Software AG 'resilient' in first quarter but lowers guidance

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Software AG 'resilient' in first quarter but lowers guidance

German business software company Software AG reported weaker first-quarter results as clients postponed deals in its Digital Business Platform division due to coronavirus, and trimmed its full-year guidance.

Still, Darmstadt-based Software AG's industrial internet and database businesses held up well, leading CEO Sanjay Brahmawar to describe performance as "resilient" and highlight progress in its business transformation.

Revenue gained by 2 percent at constant currency to 207 million euros (A$350 million) while management's preferred measure of operating profit fell 23 percent to 39.7 million euros (A$67.16 million).

Software AG, a constituent of Germany's MDAX index, trimmed its forecast for growth this year in its Digital Business Platform and Internet of Things units but kept its guidance for margins flat at 20-22 percent.

Under former IBM executive Brahmawar, Software AG is into the second year of a transformation programme called Helix that is shifting clients away from one-off licence payments to subscriptions.

Such a shift can squeeze margins in the short term but over time brings more predictability to a company's revenues. Software AG said it was standing by its medium-term goals of making 1 billion euros in revenue and expand operating margins to 25-30 percent by 2023.

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