Software AG

  • WKN: A2GS40
  • ISIN: DE000A2GS401
  • Land: Germany

Nachricht vom 29.01.2020 | 01:33

Software AG to accelerate business transformation with increased strategic investments in FY 2020

Software AG / Key word(s): Forecast
Software AG to accelerate business transformation with increased strategic investments in FY 2020

29-Jan-2020 / 01:33 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

Ad hoc Disclosure (Inside Information according to article 17 MAR)

Software AG to accelerate business transformation with increased strategic investments in FY 2020.

- Software AG announces FY 19 financial results: delivering solid performance in a year of significant transformation with 1 percent growth in both total Product and Group Revenue.

- Year One of Helix strategy delivering operational benefits and improved sales engine.

- Now targeting increased DBP (excl. Cloud & IoT) product bookings growth in FY 2020 of +10% to +15%.

- Shifting to subscription leads to flat Total Product Revenue while underlying business delivers bookings momentum.

- Further investments planned to drive business transformation in 2020.

- Operating margin (EBITA, non-IFRS) expectation for FY 2020 set at 20% to 22%, reflecting shift to subscription and incremental investments.

The Management Board of Software AG (Frankfurt MDAX: SOW) pre-announces its financial figures (IFRS, preliminary) for the fourth quarter and 2019 fiscal year, and its outlook for 2020. Software AG delivered a revenue largely in line with expectations against the backdrop of significant and far-reaching transformation of the business. On a divisional basis, A&N delivered revenue was up 3 percent year-on-year. DBP (excl. Cloud & IoT) delivered results in the middle of the guidance range, with strong action around sales and go-to-market bringing improved quality and predictability to the North America region in particular. Cloud & IoT growth at 38% was below expectation, although a significant 5-year subscription contract with a global industrial company expected in Q4 2019 has since been signed.

2020 Outlook

The investments made in 2019 in product, sales and go-to-market, subscription and its partner channel have started to pay off and further clarify the company's way forward. The Management Board believes now is the right time to make further investments in 2020, with a view to delivering higher sales growth earlier than first planned. Those investment areas are:

- Sales efforts - helping reinforce and enhance the Group's presence in key regions;

- Subscription - responding to the success of 2019 by accelerating initiatives such as the build-out of the Group's new Customer Success function;

- Marketing - adding resource to ensure the Group's teams can continue their contribution to its newly energized pipeline;

- Partnerships - bringing forward investments designed to activate the Group's channel in a growing market;

- Culture - accelerating cultural change to drive growth

Based on the expectations of business performance for 2020, Software AG's Management Board expects an operating profit margin (EBITA, non-IFRS) between 20 to 22 percent for the 2020 fiscal year. Digital Business Platform product bookings, excl. Cloud & IoT, is expected to end up in a range of +10 to +15 percent above the 2019 level. Cloud & IoT product bookings are expected to increase between +40 to +60 percent year-on-year. The bookings growth target for the Adabas & Natural database business line is between -3 to +3 percent.

An analyst & media call will be held on Wednesday, 29 January 2020 at 09:30 CET.

For further details refer to the corresponding press release and the Software AG website.

Darmstadt, January 29, 2020

Software AG

The Management Board

Person making the notification:
Frederic Freichel
Senior Manager Investor Relations

Tel: +49 6151 92 1106

29-Jan-2020 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
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