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Weaker Billing: Stock Shrinks to: Software AG Gains Significantly More Than I Expected – Realignment Car | message



However, the group's profitability at https://www.finanzen.net/index/MDAX and TecDAX was higher and, in the lower line, earned more than expected. The software company also presented its new corporate strategy for sustainable growth. Software AG expects a greater growth for the current year.

On the basis of provisional figures, sales fell 2 percent to 865.7 million euros. The company estimated the negative effects in currency in 26.7 million euros. Adjusted for currency purposes, revenue increased 2 percent. Prior to interests and taxes (EBIT), Software AG earned a 4 percent increase in 231.6 million euros. The margin thus improved to 26.9 percent from 25.3 percent. Profit after taxes increased 17 percent to 165.2 million euros.

Sales and EBIT adjusted to market expectations. In the after-tax results, analysts had waited for consensus with a smaller increase to 63 million euros.

The new boss orders the costly growth of Software AG

"In the fiftieth year of our existence, we are going to take a new and courageous way," said the August act, the new CEO of Sanjay Brahmawar on Thursday at Darmstadt. He wants to better combine the rapid growth of the machine, but still a young branch of software machine with the largest division for integration software and also trusts more in associations.

By restructuring structures and shifting focus to rental software, the administrator wants to return to the group on the growth track. In the medium term, it is expected that the company grows on an average of more than 10 percent per annum to the digital company by 2023, and the proportion of recurring revenue is # ; expects to increase up to 85 to 90 percent of sales.

"We have exceptionally strong products, financial strength and great talent in the business," said Brahmawar at the dpa-AFX finance news agency. "But we have invested too little in our brand and customer focus, and we have to rationalize our product offers and focus more on an ecosystem of associations."

In the case of integration software for networked network systems, the group expects adjusted growth for the currency between 3 and 7 percent if companies are excluded from the software of the machine and the cloud. This still small area is expected to grow between 75 and 125 percent, but much faster than expected experts. In the business of the traditional database, Software AG expects a decrease of up to 5 percent

50 million euros for the acquisition of more conversions

First of all, the course will also cost money. "In our strategic reorientation, we will make additional investments, as well as direct R & D expenses in future areas," said the manager. The current year, the company invests nearly 50 million euros in the conversion, approximately half are additional investments.

As a result, CFO Arnd Zinnhardt expects margins for operating profit (adjusted debt) to fall between 28 and 30 percent in 2019, up to 31.5 percent of the previous year. Analysts expected much more. Starting in 2020, the business license fee model must be changed to a subscribers system; Revenues will gradually grow as rent, not as a single premium. This could cost up to 2 percentage points in the margin again.

"Although the number of sales and gains as of 2020 will be negatively affected by our step towards rental software, we see a much better trend in business this year," Brahmawar said. At the beginning of 2021, this should be reflected again in Erlsen and in the margin.
The growth program could be complemented with control. "For an impulse, we could surely spend between 1,000 million euros and 1,500 million euros in data analytics or in the business of the IoT, but our strategic reorientation is focused on organic growth "said Brahmawar.

The investor is not satisfied

The disadvantage of the new course of growth has led to the actions of Software AG on Thursday the total increase in prices of the previous year. The papers of the Darmstädter fell in the business of Xetra up to 9.5 percent to 30.46 euros, before the minimum to last 5.82 percent and, therefore, a stand of 31.70 euros together

The focus is on the weakest signals of profitability, said analyst Gautam Pillai of Goldman Sachs, for the company to reinstate the course, which will initially cost money. Pillai expects profit expectations in the market to exceed a single digit percentage.

His collaborator, Stacy Pollard, of JPMorgan, also spoke of a very varied perspective: the profit margin of exploitation (adjusted to Ebita) for 2019, from 28 to 30 percent, goes Being well below the market expectations, which at 31.6 percent were above the level of the previous year they had.

The medium-term goal of increasing operational cash flows by 5 to 10 percent is better, according to the JPMorgan expert. However, the exact moment of this is not clear.

FRANKFURT (Dow Jones)

DARMSTADT (dpa-AFX)

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Sources of the image: Nigel Treblin / Getty Images, Software AG


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