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TRANSCRIPT
UBS
European Conference 2012
November 13, 2012
Arnd Zinnhardt
CFO
November 2012 | 2
This presentation contains forward-looking statements based on beliefs of
Software AG management. Such statements reflect current views of Software AG
with respect to future events and results and are subject to risks and
uncertainties. Actual results may vary materially from those projected here, due
to factors including changes in general economic and business conditions,
changes in currency exchange, the introduction of competing products, lack of
market acceptance of new products, services or technologies and changes in
business strategy. Software AG does not intend or assume any obligation to
update these forward-looking statements.
Safe-Harbor-Statement
November 2012 | 3
> € 1bn revenue
29% operating margin (EBITDA)
> € 2.5 bn market cap,
Net cash positive
> 5,000 Employees Worldwide
71% Free float,
29% Software AG Foundation
Global customer base:
80% of Fortune 10,000
Tech leader in systems integration,
process automation and data management
Software AG - At a Glance
High performance database
(pre-relational)
Process Planning,
monitoring and analysis
Middleware to integrate data
applications and digital workflows
Big-data and In-memory technology
Product Highlights
November 2012 | 4
0
200
400
600
800
1,000
1,200
0
20
40
60
80
100
120
140
160
180
200
411
1,098
24
188
Total Revenue (€m) FCF (€m)
2011 2004
0.0
0.5
1.0
1.5
2.0
2.5
0.65
2.05
EPS (€)
0.0
0.2
0.4
0.6
0.25
0.46
Dividend (€)
Software AG – Track Record
2011 2004
2011 2004 2011 2004
November 2012 | 5
(Revenue split based on FC 2012)
New Business
(started 2004)
Integration Technology
/SOA /Cloud
Business Process
Management (BPM)
Big Data / Terracotta
52%
BPE
36%
ETS
12%
IDSC
Revenue by Business Line (Segment)
Traditional Business
(started 1970)
Data Management
(ADABAS)
Application
Modernization
(Natural)
SAP Consulting
(acquired 2009 with
IDS Scheer Group)
November 2012 | 6
PIIGS
< 4%
BRICS 14%
47%
31%
13%
9%
Product Revenue by Industry
*Based on product revenue 9m 2012
Product Revenue by Region*
Product Revenue by Industry*
Revenue Split – Well Balanced
Financial Sector
Public Sector
IT Associa-
tions
Services
Manu-facturing
Telcos
Logistics
Retail Other
21%
20%
EMEA
(ex Germany)
Asia Pacific
Germany
Americas
14%
Software AG Positioned in the
Sweet Spot of IT Mega Trends
November 2012 | 8
Agility Layer
Agility Layer – Enabler for the Digital Enterprise
Increase Performance and Reduce Costs of Organizations
Integration/SOA
InMemory - BIG DATA
Processes
November 2012 | 9
Three Strategic Areas
SaaS
OLTP Hadoop
OLAP
ERP CRM HR
November 2012 | 10
SLOW
EXPENSIVE
COMPLEX
Terracotta: In-Memory & Big Data
Without BigMemory
100x FASTER than
retrieving data
from database
COST REDUCTION
maximize utilization of RAM
and reduce load on database
SIMPLE to deploy,
easy to install,
“plug & play”
SCALEABLE – capacity for
terabytes of data and 100,000s
of transactions per second
REALTIME access to business
critical data in microseconds
enables new business models
HIGH PERFORMING - lower
latency enables higher
throughput and boost high
volume transactions
With BigMemory
Database
Data „In
Memory“ Speed up
Save Costs
Data in
Database
Memory
November 2012 | 11
Risk Systems – Fraud Detection / Prevention
Business Challenge
Fraud detection processing taking too long
Resulting in transaction timeouts and loss of business
Solution
Terracotta BigMemory
Processed terabytes of real-time transaction data in-
memory
Business Value
99.999% Completed Transactions
Reduce fraud processing time from 800ms to less than 20ms
Other Benefits
Solution will expand with their 30% year over year growth
Terracotta - BigMemory at Work
November 2012 | 12
Largest Airline Reservation System
Business Challenge
Mainframe costs are too high
750K reservations a day
Retain high reliability of mainframe
Solution
Terracotta BigMemory
Storing 500GBs of travel reservation sessions and
itineraries per day
Business Value
Delivered SLA’s
Offload Mainframe MIPs by 80%
Maintained 99.999% of transaction integrity
12
Terracotta - BigMemory at Work
November 2012 | 13
Innovations for IT Mega Trends -
7 New Product Offerings will Come to Market in 2013
Cloud Social Mobile BigData
Strategy and Outlook
November 2012 | 15
Growth Strategy
Growth
based on three pillars
Organic Growth…
…leverage technology
leadership in enterprise
infrastructure software
• Fast integration
middleware
• High speed process
automation
• High performance
data management
Innovation…
…addressing
Mega Trends
for enterprise IT
• Cloud
• Big Data
• Mobile
• Collaboration
Selective M&A…
…in three strategic
areas:
• Integration / SOA &
Cloud
• Business Processes
• Big Data
November 2012 16
9% 9%
9%
26%
22% 22% 19%
26% 24%
2008 2010 2009
Innovation through own R&D as well as Acquisitions
8%
27%
18%
2011
2007
2008
2009
2010 2011 2012
BPE R&D cost + amortization of acquired
IPR/products in % of product revenue
BPE R&D cost (all expensed)
ETS R&D cost (all expensed)
Strategic Acquisitions
Technology Tuck Ins
November 2012 | 17
(Revenue in €m)
BPE – New Business Outgrowing Revenue from Traditional Business
357 383
405 396 420
381
126
238
316
372
499 528
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011 2012e
Business Process Excellence Enterprise Transaction Systems
540 –
560
375 –
380
9m
283
9m
391
2012e
Q4
Q4
November 2012 | 18
Organic Growth – BPE Investment Phase 2012/2013
(in €m)
Total
Revenue
Gross
Revenue R&D
Sales & Marketing
Segment
result
9M 2012
9M 2011
266.4
-55.2
-109.4
Segment
margin 26%
376.7
390.9
Segment
margin 28% 242.1
-44.7
-91.7
14%* 28%*
12%* 24%*
*as % of total revenue
68%*
105.7
101.8
64%*
November 2012 | 19
Outlook FY 2012
* Net of currency, delta
(in €m, IFRS)
Total Revenue BPE
FY 2011
528
24.5%
Outlook FY 2012 (as of Oct. 30, 2012)
23.0% to 24.0%
0% to + 3%*
9m 2012
22.4%
381 -4% to -2%*
0%*
674
338
+3% to +6%* + 3%*
- 2%*
+10%* +10 to +13%* thereof BPE
Total Revenue ETS
EBIT Margin Group
Product Revenue Group
November 2012 | 20
Revenue split as % of Total Revenue: according to mid-term plan
~20%
Transformation of Revenue Drivers
~80% ~15%
Traditional Business
• ETS
New Business
• Organic Growth BPE
• Integration Technology
• Business Process Mgt.
• Cloud
• Terracotta / Big Data
• Partner / Indirect Sales / OEM
• M&A / Strategic Acquisitions
SAP Consulting (IDSC)
2011/2012 2017/2018
~35%
~50%
€ 1bn
73%
27%
2005/2006
Backup
November 2012 | 22
Currency impact on revenue YTD 2012 (9 months)
37% revenue in Euro
63% revenue in foreign currency
Euro 37%
US Dollar 25%
Others 10%
ILS 4%
JPY 2%
AUD 4%
ZAR 4%
GBP 4%
CAD 4%
BRL 6%
(in €m; yoy)
Q3
2012
Q3
in %
9m
2012
9m
in %
Licenses 3.1 4% 7.6 4%
Maintenance 4.8 5% 10.7 4%
Consulting &
other
1.7
2% 4.2 2%
Total 9.6 4% 22.5 3%
Currency impact on revenue
November 2012 | 23
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD
2011 Δ%
Licenses 50.0 41.7 20% 131.3 112.1 17%
Maintenance 46.7 42.5 10% 139.7 124.4 12%
Product revenue 96.7 84.2 15% 271.0 236.5 15%
Services & other 37.6 47.0 -20% 119.9 140.2 -14%
Total revenue 134.3 131.2 2% 390.9 376.7 4%
Cost of sales -38.3 -47.2 -19% -124.5 -134.6 -8%
Gross profit 96.0 84.0 14% 266.4 242.1 10%
Sales & marketing -36.5 -31.6 16% -109.4 -91.7 19%
R & D -18.8 -15.1 25% -55.2 -44.7 23%
Segment result 40.7 37.3 9% 101.8 105.7 -4%
Segment report Q3 2012 / YTD 2012 (9 months)
Business Process Excellence
November 2012 | 24
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD 2011
Δ%
Licenses 30.2 31.7 -5% 89.1 87.2 2%
Maintenance 47.4 47.5 - 142.5 144.2 -1%
Product revenue 77.6 79.2 -2% 231.6 231.4 -
Services & other 16.2 15.9 2% 51.5 50.2 3%
Total revenue 93.8 95.1 -1% 283.1 281.6 1%
Cost of sales -18.2 -15.6 17% -54.0 -55.1 -2%
Gross profit 75.6 79.5 -5% 229.1 226.5 1%
Sales & marketing -15.9 -16.8 -5% -47.8 -47.9 -
R & D -6.3 -6.8 -7% -19.5 -20.5 -5%
Segment result 53.4 55.9 -4% 161.8 158.1 2%
Segment report Q3 2012 / YTD 2012 (9 months)
Enterprise Transaction Systems
November 2012 | 25
Segment report Q3 2012 / YTD 2012 (9 months)
IDS Scheer Consulting
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD
2011 Δ%
External product revenue 4.0 5.6 -29% 12.7 16.8 -24%
Services & other 25.3 42.8 -41% 83.9 129.3 -35%
Total revenue 29.3 48.4 -39% 96.6 146.1 -34%
Cost of sales -27.6 -37.4 -26% -93.0 -126.9 -27%
Gross profit 1.7 11.0 -85% 3.6 19.2 -81%
Sales & marketing -4.4 -7.0 -37% -13.8 -20.2 -32%
R & D - -0.1 - - -0.3 -
Segment result -2.7 3.9 - -10.2 -1.3 -
November 2012 | 26
Revenue Q3 2012 / YTD 2012 (9 months)
(in €m) Q3
2012
Q3
2011 Δ%
YTD
2012
YTD
2011 Δ%
Product 178.3 168.9 6% 515.3 484.7 6%
Licenses 80.5 74.7 8% 221.8 203.6 9%
Maintenance 97.8 94.2 4% 293.5 281.1 4%
Consulting &
Services
78.2 105.2 -26% 253.7 316.4 -20%
Other 0.9 0.5 - 1.6 3.2 -
Total 257.4 274.6 -6% 770.6 804.3 -4%
November 2012 | 27
Result Q3 2012 / YTD 2012 (9 months)
* Depreciation & amortization is included in functional areas according to IFRS
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD
2011
Δ%
Product revenue 178.3 168.9 6% 515.3 484.7 6%
Total revenue 257.4 274.6 -6% 770.6 804.3 -4%
Cost of sales -90.2 -106.4 -15% -289.5 -332.4 -13%
Gross profit 167.2 168.2 -1% 481.1 471.9 2%
Margin in % 65.0% 61.3% 62.4% 58.7%
R & D -25.2 -22.0 15% -74.8 -65.4 14%
Sales & marketing -60.4 -58.5 3% -181.3 -168.6 8%
Administration -20.0 -15.3 31% -54.2 -49.1 10%
Other income/expense -0.5 -0.4 25% 2.1 2.4 -13%
EBIT 61.1 72.0 -15% 172.9 191.2 -10%
Margin in % 23.7% 26.2% 22.4% 23.8%
EBITDA (pro-forma*) 73.7 85.1 -13% 210.8 226.3 -7%
Margin in % 28.6% 31.0% 27.4% 28.1%
November 2012 | 28
Net result Q3 2012 / YTD 2012 (9 months)
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD
2011 Δ%
EBIT 61.1 72.0 -15% 172.9 191.2 -10%
Margin in % 23.7% 26.2% 22.4% 23.8%
Financial income -1.4 -3.2 56% -5.2 -6.8 24%
Profit before tax 59.7 68.8 -13% 167.7 184.4 -9%
Taxes -19.0 -22.2 14% -53.7 -59.1 9%
Tax rate in % 31.8% 32.3% 32.0% 32.0%
Net income 40.7 46.6 -13% 114.0 125.3 -9%
EPS in €* 0.47 0.54 -13% 1.31 1.46 -10%
* Weighted average shares outstanding (basic) Q3 2012: 86.8 m / Q3 2011: 86.7 m (incl. share split)
November 2012 | 29
Cash flow Q3 2012 / YTD 2012 (9 months)
* Cash flow from investing activities except acquisitions / ** incl. share split 2011
(in €m) Q3
2012
Q3
2011 Δ% YTD
2012
YTD
2011 Δ%
Operating cash flow 28.7 17.9 60% 133.5 115.4 16%
./. CapEx* -4.1 -4.6 -8.0 -7.2
Free cash flow 24.6 13.3 85% 125.5 108.2 16%
as % of revenue 9.6% 4.8% 16.3% 13.5%
Free cash flow per share in €** 0.28 0.15 87% 2 1.45 1.26 15%
Weighted average number of
shares (in m)**
86.8 86.7 86.8 86.0
November 2012 | 30
Balance sheet
Assets Liabilities (in €m)
1,680.7
1,067.2 1,069.2
80.4 77.1
304.8 317.9
274.7 216.5
1,027.0 951.5
142.9 105.9
293.0 345.9
264.2 277.4
1,680.7 1,727.1 1,727.1 1,680.7
Sept. 30,
2012
Dec. 31,
2011
Sept. 30,
2012
Dec. 31,
2011
Cash and cash
equivalents
Trade receivables
Inventory,
other assets
Fixed assets
(goodwill
759.9 / 752.2)
Total
Financial
liabilities
Other liabilities
Deferred
income
Shareholders
equity (ratio
59.5% / 56.6%)
Total
November 2012 | 31
Amortization / depreciation impact 2012ff (preliminary)
* Estimated
Amortization IDS
(in €m)
Amortization other
Depreciation
Q3
2012
2.7
7.0
2.9
FY
2012*
11.0
25.5
11.6
FY
2013ff*
11.0
26.6
12.4
November 2012 | 32
Headcount by functional areas* and geography
* According to P+L structure
(in FTE) Sept.30,
2012
June 30,
2012 Δ%
qoq
Sept. 30,
2011 Δ%
yoy
Total 5,436 5,461 - 5,498 -1%
Consulting & Services 2,716 2,794 -3% 2,874 -5%
R & D 892 896 - 855 4%
Sales & marketing 1,084 1,042 4% 1,031 5%
Administration 744 729 2% 738 1%
USA 739 725 2% 721 2%
Germany 1,783 1,803 -1% 1,920 -7%
Rest of world 2,914 2,933 -1% 2,857 2%
Thank you
Please contact:
Investor Relations
Uhlandstrasse 12
64297 Darmstadt
Germany
phone: +49 (0) 6151 / 92- 3046
fax: +49 (0) 6151 / 92- 1933
web: softwareag.com
e-mail: [email protected]