Software AG continued to show strong growth for the second quarter of 2010, with total revenues up by 52% to €267.3-million.
The high growth was driven by the webMethods business division with license revenue up by 31% and earnings more than doubled.
At a corporate level, operating earnings, earnings after tax and earnings per share returned double-digit growth, reaching historical record levels. The free cash flow at €36.3-million (up 22%) also reached a new record level.
Software AG expects the increasing volume of projects in the process solutions area to continue and has confirmed its forecast for fiscal year 2010.
Total business division growth accelerated to 18% in the second quarter after a 9% increase in the Q1. The webMethods licensing business grew dynamically by 31% to €29.6-million. This growth was based on the experience and skills of the business organization operating in a growing software market and resulted in an increase in the number of large projects as well as an increase in the average deal size.
“We have passed a milestone at Software AG. We have succeeded in establishing a second, stable business division whose organic growth and successful acquisitions complement our profitable ETS business,” says Karl-Heinz Streibich, CEO of Software AG. “Our strategy has paid off. With webMethods we have a new, profitable growth driver that will propel the company into a new dimension. And this is only the beginning. The integration of IDS Scheer AG will strengthen our growth trend and dynamic results even further in the future.”
Emma Murray, country manager of Software AG South Africa, comments: “These results confirm that our strategic direction fits with what the market is asking for from their technology partners. Locally we have also seen a dramatic increase in the interest and success of our solutions as a result of being able to deliver real business value and positively impact business objectives within our customers’ environments. It is great to see the market reaffirmation of the decisions taken to build a sustainable roadmap for our customers into the future.”
The webMethods business division reported 18% growth in second quarter revenue of €89.4-million. The Enterprise Transaction Systems business division (Adabas, Natural) posted revenue of €96.3-million (€100.9-million in 2009), 5% under second quarter 2009 but 8% higher than the first quarter 2010 figure. The Enterprise Process Innovation division, which represents the IDS Scheer business acquired by Software AG in August 2009, contributed a total of €81.6-million to Software AG's revenue growth. Of that figure, €23.4-million came from product revenues and €57.9-million from IDS Scheer Global Consulting and product implementation.
The sharp rise in webMethods business volume and continued effective cost management resulted in increased operating earnings in the first quarter of €58.9-million. Net income grew by 29% to €37.4-million compared to €28.9-million in the second quarter of 2009. Earnings per share climbed to €1.32 compared to 2009's €1.02.
"We have established the webMethods business division as a successful growth engine in recent years. It is now also as a significant contributor to Software AG’s total earnings. webMethods and ARIS will also drive the dynamic growth of Software AG’s EBIT in the coming quarters," says Arnd Zinnhardt, CFO of Software AG. "Earnings and cash flow growth are the basis for the further strategic development of Software AG."