The MDAX-listed share temporarily lost 13.77 percent today, Wednesday. Thus, after a recovery move, the share price made a breakout gap to the downside and corrected to 22.04€. In August 2021, the share had still been trading at a high of almost twice its value.
Analysts from the investment bank JP Morgan see a need for correction of market expectations for the Darmstadt-based company in terms of operating margin and free cash flow. Analysts at Barclays also point to prospects for the current year that are significantly lower than those forecast by the company.
Like its larger competitor SAP, Software AG plans to lay off about 200 employees, or 4% of its workforce, due to increasing pressure on margins. In this way, the company aims to reduce running costs by 30 to 35 million euros from 2023. Management has set low profitability targets for the new year, forecasting sales between 16 and 18 percent as operating profit. This outlook falls well short of the figures from the previous year and also of experts’ estimates. Prior to the company’s acquisition of Streamsets last year, medium-term margins of 25 to 30 percent were forecast for this year. One reason for the missed market expectations can be found in the increased use of subscriptions, especially in the database division.