[May 01, 2013] Software AG Reports Growth in Largest Business Line Tweet May 01, 2013 (Close-Up Media via COMTEX) -- Software AG reported license revenue growth of 19 percent (at constant currency) in its largest business line, Business Process Excellence (BPE), in the first quarter of the current fiscal year. According to a release, these results, clearly outperforming the market, illustrate that the company's expansion of sales, begun last year, continue to have a positive impact. In addition to its quarterly results, Software AG announced its acquisition of LongJump, a U.S. based firm headquartered in California. LongJump offers a cloud-based software platform that enables customers to independently develop enterprise applications. In order to further fuel dynamic growth, Software AG plans to drive its growth initiatives with targeted investments in the BPE business line during the course of the current fiscal year. The company's full-year forecast for 2013 has been confirmed. Software AG CEO Karl-Heinz Streibich said, "Our first-quarter results confirm that we are exactly on track with our strategic growth initiatives. There is unprecedented demand for products around the four technological megatrends: Big Data, Cloud, Mobile and Social Collaboration. Our BPE offering addresses precisely what our customers' need and helps them successfully implement their digitization strategies. Additionally, we are enhancing organic growth through selective acquisitions." The BPE business line made the largest contribution to total revenue with growth of about 14 percent (at constant currency) to total EUR90.3 million (2012: EUR80.6 million). The business line's license revenue went up 19 percent (at constant currency) to EUR41.9 million (2012: EUR35.7 million). With these results, the company clearly outperformed its competitors which should lead to an increase of its market share in the period under review. This dynamic development verifies the impact of strategic growth measures-including the expansion of the company's sales force in specific markets-introduced last year. Based on its project pipeline, Software AG is optimistic about upcoming quarters and expects BPE license revenue to continue to rise over the course of the year. The traditional Enterprise Transaction Systems (ETS) database business generated EUR64.5 million (2012: EUR76.6 million) in the first quarter. The expected decline in the current year is due to a weaker cycle of contract renewals. Because the ETS products Adabas-Natural are a key technology to a large customer base, Software AG anticipates the division's performance to improve during the second half of 2013. The Consulting business line, which comprised the services of BPE, ETS and IDS Scheer Consulting for the first time this quarter, posted revenue at EUR70.1 million (2012: EUR97.4 million). As part of the realignment of its SAP consulting business, Software AG continues to withdraw from unprofitable markets and to focus on process optimization for SAP applications in the German speaking region. The sale of its North American SAP-related service activities in January 2013 was a major step in this direction. Software AG's total revenue for the first quarter of 2013 was EUR224.9 million (2012: EUR254.6 million) due to decreased consulting revenue. Revenue from Software AG's own products (BPE + ETS product revenue) at constant currency was slightly above the figure of EUR156.9 million from the same quarter last year. Product sales represented about 70 percent (2012: 63 percent) of total revenue. The revenue mix therefore further improved in favor of growth-driving, high-margin license and maintenance revenue. Due to the planned increase in sales and marketing expenses, at EUR72.8 million (2012: EUR59.3 million), for addressing new high-potential markets, EBIT was EUR41.6 million (2012: EUR54.8 million). Net income after taxes totaled EUR27.2 million (2012: EUR35.9 million). Software AG's equity ratio declined from 60 percent (Dec. 31, 2012) to a still very high 56 percent as of March 31, due to the ongoing successful share buy-back program. Software AG again reported net liquidity as of March 31, with a cash surplus (cash less financial liabilities) of EUR60.8 million (Dec. 31, 2012: EUR49.6 million). CFO Arnd Zinnhardt said, "We invested in organic growth and also continued to accumulate liquidity, as planned, in the first quarter. In addition, we used free cash for our current share buy-back program. Even after acquiring LongJump, we will keep our options open for further acquisitions that will enhance our portfolio and accelerate Software AG's growth." Software AG announced its acquisition of LongJump, a U.S. based company. It was founded in 2003 and has its headquarters in Santa Clara, California, as well as a research and development center in Indore, India. LongJump serves a customer base of more than 220 international companies, offering them a digital platform that enables users to create cloud-based applications independently, easily, quickly and, most importantly, without the need for help from their IT department. The demand for platforms such as this to efficiently develop applications internally is increasing steadily as enterprises become digital. Software AG is expanding its cloud expertise and extending its own cloud-ready product offering with the acquisition of LongJump. At this year's CeBIT trade show in March Software AG announced that it would gradually begin offering its product portfolio as Software-as-a-Service from the cloud. Software AG expects the positive business development to continue and confirms the forecast which was released with the 2012 full-year results on January 29. Accordingly, the company expects an increase in BPE revenue between 16 and 22 percent (at constant currency) for fiscal year 2013. Revenue for the traditional ETS database business is likely to shrink between 4 and 9 percent (at constant currency), which will be more than offset by the targeted BPE growth. Taking into account the additional investments for the expansion of sales and marketing, earnings per share should be between EUR1.70 and EUR1.80. More information: www.softwareag.com ((Comments on this story may be sent to [email protected])) [ Back To TMCnet.com's Homepage ]