Darmstadt, 31 Oct 2012
Software AG (Frankfurt TecDAX: SOW) today pre-announced its key figures for the third quarter, 2012, after an initial consolidation of its financial numbers (all figures preliminary, rounded and subject to change).
Development of licence revenues
Software AG reported software licence revenues, the key growth indicator, of around EUR81 million in the third quarter. This represents an increase of ca. 8% over the very strong previous year's third quarter (EUR74.7 million) and significantly exceeds market expectations.
In Business Process Excellence (BPE), licence sales rose by 20% to ca. EUR50 million (previous year: EUR41.7 million). This positive development was based on all regions reporting double-digit revenue growth. The sales offensive in North America, in which the company has been investing since the beginning of the year, delivered strong growth for the second consecutive quarter. Europe also continued its positive development. Moreover, the "big data" products from Terracotta continued their dynamic growth and contributed some EUR5 million licence revenue in the third quarter, repeating the record sales of the second quarter record.
In the traditional Enterprise Transaction Services (ETS) division, licence revenue was approximately EUR30 million, almost at the high level of 2011 (EUR31.6 million), contributing to the further stabilisation of the classic database business.
Development of maintenance and services revenues
Group maintenance revenue increased in the third quarter of 2012 by ca. 4% to about EUR98 million (previous year: EUR94.2 million), with both the BPE and ETS divisions contributing approximately EUR47 million each. Group services revenue in the quarter amounted to approximately EUR78 million (previous year: EUR105.2 million), of which one third was contributed by IDS Scheer Consulting, implementing SAP solutions. The background to this sales decline is the concentration of the consulting business on process-driven SAP solutions in selected core markets.
Total revenue and income for the third quarter 2012
Due to reduced services revenues, total Group sales amounted to EUR257 million (EUR274.6 million in Q3, 2011) but reached the high level of the seasonally stronger second quarter of 2012 (EUR258.6 million). The operating result (EBIT according to IFRS) was EUR60 million to EUR62 million, above the level of the previous quarter of the current year (EUR57.1 million). Due to the currently higher expenses based on the development and expansion of the marketing and sales organisation for the new growth products, particularly in the US, and this year's charges arising from the focus of the consulting business, the operating profit was below the extraordinarily strong previous year's quarter (EUR72.0 million).
Development of the first nine months 2012
Dynamic BPE licence sales was approximately EUR131 million (previous year: EUR112.1 million) in the first nine months. This is an increase of about 17%. The ETS business nine-month licence revenues were slightly above the previous year at EUR89 million (EUR87.2 million). Product revenues (licences and maintenance) at the group level climbed in the nine-month period by about 6% to around EUR515 million (previous year EUR484.7 million). Marked by the consolidation of the consulting business, sales and earnings in the services business were below the previous year's. Accordingly, consolidated sales in the first nine months were EUR770 million (previous year EUR804.3 million). The operating result was in the range of EUR172 million to EUR174 million (previous year: EUR190 million).
Outlook
The dynamic growth in licence sales, driven by the innovative BPE and Terracotta products and strengthened by stable ETS development, positively impacted the first nine months of fiscal 2012 and is expected to continue in the fourth quarter. Therefore, Software AG confirms its forecast for the full year. The company will provide refined guidance with the full disclosure of its quarterly results on 30 October 2012.
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