Software ag: conversion to subscription model costs sales

Software AG: Conversion to subscription model costs sales

The switching of license sales to a business model with subscriptions has cost software AG further revenue in the past quarter. In the three months, the company achieved 12 percent fewer sales at € 183.1 million than in the same quarter of the previous year.

Sales with subscriptions grew by 71 percent year-on-year to 35.1 million euros, which with software AS A service by 37 percent to 9.5 million. The Towns of Software AG shrank by 48 percent to € 16.7 million with the relevant licenses, with the resulting maintenance of 16 percent to 85.1 million.

High one-time revenue through license sales fall away, the Software AG hopes for the subscriptions but a stronger customer loyalty. However, sales were also something among the estimates of experts. In particular, the digital division with integration software for companies cut something more than intended as intended.

Order intake as expected

At order intake – a normalized value for the consigning from subscription tolerated in the coming years – section Software AG as expected. This coarse is currently the billing control instrument for the company.

The result-adjusted earnings before interest, taxes and goodwill was 38 percent to 24.5 million euros. This year, the Group wants to invest a lot of money in the art growth and takes a further decline in the operating margin for this year. Net profit with 10.2 million euros was only about half as high as a year ago with 20.2 million euros. The forecast kept the management for board leader Sanjay Brahmawar.

"In the important market for integration and APIs, as well as for IoT and Analytics, an average quintum growth rate (CAGR) of 10 resp. 102. 26 percent expected", Write SAP in a message. In these marketed waxes the software AG double-digit; in a period, "In many companies in the company’s most important target industries, such as the banking and financial services sector, in retail, in supply chain and logistics, in medical technology and manufacturing industry, digitization programs".

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