Software AG (Frankfurt TecDAX: SOW) continued to show strong growth in Q2 2010 with total revenue up by 52% to EUR267.3 million.
The high growth was driven by the webMethods business division, with licence revenue up by 31% and earnings more than doubled. This confirms the trend of recent quarters that the new webMethods business division is now a driver of earnings growth as well as the traditional Enterprise Transaction Systems business.
At a corporate level, operating earnings, earnings after tax and earnings per share returned double-digit growth, reaching historical record levels. The free cash flow at EUR36.3 million (up 22%) also reached a new record level. Software AG expects the increasing volume of projects in the process solutions area to continue and has confirmed its forecast for fiscal year 2010.
The business performance in the second quarter of 2010 totally confirmed the effectiveness of Software AG's growth strategy. The webMethods business division, with innovative software for integrating business applications and processes, continued to show dynamic growth. Total business division growth accelerated to 18% in the second quarter, after a 9% increase in the Q1.
The webMethods licensing business grew dynamically by 31% to EUR29.6 million. This growth was based on the experience and skills of the business organisation operating in a growing software market and resulted in an increase in the number of large projects as well as an increase in the average deal size.
“We have passed a milestone at Software AG. We have succeeded in establishing a second, stable business division whose organic growth and successful acquisitions complement our profitable ETS business,” stated Karl-Heinz Streibich, CEO of Software AG. “Our strategy has paid off. With webMethods we have a new, profitable growth driver that will propel the company into a new dimension. And this is only the beginning. The integration of IDS Scheer AG will strengthen our growth trend and dynamic results even further in the future.”
Emma Murray, Country Manager for Software AG South Africa, commented: “These results confirm that our strategic direction fits with what the market is asking for from their technology partners. Locally we have also seen a dramatic increase in the interest and success of our solutions as a result of being able to deliver real business value and positively impact business objectives within our customers' environments. It is great to see the market reaffirmation of the decisions taken to build a sustainable roadmap for our customers into the future.”
Revenue by segment
The webMethods business division reported 18% growth in second quarter revenue of EUR89.4 million. The Enterprise Transaction Systems business division (Adabas, Natural) posted revenue of EUR96.3 million (EUR100.9 million in 2009), 5% under Q2 2009 but 8% higher than the first quarter 2010 figure.
Operating earnings and cash flow
The sharp rise in webMethods business volume and continued effective cost management resulted in increased operating earnings in the first quarter of EUR58.9 million. Net income grew by 29 percent to EUR37.4 million compared to EUR28.9 million in Q2 2009. Earnings per share climbed to EUR1.32 (2009: EUR1.02).
"We have established the webMethods business division as a successful growth engine in recent years. It is now also as a significant contributor to Software AG's total earnings. webMethods and ARIS will also drive the dynamic growth of Software AG's EBIT in the coming quarters," said Arnd Zinnhardt, CFO of Software AG. "Earnings and cash flow growth are the basis for the further strategic development of Software AG."
First half of 2010
Software AG's Group revenue totalled EUR517.6 million in the first half of 2010 (H1 2009: EUR341.7 million), a 51% increase over the previous year. In the same period, product revenue was EUR308.6 million, 20% higher than in the prior year (H1 2009: EUR256.2 million).
Maintenance revenue grew by 21% to EUR178.6 million (H1 2009: EUR147.1 million). Licence revenue climbed by 19% from EUR109.1 million to EUR130.1 million. The webMethods business division showed revenue growth of 14% to EUR170.7 million, up from EUR150.1 million in the first half of 2009. Total ETS revenue of EUR185.4 million was just under the 2009 figure of EUR191.5 million.
Forecast
Software AG confirms its forecast for fiscal year 2010 first published in February of this year, with total revenue growth of between 25% and 30% and product revenue growth of between 12% and 15%, at constant currency rates.
The ETS product revenue is forecast to grow between 2% and 4% and the webMethods/ARIS product revenue between 25% and 30%. As regards earnings, the company expects a somewhat higher increase in profit after tax and earnings per share than before, raising the current profit growth to the range of 10% to 12%, at the upper end of the previous forecast.
Share
Software AG & IDS Scheer
Software AG is the global leader in business process excellence. Our 40 years of innovation include the invention of the first high-performance transactional database, Adabas; the first business process analysis platform, ARIS; and the first B2B server and SOA-based integration platform, webMethods.
We are unique in offering the world's only end-to-end - and easiest to use - business process management (BPM) solutions, with the lowest total cost of ownership. Our industry-leading brands, ARIS, webMethods, Adabas, Natural and IDS Scheer Consulting, represent a unique portfolio for: process strategy, design, integration and control; SOA-based integration and data management; process-driven SAP implementation; and strategic process consulting and services.
IDS Scheer is part of the Software AG Group and a leading provider of business process management (BPM) software, solutions and services for corporations and public organizations worldwide. With the ARIS Platform for Process Excellence, the company offers an integrated, comprehensive solution portfolio for the strategy, design, implementation and controlling of business processes, allowing companies to continuously improve their overall business performance. Utilising the ARIS Value Engineering (AVE) approach, IDS Scheer consultants bridge the gap between corporate strategy, business processes, IT solutions and process controlling.
Software AG had revenue of EUR847 million in 2009 and has more than 6 000 employees serving 10 000 enterprise and public institution customers across 70 countries. Our comprehensive software and services solutions allow companies to continuously achieve their business results faster. The company is headquartered in Germany and listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW).
Software AG - Get there faster
Editorial contacts