Declining growth in the main business sent Software AG shares down on Tuesday. Bookings in the Digital Business (DB) division rose in the third quarter, adjusted for currency effects, by 6 percent compared to the same period of the previous year. The company stated this in a mandatory notification late on Monday evening. According to Software AG, analysts had expected an average increase in incoming orders of 14.7 percent to 95 million euros. The new business was disappointing, especially since the market expectation was high because of the strong cloud business at the much larger rival SAP, said a dealer.
The shares of the M-Dax group Software AG sagged on Tuesday at times by around 14 percent to a price of a good 35 euros. The index of medium-sized German stock corporations, on the other hand, rose slightly to 34,511 points. Since the beginning of the year, however, Software AG shares are still up around 8 percent. The M-Dax, on the other hand, has even increased by 12 percent.
Software AG reduced its annual forecast for DB bookings to 13 to 17 percent from 15 to 25 percent previously. The demand in the digital business has remained strong, it said. Signing of contracts was only delayed. The outlook for total product sales in a range of zero to 5 percent growth this year, however, remained unchanged. Because the weakness of the digital business can be compensated for by the database business. The database division Adabas & Natural (A&N) will probably develop “significantly better than expected”, wrote the Darmstadt-based company. Software AG now expects a currency-adjusted decline in orders in the division of 8 to 12 percent compared to the previous year instead of a minus of between 20 and 30 percent.
The adjusted earnings (EBITA) should now reach 17 to 19 percent of sales.
So far, the number two in Germany counted behind SAP with 16 to 18 percent.
The analysts estimate for annual sales was most recently at 833 million euros.
Software AG will publish the full figures for the third quarter on Thursday.