Improved Q4 operating margin (non IFRS) up 5
percentage points to 36 percent – a five year
record high
•
Optimized sales
structures result in increased profitability
•
BPE: License revenue
up more than 40 percent quarter-on-quarter
•
ETS: Stability of
maintenance business further increased
•
Consulting: Q4
segment margin up 5 percentage points to 13 percent
•
Launch of the first Digital Business Platform at Innovation World
[Please note: All figures are preliminary and
rounded.]
Darmstadt, Germany, January 28, 2015 - Software AG (Frankfurt TecDAX: SOW) today
released
its financial results (IFRS, preliminary) for the fourth quarter and 2014
fiscal year. The software company's upward trend noted in the third quarter
continued through the end of the year. Key performance indicators further
improved substantially from October to December—typically a strong period of
the year: License revenue from the Business Process Excellence (BPE) and
Enterprise Transaction Systems (ETS) business lines grew over the previous
quarter; profitability of the Consulting business rose to 13 percent; and the
Q4 Group operating margin (non-IFRS) reached 36 percent – a five year record
high.
The ETS
database business line reaped the benefits of customer loyalty in the quarter
under review. As a result, Software AG further stabilized ETS maintenance
revenue during the course of the year. Additionally, ETS licenses in the fourth
quarter grew 7 percent year-on year to total €38.4 million. With this result,
ETS product revenue reached the upper end of the target range for 2014.
BPE
license revenue demonstrated growth at 43 percent quarter-on-quarter, but was
nonetheless
down year-on-year at €60.2 million. BPE maintenance revenue improved 7
percent
quarter-on-quarter during the period from October to December to reach €57.9
million. Sales efficiency continued to improve from the third quarter of 2014.
And despite lower revenues, BPE earnings and its segment margin were up
compared to both the previous quarter and the same quarter in 2013.
The
Consulting business line achieved a 13-percent segment margin in the fourth
quarter, which is 520 basis points better than the previous year. This strong
performance is a result of the targeted realignment of the consulting business
to focus on Software AG products.
In light
of the improved business in the second half of the year, Software AG considers
itself to be very well equipped for future profitable growth. The excellence of
the company’s product portfolio was confirmed by the positive feedback from its
clients. In the fourth quarter of 2014, Software AG launched the first Digital Business Platform at its international customer event Innovation
World in the USA. With the platform, customers can develop their own
applications to accelerate their transformation to a digital enterprise as they
have to rapidly adapt to ever changing business environments.
Karl-Heinz Streibich, CEO of Software AG,
stated, "Customer-driven development of the product portfolio, a focus on
the core business in our Consulting unit and optimized sales effectiveness were
our strategic priorities in 2014. All of the measures we implemented showed
initial successes in the second half of fiscal 2014." He continued,
"So we are starting 2015 in an excellent position to further increase
Software AG's value."
CFO Arnd Zinnhardt added, "With a
fourth-quarter operating margin of about 36 percent, we are among the top
performers of our industry. Increasing profitability remains our goal for 2015.
And that will serve as the foundation for innovation and expansion—in other
words, for Software AG's successful development."