Software AG reports lower Q4 profit and revenue, but confirms goals
- Brahmawar noted, however, that last year's operating margin, at 21.2%, was still in line with guidance.
BERLIN: Germany's Software AG on Wednesday reported declines in fourth-quarter revenue and profit, but said its business transformation was on track as the share of its recurring business grew.
Fourth-quarter revenue declined by 2% at constant currency at the database and middleware group, while operating profit fell by 26%.
Under CEO Sanjay Brahmawar, Darmstadt-based Software AG is looking to increase the share of subscription-based revenues, which increased last year to 85% of the total from 69% - already hitting the company's 2023 target.
Companies making the transition to providing such software as a service typically experience a temporary squeeze in profitability as up-front licence fees drop out of the equation and are replaced by payments spread out over time.
Brahmawar noted, however, that last year's operating margin, at 21.2%, was still in line with guidance.
Issuing its outlook for 2021, Software AG said it expected growth in total product revenue of between zero and 5% and an operating margin of 16-18%.
It confirmed its 2023 ambition of achieving revenue of 1 billion euros ($1.2 billion), up from 835 million last year, and an operating margin of 25-30%.
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