Software AG Investor Presentation

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Transcription:

Software AG Investor Presentation November 2014 1

Safe-Harbor-Statement This presentation contains forward-looking statements based on 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. 2

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 3

Software AG A leader in business processes, integration and big data Customer base including More than 70 % of the Fortune 1,000 15 x Gartner and Forrester leader 2.5 m+ users 4,600+ employees worldwide 973 million in revenue Committed to helping our customers succeed for more than 40 years 4

Business Lines BPE Digital Business Platform Business Process Excellence Business & IT Transformation Intelligent Business Operations Integration Adaptive Applications In-Memory Technology ETS Enterprise Transaction Systems Database Management System Application Development Modernization Consulting Global Consulting Services Implementing own product stack S H A R E O F R E V E N U E * 47% 31% 22% Application, infrastructure and middleware Develop, deploy and integrate applications Manage business and ITtransformation * Based on revenue 2013 ( 897m): pro forma excl. SAP consulting 5

Positioning: Middleware is Layer of Differentiation Packaged Applications e.g. Salesforce.com Front Office Standardization begins Adaptive Applications Marketing Support Commerce C U S T O M E R S Agile Development BPM/Apps Space of differentiation & Innovation Business and IT Transformation (Processes, Applications) Streaming Analytics Integration & Connectivity (Internet of Things, Big Data, Cloud) S Y S T E M S O F R E C O R D S Custom Software Adabas - Natural Packaged Applications Back Office Standardization happened SAP Oracle 6

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 7

Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Neutral vendor to install systems from large brands 70 percent of license revenue from growing IT market segments 3. Financials: Solid profit base and high cash generation 40 percent of revenue is recurring maintenance High operating margin (target 2014: 26-28%) Continuous dividend payments (current yield 2%) 8

Risk Balanced Revenue by Industry and Geography Product Revenue by Region Product Revenue by Industry 12% 9% 22% 31% 48% 19% EMEA Americas Public Sector IT Financial Sector Services Germany Asia Pacific Associations Manufacturing Other Based on product revenue group - FY 2013 9

Blue Chip Customer Base Built Over 40+ years Finance Public Sector Chemicals/Pharma Energy/Utilities Telecom Manufacturing Logistics/ Transport Healthcare/ Consumer Goods 10

Experienced Management Team and Loyal Expert Staff Karl-Heinz Streibich Eric Duffaut Dr. Wolfram Jost Arnd Zinnhardt Chief Executive Officer - since 2003 - Chief Customer Officer - since 2014 - Chief Technology Officer - since 2010 - Chief Financial Officer - since 2002 - Corporate Communications, Global Legal, Global Audit, Corporate Office and Top Management Development, Global Information Services, Corporate University Global Sales Global Consulting Services Marketing Partner Management Research & Development Finance, Controlling, Taxes, Treasury, Mergers & Acquisitions, Business Operations, Investor Relations, Global Purchasing, Human Resources 11

Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Neutral vendor to install systems from large brands 70 percent of license revenue from growing IT market segments 3. Financials: Solid profit base and high cash generation 40 percent of revenue is recurring maintenance High operating margin (target 2014: 26-28%) Continuous dividend payments (current yield 2%) 12

Leadership in 15 Product Categories by Gartner and Forrester Application Integration Suites Application Services Governance Business Process Analysis Tools Business Process Management Suites Enterprise Architecture Tools Governance, Risk and Compliance Integrated IT Portfolio Analysis Apps Complex Event Processing Platforms Comprehensive Integration Solutions EA Management Suites Elastic Caching Platforms ESB Integrated SOA Governance SOA Service Life-Cycle Management 13

Acquisitions Support Technology Leadership Integration and BPM Business Process Analysis Big Data Application PaaS 2007 2008 2009 2010 2011 2012 2013 14

Technology Leadership - Digital Business Platform 15

AIM Software Spending by Region 16

IT-Investments in Categories 2016 45 41 14 2011 79 18 3 0 20 40 60 80 100 Systems of record investment Systems of engagement spending Mobile/tablet front-end app budgets Source: Forrester Research 17

License Revenue: 70% from Growing IT Market Segments 100% 80% 60% 76% 63% 58% 56% 49% 42% 38% 33% <30% ETS BPE 40% 20% 24% 37% 42% 44% 51% 58% 62% 67% >70% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014e * BPE offerings focus on growing IT market segments * Estimate based on analyst consensus 18

Key Investment Indicators 1. Footprint: Established global player in enterprise IT Risk balanced revenue by industry and geography Blue Chip customer base built over 40+ years Experienced management team and loyal expert staff 2. USP: Technology leadership and vendor neutrality Leadership in 15 product categories by Gartner and Forrester Neutral vendor to install systems from large brands 70 percent of license revenue from growing IT market segments 3. Financials: Solid profit base and high cash generation 40 percent of revenue is recurring maintenance High operating margin (target 2014: 26-28%) Continuous dividend payments (current yield 2%) 19

40% of Revenue is Recurring Maintenance 400 350 300 250 200 m 186 213 267 305 353 362 378 369 369* ETS BPE 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014e > 40% of Group Revenue from Maintenance > 90% of Maintenance Revenue is recurring * Analyst consensus Currency impact 9m 2014: -9m 20

Group Maintenance Revenue - Scenarios A: BPE with flat license development 400 m B: BPE with license growth market perform 350 2013 2018 A B * Assumptions: BPE maintenance depending on license growth, varying with scenario; ETS maintenance -7% CAGR 21

High Operating Margin (Target 2014: 26-28%) 40% 35% 30% 25% 20% 15% 10% Required Range to achieve FY Margin Target of 26 28% Group EBITA margin (Non-IFRS) Segment result margin: BPE Consulting 5% 0% Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014e 22

Continuous Dividend Payments Ordered by fiscal year/in 0.25 0.27 0.30 0.33 0.37 0.38 0.43 0.46 0.46 0.46 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dividend policy reflects profit, cash flow and financing requirements for growth Cash out ratio: 20-25% of average FCF/net profit 23

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 24

Business Model Revenue Structure & Seasonality 40 30 20 10 0 36% License Normal license seasonality ~35% ~20% ~25% 22% Consulting ~20% Q1 Q2 Q3 Q4 Revenue Elements 41% Maintenance License Direct sales force & Partners One-time payment for perpetual license Additional payment for capacity upgrades, extended usage and add-on products Price: Capacity/MIPS or CPU based Maintenance Renewal rate > 90% Pricing: - BPE: around 18% of license - ETS: around 15% of license Consulting Services BPE & ETS: implementing own products Cost plus or fixed price projects Own staff + freelance 25

BPE - New Customers and Bigger Deals Increase License Volatility 80 60 40 20 m In the quarter very volatile * 0 240 190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2008 2009 2010 2013 2011 2012 2014 m 4 quarter rolling * 140 90 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2008 2009 2010 2013 2011 2012 2014 * Based on market expectation for Q4 2014 26

Revenue and Margin Drivers Mid Term Impact new sales staff Growing Ø deal size Platforms / use case packaging Recurring projects Cloud based offerings Partner sales / OEM Revenue mix Economies of scale (R&D, G&A) Sales productivity Channel sales Metrics 2014 2015 2016 2017 2018 27

Turning Technology Leadership into Market Leadership with Multi Channel Ecosystem Multiple Sales Channels Growth SI s OEM s/isv s Direct Sales LongJump Alfabet, ARIS Single Sales Channel webmethods Aris/web- Methods Terracotta Mychannels Apama JackBe Digital Business Platform Suite 28

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 29

The Impact of Differentiating Digital Business Solutions Refreshments Average annual benefit of several million 98% reduction in transfer time for assets 10s of millions increase in profit Employees and contractors now emergency-prepared Supply chain transformation in days 10x higher response rate to marketing campaigns 30

Transforming Financial Services Through IT Portfolio Management and Enterprise Architecture Management O P P O R T U N I T Y : Free up IT budget to directly support Aggressive international growth in the private banking sector Higher cross-selling across divisions R E S U L T S : Avoided development projects: Credit Suisse saves $6 million annually Eliminated software costs: the organization is saving $5 million annually R E S U L T: Payback in SEVERAL MILLION DOLLARS SAVED 6 MONTHS 31

Transforming Food and Beverage Through the Software AG Suite Refreshments O P P O R T U N I T Y : Automate maintenance & repair process for 1.7m coolers Streamline asset management Real-time visibility of cooler location and status R E S U L T S : Reduce time for asset transfer by 98% (from up to 8 hours to below 10 minutes) Uncover trends and recurring issues Avoid lost equipment R E S U L T : 98% REDUCTION IN TRANSFER TIME FOR ASSETS from up to 8 hours to below 10 minutes 32

Transforming Financial Services Through In-Memory Data Management O P P O R T U N I T Y : Fraud detection Reduce fraud loss Improve speed and accuracy of fraud detection system Increase rules in fraud detection algorithm from 50 to over 1,000 R E S U L T S : Drive profit up by tens of millions of Euros Meet 650 millisecond end-to-end SLA 99% of the time Achieve better accuracy R E S U L T : Fraud detection I N M I L L I S E C O N D S DRIVES PROFIT UP BY 10s of millions 33

Transforming Telecommunications Through Intelligent Business Operations O P P O R T U N I T Y : Customer retention through real-time targeted marketing campaigns Increase customer loyalty by proactively offering the right service at the right time R E S U L T S : 10 times higher response rate to marketing campaigns Marketing campaign cycle time cut from days to minutes Increased customer satisfaction and retention rates Leapfrogging competition through digital innovation R E S U L T : 10x INCREASE IN OFFER UPTAKE $ 15 million INCREASE in revenue in year one 34

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 35

Market Share in Main Markets: BPMS (Process Management) and ESB (Integration) Business Process Management Suite (BPMS) Enterprise Service Bus Suite (ESB) Appian 3% OpenText 4% Software AG 7% Tibco 3% Others 36% Others IBM 15% 29% Tibco 9% Oracle 8% Pegasystems 10% IBM 29% Software AG 11% Microsoft 13% Oracle 23% Source: Source: Gartner: Market Share, All Software Markets, Worldwide, 2013, Colleen Graham et al, 28 March 2014 36

Positioned in Leaders Quadrant of Gartner s Magic Quadrant for On-Premises Application Integration Suites Source: Gartner, Inc., Magic Quadrant for On-Premises Application Integration Suites, Jess Thompson, et al., July 29, 2014. This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Software AG. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 37

Positioned in Leaders Quadrant of Gartner s Magic Quadrant for Enterprise Architecture Tools Source: Gartner, Inc., Magic Quadrant for Enterprise Architecture Tools, Saul Brand, September 30, 2014 This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from Software AG. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 38

Software AG Ranked as a Leader in the Big Data Streaming Analytics Market Source: The Forrester Wave : Big Data Streaming Analytics Platforms, Q3 2014, Forrester Research, Inc., July 17, 2014 The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings, and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 39

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 40

Financial Data - Key Figures * Dividend payment based on 78,859,844 dividend entitled shares (0,46 /share) ** Including 56.5 Mio. Securities ***EPS basic, 2007 2010 pro-forma, adjusted for share split in m, IFRS 2013 2012 2011 2010 2009 2008 2007 Total Revenue 972.7 1,047.3 1,098.3 1,119.5 847.4 720.6 621.3 - License 330.1 318.9 295.2 327.4 269.9 272.0 241.3 - Maintenance 375.6 393.3 378.7 369.4 310.6 267.1 212.9 - Consulting & Other 267.0 335.1 424.4 422.7 266.9 181.5 167.1 BL BPE 422.9 385.5 339.6 321.5 247.2 210.7 149.9 BL ETS 274.5 310.5 313.9 355.4 328.5 332.1 310.2 BL Consulting 275.4 351.3 444.8 441.4 271.3 177.8 161.1 - BPE/ETS 199.7 n.a. n.a. n.a. n.a. 177.8 161.1 - IDS/SAP 75.7 n.a. n.a. n.a. n.a. n.a. n.a. EBIT 205.5 248.3 269.2 268.6 218.2 180.5 136.8 EPS ( )* 1.60 1.90 2.05 2.06 1.64 1.35 1.04 Dividend ( m, total) 36.3* 38.2 39.9 37.0 32.6 31.5 28.5 Free cashflow 159.1 170.7 187.7 217.8 188.4 133.4 82.2 Net debt (-) (/cash(+) Shareholders equity -106.9** +49.7-60.9-167.2-271.8-70.3-133.0 965.6 1,060.1 951.5 769.3 647.2 549.1 462.5 Employees (FTE) 5,238 5,419 5,535 5,644 6,013 3,526 3,479 41

Key Financial Ratios (IFRS; in % of revenue) FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 EBITDA margin 26.6% 28.6% 28.7% 28.1% 30.3% 28.6% 25.7% Operating Margin (Non-IFRS) 26.8% 28.5% n.a. n.a. n.a. n.a. n.a. Amortization/ Depreciation 5.5% 4.9% 4.2% 4.1% 4.6% 3.5% 2.4% Operating EBIT margin 21.1% 23.7% 24.5% 24.0% 25.8% 25.1% 23.3% NOPAT 1 margin 13.8% 15.7% 16.1% 15.7% 16.6% 16.1% 15.1% ROE 2 21.3% 23.4% 28.3% 34.9% 33.7% 32.9% 31.8% ROCE 3 14.6% 18.2% 20.5% 27.4% 20.9% 26.2% 22.5% Net Working Capital in m 4-213.5m - 41.6-23.8-194.4-211.3-74.1-55.0 Working Capital 5 24.3% 26.2% 17.5% -8.2% 0.8% 3.2% 4.2% Free Cash Flow margin 6 16.4% 16.3% 17.1% 19.5% 22.2% 18.5% 13.2% Corporate tax rate 32.0% 31.2% 31.7% 31.0% 32.7% 34.0% 35.4% WACC 7 5.12% 5.1% 5.7% 6.8% 5.5% 6.8% 8.4% Equity ratio 48.4% 59.8% 56.6% 48.1% 39.1% 51.8% 47.2% DSO (Days Sales Outstanding) 107 105 93 100 109 120 119 Capex m 12.7 13.3 10.9 9.7 12.1 6.6 11.8 Capital Employed 8 m 1,346.3 1,313.0 1,262.0 929.6 1,002.2 669.9 655.2 1. Net operating profit after tax = op. PbT./. tax rate x (op. PbT + goodwill) 2. Return on equity: Operating EBIT / Equity 3. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital) 4. Current assets./. Cash and Cash Equivalents./. Current liabilities 5. Current assets./. Current liabilities / Total revenue 6. (Operating Cash flow./. Capex) / Revenue 7. Pro forma, not applied for corporate management 8. Fixed assets + Working capital 42

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 43

Currency Impact on Revenue Q3 2014 / YTD 2014 (9 months) 38% revenue in Euro 62% revenue in foreign currency Currency impact on revenue CAD 4% AUD 4% ILS 5% Other 12% Euro 38% (in m; yoy) Q3 2014 Q3 in % YTD 2014 YTD in % Licenses 0.8 1% -3.4-2% Maintenance -0.2 - -9.0-3% BRL 5% Consulting & Other 0.3 1% -1.8-1% GBP 7% US Dollar 25% Total 0.9 - -14.2-2% Currency split 9 months 2014 44

Segment Report Q3 2014 / YTD 2014 (9 Months) Business Process Excellence (BPE) (in m) Q3 2014 Q3 2013 Δ% Δ% acc YTD 2014 YTD 2013 Δ% Δ% acc Licenses 42.2 61.8-32% -33% 118.7 146.5-19% -17% Maintenance 54.4 52.5 4% 3% 157.7 149.6 5% 8% Total revenue 96.6 114.3-15% -16% 276.4 296.1-7% -4% Cost of sales -5.4-5.5-2% -2% -16.5-16.3 1% 4% Gross profit 91.2 108.8-16% -17% 259.9 279.8-7% -5% Sales & marketing -40.8-50.4-19% -19% -135.3-144.5-6% -4% R & D -21.3-20.2 5% 5% -62.7-59.7 5% 6% Segment result 29.1 38.2-24% -26% 61.9 75.6-18% -16% 45

Segment report Q3 2014 / YTD 2014 (9 months) Enterprise Transaction Systems (ETS) (in m) Q3 2014 Q3 2013 Δ% Δ% acc YTD 2014 YTD 2013 Δ% Δ% acc Licenses 21.9 17.8 23% 22% 52.6 71.4-26% -25% Maintenance 39.3 41.1-4% -4% 115.3 127.4-9% -6% Product revenue 61.2 58.9 4% 4% 167.9 198.8-16% -13% Other 0.1 0.1 - - 0.4 0.5 - - Total revenue 61.3 59.0 4% 4% 168.3 199.3-16% -13% Cost of sales -3.1-3.5-11% -12% -9.3-10.4-11% -8% Gross profit 58.2 55.5 5% 5% 159.0 188.9-16% -13% Sales & marketing -7.8-9.9-21% -23% -25.8-37.2-31% -29% R&D -5.9-6.0-2% -1% -18.3-18.9-3% -3% Segment result 44.5 39.6 12% 13% 114.9 132.8-13% -10% 46

Segment report Q3 2014 / YTD 2014 (9 months) Consulting (in m) Q3 2014 Q3 2013 Δ% Δ% acc YTD 2014 YTD 2013 Δ% Δ% acc BPE/ETS services 47.7 47.5 - - 143.5 146.9-2% -1% SAP product revenue* - 1.9 - - 2.2 6.4-66% -66% SAP services* - 15.8 - - 20.0 52.4-62% -62% Total revenue 47.7 65.2-27% -27% 165.7 205.7-19% -19% Cost of sales -37.6-56.1-33% -33% -137.6-175.4-22% -21% Gross profit 10.1 9.1 11% 9% 28.1 30.3-7% -7% Sales & marketing -4.8-8.1-41% -42% -18.0-26.3-32% -31% Segment result 5.3 1.0 430% 430% 10.1 4.0 153% 153% * Deconsolidation of SAP related business 47

Results Q3 2014 / YTD 2014 (9 months) (in m) 44 Q3 2014 Q3 2013 Δ% Δ% acc YTD 2014 YTD 2013 Δ% Δ% acc Total revenue 205.6 238.5-14% -14% 610.5 701.2-13% -11% Cost of sales -51.4-72.6-29% -29% -182.3-221.9-18% -17% Gross profit 154.2 165.9-7% -8% 428.2 479.3-11% -8% Margin in % 75.0% 69.6% 70.1% 68.4% R & D -27.2-26.1 4% 4% -81.0-78.5 3% 4% Sales & marketing -57.5-72.5-21% -21% -191.1-219.3-13% -11% Administration -19.4-17.3 12% 13% -54.4-52.5 4% 5% Other income/expense -1.0-0.9 - - 2.9 6.1 - - EBIT 49.1 49.1 - -1% 104.6 135.1-23% -18% Margin in % 23.9% 20.6% 17.1% 19.3% 48

Non-IFRS Earnings Q3 2014 / YTD 2014 (9 months) (in m) Q3 2014 Q3 2013 YTD 2014 YTD 2013 EBIT (before all taxes) 49.1 49.1 104.6 135.1 Amortization on acquisition related intangible assets Reduction acquisition related product revenue by purchase price allocation 9.4 11.5 30.9 31.0-0.9 0.5 0.9 Other impacts from M&A activities 0.1 0.3-1.0-1.5 Share based payment 3.5 0.5 6,2-0.8 Restructuring/severances 0.7 4.0 7.0 9.2 Result from sold operations - - 2.7 - EBITA (Non-IFRS) 62.8 66.3 150.9 173.9 in % of revenue (Non-IFRS) 30.5% 27.7% 24.7% 24.8% Net income (Non-IFRS) 39.7 42.8 95.8 114.2 EPS (Non-IFRS)* 0.50 0.52 1.21 1.36 Net income (IFRS) 30.4 31.1 63.1 87.1 * Weighted average shares outstanding (basic) Q3 2014: 78.9m / Q3 2013: 83.0m // 9m 2014: 79.3m / 9m 2013: 84.2m 49

Cash flow Q3 2014 / YTD 2014 (9 months) (in m) Q3 2014 Q3 2013 Δ% YTD 2014 YTD 2013 Δ% Operating cash flow 22.0 36.6-40% 94.5 115.4-18%./. CapEx* -2.6-3.3-8.7-9.8 Free cash flow 19.4 33.3-42% 85.8 105.6-19% as % of revenue 9.4% 14.0% 14.0% 15.1% Free cash flow per share** 0.25 0.40-38% 1.08 1.25-14% * Cash flow from investing activities except acquisitions and except investments in debt instruments ** Based on average outstanding shares: Q3 2014: 78.9m / Q3 2013: 83.0m // 9m 2014: 79.3m / 9m 2013: 84.2m 50

Balance sheet (in m) Assets Liabilities Sept. 30, 2014 Dec. 31, 2013 Sept. 30, 2014 Dec. 31, 2013 335.1 Cash and cash equivalents/ Securities 506.5 437.0 Financial liabilities 613.4 260.2 92.8 Trade receivables Inventory, other assets 323.2 57.3 248.2 134.3 Other liabilities Deferred income 309.9 108.0 1,103.7 Fixed assets (goodwill 848.1/829.2) 1,109.9 972.3 Shareholders equity (ratio 54.3%/48.4%) 965.6 1,791.8 Total 1,996.9 1,791.8 Total 1,996.9 51

Financing Loan-Liquidity Structure (30 September 2014, m) due 2015-17 2018/20 Loans 298 125 437 Promissory note (2013) Bank loan & other European Investment Bank Net debt: 102 Liquidity 335 0 100 200 300 400 500 in m Liquidity: Cash ( 275m) and Securities ( 60m) 52

Outlook FY 2014 FY 2013 (in m) Outlook FY 2014 (as of June 15, 2014) 9m 2014 Product Revenue BPE 422.9 Previous year s level -4%* Product Revenue ETS 273.8-9% to -16%* -13%* Operating Margin 26.8% 26% to 28% 24.7% (Non-IFRS)** * Revenue growth or decline at constant currency ** Before adjustments for non-operating items (see non-ifrs earnings results) 53

Earnings Q3 2014 / YTD 2014 (9 months) (in m) Q3 2014 Q3 2013 Δ% YTD 2014 YTD 2013 Δ% Net Income 30.4 31.1-2% 63.1 87.1-28% Income taxes 14.5 14.6-1% 27.8 38.6-28% Other taxes 2.1 1.6 31% 6.2 4.8 29% Financial result 2.1 1.8 17% 7.6 4.6 65% EBIT (before all taxes) 49.1 49.1-104.7 135.1-23% Amortization 9.4 11.5-18% 30.9 30.9 - Depreciation 2.8 3.2-13% 8.8 10.0-12% EBITDA 61.3 63.8-4% 144.4 176.0-18% Margin in % 29.8% 26.8% 23.6% 25.1% 54

Amortization / depreciation impact 2014ff (preliminary) (in m) Q3 2014 GJ 2014 GJ 2015ff* Amortization IDS 2.6 10.5 7.7 Amortization other 6.7 30.1 24.0 Depreciation 2.9 11.6 11.6 * Estimated 55

Headcount by functional areas* and geography (in FTE) Sept. 30, 2014 June 30, 2014 Δ% qoq Sept. 30, 2013 Δ% yoy Total 4,553 4,606-1% 5,356-15% Consulting & services 1,884 1,906-1% 2,375-21% R & D 989 977 1% 1,005-2% Sales & marketing 1,026 1,059-3% 1,261-19% Administration 654 664-2% 715-9% USA 695 718-3% 804-14% Germany 1,237 1,251-1% 1,735-29% Rest of world 2,621 2,637-1% 2,817-7% * According to P+L structure 56

Revenue Q3 2014 / YTD 2014 (9 months) (in m) Q3 2014 Q3 2013 Δ% Δ% acc YTD 2014 YTD 2013 Δ% Δ% acc Product Revenue 157.8 175.1-10% -10% 446.5 501.3-11% -8% License 64.1 79.5-19% -20% 171.3 217.9-21% -20% Maintenance 93.7 93.7 - - 273.0 277.0-1% 2% Product IDS (SAP) - 1.9 - - 2.2 6.4-65% -65% Consulting BPE/ETS 47.7 47.4 1% - 143.5 146.6-2% -1% Consulting IDS (SAP) - 15.8 - - 20.0 52.4-62% -62% Other 0.1 0.2 - - 0.5 0.9 - - Total 205.6 238.5-14% -14% 610.5 701.2-13% -11% 57

Revenue 2013 excl. IDS Consulting* (pro forma) (in Mio. ) Q1 Q2 Q3 Q4 FY Product 154.6 167.1 173.2 201.7 696.6 Licenses 63.0 75.4 79.5 109.6 327.5 Maintenance 91.6 91.7 93.7 92.1 369.1 Consulting & services 49.0 50.3 47.4 53.0 199.7 Other 0.3 0.3 0.2 0.2 1.0 Total 203.9 217.7 220.8 254.9 897.3 * IDS Consulting (SAP-products and services); business unit was sold in May 2014 58

Agenda 1 Introduction 4 2 Key Investment Indicators 8 3 Business Characteristics 25 4 Product Offering & Customer References 30 5 6 7 Market Positioning & Competition 36 Key Financials 41 Financials 2014 44 8 Shares & Ownership 60 59

Solid Shareholder Structure Shareholder Structure 9% 29% Software AG Foundation Institutional Investors 30% Private & undisclosed 32% Own Shares** **as of August 2014 Institutional Investors by Region* Rest of World BeNeLux 3% 5% Germany France 3% 35% Switzerland 6% United Kingdom 8% 11% Scandinavia 29% United States Major Institutional Investors* Fidelity (FMR LLC) 4.1% Templeton 3.0% Deutsche Asset & Wealth 3.0% Norges Bank 2.9% SEB Asset Management AG 1.9% Shareholder Value 1.3% Share Data Number of total shares: 86,943,945 Freefloat: ~ 62% Indices: TecDAX, DAX 100, TechAllShare Codes: SOW, SOW GR, SOWG.DE ISIN: DE0003304002 ADR U.S. trading symbol: STWRY *Source: Ipreo, Factset, November 2014 60

Software AG Foundation Anchor Shareholder The Software AG Foundation is one of Germany s ten largest foundations (capital stock 1.1 bn (Dec. 31, 2012), Software AG shares and other assets) Founded by Dr. hc. Peter M. Schnell in 1992 Disburses financial support amounting to approx. 30 million annually Under the principle of a self-help grant, the Foundation supports nonprofit organizations not only with financial support but also with consulting services in promoting project sustainability and further developments The Foundation finances many different projects in areas including: science and research support for the elderly and disabled care and support for children and young people education and training the environment 61

Analyst Coverage Banks / Broker who cover Software AG on a regular base Baader Bank Barclays Capital Berenberg Bank Bryan Garnier Commerzbank Credit Suisse Deutsche Bank DZ Bank Independent Res. JPM/Cazenove Kepler LBBW Goldman Sachs Hauck & Aufhäuser HSBC MainFirst Metzler Mirabaud Morgan Stanley Natixis Société Générale UBS Warburg Research For latest consensus of analysts financial estimates visit our IR website on: www.softwareag.com 62

Investor Relations Uhlandstrasse 12 64297 Darmstadt Germany phone: +49 (0) 6151 / 92 1900 fax: +49 (0) 6151 / 9234 1900 softwareag.com e-mail: investor.relations@softwareag.com Follow us on Twitter: @SoftwareAG_IR