DB ACCESS GERMAN, SWISS & AUSTRIAN CONFERENCE Karl-Heinz Streibich CEO, Software AG June 9, 2016 2016 Sofware AG. All rights reserved.
SAFE HARBOR This presentation includes forward-looking statements based on the 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. This presentation constitutes neither an offer nor recommendation to subscribe or buy in any other way securities of Software AG or any of the companies that are members of the Group at present or in the future, nor does it form part of such an offer and it should not be understood as such. This presentation does not constitute an offer of sale of securities in the United States of America. Securities may not be offered or sold in the United States of America without registration or exemption from registration in accordance with the U.S. Securities Act of 1933 in its currently valid form. 2
DIGITAL TRANSFORMATION IS ON EVERY BUSINESS AGENDA 3
CORE REASON OF DIGITAL DISRUPTION DIGITAL CHALLENGERS SEPERATE THE CUSTOMERS FROM ESTABLISHED COMPANIES Hotels Retail Banks Insurance... Any industry DIGITAL DISRUPTION 4
DIGITAL TRANSFORMATION TO DO S FROM APPLICATION SILOS TO AN INTEGRATED PLATFORM ARCHITECTURE 5
NEW DIGITAL BUSINESS CAPABILITIES ARE WRITTEN IN SOFTWARE 1. Integration Centered Enterprise Architecture 2. Real-time, event driven new business models 3. Agile & flexible applications (adaptive apps) 4. Business processes digitization The new data center extension : Software platform centricity & IoT private cloud New digital innovations customer centric, B2B (IoT) external!! INOVATION Flexibility! DATA QUALITY SECURITY Internet of Things (IoT) platform (Real time, device and event driven, streaming analytics) Pervasive Integration Integration layer for differentiation & innovation (Middleware) internal!! FLEXIBILITY! DATA QUALITY (MDM)! SECURITY Integration Centric Architecture (B2B, ESB, API, Hybrid Cloud) Business process digitization Departmental agile Apps/Cloud based Integration Logic Systems of records (Data Center) internal FLEXIBILITY!! DATA QUALITY!! SECURITY Applications Business Logic 6 The old data center : Application/Database centricity
DIGITAL CAPABILITIES 5 BUILDING BLOCKS OF THE DIGITAL BUSINESS PLATFORM BUSINESS & IT TRANSFORMATION ANALYTICS & DECISIONS Business dashboards Process discovery Process monitoring Business strategy & planning Pattern detection Visual analytics Predictive analytics Event processing Collaboration Design & analysis Risk & compliance management Audit management PROCESS INTEGRATION Mobile enablement Application integration Process automation Task management B2B integration Application development Rules management Integration services Case management Process orchestration Cloud service integration Portfolio management IoT integration Mobile integration Services governance API gateway API portal Enterprise architecture IN-MEMORY DATA In-Memory data management Universal messaging Search & compute Continuous query 7
IoT Foundation INTERNET OF THINGS ( IOT ) PLATFORM OF SOFTWARE AG Enterprise IoT Solutions & Applications Predictive Maintenance Smart Logistics Connected Customer Smart Production Development & Delivery Environment Application Development Portals & API Gateway Data Visualizations IoT Platform Services + Enterprise Integration Streaming Analytics In-memory Data Management API Management Predictive Analytics & Machine Learning Device Management Agile Business Process Management Visual Analytics Ad Hoc Historical Analytics Business Systems & Partner Networks & IoT Edge Services Lightweight Messaging Device Connectivity & Embedded Agents Edge Analytics Ecosystems Connected Devices 8
ENABLING DIGITAL TRANSFORMATION OF A WORLD-LEADING MANUFACTURER Large global Supplier of Auto Components OPPORTUNITY: Leverage the huge revenue potential of the Internet of Things The company appointed Software AG as the strategic business partner RESULTS: Taking business to the cloud High reliability expected critical for IoT services for customers Improving message delivery across all production plants worldwide Digitizing internal processes Significant reduction of downtime S I N C E P A R T N E R I N G W I T H S O F T W A R E A G : Become one of the world s leading IoT companies 80% of annual revenue processed on Software AG s DIGITAL BUSINESS PLATFORM That s more than 110 million/day 9
TRANSFORMING POSTAL SERVICES THROUGH INTEGRATION CENTRIC PROCESS AUTOMATION OPPORTUNITY: Customs Affairs Platform to support quick new market entry RESULTS: Quickly define new market requirements and local business (process) models Faster entry of new markets Ensured IT readiness at time of market entry S I N C E P A R T N E R I N G W I T H S O F T W A R E A G : FASTER ENTRY OF NEW MARKETS SECURES Global Postal Services Company GLOBAL GROWTH 10
TRANSFORMING RETAIL WITH THE DIGITAL BUSINESS PLATFORM Global Pharmacy Retailer OPPORTUNITY: Unite newly merged group onto one single unit based on Digital Business Platform Build on previous investment in Software AG integration technology RESULTS: ONE platform offers all required digital capabilities Independent Federation Layer Freedom of choice in technology since Software AG s platform works with any system or application ( neutrality ) Faster implementation with Software AG s Global Consulting Services Expected 20% increased productivity S I N C E P A R T N E R I N G W I T H S O F T W A R E A G : 20% PRODUCTIVITY BOOST EXPECTED ONE DIGITAL PLATFORM FOR ENTIRE GLOBAL GROUP NEW DIGITAL APPS: FOR RETAIL & PHARMACY NO VENDOR LOCK-IN 11
OPTIMIZING B2B INTEGRATION WITH A DIGITAL BUSINESS PLATFORM One of the world s leading Internet companies OPPORTUNITY: Create a world-class B2B integration solution to meet rapidly expanding needs RESULTS: Can send/receive 300.000 partner messages/hour Scales easily 10 times leverages the cloud for elasticity Secure, thanks to regular & complete security audits Managed by Software AG s Global Consulting Services S I N C E P A R T N E R I N G W I T H S O F T W A R E A G : SUPPLY CHAIN Secure, high-performance, fully capable B2B/EDI SOLUTION run by Software AG SCALES EASILY Up to 300,000 messages/hour 12
HOW WE GOT TO OUR LEADING POSITION STRATEGY EXECUTION IN 3 STAGES 677 679 351 432 69 243 355 Revenue in m: Product Revenue (Own Products, Group) DBP A&N 2003 2006 2010 2015 2020 13
SOFTWARE AG AT A GLANCE Technology leader for more than 40 years in data management and application development platforms 870+ MILLION IN REVENUE 45%+ recurring 50% new products 2.5bn MARKET CAP ~65% Free Float 4,300+ EMPLOYEES WORLDWIDE P&L as of December 31, 2015 Consulting & Services 43% Admin 14% R&D 23% S&M 20% DBP 50% GCS 22% A&N 28% REVENUE BY BUSINESS LINE 31% USD 34% Euro REVENUE BY CURRENCY 14
DIVERSIFIED TO BALANCED RISK EQUAL PRESENCE AMERICAS AND EMEA, ALL INDUSTRIES Product Revenue by Region Product Revenue by Industry (14%) 7% 20% 45% 48% Americas EMEA (14% Germany) Asia Pacific 10% 19% 12% 19% Government Financial Services IT Services Services Manufacturing Telco & Media Transport & Logistics Other Based on Group product revenue FY 2015 15
DIGITAL BUSINESS PLATFORM REPRESENTS TWO THIRD OF PRODUCT BUSINESS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 DBP offering focused on IT digitization segments, like IoT, streaming analytics etc. A&N DBP 16
RECURRING REVENUE FOCUS: HIGH MARGIN & PREDICTABILITY in m 400 353 362 378 369 369 407 300 31% License 200 A&N DBP 22% Consulting 47% Maintenance 100 0 2010 2011 2012 2013 2014 2015 47% of Group Revenue from Maintenance (>90% recurring) 17
DIVIDEND POLICY FOCUS ON CONTINUITY Ordered by fiscal year/in 0.33* 0.37* 0.38* 0.43* 0.46 0.46 0.46 0.50 0.55 2007 2008 2009 2010 2011 2012 2013 2014 2015 * According to the 1:3 stock split, rounded 18
SOFTWARE AG VALUE INVESTMENT KPI Growing share of product and recurring revenues Operating margin* expansion 34% License 39% Maintenance 31% License 47% Maintenance 26.8% 27.9% 29.7% 27% Consulting 22% Consulting 2013 2014 2015 481.2 446.2 444.6 Operating expenses in m FY 2013 FY 2015 * Non IFRS EBITA in % of revenue 170% 130% 90% Free Cash Flow conversion rate around 120% of Net profit. 0.50 0.55 Dividend increase yield: 2.1% 50% 2011 2012 2013 2014 2015 2014 2015 19
BUSINESS DEVELOPMENT AND OUTLOOK REVENUE OUTLOOK 2016 Outlook 2016 150 DBP 432 +5% to +10% 310 A&N 247-4% to-8% 2007 2010 2013 2015 DBP Revenue in m A&N Revenue in m 20
BUSINESS DEVELOPMENT AND OUTLOOK MARGIN OUTLOOK Operating Margin* 30-31% 32 35% 2020 target 29.7% 27.9% 26.8% 2013 2014 2015 2016e * EBITA non-ifrs adjusted for non-operating items 21
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