Software AG shares slide on cautious 2018 outlook

Software AG shares are trading lower Thursday as investors digested its earnings results which included a subdued 2018 outlook.

Software AG shares slide on cautious 2018 outlook

Software AG shares are in the red, Thursday, as investors focused on a cautious outlook, despite a strong Q4 performance. The German software firm said it held a conservative view over the impact of an incoming revenue accounting rule.

By 1220 BST, Software AG shares were trading 7.63% lower at €43.81. That downward move follows a relatively stable period of the Software AG stock price.

Software AG’s outlook                                                                                                                        

Software AG’s fourth quarter and 2017 fiscal year results release included some positive numbers.

It’s Q4 EBITDA - or earnings before interest, tax and amortization – rose 9% to €98.4 million. The company’s operating profit margin hit a record of 37.6%. And, for 2017 as a whole, Software AG’s EBITDA grew 3% to total €279.5 million.

“Thanks to our initiatives in the areas of the Internet of Things and Industry 4.0, we started seeing initial results and gained increased market share in 2017,” said Software AG CEO, Karl-Heinz Streibich. “We will continue in this direction in 2018 and will extend our market leadership.”

However, the software business said it anticipates revenue growth of between 3% and 7% in 2018 – excluding the IoT business, which has been separated into a new division. EBITDA earnings growth, meanwhile, is currently expected to be 30-32%.

Software AG added it is currently working towards earnings per share growth of 5% and 15% in 2018.

No successor named for Software AG’s CEO

In addition to the German firm’s earnings results, Software AG has confirmed its CEO, Streibich, will step down in July this year.

A Software AG spokesman has told news outlets that it’s CEO will step down in six months after being at the helm since 2003. Streibich steps down when his current contract expires and due to ‘age reasons’. Streibich is 65 years old.

As yet, no successor for the role has been named.

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