Q1 2020 EARNINGS
23 April, 2020
© 2020 Software AG. All rights reserved.
WELCOME
Q1 2020 EARNINGS CALL AGENDA
1
2
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5
Sanjay Brahmawar | Covid-19 Actions | |||||
Q1 - Execution Against Strategy | ||||||
Outlook | ||||||
Arnd Zinnhardt | Q1 Financial Performance | |||||
John Schweitzer | CRO Perspective | |||||
Sanjay Brahmawar | Summary | |||||
Your Questions | ||||||
2 | | © 2020 Software AG. All rights reserved. |
Safe Harbor
This presentation includes forward-looking statements based on the 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.
This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities' Act of 1933 in its currently valid form.
3 | | © 2020 Software AG. All rights reserved. |
COVID-19
SWIFT ACTION TO SAFEGUARD PEOPLE & PLATFORM
A global team at | People & platform | Supporting our |
its best | secure | Customers |
Adaptable, energetic, collaborative | Priority 1: safety of our people | Listened to our customers |
Supporting each other, supporting our | Remote working operational with | "Business as Unusual" product |
communities | minimal friction | access initiative launched |
Will emerge a stronger, more resilient, | No major workforce health issues, | Very positive customer |
more agile business | service delivery unaffected | response and engagement |
4 | | © 2020 Software AG. All rights reserved. |
COVID-19
SURE-FOOTED: FINANCIALLY AND OPERATIONALLY
€500m gross cash, c.€200m headroom
€488m Annual recurring revenue
Prioritizing impactful | ROBUST | STRONG |
investments, cost | ||
FINANCIAL | OPERATING | |
actions taken | ||
POSITION | PLATFORM | |
Diversified customer base
Low exposure to acutely affected industry sectors
Heightened product & market relevance
5 | | © 2020 Software AG. All rights reserved. |
HEADLINE NUMBERS
EXECUTING TO DELIVER STRONG RESULTS
Q1 | +/- change as % acc | ||
Group Revenue | € 207.0m | +2% | |
Group Product Revenue | € 160.9m | +4% | |
DBP incl. IoT | € 103.5m | +3% | |
A&N | € 57.5m | +5% | |
EBIT (IFRS) | € 28.7m | -32% | |
Non-IFRS EBITA Margin | 19.2% |
Leading Indicators
ARR (DBP incl. IoT) | +11% YoY |
SaaS/Subs as % Bookings (DBP incl. IoT) | 69% |
Bookings KPIs
DBP incl. IoT | € 58.1m | +19% YoY |
IoT Bookings | € 23.5m | +65% YoY |
DBP Core Bookings | € 34.6m | +1% YoY |
A&N Bookings | € 32.0m | +47% YoY |
6 | | © 2020 Software AG. All rights reserved. |
EXECUTION AND DELIVERY
INNOVATING, EXECUTING, WINNING
Maintaining our | Executing for |
customers, winning | |
innovation pace | |
competitively | |
56 | New customers |
1stmilestone
delivered
API management win vs. [Mulesoft]
Continued A&N
resilience
zIIP & containerization
Available on Microsoft Azure
marketplace
A&N resilient in previous times of
economic shock
7 | | © 2020 Software AG. All rights reserved. |
Q1 2020
STAYING FOCUSED ON OUR STRATEGY
Culture
Marketing
Business transformation underpinned by cultural transformation
Augmenting our leadership base, attracting industry talent
Investing in competencies, processes and cross-functional collaboration
43% YoY increase in Marketing Qualified Leads
20% YoY increase in website visitor traffic
Continue to lead Analyst Rankings in key product categories
8 | | © 2020 Software AG. All rights reserved. |
FY 2020 OUTLOOK
DBP excl. Cloud & IoT Product Bookings
DBP Cloud & IoT Product Bookings
A&N Product Bookings
Operating Margin (EBITA, non-IFRS)2
1 at constant currency
2 adjusted for non-operating factors (see non-IFRS earnings definition in the 2018 annual report on p. 48f)
FY 2020 Outlook | FY 2020 Outlook |
(as of January 28) | (revised) |
As %1 | As %1 |
+10% to +15%1 | +0% to +10%1 |
+40% to +60%1 | +20% to +40%1 |
-3% to +3%1 | unchanged |
20% to 22% | unchanged |
Medium-term
ambitions
unchanged
2023
€1bn
Revenue
28% -
30% Op.
Margin
85%-
90% R. Product Rev.
9 | | © 2020 Software AG. All rights reserved. |
Results 1stQuarter 2020 (IFRS, unaudited)
23 April, 2020
Currency Impact on RevenueQ1 2020
- 32% revenue in Euro
- 68% revenue in foreign currency
ILS 5%
GBP 6%
Sonstige
Other
21% Euro
24%35% EUR 32%
USUSDDollar
25%
33%
Currency split Q1 2020
Currency impact on revenue
Q1 | Q1 | |
(in €m; yoy) | 2020 | in % |
Licenses | 0.1 | 0% |
Maintenance | 0.5 | 1% |
SaaS | 0.0 | 1% |
Professional Services | 0.6 | 1% |
& Other | ||
Total | 1.3 | 1% |
11| © 2020 Software AG. All rights reserved.
Digital Business Platform (excluding Cloud & IoT)
SEGMENT REPORT Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Bookings | 34.6 | 34.9 | -1% | 1% |
Licenses | 18.6 | 21.7 | -14% | -13% |
Maintenance | 69.4 | 68.7 | 1% | 0% |
Total revenue | 88.1 | 90.5 | -3% | -3% |
Annual Recurring Revenue | 295.3 | 272.4 | 8% | 9% |
as of March 31 | ||||
12| © 2020 Software AG. All rights reserved.
DBP Cloud & IoT
SEGMENT REPORT Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Bookings | 23.5 | 14.1 | 67% | 65% |
Licenses | 6.5 | 3.1 | 112% | 107% |
Maintenance | 2.0 | 1.6 | 28% | 27% |
SaaS / Usage based | 6.9 | 4.9 | 42% | 41% |
Total revenue | 15.4 | 9.5 | 62% | 60% |
Annual Recurring Revenue | 45.8 | 36.2 | 26% | 27% |
as of March 31 | ||||
13| © 2020 Software AG. All rights reserved.
Digital Business Platform (including Cloud & IoT)
SEGMENT REPORT Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Bookings | 58.1 | 48.9 | 19% | 19% |
Licenses | 25.1 | 24.8 | 1% | 2% |
Maintenance | 71.4 | 70.3 | 2% | 1% |
SaaS | 6.9 | 4.9 | 42% | 41% |
Total revenue | 103.5 | 100.0 | 4% | 3% |
Cost of sales | -11.5 | -9.3 | 23% | 23% |
Gross profit | 92.0 | 90.6 | 2% | 1% |
Sales & Marketing | -50.7 | -45.8 | 11% | 10% |
Research & Development | -28.0 | -27.4 | 2% | 0% |
Segment result | 13.4 | 17.5 | -23% | -21% |
Margin in % | 12.9% | 17.5% | ||
Annual Recurring Revenue | 341.0 | 308.6 | 11% | 11% |
as of March 31 | ||||
14| © 2020 Software AG. All rights reserved.
Adabas & Natural
SEGMENT REPORT Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Bookings | 32.0 | 21.4 | 49% | 47% |
Licenses | 21.5 | 17.8 | 21% | 20% |
Maintenance | 35.9 | 36.8 | -3% | -2% |
Product revenue | 57.4 | 54.6 | 5% | 5% |
Other | 0.1 | 0.2 | - | - |
Total revenue | 57.5 | 54.7 | 5% | 5% |
Cost of sales | -2.6 | -2.2 | 16% | 17% |
Gross profit | 55.0 | 52.5 | 5% | 4% |
Sales & Marketing | -9.3 | -7.4 | 26% | 26% |
Research & Development | -8.5 | -5.9 | 44% | 43% |
Segment result | 37.2 | 39.3 | -5% | -5% |
Margin in % | 64.6% | 71.7% | ||
15| © 2020 Software AG. All rights reserved.
Professional Services
SEGMENT REPORT Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Total revenue | 46.0 | 46.7 | -2% | -3% |
Cost of sales | -39.2 | -35.7 | 10% | 8% |
Gross profit | 6.8 | 11.0 | -39% | -39% |
Sales & Marketing | -4.4 | -4.3 | 3% | 2% |
Segment result | 2.4 | 6.7 | -65% | -65% |
Margin in % | 5.1% | 14.4% | ||
16| © 2020 Software AG. All rights reserved.
Results
Q1 2020
(in €m) | Q1 | Q1 | ∆% | ∆% |
2020 | 2019 | acc | ||
Total revenue | 207.0 | 201.4 | 3% | 2% |
Cost of sales | -55.3 | -49.5 | 12% | 11% |
Gross profit | 151.8 | 152.0 | 0% | -1% |
Margin in % | 73.3% | 75.4% | ||
Research & Development | -36.5 | -33.3 | 10% | 9% |
Sales & Marketing | -66.0 | -60.8 | 8% | 8% |
Administration | -21.4 | -17.6 | 22% | 21% |
Other income / expense | 0.9 | 2.0 | - | - |
EBIT | 28.7 | 42.2 | -32% | -32% |
Margin in % | 13.9% | 21.0% | ||
17| © 2020 Software AG. All rights reserved.
Non-IFRS Earnings
Q1 2020
(in €m) | Q1 | Q1 | ∆% |
2020 | 2019 | ||
EBIT (before all taxes)
Amortization on acquisition related intangible assets Share based payments
Restructuring / severances / legal case Other impacts / impacts from M&A activities
EBITA (Non-IFRS)
28.7 | 42.2 | -32% |
3.6 | 5.6 | -35% |
3.2 | 2.5 | 28% |
3.8 | 1.1 | 233% |
0.4 | 0.2 | 108% |
39.7 | 51.6 | -23% |
in % of revenue (Non-IFRS) | 19.2% | 25.6% | |
Net income (Non-IFRS) | 27.9 | 36.3 | -23% |
EPS in € (Non-IFRS)* | 0.38€ | 0.49€ | -23% |
* Weighted average shares outstanding (basic) Q1 2020: 74.0m / Q1 2019: 74.0m
18| © 2020 Software AG. All rights reserved.
Cash Flow
Q1 2020
(in €m) | Q1 | Q1 |
2020 | 2019 | |
Operating cash flow | 61.5 | 60.0 |
./. CapEx* (long-term,non-current) | -5.5 | -2.2 |
./. Repayment of lease liabilities** | -4.0 | -3.3 |
Free cash flow | 52.0 | 54.5 |
in % of revenue | 25.1% | 27.1% |
Free cash flow per share*** | €0.70 | €0.74 |
∆%
2%
-5%
-5%
- Cash flow from investing activities except acquisitions and except investments in debt instruments
- New reporting line due to IFRS 16
- Based on weighted average shares outstanding (basic) Q1 2020: 74.0m / Q1 2019: 74.0m
19| © 2020 Software AG. All rights reserved.
Balance Sheet
(in €m)
Mar 31, | Assets | Dec 31, |
2020 | 2019 | |
510.0 | Cash and cash equivalents | 513.6 |
22.3 | Financial assets | 22.8 |
279.8 | Trade and other receivables | 303.1 |
79.6 | Non-financial assets* | 75.9 |
1,203.2 | Fixed assets | 1,200.7 |
(Goodwill 986.9 / 980.1) | ||
2,094.9 | Total | 2,116.1 |
* incl. assets/liabilities hold for disposal
Mar 31,
2020
244.2
271.1
203.3
1,376.3
2,094.9
Liabilities
Financial liabilities
Other liabilities* Deferred income
Shareholders' equity (ratio 65.7% / 64.2%)
Total
Dec 31,
2019
296.6
300.9
161.1
1,357.5
2,116.1
20| © 2020 Software AG. All rights reserved.
Q1 2020 EARNINGS
23 April, 2020
© 2020 Software AG. All rights reserved.
CRO PERSPECTIVE
MOMENTUM AS HELIX TAKES HOLD
Sales & GTM
1
3 2
Focus Areas | 3 |
Regions achieved targets for Q1
Delight our customers
World class sales
organization
Double-digit
Bookings growth
North America significantly exceeded Q1 targets DBP in NAM was greater than 20%
A&N and IoT significantly beat Bookings expectations Slipped Q1 DBP deals expected to close in Q2
NPS at record high - 48%
Hired leaders from Mulesoft, Apigee, Tibco, Axway
56 new customers, 69% of Bookings from subscription
22 | © 2020 Software AG. All rights reserved.
CRO PERSPECTIVE
WINNING AGAINST THE COMPETITION
•Hybrid integration
•Optimizing purchasing experience while integrating real-time inventory systems
•Ability to rapidly respond to growing customer and business needs
•Integrating applications on-premise and in the cloud
•Gain single point-of-view on its enterprise architecture
•Ability to integrate with third-party solutions
23| © 2020 Software AG. All rights reserved.
CRO PERSPECTIVE
PARTNERSHIPS - SCALING AND GAINING
Building | Establishing |
Existing | New |
Relationships | Connections |
Software AG Alliance & Channels business shown significant double digit YoY growth
24| © 2020 Software AG. All rights reserved.
CRO PERSPECTIVE
LOOKING FORWARDS WITH PRECISION
H1 2020 | Pipeline | Professional | Planning | |
Services | ||||
Confident in | Prudently | c. 5% current | Planned for various | |
delivering a solid | requalified - overall | projects impacted | outcomes | |
H1 | 10-15% reduction | |||
Robust Q2 DBP | Majority moved to | Strong and | Able to control | |
expected based on | 2021, not lost | Resilient | EBIT in each | |
customer | outcome scenario | |||
commitments | c. 70% current | |||
pipeline across | ||||
less impacted | ||||
industry sectors |
25| © 2020 Software AG. All rights reserved.
SOFTWARE AG
OPPORTUNITY AND STRATEGY UNCHANGED
Clear Opportunity | Demonstrating Momentum | Robust Foundations |
Integration | ||
Platform | Strong financial platform | |
market | ||
$18bn by 2022 | Mission-critical product | |
positioning | ||
IoT Platform | Strong customer relationships | |
Market | ||
$23.6bn by | 2023 mid-term objectives | |
2023 | remain unchanged | |
26| © 2020 Software AG. All rights reserved.
Your Questions
© 2020 Software AG. All rights reserved.
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Software AG published this content on 23 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2020 07:42:07 UTC