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.


SAFE HARBOR STATEMENT

3 | © 2019 Software AG. All rights reserved.

TABLE OF CONTENT

› At a glance ………………………………………… 4

› Strategy, markets, trends ………………………… 9

› GTM, sales execution, partner ecosystem …….. 20

› Financial targets, key performance indicators …. 30

› Technology view, portfolio, competition ………… 40

› Financial figures …………………………………... 47

› Shares and ownership …………………………… 62


› At a glance


• Company foundation: May 30, 1969

• IPO at Frankfurt Stock Exchange: April 26, 1999 (MDax)

› Our history: We are data pioneers

› Our mission: We empower our customers to turn data in to value

› Our vision: We unlock the power of data to shape a better future

› Our promise: We offer freedom as a service

› Our mission:

› Our vision:


€m 865+ Revenue FCF margin 20+ %

All figures based on FY 2018 | * yoy at constant currency

Software AG in figures

Revenue by 4700+ Employees** by

Region EMEA: 50%

thereof Germany: 14% Americas: 39%

APJ: 9%

Product revenue (65% recurring) Digital Business: 54% rev. growth*: 5% segment margin: 32% Adabas & Natural: 25% rev. growth*: 2% segment margin:71%

Function R&D: 28%

S&M: 19%

Professional Services: 40%

Admin: 13%

COMPANY BREAKDOWN

** FTE as of December 31, 2018

Industry Government: 20%

Finance: 20%

IT Services: 15%

Services: 13%

Manufacturing: 10%

Other: 22%

Services revenue Professional Services: 21%

rev. growth*: –6% segment margin: 11%

Country Germany: 26%

India: 19%

USA: 12%

Other: 43%

7 |

Product Units

Digital Business

Business Trans-

formation


BUSINESS LINES

• Data Management • Application

Development • Support 2050+ Cloud & IOT

IoT & Analytics

Professional Services

Adabas & Natural

Growth Heritage Enablement

Sales success, Customer and

Partner Solutions

Growth, heritage and enablement as pillars of our success

Integration & API

8 |

John Schweitzer Chief Revenue Officer

—since 2018—

Arnd Zinnhardt Chief Financial Officer

—since 2002—

Dr. Stefan Sigg Chief Product Officer

—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

THE SOFTWARE AG EXECUTIVE BOARD


An experienced and energized leadership team

Sanjay Brahmawar Chief Executive Officer

—since 2018—

Dr. Elke Frank Chief Human Resources Officer

—since 2019—


› Strategy, markets, trends

10 |

H E L I X

BOLD NEW STRATEGY 2019 Our pathway to sustainable, profitable growth



STRATEGIC DIRECTION

Products

GTM

Team & Culture

Hybrid Integration | Vendor Neutrality / Freedom of Choice 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 NEW: Partner | Platforms (white label, OEM: Siemens, Adamos, etc / IoT) NEW: Reseller | Marketplaces (AWS, Microsoft, etc / IoT, Hybrid Integration)

Establishing growth mentality Reviving pioneering spirit Fostering talent development

Positioning WE INTEGRATE Devices

Clouds

Apps On premise

Data

12 |

New Clients


INTEGRATION TRENDS DRIVING OUR STRATEGY

—PAST—

On-premise systems Perpetual licenses

—FUTURE—

Cloud-enabled systems Subscription-based

webMethods.io start 2019

webMethods since 2007

EXISTING CUSTOMER BASE

Hybrid Integration

iPaas

On premise Cloud

13 |

We will not lock customers into

proprietary systems.

We make all leading databases and application platforms work in synergy

with one another.

FREEDOM AS A SERVICE


We are vendor independent

Our solutions work in harmony with the existing

IT landscape.


IOT TRENDS DRIVING OUR STRATEGY

Security & Governance

Intelligent Things

Open & Extensible

Distributed Architectures

End-to-End IoT Solutions

OT / IT Convergence


IOT BUSINESS IMPACT

Increase sales • New business models • “Assets-as-a-service” • Staying competitive

Engage customers • New customer services • Better customer experience • Increase customer retention

Reduce costs • Increase efficiencies • Preventative maintenance • Asset optimization

63% of CEOs perceive IoT to have a significant material business impact

42% of organizations have deployed at least one IoT use case

80% of organizations with implemented IoT have realized greater value than expected

Source: Gartner


USE CASES THAT WILL DRIVE IOT GROWTH

Sources: BCG Internet of Things buyer survey; IDC; expert interviews, BCG analysis

Discrete manufacturing

Process industry

Utilities

Energy & natural resources

Transportation & Logistics

Healthcare

Retail

Most relevant industries

17 |

TARGET MARKETS

$12bn

$18bn

Source: Gartner

2017

2022

+50% Integration Platform Market TAM

Integration IoT & Analytics

2018 - 2023

$9.5bn

$25.6bn

2017

2023

+18% CAGR IoT Platform TAM

Source: McKinsey

49%

Of CIOs say their business model has changed or is changing - Gartner CIO Survey 2019

$1.37bn

The total digital transformation market in 2022 - IDC forecast

Annual total potential economic impact of IoT by 2025 - McKinsey

$3.9tr - $11.1tr pa


18 |

A TRULY CONNECTED WORLD The future and its impact on our customers

A tsunami of cloud applications is emerging Cloud-based applications continue to eat up enterprise apps.

Demand is moving from data acquisition to data integration Integration of applications, devices, clouds and data drive operational excellence and superior customer experience.

Innovations will be increasingly based on platforms Openness and ‘freedom of choice’ is a key requirement.


19 |

Application-driven Create new apps

Integration-driven Integrate (apps, clouds, devices, data) to drive operational excellence

Innovation-driven New business models, new products, Predictive Analytics (AI/ ML)

Valu

e

A typical agile project adoption based on ‘Land & Expand’

SOFTWARE AG: A UNIQUE OFFERING IN AN EARLY MARKET Integration, IoT and platform-enabled innovations based on distributed architectures


Time


› GTM, sales execution, partner ecosystem

21 |

STATUS QUO 2019

WHAT WORKS WHAT WE MUST WORK ON

Product Strength Best in Class Integral &

Trusted

Financial Strength

Solid Balance Sheet

Strong Cash Flow

Cultural Strength

Creativity & Flexibility

Diversity & Opportunity

Growth in Growth Markets

Essence & Identity Growth

Product Focus

Silos & Complexity

GTM & Operations

Focus Geography Partner

Ecosystem


22 |

TEAM EXECUTION FOCUS

THREE LEVERS TO DELIVER

+ +

• High Growth Products • Right Geographies • Partners to Scale

• Go-to-Market • Shift to Subscription • Sales Incentives

• Operating Model • Employer Brand • Pioneering Spirit


23 |

Increase deal value Upscale into existing customer base

Cross-sell into A&N base Sales efficiency New business / new logos

Sales Execution

Operating Model

Customer driven innovation Deepen product knowledge in sales Strengthen entrepreneurial ownership More customer touchpoints

Subscription

Customer Success Team Realize upsell potential Higher retention rate Higher visibility, reduced volatility

Geographic Focus

Focus on Tier 1 countries Focused sales investments Increased productivity

Products (R&D)

Focus on key products that drive revenue model

Re-allocation of resources

OEM

IoT Partnerships & White Labelling Scaling through partnerships Driving relevant IoT platforms Available on major cloud market places


ROUTES TO OUR AMBITION

24 |

MARKET IMPACT

EVOLVING SALES AND GO-TO-MARKET

Specialization

Sales Coverage

Geographies

Customer Experience

Alliances and Channels

Sales Operations


25 |

SALES OPERATIONS

Simplification Metrics Sales Methodology

Quoting tools, approvals, contracts, revenue recognition

Leading and lagging indicators

Planning and continuous enablement

Simpler, faster quote to cash process

Increase accountability:

analyze, plan, adjust

Drive alignment: resources and

efficiency

Demand Generation

Sales playbook and improved lead flow

Maximize pipeline: volume, conversion


26 |

Germany France Spain Italy BeNeLux Sweden

USA Canada Brazil UK Switzerland South Africa

China Japan Korea Australia UAE

FOCUSED GEOGRAPHY

Biggest market

opportunity

Best established

footprint

BIGGEST MARKET IMPACT =


27 |

ALLIANCES AND CHANNELS

ISV – extend reach G2000 Application Partners

OEM – embed solutions White-Labelling

ISV OEM Market-place

Marketplace – extend reach SMB Cloud, Public and Private

SI

SI – expand wallet-share Increase Competitiveness



STRATEGIC PARTNERSHIPS

Joint plug-and-play solutions offering scalable, powerful quick start to IoT projects

Connect customer data from across multiple enterprise systems into a centralized and actionable real-time customer profile

Software AG application integration, API management, process design / transformation, analytics, data management available via AWS container marketplace

New solution delivers a connected ecosystem in Microsoft Azure for faster, safer, more manageable migrations while ensuring business continuity

29 |

Alliances and Channels

SALES AND GTM TRANSFORMATION

Sales Operations

Geographies

2019 2020 2021 2022 2023

Rel

ativ

e Im

pact

Specialization

Sales Coverage

Customer Experience



› Financial targets, key performance indicators


STRATEGY GOALS Our financial targets medium term

30%+ Operating

Margin

Strong Free

Cash Flow

85% – 90% Recurring Revenue

20% – 30% Partner

Revenue

Digital Business

10%+ CAGR

Accelerated growth Reduced volatility Quality revenue Attractive margins Strong cash generation

32 |

85% – 90% Recurring Revenue


SWITCH TO SUBSCRIPTION Recurring Revenue share increasing*

2 3 Year Year

Perpetual license 100 Subscription 100 0 0

2 3

+33 +33 Maintenance 200

100 33

200 Professional Services 150 150 Total Revenue 550 483

2 3

+33 +33

+33…

Until Dec. 2019 As of Jan. 2020 1 1 4

0 0

0 0

0 0 0

1 2 3 4 5 Perpetual license Model (Single payment) Subscription Model

Subscription Model Ramp-up period: lower stated revenues

Medium term higher revenues

*Example calculation

33 |

30%+ Operating

Margin

0

10

20

30

2018 2019 2020 2023

HELIX Investment Net 20 – 30 €m • Sales and

Marketing-adjustments

• Change Management

Contractual switch to Subscription Licensing model

31.5% 28 – 30%

–200BP

30% +

+ Pay-per-Use

+ Partner sales

+ Sales efficiency in %


MARGIN DEVELOPMENT (OP. EBITA) Mid-term above 30 percent again


STRONG FREE CASH FLOW M

id te

rm

10%+

FCF

CAG

R

>30% margin Digital Business driving growth Recurring Revenue (85 – 90%)

Growth financing (M&A activities) Share buy back programs

Attractive dividend payments

Strong Free

Cash Flow

35 |

Customer Driven

Customer Benefit

Software AG Benefit

Fastest updates,

latest capabilities

Lower upfront cost

Higher contract values

Higher retention and lifetime value

Lower cost to serve

Lower customer

acquisition cost

By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models Gartner, 2018

Realign our model Extract the benefit over time


ENABLING THE SHIFT TO SUBSCRIPTION

Scale up with demand & experiment

Maintenance as a Service


RECURRING REVENUE Subscription accelerates growth

65%

2018 2014

58%

Share of Recurring Revenue

Product Revenue

4 financial years

2023

85% – 90%

5 financial years

37 |

2019 & MEDIUM-TERM GUIDANCE

2019

DBP

IoT

A&N

EBITA Margin

–6 to 0%*

75 to 125%

–3 to 3%**

28 to 30% Non-IFRS

Medium Term

Bookings 15 to 20% CAGR

ARR 12 to 17% CAGR

Adjusted (Operational) Free Cash Flow 5 to 10% CAGR

Revenue

Non-IFRS EBITA Margin

Introduction of new subscription licensing model to

reduce volatility

increase predictability

Revenue Recognition – quarterly/annual, not up-front

EBITA margin – technical compression in

early phase up to 200bp

2020

* Updated guidance as of July 18, 2019 | ** Updated guidance as of April 11, 2019


38 |

Rel

ativ

e Im

pact

2019 2021 2022 2023 2020

high

er

low

er

Sales Execution

Subscription OEM

R&D Operating Model

Geographic Focus


FIRST FINANCIAL IMPACT AND PHASING PER ROUTE

39 |

• Subscription-based revenue including the licenses and maintenance

• Software as a Service (SaaS) revenue

• Maintenance revenue related to license agreements of indefinite duration

• Usage-based revenue from licenses and maintenance


KPIS TO TRACK OUR PROGRESS Bookings, Recurring Revenue, Adjusted (Operational) Free Cash Flow

Bookings (normalized across 3 years)

Recurring Revenue (calculation and reporting)

Adjusted (Operational) Free Cash Flow

Licenses of indefinite duration

Total contract value

Maintenance services with new licenses of indefinite duration

Three years of maintenance Services

Subscription agreements

Contract value divided by the term of agreement, multiplied by three years

Software as a Service (SaaS)

Contract value divided by the term of agreement, multiplied by three years

Usage-based license models including maintenance

Difference between usage determined at the end of a quarter and beginning of quarter, multiplied by four (quarters), multiplied by three years

Net cash flow from operating activities (operating cash flow) Net cash from investing activities (CapEx) Adjusted for: – Proceeds from the sale of current financial assets + Payments for investments in current financial

assets – Proceeds from the sale of disposal groups + Net payments for acquisitions – Repayment of leasing obligations (new due to

application of IFRS 16)

Free cash flow + Payments for share price-based remuneration + Payments for restructuring/severance/litigation + Payments of other expenses associated with

M&A activities

Adjusted (operational) free cash flow divided by total revenue in the period

= Adjusted (op’l) free cash flow as percentage of revenue

divided by the average number of shares outstanding in the period

= Adjusted (op’l) free cash flow per share

Share of recurring revenue (accruing in the period)

ARR – annual recurring revenue (at quarter end)

Sum of recurring revenue ÷ product revenue in the period = percentage of recurring revenue in the period

Total value of recurring revenue from contracts active at quarter end Individual contract duration in months x12

Achieved in the reported period

Forward-looking figure

÷ ÷


› Technology, portfolio, competition


Focus on well- defined markets

Drive convergence of integration & IoT

Expand cloud and edge scalability

Evolve analytics and solutions

PRODUCT PORTFOLIO STRATEGY

Integrate

to Innovate

Data

Clouds

Devices

Apps iPaas EAI B2B

IoT

Analytics DaaS

42 |

TRENDMINER Time-Series Analytics BUILT.IO Cloud Integration

CUMULOCITY Internet of Things ZEMENTIS Artificial Intelligence

APAMA Streaming Analytics ALFABET IT Architecture Management

TERRACOTTA Big Data (In-Memory)

ARIS Business Process Analysis

WEBMETHODS Integration Platform and BPM


2007 2009 2011 2013 2017 2018

OUR ACQUISITION STRATEGY Buy innovative technology and fully integrate with existing products

• 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 |

EAI B2B ETL

ESB SOA Messaging

iPaaS API Mgmt Hybrid / Edge IoT Analytics

AI/ML DaaS Blockchain IoT Solutions

1990s 2020s

We are here.

Application-driven integration

Services-driven integration

Self-service integration

Securely automated integration of

everything

CONVERGENCE OF INTEGRATION & IOT


Status of maturity

44 |

PRODUCT FOCUS AND R&D SHIFT

IoT & Analytics

Business Transformation

Adabas & Natural

Integration & API

ARIS

CUMOLOCITY IOT APAMA

WEBMETHODS.io

ALFABET

ADABAS & NATURAL

TRENDMINER

BUILT.io


ZEMENTIS


Integration & API

API Lifecycle Management MicroServices

App & Cloud Integration

B2B Integration

API Gateway & Portal

In Memory Data Management Messaging

+ HYBRID

CLOUD

ON PREMISES

EDGE

EXTEND AND AMPLIFY CAPABILITIES

IoT & Analytics

Machine Learning Edge Services

Device Management

Streaming Analytics

Edge Analytics

Monitoring & Dashboarding

Self-service Industrial Analytics

Business Transformation

Business Strategy & Planning

Integrated Portfolio

Management

Design & Analysis

Enterprise Architecture Management

Process Mining

Risk & Compliance Management

Strategy Synchronization


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.

MAGIC QUADRANTS

For further information please follow the link: https://www.softwareag.com/corporate/company/awards_analyst/default.html.

PUT YOUR FAITH IN TECHNOLOGY LEADERSHIP Confirmed by market analyst recognition

The Forrester WaveTM: API Management Solutions, Q4 2018

The Forrester WaveTM: Industrial IOT Software Platforms, Q3 2018

The Forrester WaveTM: Op. Intelligence for B2B Integration, Q1 2018

The Forrester WaveTM: Streaming Analytics, Q3 2017

The Forrester WaveTM: Digital Process Automation, Q3 2017

The Forrester WaveTM: Strategic Portfolio Management, Q3 2017

Integrated IT Portfolio Analysis Applications, November 2018

Enterprise Architecture Tools, October 2018

Full Life Cycle API Management, April 2018

The Forrester WaveTM: Enterprise Architecture Management Suites , Q1 2019

The Forrester WaveTM: iPaas And Hybrid Integration Platform Wave, Q1 2019 Enterprise Integration Platform as a Service (EiPaaS), April 2019

Industrial IOT Platforms, June 2019

https://www.softwareag.com/corporate/company/awards_analyst/default.html

https://www.softwareag.com/corporate/company/awards_analyst/default.html


› Financial figures

48 |

DBP Total Revenue

Adabas & Natural

Operating Margin Group (EBITA non-IFRS)2)


OUTLOOK Full Year 2019

1) At constant currency rates 2) Adjusted for non-operating items (see non-IFRS earnings results)

- DBP Cloud & IoT

- DBP (excl. Cloud & IoT)

FY 2018 (in €m)

218.3

464.7

31.5%

30.3 434.4

FY 2019 Outlook (*as of April 11, 2019; **as of July 18, 2019)

28% to 30%

–3% to +3%1) *

N/A

+75% to +125%1)

–6% to 0%1) **

FY 2019 Outlook (as of January 31, 2019)

28% to 30%

–5% to –0%1)

N/A

+75% to +125%1)

+3% to +7%1)

49 |

in €m, IFRS 2018 2017 2016 2015 2014

Total Revenue 865.7 879.0 871.8 873.1 857.8 BL Digital Business (DBP) 464.7 456.3 441.4 431.5 394.5 thereof Cloud & IoT 30.3 14.9 n/a n/a n/a

BL A&N 218.3 223.7 234.6 248.0 245.3 BL Professional Services 182.6 198.8 195.8 193.6 218.0 Group License 249.4 250.1 263.0 271.9 270.1

Group Maintenance 415.4 420.2 412.2 406.9 371.3

SaaS / Usage based 17.6 9.1 n/a n/a n/a

EBIT 231.6 222.8 213.9 209.4 176.0

EBITA (non-IFRS) 272.9 279.5 272.0 259.1 239.3

EPS (in €, non-IFRS) 2.64 2.38 2.37 2.22 1.96

Dividend cash out 52.5 44.3 41.9 39.5 39.5

Free cash flow 184.1 161.9 187.0 170.0 132.7

Net cash / (Net debt) 149.0 55.2 73.1 (25.7) (15.1)

Shareholders’ equity 1,239.1 1,118.3 1,196.8 1,089.8 1,013.4

Employees (FTE) 4,763 4,596 4,471 4,337 4,421

FINANCIAL DATA


Key figures

50 |

1. 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

4. Current assets ./. Current liabilities / Total revenue 5. (Operating Cash flow ./. Capex) / Revenue.

IFRS unless stated different FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Operating margin (EBITA, non-IFRS) 31.5 31.8 31.2 29.7 27.9

EBITDA margin 30.5 30.0 29.1 29.7 26.4 EBIT margin 26.8 25.3 24.5 24.0 20.5 ROE1 18.7 19.9 17.9 19.2 17.4 ROCE2 16.4 18.0 15.2 16.1 12.6 Net working capital (€m)3 -€225.8 -€298.1 -€200.2 -€155.9 -€98.1 Working capital ratio4 27.3 7.7 20.0 16.6 25.7 Free cash flow margin5 21.3 18.4 21.4 19.5 15.5 Corporate tax rate (income and other taxes) 30.0 37.3 33.0 32.4 33.7 WACC6 5.32 4.95 4.05 4.13 4.35 Equity ratio 61.7 58.6 61.2 60.1 54.8 DSO (Days Sales Outstanding) 103 103 113 111 115 Capex (in €m) €11.0 €27.5 €16.7 €15.5 €10.5 Capital employed7 (in €m) €1,408.9 €1,248.4 €1,381.9 €1,282.8 €1,326.0

KEY FINANCIAL RATIOS


in per cent of revenue

6. Pro forma, not applied for corporate management 7. Fixed assets + Working capital

51 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

DBP (excl. Cloud & IoT) 97.5 101.8 -4% -6% 187.9 191.2 -2% -4%

- thereof Licenses 28.3 35.7 -21% -21% 50.0 59.1 -15% -16%

- thereof Maintenance 69.2 66.1 5% 2% 137.9 132.1 4% 2%

DBP Cloud & IoT 12.8 5.3 144% 141% 22.3 11.6 92% 89%

Total revenue 110.3 107.1 3% 1% 210.3 202.9 4% 2%

Cost of sales -9.6 -9.1 5% 4% -18.9 -17.7 7% 6%

Gross profit 100.7 98.0 3% 1% 191.3 185.2 3% 1%

Sales & Marketing -48.7 -43.1 13% 11% -94.5 -80.8 17% 14%

Research & Development -24.4 -24.1 1% 3% -51.8 -46.9 11% 11%

Segment result 27.5 30.8 -11% -14% 45.0 57.7 -22% -25%

Margin in % 25.0% 28.8% 21.4% 28.3%

Annual Recurring Revenue as of June 30, 2019 315.3 287.5 10% 9%


DIGITAL BUSINESS PLATFORM (INCLUDING CLOUD & IoT) Segment Report Q2 2019 / YTD 2019 (6 months)

52 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

Licenses 5.7 0.2 2662% 2638% 8.7 2.0 339% 335%

Maintenance 1.8 0.8 135% 132% 3.3 1.6 112% 109%

SaaS / Usage based 5.4 4.3 25% 23% 10.3 8.1 27% 25%

Total revenue 12.8 5.3 144% 141% 22.3 11.6 92% 89%

Annual Recurring Revenue as of June 30, 2019 39.6 24.8 60% 59%


DBP CLOUD & IOT Segment Report Q2 2019 / YTD 2019 (6 months)

53 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

Licenses 16.2 17.6 -8% -8% 34.0 26.5 28% 29%

Maintenance 36.6 34.8 5% 4% 73.4 70.5 4% 3%

Product revenue 52.8 52.4 1% 0% 107.4 97.0 11% 10%

Other 0.1 0.2 - - 0.3 0.3 - -

Total revenue 53.0 52.6 1% 0% 107.7 97.3 11% 10%

Cost of sales -1.8 -1.3 45% 43% -4.0 -2.7 50% 49%

Gross profit 51.2 51.3 0% -1% 103.7 94.7 10% 9%

Sales & Marketing -8.3 -7.8 5% 4% -15.6 -14.5 8% 8%


Segment result 36.6 37.5 -2% -3% 75.9 68.7 11% 10%

Margin in % 69.1% 71.3% 70.4% 70.6%


ADABAS & NATURAL Segment Report Q2 2019 / YTD 2019 (6 months)

54 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

Total revenue 46.7 46.0 2% 0% 93.4 92.1 1% 0%

Cost of sales -35.7 -36.0 -1% -2% -71.4 -73.5 -3% -4%

Gross profit 11.0 10.1 9% 8% 22.0 18.6 18% 17%

Sales & Marketing -4.3 -4.3 2% 0% -8.6 -8.6 0% -2%

Segment result 6.7 5.8 15% 18% 13.4 10.0 34% 36%

Margin in % 14.3% 12.6% 14.3% 10.8%


PROFESSIONAL SERVICES Segment Report Q2 2019 / YTD 2019 (6 months)

55 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

Product revenue 163.1 159.5 2% 1% 317.7 299.9 6% 4%

Licenses 50.2 53.5 -6% -7% 92.8 87.6 6% 5%

Maintenance 107.6 101.7 6% 4% 214.7 204.2 5% 3%

SaaS / Usage based 5.4 4.3 25% 23% 10.3 8.1 27% 25%

Services 46.7 46.0 2% 0% 93.4 92.1 1% 0%

Other 0.1 0.2 - - 0.3 0.4 - -

Total 210.0 205.7 2% 1% 411.4 392.3 5% 3%


REVENUE Q2 2019 / YTD 2019 (6 months)


Euro 35%

US Dollar 25%

Sonstige 21%

CURRENCY IMPACT ON REVENUE Q2 2019 / YTD 2019 (6 months)

AUD 4%

GBP 5%

Currency impact on revenue

35% revenue in Euro 65% revenue in foreign currency

Currency split YTD 2019

ILS 5%

(in €m; yoy)

Q2 2019

Q2 in %

YTD 2019

YTD in %

Lizenses 0.4 1% 0.4 0%

Maintenance 2.0 2% 4.4 2%

SaaS 0.1 2% 0.2 2%

Professional Services & Other 0.7 2% 1.3 1%

Total 3.2 2% 6.3 2%

EUR 35%

USD 27%

Other 24%

57 |

(in €m) Q2 2019

Q2 2018

∆% ∆% acc

YTD 2019

YTD 2018

∆% ∆% acc

Total revenue 210.0 205.7 2% 1% 411.4 392.3 5% 3%

Cost of sales -49.1 -48.4 2% 0% -98.6 -97.9 1% -1%

Gross profit 160.9 157.3 2% 1% 312.8 294.5 6% 5%

Margin in % 76.6% 76.5% 76.0% 75.1%


Sales & Marketing -64.7 -58.4 11% 9% -125.6 -110.5 14% 12%

Administration -17.6 -18.0 -2% -3% -35.2 -35.0 1% 0%

Other income / expense -0.1 1.3 - - 1.9 3.7 - -

EBIT 47.7 52.2 -9% -9% 89.9 94.3 -5% -5%

Margin in % 22.7% 25.4% 21.9% 24.0%


RESULTS Q2 2019 / YTD 2019 (6 months)

58 |

(in €m) Q2 2019

Q2 2018 ∆% YTD

2019 YTD 2018 ∆%

EBIT (before all taxes) 47.7 52.2 -9% 89.9 94.3 -5%

Amortization on acquisition related intangible assets 5.4 5.2 3% 11.0 10.5 5%

Share based payments 2.3 3.1 -27% 4.8 6.0 -21%

Restructuring / severances / legal case 0.7 0.6 9% 1.8 1.5 19%

Other impacts / impacts from M&A activities 0.0 0.3 -91% 0.2 0.4 -48%

EBITA (Non-IFRS) 56.1 61.5 -9% 107.7 112.7 -4%

in % of revenue (Non-IFRS) 26.7% 29.9% 26.2% 28.7%

Net income (Non-IFRS) 39.3 42.2 -7% 75.6 78.7 -4%

EPS in € (Non-IFRS)* 0.53€ 0.57€ -7% 1.02€ 1.06€ -4%


NON-IFRS EARNINGS Q2 2019 / YTD 2019 (6 months)

* Weighted average shares outstanding (basic) Q2 2019: 74.0m/ Q2 2018: 74.0m, YTD 2019: 74.0m / YTD 2018: 74.0m

59 |

(in €m) Q2 2019

Q2 2018 ∆% YTD

2019 YTD 2018 ∆%

Operating cash flow 30.6 33.5 -9% 90.6 95.1 -5%

./. CapEx* (long-term, non-current) -3.7 -5.0 -6.0 -6.5

./. Repayment of lease liabilities** -4.5 - -7.7 -

Free cash flow 22.4 28.5 -21% 76.9 88.6 -13%

Payment adjustments for

- Share based compensation 3.9 2.9 7.8 18.4

- Restructuring/ severances/ legal cases 0.7 0.8 7.9 3.0

Adjusted operational Free Cash flow 27.0 32.2 -16% 92.6 110.0 -16%

in % of revenue 12.9% 15.7% 22.5% 28.0%

Adjusted operational Free Cash flow per share*** 0.36€ 0.44€ -16% 1.25€ 1.49€ -16%


CASH FLOW Q2 2019 / YTD 2019 (6 months)

* 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) Q2 2019: 74.0m / Q2 2018: 74.0m; YTD 2019: 74.0m / YTD 2018: 74.0m

60 |

34.9

June 30, 2019

June,30 2019

Assets Liabilities


BALANCE SHEET (in €m)

Dec 31, 2018

Dec 31, 2018

462.3

276.2 62.1

1,172.4

2,007.9

Cash and cash equivalents

Financial assets Trade and other receivables

Fixed assets (Goodwill 970.9 / 964.6)

Total

Non-financial assets

313.3

316.0

139.5

1,239.1

2,007.9

Financial liabilities

Other liabilities

Deferred income

Shareholders’ equity (ratio 61.5% / 61.7%)

Total

509.9

231.4 77.4

1,204.1

2,048.0

25.2

373.6

241.0 173.1

1,260.3

2,048.0

61 |

(in FTE) June 30, 2019

Dec 31, 2018

∆%

June 30, 2018

∆% yoy

Total 4,740 4,763 0% 4,655 2%

Professional Services 1,828 1,901 -4% 1,910 -4%

Research & Development 1,348 1,310 3% 1,205 12%

Sales & Marketing 943 926 2% 936 1%

Administration 620 626 -1% 604 3%

Germany 1,248 1,243 0% 1,218 2%

USA 571 580 -2% 574 0%

India 894 895 0% 803 11%

Rest of world 2,027 2,044 -1% 2,060 -2%


HEADCOUNT By functional areas* and geography

* According to P+L structure

62 |

› Shares & ownership


63 |

33.6%

23.6%

36.0%

6.2% 0.5%

Germany

North America

Continental Europe(excl. Germany)UK and Ireland

Rest of World

33.7% 60.1%

Software AGFoundation

Own Shares (0.03%)

InstitutionalInvestors

Private Investors

Share Data SOW, SOW:GR, SOWGn.DE

ISIN: DE000A2GS401

ADR symbol: STWRY

Indices: MDAX, TecDAX, DAX100

Share Info Number of total shares: 74,000,000

Thereof Free Float: ~ 66%

Number of shares outstanding: ~ 74m

Registered shares since Oct. 2, 2017

Major Institutional Shareholders** BlackRock, Inc 4.52%

Axxion S.A. 2.97%

DWS Investment GmbH 2.84%

Norges Bank 2.79%

SHAREHOLDER STRUCTURE


Ownership* Regional Split**

**Institutional shareholders based on public files, August 2019

* shareholder structure based on share register, August 2019

64 |

0.37* 0.38* 0.43* 0.46 0.46 0.46 0.50

0.55 0.60

0.65 0.71

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DIVIDEND POLICY


Focus on continuity Dividend by fiscal year (in € per share)

*According to the 1:3 stock split, rounded

65 |

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


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.

Software AG We believe that moral principles and economic rewards not only go together, they belong together.

CORPORATE SOCIAL RESPONSIBILITY

Software AG Foundation One of Germany’s largest charities & major shareholder of Software AG

Creating sustainable value

67 |

ANALYST COVERAGE


Baader Helvea E.R. Barclays Capital Bryan, Garnier & Co Commerzbank Crédit Suisse Deutsche Bank DZ Bank

Pareto Securities AS 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 the latest consensus of analysts‘ financial estimates please visit our IR website

Banks / Broker who cover Software AG on a regular base

https://investors.softwareag.com/en

68 |

INVESTOR RELATIONS


Uhlandstrasse 12 64297 Darmstadt Germany phone: +49 (0) 6151 / 92 1900 fax: +49 (0) 6151 / 9234 1900 softwareag.com e-mail: [email protected]

mailto:[email protected]


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