2019 HELIX STRATEGY REFRESH & Q1 FINANCIALS/media/Files/S/Software... · 2019. 5. 14. · 2019...
Transcript of 2019 HELIX STRATEGY REFRESH & Q1 FINANCIALS/media/Files/S/Software... · 2019. 5. 14. · 2019...
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© 2019 Software AG. All rights reserved.
May 13, 2019
2019 HELIX STRATEGY REFRESH & Q1 FINANCIALS
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This presentation includes forward-looking statements based on the beliefs of Software AG management. 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 techno-logies and changes in business strategy. Software AG does not intend or assume any obligation to update these forward-looking statements.
This presentation 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 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 presentation does not constitute an offer of sale of securities in the United States of America. Securities 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 in its currently valid form.
SAFE-HARBOR-STATEMENT
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H E L I X
Our pathway to sustainable, profitable growth
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THE RIGHT MOMENT TO ASSESS WHERE WE STAND
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WHAT WORKS
Product Strength
Financial Strength
Cultural Strength
Best in Class
Solid Balance Sheet
Creativity & Flexibility
Integral & Trusted
Strong Cashflow
Diversity & Opportunity
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WHAT WE MUST WORK ON Growth
GTM and Operations
No growth in growth markets
Product focus too
broad
Partner focus too narrow
Ecosystem
Siloes & complexity
Essence & identity
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HELIX: A MULTI-YEAR TRANSFORMATION
FOCUS
EXECUTION
TEAM
• Targeting sustainable, profitable growth • Committing ~€50m in investment
• Committing to medium term milestones, metrics and pathway • Three levers will enable our success:
GENERATING SUSTAINABLE, PROFITABLE GROWTH
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FOCUS EXECUTION TEAM
• Right products • Right markets • Right resources
and capabilities
• Simpler, sharper, disciplined GTM
• Improved operating model and accountability
• Drive necessary shift to subscription
• Harnessing our talent
• Expanding and empowering our ecosystem
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RE-IMAGINING INTEGRATION
€24bn
TAM 2018
DIGITAL TRANSFORMATION
REAL-TIME DATA
€7.9 bn
IoT & Analytics
€2.4 bn
Business Transformation
€10.2 bn
€3.4 bn
A&N Integration
49%
Of CIOs say their business model has changed or is changing - Gartner CIO Survey 2019
$1.37bn
The total digital transformation market in 2022 - IDC forecast
Annual total potential economic impact of IoT by 2025 - McKinsey
$3.9tr - $11.1tr pa
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EVOLVING SO THAT WE START WITH THE CUSTOMER
Real-life time sensitive problems
Intuitive UI and instant results
Plain-speaking support and responsiveness
Scale over time based on results
Experiment, test and probe capabilities
Facilitate, not sell
Value-based engagement
SaaS/Subscription 1st
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TEAM EXECUTION FOCUS
THREE LEVERS WE CAN CONTROL
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FOCUS SHAPING OUR OFFER AND ORGANISATION FOR SUCCESS
PRIORITIZE INVESTMENT WHERE WE SEE:
• Growth > market
• Potential to take share
• Low barriers to success
CLARIFY VALUE PROPOSITION BY:
• Realigning DBP portfolio:
Integration, IoT, Business Transformation
• Focus on areas where there is clear market growth
• Refocus R&D spending where it matters most
LEVERAGE STRATEGIC M&A TO:
• Enter adjacent markets
• Bolster existing strengths
• Gain a technology edge
M A R K E T S P R O D U C T S C A P A B I L I T Y
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FOCUS IN ACTION – INTEGRATION
Customer integration opportunity
Legacy stack and existing architecture
• Integration: a big problem for enterprise • It’s only getting bigger • A business-level, front-line problem
$12bn
$18bn
Source: Gartner
2017
2022
50%
Integration Platform Market TAM
API iPaaS IoT & Analytics
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FOCUS IN ACTION – IOT & ANALYTICS
Industrial IoT
Telecommunications
Insurance/Financial Services
2018 - 2023
Create replicable solutions
Scale OEM parterships
Cumulocity and System Integrators
$9.5bn
$25.6bn
2017
2023
18% CAGR
IoT Platform TAM
Source: McKinsey
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EXECUTION – DELIVERY AS OUR WATCHWORD
Drive accountability
Create right leadership group
Reward success appropriately
Specialization
Geography
Sales coverage
Capitalize on major industry trend
Respond to customer preferences
Capture economic upside
1. New operating model 2. Refined go-to-market 3. Subscription sales
sustainable, profitable growth over the medium term
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Sanjay Brahmawar Chief Executive Officer
Arnd Zinnhardt Chief Financial Officer
John Schweitzer Chief Customer Officer
Dr. Stefan Sigg Chief Product Officer
Paz Macdonald Chief Marketing Officer
Bernd Gross Chief Technology Officer
TEAM EXPERIENCE & ENERGY
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TEAM — NURTURING AN ECOSYSTEM TO SUPPORT OUR GROWTH
Partners
People
Launch comprehensive new program
Embrace co-petition
Grow partner revenue to substantial % of mix
New employee value proposition
Agile talent and performance framework
Incentive structures to match
Scalable
Durable
Profitable
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COMMITMENT. INVESTMENT. MEASUREMENT.
Op Free Cash Flow
Bookings / ACV
ARR
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HELIX: THE RIGHT PATHWAY
GENERATING SUSTAINABLE, PROFITABLE GROWTH
Unlock our greatest strengths
Convert a significant opportunity
Committed investment, strong team
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EVOLVING OUR FINANCIAL PLATFORM FOR GROWTH
EVOLVING OUR FINANCIAL PLATFORM FOR GROWTH
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30%+ Operating
Margin
Strong Free Cash Flow
Digital Business
10%+ CAGR
85% - 90% Recurring Revenue
Medium term
Accelerated growth, higher quality and higher visibility of revenues, good margin and cash generation
OUR AMBITION
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ROUTES TO OUR AMBITION
Accelerated growth, higher quality and higher visibility of
revenues, good margin and cash generation
Sales Execution
R&D
OEM
Geographic Focus
Subscription
Operating Model
Our Ambition
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Customer Value Team Increase deal value Upscale into existing customer base
Cross-sell into A&N base Sales efficiency New business / new logos
Sales Execution
Operating Model
Customer driven innovation Deepen sales knowledge Strengthen entrepreneurial ownership More customer touchpoints
Subscription
Customer Success Team Realise upsell potential Higher retention rate Higher visibility, reduced volatility
Geographic Focus
Focus on Tier 1 countries Focused sales investments Increased productivity
R&D
OEM
Re-allocation of resources Focus on key products that
drive revenue model
IoT Partnerships & White Labelling Scaling through partnerships,
penetrating the relevant IoT platforms
ROUTES TO OUR AMBITION
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Rel
ativ
e Im
pact
2019 2021 2022 2023 2020
high
er
low
er
Sales Execution
Subscription OEM
R&D Operating Model
Geographic Focus
FIRST FINANCIAL IMPACT AND PHASING PER ROUTE
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Customer Driven
Customer Benefit
Software AG Benefit
Fastest updates,
latest capabilities
Lower upfront cost
Higher contract values
Higher retention and lifetime value
Lower cost to serve
Lower customer
acquisition cost
By 2020, all new entrants and 80% of historical vendors will offer subscription-based business models Gartner, 2018
Realign our model Extract the benefit over time
ENABLING THE SHIFT TO SUBSCRIPTION
Scale up with demand & experiment
Maintenance as a Service
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OLD IFRS
To 2017 2018 – 2019 2020+
Perpetual Upfront Upfront Upfront
Subscription Pro-rata Upfront Quarterly / Annually
SaaS / Usage Pro-rata Pro-rata Pro-rata
Perpetual license & support
Subscription revenue
1 2 3 4 5
Subscription Pathway Greater Lifetime Revenues
Cash flow & revenue
both up +30 to 40%
IFRS 15
NEW SUBSCRIPTION LICENSING MODEL
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2018 as is as would beTotal Total Delta
PERPETUAL LICENSE 250 250
SUBSCRIPTION LICENSE 30 0 0 30 10 10 10 10 10 10 50 20
MAINTENANCE 400 400
CONSULTING 180 180
TOTAL REVENUE 860 840
COSTS 590 590
operating EBITA 270 250
MARGIN in % 31.5% ~29.5%
∆ ~200bp
MODEL CHANGE: IMPACT AND PHASING 2018 reimagined
2 3 2 3
4 5
As 2018 would have been
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Product Revenue
Op EBITA Margin
Traditional KPIs
We will begin to introduce new metrics
that show our underlying progress in
creating a more valuable base
Bookings / ACV
Annual Recurring Revenue
From measuring simple up-front deal size to measuring long term customer value and increasing revenue predictability
Committed sales order in / annualized average revenue
per contract
Annual value of all recurring revenue components to a
contract
Op Free Cash Flow “Cash is King!”
KPIS TO TRACK OUR PROGRESS
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Management KPI Development 2018 – 2023
Statutory KPI Development 2018 – 2023
ARR OpCF Bookings Product revenue (old licensing model)
Product revenue (new licensing model) Cost
12-17% CAGR
15- 20% CAGR
5-10% CAGR
MEDIUM TERM KPI DEVELOPMENT
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2019
DBP
IoT
A&N
EBITA Margin
3 to 7%
75 to 125%
-3 to +3%*
28 to 30% Non IFRS
Medium Term Capital Returns
Dividend Pay Out
Share Buy Back
25 to 33% FCF
Opportunity Based
Revenue
Non-IFRS EBITA Margin
Bookings 15 to 20% CAGR
ARR 12 to 17% CAGR
Operating Cash Flow 5 to 10% CAGR
GROWTH AND CAPITAL RETURNS
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*as of April 11, 2019
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Higher retention, contract and lifetime values
TOD
AY
MED
IUM
TER
M
10%+
CAG
R
85–90% recurring
~ 65% recurring
Lower cost to serve
Lower customer acquisition cost
Digital Business Driving Recurring Revenue
THIS TRANSITION BUILDS US A BETTER BUSINESS
30%+ Operating
Margin Strong Free Cash Flow
Digital Business
10%+ CAGR
85%–90% Recurring Revenue
Medium term
Ambition Accelerated growth, higher quality and
higher visibility of revenues, good margin and cash generation
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OUR TECHNOLOGY VISION
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Cloud computing ‘Everything as a Service’ (XaaS)
Market Trends Smart Products/ Smart Services
Convergence of IT & OT Data Security and Privacy
IoT Shortage of skilled employees 5G
Edge computing LP WAN Industry 4.0
AI/ ML Data Accessibility Globalization 4.0
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A TRULY CONNECTED
WORLD The revolution has already started…
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WHAT DOES ‘A TRULY CONNECTED WORLD’ MEAN FOR OUR CUSTOMERS & PARTNERS
A tsunami of Cloud applications is emerging Cloud-based applications continue to eat up enterprise apps
Demand is moving from data acquisition to data integration Integration of Applications, Devices, Clouds and Data to drive operational excellence and superior customer experience
Innovations will be increasingly based on platforms Openness and ‘freedom of choice’ is a key requirement
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A TRULY CONNECTED WORLD IN ACTION
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iPaaS: a fully connected sports arena
Business application integration is key
Software AG and Coca-Cola European Partners have entered into a strategic partnership around business application integration and transformation.
Together with SK we developed an application that unlocks their new state-of-the-art arena capabilities and integrates a range of connected services, including real-time game stats, ticket bookings as well as in-seat food ordering.
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Next generation of digital offerings
Software AG’s platform is centrally deployed to enable the next generation of digitalization including Smart Products.
Location of goods and wagons on rail network is a real issue. If an item is delayed or misrouted, fast recovery is important. If refrigeration fails or product knocked in transit, immediate alerts are key (condition monitoring).
Condition monitoring and tracking
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“With Cumulocity IoT Edge, the health of each of the 5,500 wind turbines can be monitored and analyzed locally using a variety of different sensors for vibration, power output, temperatures and wind conditions using a combination of low-cost edge devices and sensors.”
- Stefan Ewald, CIO of Nordex
THE NEW WAY TO GO: CLOUD + EDGE = SUCCESS Optimize power generation and prevent breakdowns - globally
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“We have taken Software AG’s Cumulocity IoT platform and rebranded it ‘STW machines.cloud’. Big data can be used to detect patterns alerting problems in bus engines. This reduces the amount of data transmitted, and enables predictive maintenance which avoids unnecessary preventive actions and breakdowns.”
- Dr. Michael Schmitt, CEO, STW
REMOTE MONITORING OF 5,000 LONDON BUSES To reduce emissions and prevent breakdowns
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The speedway to the Industrial Internet of Things is just ahead! Cumulocity IoT Edge powered by Dell Technologies - a joint software appliance by Software AG and Dell EMC - offers plug-and-play entry onto the IIoT, literally the shortest time-to-market. The performance-optimized, industrial-grade appliance comes with preinstalled software, making it fully usable out of the box.
DELL SELECTED SOFTWARE AG’S CUMULOCITY EDGE
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SIEMENS MINDSPHERE IS POWERED BY SOFTWARE AG
MindConnect API
MindConnect Integration • Simplified integration of application data into
MindSphere • Combine machine data with data out of our
applications, on premise or in the cloud
MindConnect IoT Extensions • Extends range of IoT devices • Combines device identity, asset and software
management • Use other customizable software agents on custom
devices
Connect and integrate data into MindSphere
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FROM MACHINE MANUFACTURERS FOR MACHINE MANUFACTURERS, THEIR SUPPLIERS AND CUSTOMERS
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Application driven Create new apps
Integration Driven Integrate (Apps, Clouds, Devices, Data) to drive operational excellence
Innovation driven New Business Models, New Products, Predictive Analytics (AI/ ML)
Value
A typical agile project adoption based on ‘Land & Expand’
E.g. remote management & control, condition monitoring
Enterprise wide integration with e.g. ERP/ CRM systems
Predictive Maintenance, Everything-as-a-Service
A UNIQUE OFFERING IN AN EARLY MARKET We combine integration, IoT and platform enabled innovations based on distributed architectures
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Leapfrogging to Hybrid Integration & Distributed Architectures (Cloud & Edge)
Co-Innovations with Customers & Partners is key
We have a unique position - combine integration, IoT and platform enabled innovations
SUMMARY
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OUR PRODUCT STRATEGY
OUR PRODUCT STRATEGY
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Challenge for Operating & Manufacturing Companies Improved efficiency, consistency, quality for construction processes
• Reduction of operating costs • Easiness of machine handling • Real-time analytics • Data mining to increase quality and machine
availability
CO-INNOVATION
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Solution for Dürr and its customers Streaming analytics powered by the ADAMOS IIoT Platform • Real-time streaming analytics • Real-time quality control during production • Intuitive UI for machine operators • Toolkit for self-service real-time data analytics
and algorithm
CO-INNOVATION
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Applications – Databases – BI … “take it or leave it”
“IT DICTATORSHIP”
Product Manager Plant Manager Operations Manager Support Engineer Machine Operator
IT MANAGED CONSISTENCY
BUSINESS AGILITY
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“DEMOCRATIZATION” BY INTEGRATION
Easy & Intuitive Experience
(Web/Mobile UI/App)
Cloud (Private or public)
DaaS
PaaS PaaS
Product Manager Plant Manager Operations Manager Support Engineer Machine Operator
SaaS
Contextual - Self service - Low Code – … “empower and serve”
IT MANAGED CONSISTENCY
BUSINESS AGILITY
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INTEGRATE TO INNOVATE
Data Clouds Devices Apps
Easy & Intuitive Experience
(Web/Mobile UI/App)
Cloud (Private or public)
DaaS
PaaS PaaS
Product Manager Plant Manager Operations Manager Support Engineer Machine Operator
SaaS
Contextual - Self service - Low Code
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51 | © 2019 Software AG. All rights reserved.
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Integration & API
IoT & Analytics
Business Transformation
Adabas & Natural
THE FOUR PRODUCT UNITS – FOCUS PER MARKET SEGMENT
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EAI B2B ETL
ESB SOA Messaging
iPaaS API Mgmt Hybrid / Edge IoT Analytics
AI/ML DaaS Blockchain IoT Solutions
1990s 2020s
we are here
Application-driven Integration
Services-driven Integration
Self-service Integration
Securely Automated Integration of
Everything
MATURITY OF THE CONVERGENCE OF INTEGRATION AND IOT
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INTERPLAY BETWEEN DEVICE INTEGRATION AND ANALYTICS
APAMA
CUMULOCITY
ZEMENTIS
Data Science
Operations The Analytics Flow
TRENDMINER
WEBMETHODS External data context
External models
∑
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KEY TAKE-AWAYS
FOCUS ON WELL-DEFINED MARKETS
CONVERGENCE OF INTEGRATION AND IOT
CLOUD AND EDGE SCALABILITY
ANALYTICS AND SOLUTIONS
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56 | © 2019 Software AG. All rights reserved.
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SALES AND GTM SALES AND GTM
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THE STRENGTH OF OUR FOUNDATION
TRUSTED BRAND
10K CUSTOMERS
FINANCIAL STRENGTH
20%+
PRODUCT INNOVATION
10+ ANALYST
LEADERSHIP OP. CASH FLOW /
REVENUE
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EVOLVING SALES AND GO-TO-MARKET
FOCUS EXECUTE
Specialization
Sales Coverage
Geographies MARKET IMPACT
Customer Experience
Alliances and Channels
Sales Operations
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SPECIALIZED ACCOUNT EXECUTIVE: SALES BAG AND ROLE
SPECIALIST ROLES TO PERSONAS
TARGETED SALES BAGS
MARKET FOCUS
1
2
3
Professional Services
Customer
Adabas Natural
Integration & API
IoT & Analytics
Business Transformation
Personae
Markets
NAM
DACH
EMEA
LATAM
APJ
……… iPaaS ……… Process Mining ……… IoT
Platform
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FOCUSED GEOGRAPHY
Sweden
Switzerland
B+Lux Netherlands
China Canada
Japan Australia
Korea Brazil
Italy South Africa
France
UK
Germany
USA
Spain UAE
Biggest market
opportunity
Best established
footprint
BIGGEST MARKET IMPACT
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FOCUSED SALES COVERAGE
NEW LOGOS
GROW SHARE OF
WALLET
NEW CHANNELS
1
2
3
Strategic Account Manager
Enterprise Account Manager
Territory Account Manager
TERRITORY ACCOUNTS
STRATEGIC ACCOUNTS
ENTERPRISE ACCOUNTS Alliances and
Channels
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MODERN CUSTOMER EXPERIENCE
Evaluate
Adopt
Onboard Expand
Buy Renew
Evaluate and select
Upsell / Xsell
On-board and enable Value realization reference
Secure renewal
Contract execution Customer Life Cycle
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ALLIANCES AND CHANNELS
ISV – extend reach G2000 Application Partners
OEM – embedded solutions White-labelling
ISV OEM Marketplace
Marketplace – extend reach SMB Cloud, Public and Private
SI
SI – expand wallet-share Increase competitiveness
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SALES OPERATIONS
Simplification Metrics Sales Methodology
Quoting tools, approvals, contracts, revenue recognition
Leading and lagging indicators
Planning and continuous enablement
Simpler, faster quote to cash process
Increase accountability:
analyze, plan, adjust
Drive Alignment: resources and
efficiency
Demand Generation
Sales playbook and improved lead flow
Maximize Pipeline: volume, conversion
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INCENTIVES: CORE AE COMPENSATION PRINCIPLES
DRIVE SUBSCRIPTIONS
OUTSIZED PERFORMANCE
RENEWALS: PROTECT & EXPAND
DRIVE SOLUTION PERFORMANCE
RIGHT-SIZED TERM LENGTHS
IMPROVE LINEARITY
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SALES AND GTM TRANSFORMATION
Sales Operations
Geographies
2019 2020 2021 2022 2023
Rel
ativ
e Im
pact
Specialization
Sales Coverage
Customer Experience
Alliances and Channels
TODAY
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SUMMARY – DELIVERING MARKET IMPACT
FOCUS
EXECUTE
EXECUTE
EVALUATE
GROWTH
Specialization
Sales Coverage
Geographies
Customer Experience
Alliances and Channels
Sales Operations
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APRIL 18, 2019
RESULTS 1ST QUARTER 2019 (IFRS, UNAUDITED)
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in €m, IFRS 2018 2017 2016 2015 2014
Total Revenue 865.7 879.0 871.8 873.1 857.8 BL DBP ex Cloud & IoT 434.4 441.4 441.4 431.5 394.5 BL Cloud & IoT 30.3 14.9 n/a n/a n/a
BL A&N 218.3 223.7 234.6 248.0 245.3 BL Consulting / Services 182.6 198.8 195.8 193.6 218.0 Group License 249.4 250.1 263.0 271.9 270.1
Group Maintenance 415.4 420.2 412.2 406.9 371.3
SaaS / Usage based 17.6 9.1 n/a n/a n/a
EBIT 231.6 222.8 213.9 209.4 176.0
EBITA (non-IFRS) 272.9 279.5 272.0 259.1 239.3
EPS (in €, non-IFRS)* 2.64 2.38 2.37 2.22 1.96
Dividend cash out n/a 44.3 41.9 39.5 39.5
Free cash flow 184.1 161.9 187.0 170.0 132.7
Net cash / Net debt 149.0 55.2 73.1 -25.7 -15.1
Shareholders’ equity 1,239.1 1,118.3 1,196.8 1,089.8 1,013.4
Employees (FTE) 4,763 4,596 4,471 4,337 4,421
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FINANCIAL DATA KEY FIGURES
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1. Return on equity: Operating EBIT / Equity 2. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital) 3. Current assets ./. Cash and Cash Equivalents ./. Current liabilities
4. Current assets ./. Current liabilities / Total revenue 5. (Operating Cash flow ./. Capex) / Revenue.
IFRS unless stated different FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Operating margin (EBITA, non-IFRS) 31.5 31.8 31.2 29.7 27.9
EBITDA margin 30.5 30.0 29.1 29.7 26.4 EBIT margin 26.8 25.3 24.5 24.0 20.5 ROE1 18.7 19.9 17.9 19.2 17.4 ROCE2 16.4 18.0 15.2 16.1 12.6 Net working capital (€m)3 -€225,8 -€298.1 -€200.2 -€155.9 -€98.1 Working capital ratio4 27.3 7.7 20.0 16.6 25.7 Free cash flow margin5 21.3 18.4 21.4 19.5 15.5 Corporate tax rate 30.0 37.3 33.0 32.4 33.7 WACC6 5.32 4.95 4.05 4.13 4.35 Equity ratio 61.7 58.6 61.2 60.1 54.8 DSO (Days Sales Outstanding) 10.3 103 113 111 115 Capex (in €m) €11.0 €27.5 €16.7 €15.5 €10.5 Capital employed7 (in €m) €1,408.9 €1,248.4 €1,381.9 €1,282.8 €1,326.0
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KEY FINANCIAL RATIOS IN PER CENT OF REVENUE
6. Pro forma, not applied for corporate management 7. Fixed assets + Working capital
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CURRENCY IMPACT ON REVENUE
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Q1 2019 / FY 2018
Euro 34%
US Dollar 31%
Other 17%
ILS 4%
BRL 4%
AUD 4%
GBP 6%
(in €m; yoy)
Q1 2019
Q1 in %
FY 2018
FY in %
Licenses 0.0 0% -5.2 -2%
Maintenance 2.4 2% -17.0 -4% SaaS 0.1 3% -0.4 -2%
Services & Other 0.6 1% -4.2 -2%
Total 3.1 2% -26.7 -3%
Currency impact on revenue
34% revenue in Euro 66% revenue in foreign currency
Currency split FY 2018
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(in €m) Q1 2019
Q1 2018
∆% ∆% acc
FY 2018
FY 2017
∆% ∆% acc
DBP (excl. Cloud & IoT) 90.5 89.4 1% -1% 434.4 441.4 -2% 1%
- thereof Licenses 21.7 23.4 -7% -8% 166.2 176.7 -6% -4%
- thereof Maintenance 68.7 66.0 4% 1% 268.2 264.7 1% 5%
DBP Cloud & IoT 9.5 6.4 49% 47% 30.3 14.9 103% 106%
Total revenue 100.0 95.8 4% 2% 464.7 456.5 2% 5%
Cost of sales -9.3 -8.6 9% 8% -35.9 -34.4 4% 7%
Gross profit 90.6 87.2 4% 1% 428.8 422.0 2% 5%
Sales & Marketing -45.8 -37.8 21% 18% -181.2 -174.3 4% 7%
Research & Development -27.4 -22.8 20% 19% -100.6 -96.9 4% 6%
Segment result 17.5 26.7 -35% -38% 147.0 150.9 -3% 1%
Margin in % 17.5% 27.8% 31.6% 33.1%
Annual Recurring Revenue *as of March 31 308.6 276.5 12% 10% 434.4 441.4 -2% 1%
DIGITAL BUSINESS PLATFORM (including DBP Cloud & IoT)
Q1 2019 segment report
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(in €m) Q1 2019
Q1 2018
∆% ∆% acc
FY 2018
FY 2017
∆% ∆% acc
Licenses 3.1 1.8 71% 70% 8.7 3.5 149% 149%
Maintenance 1.6 0.8 91% 89% 4.1 2.4 72% 73%
SaaS / Usage based 4.9 3.8 30% 26% 17.6 9.1 93% 97%
Total revenue 9.5 6.4 49% 47% 30.3 14.9 103% 106%
Annual Recurring Revenue as of March 31 36.2 18.7 94% 91%
DBP CLOUD & IOT Q1 2019 segment report
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(in €m) Q1 2019
Q1 2018
∆% ∆% acc
FY 2018
FY 2017
∆% ∆% acc
Licenses 17.8 9.0 98% 102% 74.4 69.9 6% 8%
Maintenance 36.8 35.7 3% 2% 143.2 153.1 -6% -1%
Product revenue 54.6 44.6 22% 22% 217.6 223.0 -2% 2%
Other 0.2 0.2 0.7 0.7 0% 0%
Total revenue 54.7 44.8 22% 22% 218.3 223.7 -2% 2%
Cost of sales -2.2 -1.4 54% 53% -6.3 -10.1 -38% -35%
Gross profit 52.5 43.4 21% 21% 212.1 213.6 -1% 3%
Sales & Marketing -7.4 -6.6 11% 11% -32.8 -33.3 -2% 1%
Research & Development -5.9 -5.6 7% 8% -23.8 -23.8 0% -1%
Segment result 39.3 31.2 26% 25% 155.4 156.5 -1% 5%
Margin in % 71.7% 69.7% 71.2% 70.0%
ADABAS & NATURAL
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Q1 2019 segment report
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SERVICES
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Q1 2019 segment report (in €m) Q1
2019 Q1
2018 ∆% ∆%
acc FY 2018
FY 2017
∆% ∆% acc
Total revenue 46.7 46.1 1% 0% 182.6 198.8 -8% -6%
Cost of sales -35.7 -37.5 -5% -6% -144.9 -155.8 -7% -5%
Gross profit 11.0 8.5 29% 28% 37.8 43.0 -12% -10%
Sales & Marketing -4.3 -4.4 -3% -4% -17.4 -19.2 -9% -6%
Segment result 6.7 4.2 62% 61% 20.3 23.8 -15% -12%
Margin in % 14.4% 9.0% 11.1% 12.0%
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(in €m) Q1 2019
Q1 2018
∆% ∆% acc
FY 2018
FY 2017
∆% ∆% acc
Total revenue 201.4 186.6 8% 6% 865.7 879.0 -2% 2%
Cost of sales -49.5 -49.5 0% -1% -195.0 -213.4 -9% -7%
Gross profit 152.0 137.1 11% 9% 670.7 665.6 1% 4%
Margin in % 75.4% 73.5% 77.5% 75.7%
Research & Development -33.3 -28.3 17% 15% -124.4 -120.6 3% 5%
Sales & Marketing -60.8 -52.0 17% 15% -244.7 -243.5 1% 3%
Administration -17.6 -17.0 3% 3% -74.0 -75.9 -3% -1%
Other income / expense 2.0 2.4 3.9 -2.8
EBIT 42.2 42.1 0% — 231.6 222.8 4% —
Margin in % 21.0% 22.5% 26.8% 25.3%
RESULTS
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Q1 2019
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(in €m) Q1 2019
Q1 2018 ∆% FY
2018 FY 2017 ∆%
EBIT (before all taxes) 42.2 42.1 0% 231.6 222.8 4%
Amortization on acquisition related intangible assets 5.6 5.3 6% 21.1 29.6 -29%
Share based payments 2.5 2.9 -14% 11.0 20.7 -47%
Restructuring / severances / legal case 1.1 0.8 27% 6.9 4.7 45%
Other impacts / impacts from M&A activities 0.2 0.1 128% 2.3 1.7 39%
EBITA (Non-IFRS) 51.6 51.2 1% 272.9 279.5 -2%
in % of revenue (Non-IFRS) 25.6% 27.4% 31.5% 31.8%
Net income (Non-IFRS) 36.3 36.5 -1% 195.0 177.3 10%
EPS in € (Non-IFRS)* €0.49 €0.49 -1% €2.64 €2.38 11%
NON-IFRS EARNINGS
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Q1 2019
* Weighted average shares outstanding (basic) Q1 2019: 74.0m / Q1 2018: 74.0m
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(in €m) Q1 2019
Q1 2018 ∆% FY
2018 FY 2017 ∆%
Operating cash flow 60.0 61.6 -3% 195.1 189.4 3%
./. CapEx* (long-term, non-current) -2.2 -1.5 -11.0 -27.5****
./. Repayment of lease liabilities** -3.3 0.0
Free cash flow 54.5 60.1 -9% 184.1 161.9 14%
Payment adjustments for
- Share based compensation 3.9
- Restructuring/ severances/ legal cases 7.2
- Other payments/ M&A impacts 0.0
Adjusted operational Free Cash flow 65.6
in % of revenue 32.6%
Adjusted operational Free Cash flow per share*** €0,89
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CASH FLOW Q1 2019
* Cash flow from investing activities except acquisitions and except investments in debt instruments | ** New reporting line due to IFRS 16 *** Based on weighted average shares outstanding (basic) Q1 2019: 74.0m/ Q1 2018: 74.0m | **** YOY change because of one-time property investment at Darmstadt
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34.9
Mar 31, 2019
Mar 31, 2019
Assets Liabilities
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BALANCE SHEET (in €m)
Dec 31, 2018
Dec 31, 2018
462.3
276.2 62.1
1,172.4
2,007.9
Cash and cash equivalents
Financial assets Trade and other receivables
Fixed assets (Goodwill 975.9 / 964.6)
Total
Non-financial assets
313.3
316.0
139.5
1,239.1
2,007.9
Financial liabilities
Other liabilities
Deferred income
Shareholders’ equity (ratio 63.5% / 61.7%)
Total
483.5
246.0 66.8
1,216.3
2,036.5
23.9
306.6
251.1 185.3
1,293.5
2,036.5
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DBP Total Revenue
Adabas & Natural
Operating Margin Group (EBITA non-IFRS)2)
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OUTLOOK FULL YEAR 2019
1) At constant currency rates 2) Adjusted for non-operating items (see non-IFRS earnings results)
- DBP Cloud & IoT
- DBP (excl. Cloud & IoT)
FY 2019 Outlook (as of January 31, 2019)
28% to 30%
-5% to -0%1)
N/A
FY 2018 (in €m)
218.3
464.7
31.5%
30.3 +75% to +125%1)
+3% to +7%1) 434.4
FY 2019 Outlook (as of April 11, 2019)
28% to 30%
-3% to +3%1)
N/A
+75% to +125%1)
+3% to +7%1)
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APPENDIX
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(in FTE) Mar 31, 2019
Dec 31, 2018
∆%
Mar 31, 2018
∆% yoy
Total 4,737 4,763 -1% 4,610 3%
Professional Services 1,843 1,901 -3% 1,938 -5%
Research & Development 1,339 1,310 2% 1,197 12%
Sales & Marketing 936 926 1% 868 8%
Administration 619 626 -1% 607 2%
Germany 1,240 1,243 0% 1,210 2%
USA 570 580 -2% 575 -1%
India 886 895 -1% 813 9%
Rest of world 2,041 2,044 0% 2,011 1%
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HEADCOUNT BY FUNCTIONAL AREAS* AND GEOGRAPHY
* According to P+L structure
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(in €m) Q1 2019
Q1 2018 ∆% FY
2018 FY
2017 ∆%
EBIT (before all taxes) 42.2 42.1 0% 231.6 222.8 4%
Financial result 1.4 1.4 2% 4.3 1.4 195%
Profit before taxes 43.6 43.4 0% 235.9 224.2 5%
Other taxes -1.5 -1.8 -19% -7.0 -7.2 -2%
Income taxes -12.5 -11.7 7% -63.7 -76.4 -17%
Tax rate in % 32.0% 31.0% 30.0% 37.3%
Net income 29.7 29.9 -1% 165.2 140.6 17%
EPS in €* 0.40 0.40 -1% €2.23 €1.88 19%
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EARNINGS Q1 2019
* Weighted average shares outstanding (basic) Q1 2019: 74.0m / Q1 2018: 74.0m
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FY 2020*
FY 2019*
* Estimated
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AMORTIZATION / DEPRECIATION IMPACT (PRELIMINARY)
(in €m) Amortization
Depreciation
Q1 2019
FY 2021*
-5.6
-6.0
-21.8
-24.6
-14.1
-24.0
-13.7
-24.0
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(in €m) Q1 2019
Q1 2018
∆% ∆% acc
FY 2018
FY 2017
∆% ∆% acc
Product revenue 154.5 140.4 10% 8% 682.3 679.4 0% 4%
Licenses 42.6 34.2 25% 25% 249.4 250.1 0% 2%
Maintenance 107.1 102.5 5% 2% 415.4 420.2 -1% 3%
SaaS / Usage based 4.9 3.8 30% 26% 17.6 9.1 93% 97%
Services 46.7 46.1 1% 0% 182.5 198.8 -8% -6%
Other 0.2 0.2 0.9 0.8
Total 201.4 186.6 8% 6% 865.7 879.0 -2% 2%
REVENUE Q1 2019
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