Software AG Reports Further Profitable Growth in the Third Quarter 2009; U.S. Operations Contribute Positively to Group Results

RESTON, Va.--(BUSINESS WIRE)--Software AG (Frankfurt TecDAX:SOW) again reported an increase in revenue and earnings for the third quarter of 2009. Group revenue grew during the quarter by 19 percent year-on-year to €214 million. In the same period, product revenue increased by 4 percent to €143 million and Consulting by 66 percent to €70 million. Operating results (EBIT) grew by 16 percent to €56 million and net income to €38 million, up 23 percent. The EBIT margin for the third quarter at 26.4 percent closely matched the record 27 percent reported in Q3, 2008. Earnings per share in the quarter rose 25 percent to €1.35 (€1.08 in 2008). The consolidation of IDS Scheer, as of August 20 2009, had a positive net impact on revenue; €39 million and net income; €0.4 million.

“We are proud of our performance in the face of a continuing difficult market”

Revenue

Software AG continued its stable performance despite the persistently difficult economic environment. The third quarter did however show the normal business development seasonal effects and this indicates an overall improvement in market outlook. The U.S. operations contributed to the positive group results, accounting for approximately 25 percent of group revenue.

Total revenue for Software AG rose 19 percent to €214 million in the third quarter of 2009 over the same period in 2008 (€180 million). Total product revenue was up 4 percent to €143 million (€138 million in 2008) and Consulting at €70 million (€42 million in 2008) up 66%, reflecting a significant contribution from IDS Scheer.

Total revenue from the data management business ETS amounted to €99 million, marginally under the third quarter 2008 figure of €101 million, which included a major contract in Brazil. Product revenue was stable at €83.1 million (Q3 2008: €83.9 million) reflecting further strong growth in Brazil and continuing customer investments in their running businesses.

The webMethods business line further raised the Group EBIT margin in Q3 2009; raising its segment contribution by 7% to €29.8 million (28 million in 2008) through increased sales efficiencies. Q3 product revenue, down by 8% compared to the previous year’s quarter, reflects the difficult market conditions for new projects. A sequential comparison however, with the previous quarter (Q2 2009), shows a normal seasonal impact on license revenue, signaling an encouraging improvement in the business environment. With a continuing level of R&D investment and the potential cross-selling opportunities offered by over 7,000 customers of IDS Scheer, the webMethods business line will significantly benefit from a future upturn in business sentiment.

“We are proud of our performance in the face of a continuing difficult market,” said Software AG CEO, Karl-Heinz Streibich. “We continue to increase our efficiency, protecting and improving our profitability. Recent large and strategic customer deals give grounds for cautious optimism as does the significant cross-selling opportunities presented by the acquisition of IDS Scheer.”

IDS Scheer acquisition

Software AG’s acquisition of IDS Scheer AG, Germany’s third-largest software company, is on track. Following approval by the relevant supervisory bodies and a six-week acceptance period for shareholders, Software AG had acquired more than 90 percent of IDS Scheer AG shares. Karl-Heinz Streibich and Arnd Zinnhardt have also assumed positions on the IDS Scheer AG supervisory board. The planned next step is a domination and profit transfer agreement.

Revised forecast for 2009

Originally, Software AG’s forecast for the full year anticipated an increase in revenue of between 4 and 8 percent and an EBIT margin of between 24.5 and 25.5 percent. Following the acquisition of IDS Scheer the EBIT margin forecast has been raised to the 25 to 25.5 percent range and the revenue forecast to between €835 and €845 million.


Key Figures
IFRS, unaudited

€ million (unless otherwise stated)	Q3 2009	Q3 2008	Change in %
Total revenue	213.6	180.1	19
- Product revenue (License & maintenance)	143.2	138.0	4
- Consulting revenue	69.5	41.8	66
Revenue ETS business division	99.2	101.1	-2
Revenue webMethods business division	75.8	79.0	-4
EBIT	56.4	48.7	16
EBIT Margin (in %)	26.4	27.0
Net income	38.1	31.0	23
Earnings per share (EUR)	1.35	1.08	25
Free Cash Flow	47.0	34.2	37

About Software AG

With more than 1,000 U.S.-enterprise customers and 700 employees, Software AG's U.S. operation contributes one third of the company's total revenue and is Software AG's largest market presence and R&D location. Software AG has operated nationwide in the U.S. since 1973 through a fully-owned subsidiary, Software AG USA Inc., which is headquartered in Reston, Virginia – also an R&D hub for the company’s core data management and integration technologies. R&D labs for the development of Software AG’s webMethods product suite – offering SOA integration and BPM solutions – include facilities in San José/Silicon Valley, Seattle and Denver. For more information, visit www.softwareag.com/us.

Software AG is the world’s largest independent provider of Business Infrastructure Software. Our 4,000 global enterprise customers achieve business results faster by modernizing, integrating and automating their IT systems and processes. Our leading product portfolio includes solutions for high performance data management, developing and modernizing applications, enabling service-oriented architecture, and improving business processes. Software AG has 40 years of global IT experience and about 3,600 employees serving customers in 70 countries. The company is headquartered in Germany and listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW). Software AG posted total revenues of €721 million in 2008.

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