Welcome!

SAP Authors: PagerDuty Blog, Pat Romanski, Plutora Blog, Srinivasan Sundara Rajan, Tim Hinds

News Feed Item

Software AG 2012: Largest Business Line (BPE) Outperforms Market with 15.5 Percent License Revenue Growth

Software AG (Frankfurt TecDAX: SOW) today released its financial results (IFRS, preliminary) for fiscal year 2012. The company reported €1.05 billion (2011: €1.1 billion) in total group revenue thereby achieving its target for the year. Product revenue (licenses and maintenance) increased 5.7 percent to reach €712.2 million (2011: €673.9 million) in the period under review. Software AG implemented a number of operational and strategic measures in 2012 to set the course for further growth, including intensifying investments by €40 million in sales as well as research and development for the high-growth Business Process Excellence (BPE) division. The implemented growth-generating initiatives began bearing the first fruits during the year. The largest business line achieved a dynamic 15.5 percent growth in license sales. At the same time, the high-margin Enterprise Transaction Systems (ETS) business line developed more solidly than had been projected at the start of 2012. Group EBIT was €248.3 million (2011: €269.2 million) due to targeted investment expenses and lower revenue in the IDS Scheer Consulting (IDSC) line. The company's EBIT margin climbed steadily over the course of the year from 21.5 to 27.2 percent due to better-than-expected ETS performance, continuously increasing BPE license revenues and effective cost management. Software AG plans to make more dedicated investments in the high-growth BPE business and thus lay the foundation for further dynamic growth.

Karl-Heinz Streibich, CEO of Software AG, states, "2012 was a successful year of transformation for Software AG. We consolidated traditional areas of business and strengthened new areas of growth with increased investments. Our financial results, for example our dynamic revenue growth of more than 400 percent with the big data products, are a clear confirmation that we are right on track. Based on these positive experiences, we have developed a new growth strategy with the goal of reaching more than one billion euros in product revenue in the BPE business line in 2018."

Business Line Development

Software AG was able to increase group product revenue by 5.7 percent to €712.2 million (2011: €673.9 million) in fiscal 2012. It represents about 68 percent of total revenue, which was €1.05 billion (2011: €1.1 billion). The distribution of revenue thus shifted in favor of the company's growth-driving, high-margin license and maintenance revenue.

The BPE business line made the largest contribution with product revenue growth of 13.9 percent to total €384.7 million (2011: €337.8 million). License revenue growth reached 15.5 percent. This dynamic growth was propelled by sales of the big data products by Terracotta, a U.S.-based Software AG subsidiary. Revenue from these products more than quadrupled in 2012, totaling €16.5 million (2011: €3.6 million). About 54 percent of total product revenue was attributable to integration and process software or to innovative in-memory/big data solutions. Software AG's revenue is driven primarily by the BPE business line. This trend confirms the forward-looking direction of the company. Software AG set the course for further long-term, dynamic growth with an additional investment of €40 million in sales and marketing as well as in research and development.

The profitable ETS business line surpassed expectations considerably in the period under review. The traditional database business produced fairly stable results year on year with product revenue at €309.6 million (2011: €312.9 million). Total ETS revenue was €375.3 million (2011: €381.3 million) in fiscal 2012, down just 1.6 percent from last year.

Reorganization of the IDSC business line continued in 2012. The focal points were the withdrawal from unprofitable markets and an emphasis on the process side of SAP application consulting —particularly in German-speaking countries. These measures led to a decrease in revenue to €125.1 million (2011: €189.2 million). The sale of North American SAP-related service activities in January 2013 was a successful step forward in the realignment of IDSC.

Earnings Performance

Due to expenses associated with the expansion of sales in order to access new high-growth business areas, intensified investments in research and development, and expenses from the consolidation of the SAP consulting business, EBIT (earnings before interest and taxes) was down about 8 percent year on year to €248.3 million (2011: €269.2 million). At the same time, the EBIT margin improved steadily over the course of the year due to stable ETS performance and continuously increasing BPE revenues (Q1 2012: 21.5 percent; Q2 2012: 22.1 percent; Q3 2012: 23.7 percent; Q4 2012: 27.2 percent). With respect to the full fiscal year, the EBIT margin was 23.7 percent (2011: 24.5 percent) and thus in the top half of the forecast range. Net income after taxes totaled €164.7 million (2011: €177.2 million). Based on Software AG's total assets of approximately €1.8 billion as of December 31, 2012, the company's equity ratio was about 60 percent. Software AG reported net liquidity as of December 31, 2012 with a cash surplus (cash less financial liabilities) of €49.6 million.

According to CFO Arnd Zinnhardt, "Our bold investments, which began paying off in part during the year, enabled us to significantly strengthen the operational side of business in 2012. At the same time, our financial discipline allowed us to increase our EBIT margin over the course of the year and further optimize our balance sheet structure. This positions us ideally for further dynamic growth."

Q4 2012

Software AG increased its product revenue by 4.0 percent to €196.8 million (2011: €189.2 million) in the fourth quarter of 2012. The BPE business line made the largest contribution to growth with a 12.2 percent increase in product revenue year-on-year at €113.7 million (2011: €101.3 million). ETS product revenue performed according to expectations with a slight decline of 4.3 percent to total €78.0 million (€81.5 million). As a result of the previously mentioned revenue reduction in SAP consulting (IDSC), total revenue for the Software AG group was down 5.9 percent year on year to €276.7 million (2011: €294.0 million) in the fourth quarter of 2012. Due to increased investments and expenses from the IDSC consolidation, fourth-quarter EBIT was €75.4 million (2011: €78.0 million).

Employees

As of December 31, 2012 Software AG had 5,419 (2011: 5,535) employees, of which 1,131 (2011: 1,023) worked in Sales and Marketing and 887 (2011: 887) in Research and Development. The total number of employees in Germany was 1,768 (2011: 1,881). The total number of employees working in Darmstadt as of December 31, 2012 was 733 (2011: 719).

Outlook for 2013

Software AG's outlook continues to be positive. For fiscal year 2013, it anticipates BPE product revenue growth between 16 and 22 percent (at constant currency) and a revenue decline in the traditional ETS database business between 4 and 9 percent (at constant currency). In light of the average growth forecast of about 10 percent in the promising BPE market, Software AG plans to gain market share and therefore continues investing in sales and marketing in the current fiscal year.

Through the additional investments in sustainable, dynamic growth for the high-potential BPE business, the BPE revenue contribution will account for about 80 percent of the company’s total revenue in the year 2018. BPE product revenue is expected to reach €1 billion by that time. The company’s early entrance into the future-oriented integration and process software market space as well as the big data market is paying off strategically and thus securing the company's long-term success.

###

About Software AG

Software AG (FRA: SOW) helps organizations achieve their business objectives faster. The company's big data, integration and business process technologies enable customers to drive operational efficiency, modernize their systems and optimize processes for smarter decisions and better service. Building on over 40 years of customer-centric innovation, the company is ranked as a "leader" in fifteen market categories, fueled by core product families Adabas and Natural, ARIS, Terracotta and webMethods. Software AG has more than 5,400 employees in 70 countries and had revenues of €1.05 billion in 2012 (IFRS, unaudited). Learn more at www.softwareag.com.

Software AG - Get There Faster

Detailed press information about Software AG including a picture and multimedia database are available at: www.softwareag.com/press

Follow us on Twitter
Find us on Facebook

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
“The age of the Internet of Things is upon us,” stated Thomas Svensson, senior vice-president and general manager EMEA, ThingWorx, “and working with forward-thinking companies, such as Elisa, enables us to deploy our leading technology so that customers can profit from complete, end-to-end solutions.” ThingWorx, a PTC® (Nasdaq: PTC) business and Internet of Things (IoT) platform provider, announced on Monday that Elisa, Finnish provider of mobile and fixed broadband subscriptions, will deploy ThingWorx® platform technology to enable a new Elisa IoT service in Finland and Estonia.
Advanced Persistent Threats (APTs) are increasing at an unprecedented rate. The threat landscape of today is drastically different than just a few years ago. Attacks are much more organized and sophisticated. They are harder to detect and even harder to anticipate. In the foreseeable future it's going to get a whole lot harder. Everything you know today will change. Keeping up with this changing landscape is already a daunting task. Your organization needs to use the latest tools, methods and expertise to guard against those threats. But will that be enough? In the foreseeable future attacks w...
As enterprises move to all-IP networks and cloud-based applications, communications service providers (CSPs) – facing increased competition from over-the-top providers delivering content via the Internet and independently of CSPs – must be able to offer seamless cloud-based communication and collaboration solutions that can scale for small, midsize, and large enterprises, as well as public sector organizations, in order to keep and grow market share. The latest version of Oracle Communications Unified Communications Suite gives CSPs the capability to do just that. In addition, its integration ...
SYS-CON Events announced today that ActiveState, the leading independent Cloud Foundry and Docker-based PaaS provider, has been named “Silver Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. ActiveState believes that enterprises gain a competitive advantage when they are able to quickly create, deploy and efficiently manage software solutions that immediately create business value, but they face many challenges that prevent them from doing so. The Company is uniquely positioned to help address these challenges thro...
Today’s enterprise is being driven by disruptive competitive and human capital requirements to provide enterprise application access through not only desktops, but also mobile devices. To retrofit existing programs across all these devices using traditional programming methods is very costly and time consuming – often prohibitively so. In his session at @ThingsExpo, Jesse Shiah, CEO, President, and Co-Founder of AgilePoint Inc., discussed how you can create applications that run on all mobile devices as well as laptops and desktops using a visual drag-and-drop application – and eForms-buildi...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, shared some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, a...
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
The Internet of Things is a misnomer. That implies that everything is on the Internet, and that simply should not be - especially for things that are blurring the line between medical devices that stimulate like a pacemaker and quantified self-sensors like a pedometer or pulse tracker. The mesh of things that we manage must be segmented into zones of trust for sensing data, transmitting data, receiving command and control administrative changes, and peer-to-peer mesh messaging. In his session at @ThingsExpo, Ryan Bagnulo, Solution Architect / Software Engineer at SOA Software, focused on desi...
Disruptive macro trends in technology are impacting and dramatically changing the "art of the possible" relative to supply chain management practices through the innovative use of IoT, cloud, machine learning and Big Data to enable connected ecosystems of engagement. Enterprise informatics can now move beyond point solutions that merely monitor the past and implement integrated enterprise fabrics that enable end-to-end supply chain visibility to improve customer service delivery and optimize supplier management. Learn about enterprise architecture strategies for designing connected systems tha...
SYS-CON Events announced today that CodeFutures, a leading supplier of database performance tools, has been named a “Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. CodeFutures is an independent software vendor focused on providing tools that deliver database performance tools that increase productivity during database development and increase database performance and scalability during production.
"For over 25 years we have been working with a lot of enterprise customers and we have seen how companies create applications. And now that we have moved to cloud computing, mobile, social and the Internet of Things, we see that the market needs a new way of creating applications," stated Jesse Shiah, CEO, President and Co-Founder of AgilePoint Inc., in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Recurring revenue models are great for driving new business in every market sector, but they are complex and need to be effectively managed to maximize profits. How you handle the range of options for pricing, co-terming and proration will ultimately determine the fate of your bottom line. In his session at 15th Cloud Expo, Brendan O'Brien, Co-founder at Aria Systems, session examined: How time impacts recurring revenue How to effectively handle customer plan changes The range of pricing and packaging options to consider
Things are being built upon cloud foundations to transform organizations. This CEO Power Panel at 15th Cloud Expo, moderated by Roger Strukhoff, Cloud Expo and @ThingsExpo conference chair, addressed the big issues involving these technologies and, more important, the results they will achieve. Rodney Rogers, chairman and CEO of Virtustream; Brendan O'Brien, co-founder of Aria Systems, Bart Copeland, president and CEO of ActiveState Software; Jim Cowie, chief scientist at Dyn; Dave Wagstaff, VP and chief architect at BSQUARE Corporation; Seth Proctor, CTO of NuoDB, Inc.; and Andris Gailitis, C...
Code Halos - aka "digital fingerprints" - are the key organizing principle to understand a) how dumb things become smart and b) how to monetize this dynamic. In his session at @ThingsExpo, Robert Brown, AVP, Center for the Future of Work at Cognizant Technology Solutions, outlined research, analysis and recommendations from his recently published book on this phenomena on the way leading edge organizations like GE and Disney are unlocking the Internet of Things opportunity and what steps your organization should be taking to position itself for the next platform of digital competition.
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial Cloud.
SYS-CON Media announced that Splunk, a provider of the leading software platform for real-time Operational Intelligence, has launched an ad campaign on Big Data Journal. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. The ads focus on delivering ROI - how improved uptime delivered $6M in annual ROI, improving customer operations by mining large volumes of unstructured data, and how data tracking delivers uptime when it matters most.
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Dale Kim is the Director of Industry Solutions at MapR. His background includes a variety of technical and management roles at information technology companies. While his experience includes work with relational databases, much of his career pertains to non-relational data in the areas of search, content management, and NoSQL, and includes senior roles in technical marketing, sales engineering, and support engineering. Dale holds an MBA from Santa Clara University, and a BA in Computer Science from the University of California, Berkeley.
SYS-CON Media announced that Cisco, a worldwide leader in IT that helps companies seize the opportunities of tomorrow, has launched a new ad campaign in Cloud Computing Journal. The ad campaign, a webcast titled 'Is Your Data Center Ready for the Application Economy?', focuses on the latest data center networking technologies, including SDN or ACI, and how customers are using SDN and ACI in their organizations to achieve business agility. The Cisco webcast is available on-demand.