Darmstadt (pta/31.01.2023/19:59) -
Darmstadt, Germany – January 31, 2023: Software AG (Frankfurt MDAX®: SOW) today announced financial results for the fourth quarter and full year 2022, and shared its strategic priorities and outlook for 2023.
Sanjay Brahmawar, Software AG's Chief Executive Officer (CEO), commented:
"Our seventh consecutive quarter of Digital Business revenue growth underpinned a strong finish to the year and saw us end 2022 in line with our top and bottom-line guidance.
Today we have announced clear priorities for 2023. We will double down on cloud, intensify our focus on application and data integration, and increase operational efficiency to become a leaner organization. Despite a challenging macro environment, with the resilience of our business and with our new CFO Daniela on board, we are confident in achieving our guidance for 2023."
Daniela Bünger, Software AG's Chief Financial Officer (CFO), commented:
"Helix has enabled Software AG to build a solid foundation for growth. Our task now is to push that growth forward and increase operating leverage by scaling our business efficiently. Our 2023 plan will simplify our business to ensure we achieve these ambitions in the face of a challenging macroeconomic environment. We are confident that our 2023 guidance represents a set of achievable ambitions in the given context, and I look forward to working with the team to deliver on it."
2022 highlights – continued transformation progress
[Unless otherwise stated, all figures are IFRS. Changes at constant currency and rounded. Organic results exclude contributions from StreamSets. Group results include StreamSets.]
2023 priorities – building on Helix to kick off the next phase of transformation
2023 guidance and guidance assumptions
In light of the Group's progress in its business model shift to subscription, Software AG has today updated its headline guidance metric from product bookings to ARR for both the Digital Business and A&N. The Group's other guidance metrics remain unchanged. Software AG will provide more detail on the drivers of ARR at the Group's Capital Markets Day in June 2023.
The Group's 2023 guidance is underpinned by its continued growth ambition, its strategic priorities for 2023 and its awareness of unpredictability in the macro environment.
The Group's guidance ranges for 2023 include StreamSets. They are, with the exception of margin, presented at constant currency.
Fourth-quarter and full-year 2022 business line bookings performance
On an organic basis, Software AG's bookings of €273.9 million in the fourth quarter represented growth of 35 percent year-on-year (Q4 2021: €195.1 million), with bookings of €623.4 million in the full year up 15 percent year-on-year (FY 2021: €517.7 million). With the contribution of StreamSets, Group bookings were €315.0 million in the fourth quarter and €700.1 million in the full year.
Organic bookings in the Digital Business grew 15 percent year-on-year to €197.6 million in the fourth quarter (Q4 2021: €164.8 million) and grew 12 percent year-on-year to €478.9 million in the full-year (FY 2021: €406.0 million). With the addition of StreamSets, bookings in the Group's Digital Business were €238.7 million in the fourth quarter and €555.6 million for the full year.
On an organic basis, the proportion of bookings within the Digital Business coming from subscription and SaaS was 93 percent in the fourth quarter and 91 percent for the full year.
The Group's A&N business line delivered bookings of €76.3 million in the fourth quarter (Q4 2021: €30.3 million), and €144.5 million for the full year (FY 2021: €111.7 million). This represented an increase of 144 percent and 23 percent year-on-year, respectively.
Fourth-quarter and full-year 2022 Group revenue and earnings performance
On an organic basis, Software AG reported €292.0 million in total revenue in the fourth quarter (Q4 2021: €234.6 million) and €930.8 million in revenue for the full year (FY 2021: €833.8 million). With the contribution of StreamSets, Software AG reported €303.8 million in Group revenue in the fourth quarter and €958.2 million for the full year.
On an organic basis, product revenue saw an increase of 24 percent in the fourth quarter to €251.4 million (Q4 2021: €194.6 million) and was up 7 percent at €773.4 million in the full year (FY 2021: €684.0 million). With the addition of StreamSets IFRS revenue, Group product revenue was €261.0 million in the fourth quarter and €795.6 million in the full year.
StreamSets IFRS revenue was €9.6 million in the fourth quarter and was €22.1 million for the period of eight and a half months since the closing of the acquisition. Its non-IFRS revenue contribution was reached by adding back non-operating net negative factors, including the accounting policy change to IFRS and the purchase price allocation related to the acquisition. Adjusting for these factors, StreamSets non-IFRS revenue contribution was about €27 million in the full year.
On an organic basis, Digital Business product revenue saw growth of 7 percent in the fourth quarter to €159.8 million, representing a seventh consecutive quarter of product revenue growth (Q4 2021: €143.3 million). For the full year, Digital Business product revenue saw growth of 7 percent to €527.5 million (FY 2021: €469.5 million). With the addition of StreamSets, product revenue in the Group's Digital Business was €169.4 million in the fourth quarter and €549.7 million in the full year.
ARR, now a headline guidance metric for the business, was €660.0 million on an organic basis at the end of the fourth quarter, representing 10 percent growth year-on-year. Organic ARR within the Digital Business grew 11 percent year-on-year to €476.2 million. Organic recurring revenue represents 93 percent of the organic total product revenue for the full year 2022.
A&N product revenue was €91.6 million in the fourth quarter, representing a year-on-year increase of 72 percent, driven by the increasing share of subscription in the Group's A&N revenue mix (Q4 2021: €51.3 million). In the full year, A&N product revenue was €245.9 million (FY 2021: €214.5 million).
Within Professional Services, the fourth quarter saw revenue decline 3 percent year-on-year to €40.6 million (Q4 2021: €40.0 million) on an organic basis and delivered gross profit of €4.2 million in the fourth quarter, 70 percent lower year-on-year (Q4 2021: €12.0 million). In the full-year, organic Professional Services revenue decreased 1 percent to €157.4 million (FY 2021: €149.8 million) and delivered gross profit of €35.3 million in the full year (FY 2021: €41.2 million).
On an organic basis, EBIT was €43.1 million in the fourth quarter (Q4 2021: €32.2 million) and €133.8 million over the full year (FY 2021: €122.1 million).
With the addition of StreamSets, the Group's EBIT was €22.8 million in the fourth quarter and €78.1 million in the full year.
Organic operating EBITA (non-IFRS) was €67.4 million in the fourth quarter (Q4 2021: €45.2 million), giving Software AG an organic operating EBITA (non-IFRS) margin of 23.1 percent, up 3.8 percentage points year-on-year (Q4 2021: 19.3 percent). For the full year, organic operating EBITA (non-IFRS) stood at €197.6 million (FY 2021: €163.8 million), giving Software AG an organic operating EBITA (non-IFRS) margin within the guidance of 21.2 percent, up 1.6 percentage points year-on-year (FY 2021: 19.6 percent). The Group's margin expansion performance continues to be underpinned by the operating leverage of its subscription business model.
With the addition of StreamSets, the Group's operating EBITA (non-IFRS) was at €58.3 million in the fourth quarter and was €178.5 million in the full year. StreamSets negative impact on operating EBITA (non-IFRS) was €9.1 million during the fourth quarter and €19.1 million in its eight and a half months of ownership.
The Group's free cash flow in the fourth quarter was €-10.2 million (Q4 2021: €17.7 million) and €-1.1 million in the full year (FY 2021: €91.4 million).
As of December 31, 2022, the Group, including StreamSets, had 4.996 employees worldwide (FTEs); December 31, 2021: 4.819). This represents an increase in the Group's employee base of 177, or up 4 percent year-on year.
A webcast for investors and financial analysts will take place on February 1, 2023, at 9:30 a.m. CEST (8:30 a.m. BST). Please pre-register to receive dial-in details at Result Center (softwareag.com).
About Software AG
Software AG simplifies the connected world. Founded in 1969, it helps deliver the experiences that employees, partners and customers now expect. Its technology creates the digital backbone that integrates applications, devices, data and clouds; empowers streamlined processes; and connects "things" like sensors, devices and machines. It helps 10,000+ organizations to become a truly connected enterprise and make smarter decisions, faster. The Company has about 5,000 employees across more than 70 countries and annual Group revenue of over €950 million.
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Key Group Figures Including StreamSets1
|Fourth Quarter 2022 – Key Figures as of December 31, 2022|
|in € millions (unless otherwise stated)||Q4 2022||Q4 2021||%||% acc2||FY 2022||FY 2021||%||% acc2|
|Adabas & Natural||76.3||30.3||+152||+144||144.5||111.7||+29||+23|
|Software as a Service (SaaS)||61.5||33.5||+84||+72||145.8||84.1||+73||+63|
|Group annual recurring revenue (ARR)3||700.2||585.4||+20||+16||700.2||585.4||+20||+16|
|Adabas & Natural||183.8||166.9||+10||+7||183.8||166.9||+10||+7|
|Adabas & Natural||91.6||51.3||+79||+72||245.9||214.5||+15||+8|
|Software as a Service (SaaS)||22.4||12.6||+78||+69||75.8||44.1||+72||+62|
|EBITA (non-IFRS) (operating profit)||58.3||45.2||+29||178.5||163.8||+9|
|as % of revenue (operating margin)||19.2||19.3||18.6||19.6|
|Net income (non-IFRS)||-14.3||34.8||-141||48.9||114.2||-57|
|Earnings per share € (non-IFRS)4||-0.19||0.47||-141||0.66||1.54||-57|
|Free cash flow||-10.2||17.7||-158||-1.1||91.4||-101|
|Free cash flow per share4 in €||-0.14||0.24||-158||-0.01||1.24||-101|
|Employees (FTE) (in thousands)||4,996||4,819||+4|
1 All figures are preliminary and unaudited. Due to rounding, numbers may not add up precisely. StreamSets is present in all numbers listed, excluding A&N and all perpetual figures.
|2 At constant currency.|
|3 Definitions on page 78 of the 2021 Annual Report.|
|4 Based on weighted average shares outstanding (basic) Q4 2022: 74 mn/Q4 2021: 74 mn.|
This document includes forward-looking statements based on the beliefs of the management of Software AG (together with its consolidated subsidiaries, the "Software AG Group"), which are predictions, projections, or other statements about future events. 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 have any obligation to update these forward-looking statements and has no intention to assume such an obligation.
This document 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 Software AG 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 document does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States of America or in any other jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. Securities of Software AG 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, as amended.
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|Phone:||+49 615192 1900|
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