DGAP-Adhoc: Software AG publishes preliminary Q2 2019 financial results and adjusts 2019 outlook for Digital Business Platform business line

Ad hoc Disclosure (Inside Information according to article 17 MAR)

Software AG publishes preliminary Q2 2019 financial results and adjusts 2019 outlook for Digital Business Platform business line

- Total revenue at EUR 210 million up by 2.1% year-on-year / in line with analyst consensus of EUR 211.8 million

- DBP business (excluding Cloud & IoT) at EUR 97.5 million (consensus EUR 104.3 million) down by 4.3% year-on-year

- Cloud & IoT business EUR 12.8 million (consensus EUR 10.3 million) up by 143.6% year-on-year

- Adabas & Natural (A&N) business at EUR 53 million (consensus EUR 51 million) up 0.8% year-on-year

- EBIT at EUR 47.7 million (consensus EUR 47.7 million) in line with market expectation

- EBITA (non-IFRS) margin at 26.7%

- New FY outlook for DBP (ex. Cloud & IoT) revenue growth is -6% to 0% at constant currency

- All other 2019 outlook numbers re-confirmed

- Analyst conference call to be held on July 19, 2019 at 09:00 CEST

[Unless otherwise mentioned, all percentages are rounded stated numbers to reflect year-on-year comparisons]

Today, the Management Board of Software AG (MDAX, ISIN DE000A2GS401 / SOW) pre-announced its financial figures (IFRS, preliminary) for the second quarter of 2019. According to an initial consolidation of the results, the company showed group revenue and profit by and large in line with analyst consensus. However the revenue mix of the business lines varied: within the digital business Software AG's Cloud & IoT revenue increase of 143.6% in Q2 was ahead of expectations (consensus +95%) whereas the revenues from integration software (DBP excluding Cloud and IoT) were lower than expected (EUR 97.5 million vs. consensus EUR 104.3 million; previous year EUR 101.8 million). Ongoing reorganisation of the sales force in North America led to DBP license revenues of EUR 28.3 million (consensus EUR 35.1 million; previous year EUR 35.7 million). On the other hand the traditional business with Adabas & Natural products delivered again stable results proving the sustainable strength of the business line. Including professional services of EUR 46.7 million (consensus EUR 46.2 million; previous year EUR 46 million), the company's total revenue in the second quarter increased by 2.1% reaching EUR 210 million (consensus EUR 211.8 million; previous year EUR 205.7 million).

Based on an initial consolidation of the results, the expected EBIT will be in line with analyst consensus at EUR 47.7 million (previous year EUR 52.2 million). Reflecting the HELIX transformation, the Group's EBITA (non-IFRS) margin will be 26.7% (consensus 27.0%; previous year 29.9%).

Based on the current business development and the pipeline at the end of Q2 2019, Software AG's Management Board adjusts its 2019 outlook for DBP revenue growth to a new corridor of -6% to 0% (from previously 3% - 7%) at constant currency. The 2019 outlook for the business line A&N (-3% to +3%) and Cloud & IoT (+75% to +125%) revenue growth at constant currency as well as EBITA (non-IFRS) margin (28% to 30%) remains unchanged. For the mid-term perspective management confirms good progress in the business transformation program Helix.

An analyst & media call will be held on July 19, 2019 at 09:00 CEST.

The full set of Q2 2019 preliminary financial figures will be published on July 23^th, 2019.

Darmstadt, July 18, 2019

Software AG / The Management Board