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©2014 Software AG. All rights reserved.

1 |

August 2014

Software AG

Investor Factbook


2 |

Safe-Harbor-Statement

This presentation contains forward-looking statements based on 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 technologies

and changes in business strategy. Software AG does not intend or assume any

obligation to update these forward-looking statements.


3 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 15

Product Offering & Use Cases / Customer References 23

Market Positioning & Competition 34

Key Financials 43

Shares & Ownership 68

Financials 2013/2014 52


4 |

Key Investment Indicators

1. Footprint: Established global software player with blue chip customer base

2. USP: Unique technology leadership in fast growing IT segments

3. Financials: Strong balance sheet and cash generation

4. Assets: Experienced management team and loyal expert staff

5. Timing: Business model in transition / leverage ahead


5 |

Software AG - At a Glance

High performance data management

Process planning, monitoring and

analysis

Middleware to integrate data, applications and

digital workflows

Intelligent Business Operations and In-

Memory Data Management

~ €1bn Revenue (FY 2013)

~ 27% Operating margin (Non-IFRS, FY 2013)

~ 16% Free cash flow margin (FY 2013)

> 4,500 Employees worldwide

~ 1,000 R&D

~ € 2bn Market cap

> 60% Free float

~ 38% Software AG Foundation and own shares

70 Countries

Global customer base: 80% of Fortune 10,000

Technology leader in system integration,

process automation and data management


6 |

What we do - Overcome Digital Gaps

6


7 | 7 |

APPS

SEARCH

ERP

CRM, HR

ADABAS ETC.

ESB / SOA-GOV.

DATA MGMT.

COLLABORATION

EVENT MGMT.

RULES

Process Automation

IntegrationMiddleware

Application Silos HW Infrastructure

Analytics Visualization

REAL-TIME DATA

In-Memory Big Data/IBO

Enabler of the Digital Enterprise

IT 1.0

IT 3.0

Internet 4.0


8 |

Large Enterprise / Public Sector Customers in 70 Countries

Finance Public Sector Telecom Chemicals/Pharma Energy/Utilities

Manufacturing Logistics/ Transport

Healthcare/

Consumer Goods


9 |

Based on product revenue group - FY 2013

Revenue Split – Well Balanced

Product Revenue by Region Product Revenue by Industry

Public Sector Financial Sector IT

Services Associations Manufacturing

Telcos Logistics Retail

Energy Other

22%

19%

48%

31%

12%

9%

EMEA

Germany Asia Pacific

Americas


10 |

Enterprise Transaction Systems ETS

• Manage sustainable

cash flow

• Adjust cost to

maintain segment

margin > 60%

Business Process Excellence

• Technology leadership position in fast

growing markets

• Transform technology leadership into

market leadership

• >50% contribution to group result, mid-term

Business Lines & Development

BPE

IT PORTFOLIO

MANAGEMENT

REAL-TIME INTELLIGENCE AND BIG DATA

PROCESS AUTOMATION

AND INTEGRATION

COLLABORATIVE

PROCESS ANALYSIS

DATABASE MANAGEMENT

SYSTEMS

Consulting

APPLICATION DEVELOPMENT &

MODERNIZATION

ENABLER FOR OWN

PRODUCT SALES (BPE/ETS)

• Successful Turnaround

• Focus on Integration

and Business Solutions

• Margin expansion /

stable revenue

47% 31%

22%

S H A R E O F R E V E N U E *

*based on revenue 2013 ( € 897m): pro forma excl. SAP consulting

SAP CONSULTING

(DISPOSAL IN Q2 2014)


11 |

0

20

40

60

80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

BPE - New Customers and Bigger Deals increase License Volatility

€m

€m Four quarter rolling - steady growth

40

80

120

160

200

240

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2008 2009 2010 2013 2011 2012

2008 2009 2010 2013 2011 2012

In the quarter - volatile


12 |

0

50

100

150

200

250

300

350

400

2006 2007 2008 2009 2010 2011 2012 2013

Maintenance – High Level of Recurring Revenue and Profits

186 213

267

305

353 362 378

> 90% of Maintenance Revenue is recurring

€m

BPE

ETS

369*

*currency impact: € 16m


13 |

Group Maintenance Revenue

€m

350

400

2013 2018

2 scenarios* for BPE

License growth

A: Flat

B: Market perform

• assumptions: BPE maintenance depending on license growth, varying with scenario;

ETS maintenance -7% CAGR

A B


14 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 15



Key Financials 46




15 |

Software AG - Management

Karl-Heinz Streibich Arnd Zinnhardt Dr. Wolfram Jost

Corporate Communications, Global

Legal, Global Audit, Corporate

Office and Top Management

Development

Chief Executive Officer (CEO)

- since 2003 -

Finance, Controlling, Taxes,

Treasury, Mergers & Acquisitions,

Business Operations, Investor

Relations, Global Purchasing,

Human Resources

Chief Financial Officer (CFO)

- since 2002 -

Research & Development

Chief Technology Officer (CTO)

- since 2010 -


16 |

Growth Strategy

G R O W T H B A S E D O N T H R E E P I L L A R S

…leveraging technology

leadership in enterprise

infrastructure software

O R G A N I C G R O W T H …

…addressing Mega Trends for

enterprise IT

I n n o v a t i o n / M & A

Pa r t n e r / C h a n n e l

• Integration

middleware

• Process analysis and

automation

• High performance

data management

• Cloud

• Big Data / Analytics

• Collaboration

…enable eco-system, incl.

attractive partner sales:

• SI’s

• Reseller

• OEM

• Cloud


17 |

B I G D ATA a n d I N - M E M O RY D ATA M A N A G E M E N T

Software AG Agility Platform – Enabler of the Digital Enterprise

I N T E L L I G E N T B U S I N E S S O P E R AT I O N S

Event Processing Process Mining Historic KPI's Activity Monitoring Data Analytics

Business Process Analysis

PORTFOLIO MANAGEMENT

IT Portfolio Management Enterprise Architecture

COLLABORATIVE PROCESS ANALYSIS

Proactive Alerts Dashboards Real-Time Insight Mobile Anywhere

P R O C E S S A U TO M AT I O N / I N T E G R AT I O N

Application Integration B2B Integration SOA Governance Composite Applications

ERP Custom CRM

Process Automation

Governance, Risk & Compliance

System of Records


18 |

Acquisitions Support Technology Leadership

Big Data and In-Memory Data Management

Intelligent Business Operations

Event Processing

Real-Time Dashboards

Process Automation / Integration

Collaborative Process Analysis

Portfolio Management

Event Processing

IT Portfolio Management

Visualization

Cloud Application Development

Messaging Mobile Suite


19 |

Turning Technology Leadership into Market Leadership:

Build Multi Channel Ecosystem and Integrated Portfolio Suite

Aris/web-Methods

webMethods

Apama

JackBe

LongJump

Alfabet, ARIS

Business Process Platform

Integration Platform

TerracottaMychannels

Cloud Suite & on-premise

Big Data/IBO Platform

Growth Multiple

Sales

Channels

Single

Sales

Channel

SI‘s

OEM‘s/ISV‘s

Suite

Direct Sales +€50m S+M Investment


20 |

Revenue and Margin Drivers mid term

2014 2015 2016 2017 2018

Impact new sales staff

Growing Ø deal size

Platforms / use case packaging

Recurring projects

Cloud based offerings

Partner sales / OEM

Revenue mix

Economies of scale

(R&D, G&A)

Metrics

Channel

sales

Sales

productivity


21 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 15



Key Financials 43




22 |

Product Portfolio

PORTFOLIO

MANAGEMENT

IBO AND BIG DATA

PROCESS AUTOMATION AND INTEGRATION

ALFABET

IT Planning and

Portfolio

Management

ALFABET

Enterprise

Architecture

Management

WEBMETHODS

Integration

WEBMETHODS

Business Process

Management

APAMA

Intelligent

Business

Operations

TERRACOTTA

In-Memory Data

Management

Portfolios Live

COLLABORATIVE

PROCESS ANALYSIS

ARIS

Business Process

Analysis

ARIS

Governance,

Risk and

Compliance

Management

Process Live

ADABAS-NATURAL

Application Development

ADABAS-NATURAL

Application Modernization

ADABAS-NATURAL

Database Management System

AgileApps Live

Integration Live


23 |

Software AG Cloud Offering

Pr o c e s s L i v e

Business Modeling

Process Publishing

Po r t f o l i o L i v e

IT Portfolio Management

A g i l e A p p s L i v e

Application Development Case Management

I n t e g r a t i o n L i v e

Cloud-to-Cloud Cloud-to-on premise

Unified PaaS

on premise SaaS

Private cloud


24 |

The Impact of Differentiating Digital Business Solutions

Refreshments

Supply chain transformation in days

10s of millions increase in profit

higher response

rate to marketing

campaigns

reduction in

transfer time

for assets 98%

10x

several million

Average annual benefit of

now emergency-prepared

Employees and contractors


25 |

O P P O R T U N I T Y :

R E S U L T S :

Transforming Financial Services

• Free up IT budget to directly support

‐ Aggressive international growth in the

private banking sector

‐ Higher cross-selling across divisions

• Avoided development projects: Credit

Suisse saves $6 million annually

• Eliminated software costs: the

organization is saving $5 million annually

Through IT Portfolio Management and Enterprise Architecture Management

Payback in

6 MONTHS

SEVERAL MILLION DOLLARS SAVED

R E S U LT:


26 |


R E S U L T S :

Transforming Food and Beverage

• Automate maintenance & repair process

for 1.7M coolers

– Streamline asset management

– Real-time visibility of cooler location

and status

• Reduce time for asset transfer by 98%

(from up to 8 hours to below 10 minutes)

• Uncover trends and recurring issues

• Avoid lost equipment

Through the Software AG Suite

R E S U L T:

98%

from up to 8 hours to below 10 minutes

REDUCTION IN TRANSFER TIME FOR ASSETS

Refreshments


27 |


R E S U L T S :

Transforming Financial Services

• Fraud detection

• Reduce fraud loss

• Improve speed and accuracy of fraud

detection system

• Increase rules in fraud detection

algorithm from 50 to over 1,000

• Drive profit up by tens of millions of

Euros

• Meet 650 millisecond end-to-end SLA 99%

of the time

• Achieve better accuracy

Through In-Memory Data Management

R E S U L T:

Fraud detection I N M I L L I S E C O N D S

DRIVES PROFIT UP

of millions €

BY 10s


28 |


R E S U L T S :

Transforming Manufacturing

• Consumer-centric order-to-ship process • Provide end-to-end supply chain visibility

to retail through defined process monitoring points, KPIs, alerts and pre-configured dashboards

• Integrate Electrolux’s heterogeneous systems and partners

• New business model supported in days,

enabling Electrolux to win a new major

retail customer

• Real-time insight into processes, orders

and inventory

• Early indicator of potential problems

• Enables “management by exception”

• Reduced cycle times — products

delivered faster, fewer reschedules

Through Process Automation and Integration

R E S U L T:

Consumer Retail Distribution Manufacturer

Bulk order

New Retail

Customer Consumer order

Consumer order delivery

Full Supply Chain Visibility

Installation

Supply

Chain


29 |


R E S U L T S :

Transforming Automotive

• New business model: also sell the

company’s engines to other car

manufacturers

• Increase production capacity by 500%

without compromising on quality

• Meet strict logistics and SLA requirements

of other car manufacturers

• Integrated B2B network with external

logistic partners

• A real time dashbording to monitor all

business processes

Through Process Automation and Integration

ENGINE PRODUCTION

R E S U L T:

INCREASE

CAPACITY from 10.000 to 50.000 per year

Italian Sports Car

Manufacturer


30 |


R E S U L T S :

Transforming Telecommunications

• Customer retention through real-time

targeted marketing campaigns

• Increase customer loyalty by proactively

offering the right service at the right

time

• 10 times higher response rate to

marketing campaigns

• Marketing campaign cycle time cut from

days to minutes

• Increased customer satisfaction and

retention rates

• Leapfrogging competition through digital

innovation

Through Intelligent Business Operations

10x INCREASE IN OFFER UPTAKE

$15 million

in revenue

in year one

INCREASE

R E S U L T:


31 |


R E S U L T S ( E x p e c t e d ) :

Transforming Telecommunications

• Company wide business transformation

program

• Focus on the customer and on cost

reductions

• Redesign all processes and supporting

applications

• Identify the 20% of the processes required

to fulfill customer needs and a way to

eliminate the rest

• Significant costs savings in the execution

chain

Through Collaborative Process Analysis

R E S U L T:

savings

Significant cost

FULFILL 80% of customer requirements

with 20% EFFORT

Global Top 5 Telco


32 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 16



Key Financials 43




33 |

IBM 29%

Pegasystems 10%

Oracle 8%

Software AG 7%

OpenText 4%

Appian 3%

Tibco 3%

Others 36% IBM

29%

Oracle 23%

Microsoft 13%

Tibco 9%

Others 15%

Business Process Management Suite

(BPMS)

Enterprise Service Bus Suite

(ESB)

Source: Source: Gartner: Market Share, All Software Markets, Worldwide, 2013, Colleen Graham et al, 28 March 2014

Market Share in Main Markets: BPMS (Process Management)

and ESB (Integration)

Software AG

11%


34 |

Software AG Suite is a Top-Ranked Leader

Application Integration Suites • • • • •

Application Services Governance • •

Business Process Analysis Tools • • •

Business Process Management Suites • • •

Enterprise Architecture Tools • •

Governance, Risk and Compliance • •

Integrated IT Portfolio Analysis Apps •

Complex Event Processing Platforms • • •

Comprehensive Integration Solutions • • • • •

EA Management Suites •

Elastic Caching Platforms • • •

ESB • • • •

Integrated SOA Governance • •

SOA Service Life-Cycle Management •


35 |

Positioned in Leaders Quadrant of Gartner’s Magic Quadrant for

On-Premises Application Integration Suites

“Leaders in infrastructure that supports systematic

application integration provide a comprehensive

ESB suite offering as well as the ability to

integrate that offering with other relevant

technologies (including community management,

data integration, SOA and integration governance,

and BPM). This is combined with a strong

commitment to this market, which is expressed

through focused value propositions and go-to-

market strategies (for example, by packaging

platforms and/or by providing integrated product

and service offerings specific for this market).”

Source: Gartner, Inc., Magic Quadrant for On-Premises Application Integration Suites, Jess Thompson, et

al., June 27, 2013

This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated

in the context of the entire document. The Gartner document is available upon request from Software AG.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does

not advise technology users to select only those vendors with the highest ratings. Gartner research

publications consist of the opinions of Gartner's research organization and should not be construed as

statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research,

including any warranties of merchantability or fitness for a particular purpose.


36 |

Forrester Wave™: Platform-As-A-Service, ISV Scenario, Q2 ’11; May

2011 “The Forrester Wave™: Platform-As-A-Service For Vendor

Strategy Professionals, Q2 2011”

LongJump – Cloud Experience

• Cloud: Deployment of solutions on the

public or private cloud, on-premise or

within hybrid environments

• Deployment to any mobile device is

supported with utmost ease, since

applications are automatically mobile-

ready


37 |

Software AG (Apama) Ranked as a Leader in the CEP Market

Software AG purchased Apama

from Progress Software in July

2013

“Apama earned high marks for

its event processing features,

its development tools, and its

business end-user tools,

propelling it into its position

as a Leader.”

Source: The Forrester Wave™: Complex Event Processing (CEP) Platforms, Q3 2009, Forrester

Research, Inc., August 4, 2009

The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave

are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation

of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed

scores, weightings, and comments. Forrester does not endorse any vendor, product, or

service depicted in the Forrester Wave. Information is based on best available resources.

Opinions reflect judgment at the time and are subject to change.


38 |

Best of 2 Worlds - Big Data and AIM merge to IBO

slow fast

AIM Big

Data

Apama

Terracotta

Nirvana

BPM

ESB

SOA

IBO

modern traditional


39 |

Intelligent Business Operations – Driving growth of AIM Market

Modern

ESB

SOA, B2B

& other

Modern

BPMS

Addressable AIM

Market Segments= $7.1bn

Addressable AIM

Market Segments = $9.2bn

1.1bn

1.6bn

1.2bn

2.1bn

SOA, B2B

& other

2014 2017 Tradit.

ESB Tradit.

BPMS 1.5bn

1.7bn 2.1bn

1.3bn

3.0bn

0.6bn

Modern

ESB

Modern

BPMS

Tradit.

BPMS

Tradit.

ESB

IBO related segments 2.9bn

5.1bn

21% CAGR

9% CAGR


40 | December 9, 2011 40

Market Potential - Intelligent Business Operations

Source: Wikibon (Big Data Application (Analytic & Transactional) Revenue Forecast, in $bn, 2014 – 2017 Δ 113%)

Gartner (estimate for IBO: customer use case oriented solution)

3.5

5.3

6.5

7.4

0

1

2

3

4

5

6

7

8

2014 2015 2016 2017

Wikibon

Gartner

$bn


41 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 16



Key Financials 43




42 |

Financial Data - Key Figures

in €m, IFRS 2013 2012 2011 2010 2009 2008 2007

Total Revenue 972.7 1,047.3 1,098.3 1,119.5 847.4 720.6 621.3

- License 330.1 318.9 295.2 327.4 269.9 272.0 241.3

- Maintenance 375.6 393.3 378.7 369.4 310.6 267.1 212.9

- Consulting

& Other 267.0 335.1 424.4 422.7 266.9 181.5 167.1

BL BPE 422.9 385.5 339.6 321.5 247.2 210.7 149.9

BL ETS 274.5 310.5 313.9 355.4 328.5 332.1 310.2

BL Consulting 275.4 351.3 444.8 441.4 271.3 177.8 161.1

- BPE/ETS 199.7 n.a. n.a. n.a. n.a. 177.8 161.1

- IDS/SAP 75.7 n.a. n.a. n.a. n.a. n.a. n.a.

EBIT 205.5 248.3 269.2 268.6 218.2 180.5 136.8

Net income 134.0 164.7 177.2 175.6 140.8 115.9 88.4

Dividend (€m, total) 36.3* 38.2 39.9 37.0 32.6 31.5 28.5

Free cashflow 159.1 170.7 187.7 217.8 188.4 133.4 82.2

Net debt (-)

(/cash(+) -106.9** +49.7 -60.9 -167.2 -271.8 -70.3 -133.0

Shareholders‘

equity 965.6 1,060.1 951.5 769.3 647.2 549.1 462.5

Employees (FTE) 5,238 5,419 5,535 5,644 6,013 3,526 3,479

* Dividend payment based on 78,859,844 dividend entitled shares (0,46€/share)

** including € 56.5 Mio. Securities


43 |

1. Net operating profit after tax = op. PbT ./. tax rate x (op. PbT + goodwill)

2. Return on equity: Operating EBIT / Equity

3. Return on cap. employed: Operating EBIT / (Fixed assets + Working capital)

4. Current assets ./. Cash and Cash Equivalents ./. Current liabilities

FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007

EBITDA margin 26.6% 28.6% 28.7% 28.1% 30.3% 28.6% 25.7%

Operating Margin (Non-IFRS) 26.8% 28.5% n.a. n.a. n.a. n.a. n.a.

Amortization/ Depreciation

5.5% 4.9% 4.2% 4.1% 4.6% 3.5% 2.4%

Operating EBIT margin 21.1% 23.7% 24.5% 24.0% 25.8% 25.1% 23.3%

NOPAT1 margin 13.8% 15.7% 16.1% 15.7% 16.6% 16.1% 15.1%

ROE2 21.3% 23.4% 28.3% 34.9% 33.7% 32.9% 31.8%

ROCE3 14.6% 18.2% 20.5% 27.4% 20.9% 26.2% 22.5%

Net Working Capital in €m4 -€213.5m -€41.6 -€23.8 -€194.4 -€211.3 -€74.1 -€55.0

Working Capital5 24.3% 26.2% 17.5% -8.2% 0.8% 3.2% 4.2%

Free Cash Flow margin6 16.4% 16.3% 17.1% 19.5% 22.2% 18.5% 13.2%

Corporate tax rate 32.0% 31.2% 31.7% 31.0% 32.7% 34.0% 35.4%

WACC7 5.12% 5.1% 5.7% 6.8% 5.5% 6.8% 8.4%

Equity ratio 48.4% 59.8% 56.6% 48.1% 39.1% 51.8% 47.2%

DSO (Days Sales Outstanding) 107 105 93 100 109 120 119

Capex €m €12.7 €13.3 €10.9 €9.7 €12.1 €6.6 €11.8

Capital Employed8 €m €1,346.3 €1,313.0 €1,262.0 €929.6 €1,002.2 €669.9 €655.2

5. Current assets ./. Current liabilities / Total revenue

6. (Operating Cash flow ./. Capex) / Revenue

7. Pro forma, not applied for corporate management

8. Fixed assets + Working capital

Key Financial Ratios (IFRS; in % of revenue)


44 |

BPE Investments lead to higher S&M spendings

BPE S&M costs

ETS S&M costs

0%

10%

20%

30%

40%

50%

60%

20082009

20102011

20122013

23.0% 21.6%

20.7% 21.3% 20.9%

18.4%

44.9% 42.2%

39.2% 37.1% 39.1%

47.6%


45 |

R&D drives Leverage of acquired Technology

BPE R&D expenses (costs + IPR amortization)

BPE R&D costs

ETS R&D costs

0%

5%

10%

15%

20%

25%

30%

20082009

20102011

20122013

9.0% 9.0%

8.9% 8.4%

8.4% 9.2%

22.2% 21.6%

18.7% 18.1% 19.5% 19.5%

25.8% 25.8% 24.2% 24.3% 25.8% 25.6%


46 |

-127.7

-107

49.6

-60.9

-137.3

-271.8

-70.3

-133

182.9

-300 -200 -100 0 100 200 300

H1 2014

2013

2012

2011

2010

2009

2008

2007

2006

Solid Business & Cash Flow generate Growth Opportunities

Net Cash Net Debt

n/a

0.88

0.34

1.06

0.53

0.19

n/a

0.41

n/a

Net debt/EBITDA

€ 480m

$ 560m

5 tech acquisitions €113m


47 |

Loan-Liquidity Structure (30 June 2014, €m)

Financing

0 100 200 300 400 500

Liquidity

Loans

309

437

Promissory notes

Bank loan & other

European Investment Bank

due 2015-17 2018/20

Net debt: 128

125

in €m

298

Liquidity:

Cash (€ 254m) and

Securities (€ 55m)


48 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 16



Key Financials 46




49 |

Euro 41%

US Dollar 22%

Other 9%

BRL 5%

ILS 5%

ZAR 3%

AUD 4%

CAD 4%

GBP 7%

(in €m; yoy)

Q2

2014

Q2

in %

YTD

2014

YTD

in %

Licenses -0.5 -1% -4.2 -4%

Maintenance -3.9 -4% -8.8 -5%

Consulting &

Other -1.0 -2% -2.1 -2%

Total -5.4 -3% -15.1 -4%

Currency impact on revenue

Currency impact on revenue

Q2 2014 / YTD 2014 (6 months)

41% revenue in Euro

59% revenue in foreign currency

Currency split YTD 2014


50 |

Segment report Q2 2014 / YTD 2014 (6 months)

Business Process Excellence (BPE)

(in €m) Q2

2014

Q2

2013

Δ% Δ% acc

YTD

2014

YTD

2013

Δ% Δ% acc

Licenses 32.7 42.8 -24% -22% 76.5 84.7 -10% -6%

Maintenance 51.9 48.6 7% 11% 103.3 97.1 6% 11%

Total revenue 84.6 91.4 -7% -5% 179.8 181.8 -1% 3%

Cost of sales -5.5 -4.9 12% 15% -11.1 -10.8 3% 8%

Gross profit 79.1 86.5 -9% -6% 168.7 171.0 -1% 3%

Sales & marketing -45.4 -48.1 -6% -2% -94.5 -94.1 - 4%

R & D -20.4 -19.8 3% 4% -41.4 -39.5 5% 6%

Segment result 13.3 18.6 -28% -27% 32.8 37.4 -12% -5%


51 |


Enterprise Transaction Systems (ETS)

(in €m) Q2

2014

Q2

2013

Δ% Δ% acc

YTD

2014

YTD

2013

Δ% Δ% acc

Licenses 17.4 32.6 -47% -47% 30.7 53.6 -43% -40%

Maintenance 38.3 43.1 -11% -6% 76.0 86.3 -12% -7%

Product revenue 55.7 75.7 -26% -24% 106.7 139.9 -24% -20%

Other 0.2 0.1 100% 4% 0.3 0.4 -25% -4%

Total revenue 55.9 75.8 -26% -24% 107.0 140.3 -24% -20%

Cost of sales -2.9 -3.1 -6% -6% -6.2 -6.9 -10% -6%

Gross profit 53.0 72.7 -27% -25% 100.8 133.4 -24% -20%

Sales & marketing -8.8 -13.5 -35% -32% -17.9 -27.3 -34% -32%

R&D -6.3 -6.4 -2% -2% -12.5 -12.9 -3% -3%

Segment result 37.9 52.8 -28% -25% 70.4 93.2 -24% -19%


52 |


Consulting

(in €m) Q2

2014

Q2

2013 Δ% Δ%

acc

YTD

2014

YTD

2013 Δ% Δ%

acc

BPE/ETS services 47.2 50.4 -6% -4% 95.9 99.5 -4% -1%

SAP product revenue 1.0 2.1 -52% -53% 2.1 4.5 -53% -52%

SAP services 7.3 18.0 -59% -59% 20.0 36.6 -45% -45%

Total revenue 55.5 70.5 -21% -20% 118.0 140.6 -16% -15%

Cost of sales -48.1 -59.2 -19% -18% -100.0 -119.4 -16% -15%

Gross profit 7.4 11.3 -35% -32% 18.0 21.2 -15% -13%

Sales & marketing -5.9 -8.6 -31% -29% -13.2 -18.2 -27% -26%

Segment result 1.5 2.7 -44% -42% 4.8 3.0 60% 62%


53 |

Revenue YTD 2014 (6 months)

(in €m) YTD

2014

YTD

2013

Δ% Δ%

acc

Product 288.7 326.2 -11% -8%

Licenses 107.3 139.4 -23% -20%

Maintenance 181.4 186.8 -3% 2%

Consulting & services 115.9 135.8 -15% -13%

Other 0.3 0.7 -57% -46%

Total 404.9 462.7 -12% -9%


54 |

44

Results Q2 2014 / YTD 2014 (6 months)

(in €m) Q2

2014

Q2

2013 Δ%

YTD

2014

YTD

2013 Δ%

Total revenue 196.0 237.7 -18% 404.9 462.7 -12%

Cost of sales -62.9 -73.5 -14% -130.9 -149.4 -12%

Gross profit 133.1 164.2 -19% 274.0 313.3 -13%

Margin in % 67.9% 69.1% 67.7% 67.7%

R & D -26.6 -26.2 2% -53.8 -52.4 3%

Sales & marketing -64.2 -73.9 -13% -133.6 -146.8 -9%

Administration -15.9 -17.4 -9% -35.0 -35.2 -1%

Other income/expense -1.4 -2.3 -39% 3.9 7.1 -45%

EBIT 25.0 44.4 -44% 55.5 86.0 -35%

Margin in % 12.8% 18.7% 13.7% 18.6%


55 |

Operating Result (Non-IFRS) 1H 2014

1H 2014 1H 2013 ∆% ∆% acc

Total Revenue 404.9 462.7 -13% -9%

- License 107.3 139.4 -13% -9%

- Maintenance 181.4 186.3 -3% 2%

Gross Profit 274 313.3 -12%

OPEX 222.4 234.4 -5%

EBIT (before all taxes) 55.5 86.0 -35%

Amortization 21.5 19.5

Adj. EBITA (Non-IFRS) 88.1 110.7

Margin in % of revenue 21.8% 23.9%

NOPAT 56.1 73.4 -14%

Margin in % of revenue 13.9% 15.9%

EPS* 0.71 0.87 -18%

* Weighted average shares outstanding (basic): 6m 2014: 79.5m / 6m 2013: 84.8m


56 |

Non-IFRS Earnings Q2 2014 / YTD 2014 (6 months)

(in €m) Q2

2014

Q2

2013

YTD

2014

YTD

2013

EBIT (before all taxes) 25.0 44.4 55.5 86.0

Amortization on acquisition related

intangible assets 10.4 10.1 21.5 19.5

Reduction acquisition related product

revenue by purchase price allocation 0.2 - 0.5 -

Other impacts from M&A activities 1.6 1.2 -1.1 1.3

Share based payment 1.2 -0.7 2.7 -1.3

Restructuring/severances 4.0 3.7 6.3 5.2

Result from sold operations 2.7 - 2.7 -

EBITA (Non-IFRS) 45.1 58.7 88.1 110.7

margin in % of revenue (Non-IFRS) 23.0% 24.7% 21.8% 23.9%

NOPAT (Net income Non-IFRS) 28.5 38.9 56.1 73.4

EPS (Non-IFRS)* 0.36 0.46 0.71 0.87

* Weighted average shares outstanding (basic) Q2 2014: 78.9m / Q2 2013: 83.8m // 6m 2014: 79.5m / 6m 2013: 84.8m


57 |

Cash flow Q2 2014 / YTD 2014 (6 months)

(in €m) Q2

2014

Q2

2013

Δ% YTD

2014

YTD

2013

Δ%

Operating cash flow 22.4 13.3 68% 72.5 78.7 -8%

./. CapEx* -3.9 -3.7 -6.2 -6.4

Free cash flow 18.5 9.6 93% 66.3 72.3 -8%

as % of revenue 9.5% 4.0% 16.4 15.6%

Free cash flow per share** 0.23€ 0.11€ 109% 0.83€ 0.85€ -2%

* Cash flow from investing activities except acquisitions and except investments in debt instruments

** Weighted average shares outstanding (basic) Q2 2014: 78.9m / Q2 2013: 83.8m / 6m 2014: 79.5m / 6m 2013: 84.8m


58 |

June 30,

2014

June 30,

2014

1,730.7 1,730.7

309.2

254.6

84.9

1,082.0

436.9

245.4

139.3

909.1

Cash and cash

equivalents/

Securities

Trade receivables

Inventory, other assets

Fixed assets

(goodwill 825.6/829.2)

Total

Financial liabilities

Other liabilities

Deferred income

Shareholders’ equity

(ratio 52.5%/48.4%)

Total

Assets Liabilities

Balance sheet (in €m)

Dec. 31,

2013

Dec. 31,

2013

1,996.9

613.4

309.9

108.0

965.6

1,996.9

506.5

323.2

57.3

1,109.9


59 |

Outlook FY 2014 - UPDATE

Product Revenue BPE

Product Revenue ETS 273.8

422.9

26.8%

FY 2013 (in €m)

26% to 28%

-9% to -16%*

Previous Year’s Level

Outlook FY 2014 (as of July 15, 2014)

Operating Margin

(EBITA, Non-IFRS)**

* Revenue growth or decline at constant currency

** Before adjustments for non-operating items (see non-IFRS earnings results)

H1 2014 ( ∆ yoy)

+3%*

-20%*

21.8%


60 |

Earnings Q2 2014 / YTD 2014 (6 months)

* Weighted average shares outstanding (basic) Q2 2014: 78.9m / Q2 2013: 83.8m / 6m 2014: 79.5m / 6m 2013: 84.8m

(in €m) Q2

2014

Q2

2013

Δ% YTD

2014

YTD

2013

Δ%

EBIT (before all taxes) 25.0 44.4 -44% 55.5 86.0 -35%

Financial result -2.6 -1.5 73% -5.5 -2.8 96%

Profit before taxes 22.4 42.9 -48% 50.0 83.2 -40%

Other taxes -2.4 -1.4 71% -4.0 -3.2 25%

Income taxes -5.8 -12.7 -54% -13.3 -24.0 -45%

Tax rate in % 36.6% 32.9% 34.6% 32.7%

Net Income 14.2 28.8 -51% 32.7 56.0 -42%

EPS in €* 0.18€ 0.34€ -47% 0.41€ 0.66€ -38%


61 |

Earnings Q2 2014 / YTD 2014 (6 months)

(in €m) Q2

2014

Q2

2013

Δ% YTD

2014

YTD

2013

Δ%

Net Income 14.2 28.8 -51% 32.7 56.0 -42%

Income taxes 5.8 12.7 -54% 13.3 24.0 -45%

Other taxes 2.4 1.4 71% 4.0 3.2 25%

Financial result 2.6 1.5 73% 5.5 2.8 96%

EBIT (before all taxes) 25.0 44.4 -44% 55.5 86.0 -35%

Margin in % 12.8% 18.7% 13.7% 18.6%

Amortization 10.5 10.0 5% 21.5 19.4 11%

EBITA 35.5 54.4 -35% 77.0 105.4 -27%

Margin in % 18.1% 22.9% 19.0% 22.8%

Depreciation 3.0 3.5 -17% 5.9 6.8 -13%

EBITDA 38.5 57.9 -34% 82.9 112.2 -26%

Margin in % 19.6% 24.4% 20.5% 24.2%


62 |

Amortization / depreciation impact 2014ff

(preliminary)

Q2

2014

GJ

2014

GJ

2015ff*

* Estimated

Amortization IDS

(in €m)

Amortization other

Depreciation

2.6

7.8

3.0

10.5

28.9

11.9

7.7

24.0

12.0


63 |

Headcount by functional areas* and geography

(in FTE) June 30,

2014

Dec.31,

2013

Δ% qoq

June 30,

2013

Δ% yoy

Total 4,606 5,238 -12% 5 5,375 -14%

Consulting & services 1,906 2,347 -19% 2,484 -23%

R & D 977 998 -2% 941 4%

Sales & marketing 1,059 1,180 -10% 1,229 -14%

Administration 664 713 -7% 721 -8%

USA 718 778 -8% 769 -7%

Germany 1,251 1,711 -27% 1,777 -30%

Rest of world 2,637 2,749 -4% 2,829 -7%

* According to P+L structure


64 |

Revenue 2013

excl. IDS Consulting* (pro forma)

(in Mio. €) Q1 Q2

Q3 Q4 FY

Product 154.6 167.1 173.2 201.7 696.6

Licenses 63.0 75.4 79.5 109.6 327.5

Maintenance 91.6 91.7 93.7 92.1 369.1

Consulting & services 49.0 50.3 47.4 53.0 199.7

Other 0.3 0.3 0.2 0.2 1.0

Total 203.9 217.7 220.8 254.9 897.3

* IDS Consulting (SAP-products and services); business unit was sold in May 2014


65 |

Executive Summary 4

1

3

4

5

6

2

Agenda

7

Company Strategy 16



Key Financials 46




66 |

*Source: ThomsonOne, July 2014

Number of total shares: 86,943,945

Freefloat: ~ 62%

Indices: TecDAX, DAX 100, TechAllShare

Codes: SOW, SOW GR, SOWG.DE

ISIN: DE0003304002

ADR U.S. trading symbol: STWRY

Share Data

Major Institutional Investors

Solid Shareholder Structure

Shareholder Structure

Institutional Investors by Region*

Software AG Foundation

Institutional Investors

Private & undisclosed

26% 29%

36% Own Shares**

**as of July 2014

Fidelity (FMR LLC) 3.5%

Alken Asset Management LLP 3.0%

Templeton 3.0%

Deutsche Asset & Wealth 3.0%

Deka Investment 2.9%

Norges Bank 2.9%

34%

24% 14%

13%

5% Germany

United States

United Kingdom

Scandinavia

France

Rest of World

5%

BeNeLux

5%

9%


67 |

The Software AG Foundation is one of Germany’s ten largest foundations

(capital stock € 1.1 bn (Dec. 31, 2012), Software AG shares and other assets)

Founded by Dr. hc. Peter M. Schnell in 1992

Disburses financial support amounting to approx. € 30 million annually

Under the principle of a “self-help grant”, the Foundation supports nonprofit

organizations not only with financial support but also with consulting services in

promoting project sustainability and further developments

The Foundation finances many different projects in areas including:

• science and research

• support for the elderly and disabled

• care and support for children and young people

• education and training

• the environment

Software AG Foundation – Anchor Shareholder


68 |

Dividend policy reflects profit, cash flow and financing requirements for growth

Cash out ratio: 20-25% of average FCF/net profit

Continuous Dividend

0.25 0.27 0.30

0.33 0.37 0.38

0.43 0.46 0.46 0.46

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Ordered by fiscal year/in €


69 |

Baader Bank

Barclays Capital

Berenberg Bank

Bryan Garnier

Commerzbank

Credit Suisse

Deutsche Bank

DZ Bank

Independent Res.

JPM/Cazenove

Kepler

LBBW

Goldman Sachs

Hauck & Aufhäuser

HSBC

MainFirst

Metzler

Mirabaud

Morgan Stanley

Natixis

Société Générale

UBS

Warburg Research

Analyst Coverage

Banks / Broker who cover Software AG on a regular base

For latest consensus of analysts‘ financial estimates visit our

IR website on: www.softwareag.com


70 |

Financial Calendar Q3 2014

October 29 Financial figures Q3 2014

September 23 Baader Investment Conference

Investor Relations

Munich, Germany

September 9 Commerzbank Sector Conference Week

CFO Arnd Zinnhardt

Frankfurt, Germany

September 8-9 UBS Best of Germany

one-on-one Conference

Jay Johnson, CEO of Software AG North America

Investor Relations

New York, USA


Follow us on Twitter:

@SoftwareAG_IR

Investor Relations

Uhlandstrasse 12

64297 Darmstadt

Germany

phone: +49 (0) 6151 / 92 1900

fax: +49 (0) 6151 / 9234 1900

softwareag.com

e-mail: [email protected]

mailto:[email protected]

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