On the basis of the preliminary results for the third quarter, the Management Board of Software AG (MDAX, ISIN DE000A2GS401 / SOW) has decided to adjust its full year outlook for 2021.
The strong business development of Adabas & Natural (A&N) seen in the first half continued in the third quarter, with A&N third quarter bookings up 2 percent year on year at constant currencies and up by 7 percent at constant currencies through the first nine months of 2021, as customers continued to opt for the modernization of their A&N landscape.
Digital Business bookings grew by 6 percent at constant currencies in the third quarter and 11 percent at constant currencies through the first nine months of 2021. While the digital business continues to see strong end-market demand, some of the pipeline investments made earlier this year are taking longer to deliver mature opportunities than expected, leading to a change in the outlook for full year digital business bookings growth.
The combination of stronger-than-expected bookings in A&N together with solid growth in digital business recurring revenues underpins the Management Board's confidence in the full year product revenue growth and the group's updated full year non-IFRS EBITA margin expectation.
The Management Board adjusts the outlook for the full year 2021 as follows:
Full year bookings in the A&N segment are expected to show a significantly better-than-expected development, with year-on-year growth of between -8 and -12 percent, at constant currencies for the full year 2021 (previously: -20 to -30 percent).
In the Digital Business segment bookings are expected to grow year on year between + 13 to + 17 percent at constant currencies for the full year (previously: +15 to +25 percent).
Full year total Product Revenue guidance remains unchanged, with growth expected to be between 0 to 5 percent at constant currencies.
Full year operating profit margin (EBITA, non IFRS) is now expected to be in the range of 17 to 19 percent (previously: 16 to 18 percent).
The group also confirms its mid-term ambitions: €1 billion group revenue, 25 percent to 30 percent operating profit margin (EBITA, non-IFRS), 85 percent to 90 percent recurring product revenue and roughly 15 percent Digital Business CAGR in 2023.
The company will continue the process to consolidate its overall preliminary results for the third quarter and first nine months 2021. These will be published as planned on October 21, 2021.
The conference call on the full financial results for the third quarter and the first nine months of 2021 for investors, analysts, and journalists will take place on October 21, 2021 at 09:30 a.m. (CEST, 08:30 a.m. BST).
Darmstadt, October 18, 2021
The Management Board
Software AG published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 October 2021 05:11:02 UTC.