Software AG reports Digital Business ARR growth of 21 percent; confirms full-year guidance

Darmstadt, Germany – Software AG (Frankfurt TecDAX®: SOW) today announced financial results for the first quarter of 2023.

Sanjay Brahmawar, Software AG CEO, commented:
“Software AG has accelerated Digital Business annual recurring revenue growth in the first quarter, putting us on track to fulfill our full-year guidance. Despite ongoing macro-economic headwinds, we continue to see our mission-critical software resonate in the market, as we are helping our customers to manage their digital transformation. We remain laser-focused on integration with successful customer wins through our combination with StreamSets’ competitive platform solutions. We welcome the deepened partnership with Silver Lake and are confident to deliver our goals as we enter the next phase of our strategic road map."

Daniela Bünger, Software AG CFO, commented:
“Our first-quarter results show that our strategic focus on cloud-first, SaaS, integration, and our sales specialization is paying off. We have initiated the right measures to align our cost base and will maintain our financial prudence for the remainder of the year. While we continue to see the technical impact of our business model transformation, we were able to mitigate the effect by consistently improving efficiency and effectiveness in our operations.”

First-quarter highlights

  • Digital Business momentum continues with year-on-year annual recurring revenue (ARR) growth of 21 percent, product revenue growth of 9 percent or 8 at constant currency, and thereof Software-as-a-Service (SaaS) revenue growth of 66 percent or 64 percent at constant currency.
  • Adabas & Natural (A&N) subscription shift continues with ARR reaching an increase of 5 percent or 7 percent at constant currency.
  • Group product revenue up 2 percent year-on-year or 1 percent at constant currency, in line with expectations.
  • Operating margin (EBITA, non-IFRS) developed as planned and stood at 11.2 percent.
  • 2023 full-year guidance reconfirmed.

First quarter 2023 ARR performance

By the end of the first quarter of 2023, Software AG’s Digital Business ARR was €518.9 million (Q1 2022: €429.4 million), representing a year-on-year growth of 21 percent as stated and at constant currency. The ARR of the Group’s A&N business line was €185.4 million compared to €176.1 million by the end of the first quarter of 2022, representing a year-on-year growth of 5 percent or 7 percent at constant currency. The steady growth of ARR demonstrates the success of Software AG’s business model shift to subscription and SaaS, and the resulting higher quality, more predictable revenue streams.

First quarter 2023 Group revenue and earnings performance
Software AG reported €210.6 million in total revenue in the first quarter (Q1 2022: €206.0 million). This represented growth of 2 percent, both, as stated and at constant currency. Group product revenue growth was 2 percent or 1 percent at constant currency to €169.8 million (Q1 2022: €166.9) million). The subscription and SaaS portion of Group product revenue was 57 percent, an increase of 13 percentage points compared to the prior-year period. Digital Business product revenue saw growth of 9 percent or 8 percent at constant currency in the first quarter to €120.6 million (Q1 2022: €110.9 million). A&N product revenue was €49.3 million in the first quarter (Q1 2022: €56.0 million), representing a decline of 12 percent as stated and based on constant currencies. Professional Services revenue in the first quarter was €40.7 million, up 4 percent (Q1 2022: €39.1 million).

The Company's EBIT was €3.1 million in the first quarter (Q1 2022: €30.0 million). The Group’s operating EBITA (non-IFRS) stood at €23.6 million in the first quarter (Q1 2022: €40.9 million), giving Software AG an operating margin (EBITA, non-IFRS) of 11.2 percent in the first quarter (Q1 2022: 19.9 percent).

The Group’s free cash flow in the first quarter was at €20.9 million (Q1 2022: €24.3 million).


The Group has today reiterated its guidance for the full year 2023. The Group’s guidance ranges are, except for margin, presented at constant currency:

  • Digital Business ARR growth of between 10 and 15 percent
  • A&N ARR development of between -2 and 2 percent
  • Group product revenue growth of between 6 and 10 percent
  • Operating margin (EBITA, non-IFRS) between 16 and 18 percent

Software AG remains committed to double-digit revenue growth in the Digital Business segment and reiterates its ambition to reach an operating profit margin in the high twenties in the medium term which will translate into improved cash flow generation.

Conference call
A webcast for investors and financial analysts will take place on Thursday, April 27, 2023, at 9:30 am CEST (8:30 am BST). Please pre-register to receive dial-in details at Result Center.

About Software AG
Software AG simplifies the connected world. Founded in 1969, it helps deliver the experiences that employees, partners and customers now expect. Its technology creates the digital backbone that integrates applications, devices, data and clouds; empowers streamlined processes; and connects “things” like sensors, devices and machines. It helps 10,000+ organizations to become a truly connected enterprise and make smarter decisions, faster. The Company has about 5,000 employees across more than 70 countries and annual Group revenue of more than €950 million.

For more information, also follow on LinkedIn and Twitter.  


For Investor Inquiries

Robert Hildebrandt
Director, Investor Relations
E: robert.hildebrandt@softwareag.com
T: +496151 92-1040

For Media Inquiries

Dr. Astrid Kasper
Senior Vice President, Corporate Communications
E: astrid.kasper@softwareag.com
T: +49-6151-92-1397

Dorothee Tschampa
Senior Manager, Financial Communications
E: dorothee.tschampa@softwareag.com
T: +49-6151-92-1575

Key Figures

[All figures are preliminary, unaudited and, unless otherwise stated, based on IFRS.]

1 At constant currency.
2 Annual recurring revenue.
3 Based on weighted average shares outstanding (basic) Q1 2023: 74.0 mn/Q1 2022: 74.0 mn.
4 Cash flow from investing activities adjusted for acquisitions and investments in debt instruments.

This document includes forward-looking statements based on the beliefs of the management of Software AG (together with its consolidated subsidiaries, the Software AG Group), which are predictions, projections, or other statements about future events. 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 have any obligation to update these forward-looking statements and has no intention to assume such an obligation.

This document 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 Software AG 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 document does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States of America or in any other jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. Securities of Software AG 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, as amended.