DGAP-Ad hoc: Software AG

DGAP-Adhoc: Software AG Publishes Q3 Financial Figures and Confirms 2016 Outlook

Software AG / Key word(s): Quarter Results/Preliminary Results

14.10.2016 01:06

Disclosure of an inside information according to Article 17 MAR, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.

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Ad-hoc-release pursuant to article 17 MAR

Software AG Publishes Q3 Financial Figures and Confirms 2016 Outlook

- One-time charge (provisions for lawsuit in the USA) burdens EBIT by EUR5.4 million

- Q3 2016 DBP product revenue same level as Q3 2015

- DBP license deals with strategic customers valuing approx. EUR7.2 million planned for Q3 2016 were signed after the close of the quarter

- Adabas & Natural: performance confirms expected annual revenue

- Operating profit margin (Non-IFRS) up at 33.7 percent in Q3 2016

- Free Cash Flow up significantly

- Outlook confirmed for 2016 fiscal year

Earnings Performance

Software AG's earnings before interest and taxes (EBIT) were EUR50.1 million (2015: EUR66.8 mn.) in the third quarter. EBIT was burdened by a one-time charge (provisions for lawsuitin the USA) in the amount of EUR5.4 million. Operating earnings (EBITA, Non-IFRS) totaled EUR66.8 million (2015: EUR70.2 mn.). The operating profit margin increased to 33.7 percent (2015: 32.5 percent) in the period under review.

DBP Business Line Performance

Product revenue (licenses + maintenance) for the Digital Business Platform (DBP) totaled EUR101.9 million (2015: EUR103.2 mn.) in the third quarter, which approximates last year's figure. License revenue dropped year-on-year by 8.8 percent to EUR37.5 million (2015: EUR41.4 mn.). Third-quarter maintenance revenue was up 6 percent from last year at EUR64.4 million (2015: EUR61.8 mn.).

Taking into account the large DBP deals signed after the end of the third period 2016, which were originally planned for the third quarter of 2016, DBP license revenue (pro forma; sales performance) totaled EUR44.7 million, which would have been 8 percent growth.

Adabas & Natural Business Line Performance

The Adabas & Natural (A&N) business line recorded EUR39.6 million (2015: EUR39.2 mn.) in maintenance revenues in the third quarter of 2016, representing 1.4 percent growth at constant currency. After an exceptionally strong first half of 2016 with double-digit growth, as expected, A&N license revenue dropped to EUR9.3 million (2015: EUR27.5 mn). Total A&N revenue was EUR49.1 million (2015: EUR66.9 mn.). This reflects a moderate decline of 5 percent over the course of the year, which is within the anticipated range for fiscal 2016.

Total Revenue

Software AG's total revenue for the third quarter of fiscal 2016 was EUR198.3 million (2015: EUR215.9 million). Third-quarter maintenance revenue accounted for EUR104.0 million (2015: EUR101.0 mn.), representing a 4 percent rise compared to the previous year's figure.

Free Cash Flow continued to perform well in the third quarter, resulting in at least 10 percent growth for the first nine months of the year and a record high in the history of Software AG.

2016 Outlook

Based on current business development and projections for the fourth quarter, Software AG confirms its outlook, which was raised after the first half of 2016. An operating profit margin (EBITA, Non-IFRS) between 30.5 and 31.5 percent is expected for fiscal 2016. The full-year forecast for product revenue in the Digital Business Platform (DBP) business line remains unchanged with an anticipated currency-adjusted increase between 5 and 10 percent. Based on expected contract signings in the Adabas & Natural line, Software AG foresees a decline in product revenue between 2 and 6 percent at constant currency and year-on-year in its database business.

Key Figures for Q3 2016 (IFRS, unaudited)

in EUR millions Q3/2016 Q3/2015 9M/2016 9M/2015 Total revenue 198.3 215.9 607.9 615.6 Product revenue 150.9 169.9 461.5 473.3 Maintenance revenue 104.0 101.0 306.0 304.3 License revenue 46.9 68.9 155.5 169.0 Digital Business Platform 101.9 103.2 296.9 293.9 DBP maintenance 64.4 61.8 188.7 184.4 DBP licenses 37.5 41.4 108.2 109.5 Adabas & Natural 49.1 66.9 165.1 179.8 A&N maintenance 39.6 39.2 117.2 119.8 A&N licenses 9.3 27.5 47.4 59.5 Consulting 47.3 45.8 145.8 141.8 in EUR millions Q3/2016 Q3/2015 9M/2016 9M/2015 EBIT* 50.1 66.8 138.8 129.3 as % of total revenue 25.3% 30.9% 22.8% 21.0% Operating Earnings (EBITA, Non-IFRS) ** 66.8 70.2 181.8 166.9 as % of total revenue 33.7% 32.5% 29.9% 27.1%



* = consolidated net income + income tax + other tax + financial result ** = EBITA adjusted for reduction of acquisition-related product revenue by purchase price allocation, other acquisition effects, share-based payment, restructuring/severance payments and operating income of divested units

2016 Outlook

Unchanged 2016 outlook from July 13, 2016 Digital Business Platform product +5% to +10%* revenue Adabas & Natural product revenue -2% to -6%* Operating profit margin +30.5% to +31.5% (EBITA, non-IFRS)



* At constant currency





Contact:

Otmar Winzig Senior Vice President Investor Relations Uhlandstrasse 12 64297 Darmstadt Germany Tel: +49 (0) 6151 92-1669 Email: otmar.winzig@softwareag.com

Byung-Hun Park Senior Vice President Corporate Communications Tel: +49 6151 92-2070 byung-hun.park@softwareag.com

Person making the notification: Frederic Freichel Junior Manager Investor Relations

Email: frederic.freichel@softwareag.com Tel: +49 6151 92 1106

14.10.2016 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de

--------------------------------------------------------------------------- Language: English Company: Software AG Uhlandstraße 12 64297 Darmstadt Germany Phone: +49 (0)6151 92-1900 Fax: +49 (0)6151 92-34 1899 E-mail: Investor.Relations@softwareag.com Internet: www.softwareag.com ISIN: DE0003304002 WKN: 330400 Indices: TecDAX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; London, SIX End of Announcement DGAP News-Service ---------------------------------------------------------------------------