Software AG increases profits significantly, subscription business picks up

By: MRT Desk

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Software AG increases profits significantly, subscription business picks up

Darmstadt-based Software AG increased its profit significantly in the second quarter. The switch to subscriptions showed “the first positive effects”, according to a statement from the group on Wednesday. The EBIT increased by 65 percent to 50.1 million euros. Group sales rose year-on-year by 10 percent, adjusted for currency effects, to 218.2 million euros, and product sales by 17 percent to 180.9 million euros. Nevertheless, the share fell slightly on the stock exchange.

In the second quarter, the share of sales with subscriptions rose by 95 percent, as can be seen in Software AG’s annual report. So far, switching from a license to a subscription model has cost the group more of its revenue. Specifically, sales in this area rose from 38.4 million euros in the same quarter of the previous year to 73 million euros.

The Adabas & Natural (A&N) division, with sales of 67.2 million euros, was 28 percent stronger than in the same period in 2020. At that time, sales were still 52.4 million euros. The Digital Business division grew by 7 percent. The turnover in the second quarter amounts to 113.7 million euros. The SaaS business (Software as a Service) increased by 47 percent to 10.5 million euros. The maintenance business from perpetual licenses, on the other hand, fell from 100.7 million euros in the same quarter of the previous year to 85.6 million euros.

The bottom line is that the group has 50.1 million euros. Analysts had expected significantly less and assumed around 21 million euros.

Sanjay Brahmawar, CEO of Software AG, was pleased with the extremely positive result and sees continued good business development for the second half of the year: “Our focus on the growth of bookings in our digital business and the switch to subscriptions is showing the first positive effects on our income statement (Income Statement) and delivered double-digit sales growth in the Digital Business segment this quarter. These early signs clearly show that our Helix transformation program is delivering results, and I am very proud of our team for achieving this important milestone Our innovations in the product areas IoT, Integration Platform as a Service, API Management and Process Mining are the drivers of our sales success, and thanks to improved implementation, we were able to win a record number of new customers in the second quarter always reliable siger on the road, and given our stable pipeline, I am confident for the second half of the year. “

Software AG is sticking to its forecast for the current fiscal year 2021. Incoming orders are expected to increase further. In the A&N area, the group expects growth of 15 to 25 percent, but in the digital business area, incoming orders are expected to decline by between 20 and 30 percent.

The shareholders were largely unimpressed by the business figures. Software AG shares fell by around one percentage point on Wednesday morning. A piece of paper now costs 39.96 euros.


(olb)

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