Softing AG: Interim Statement on the 3rd Quarter and First 9 Months of 2026

DEAR SHAREHOLDERS, EMPLOYEES, PARTNERS AND FRIENDS OF SOFTING,

The first nine months of the year can be summarized by saying that the Industrial segment recorded strong revenue growth and very strong growth in incoming orders. Although revenue and earnings in the Automotive segment are currently still lagging behind expectations, we will fully meet our targets once invoices have been processed at the end of the year. We significantly reduced structural costs in the IT Networks segment; however, one-time restructuring expenses and a weak start to the year continue to weigh on this business and will result in a loss for the year even after a typically strong fourth quarter.

Industrial Automation had a slow start to the year before recovering rapidly to record year-on-year revenue growth of just over 7% in the first nine months of 2026. Our North America business generated impressive revenue growth of around 20%, while healthy book-to-bill ratios in the EMEA region also made a major contribution to building our order book. The order book for the entire Group grew by more than 50% from EUR 17.5 million in the previous year to EUR 26.8 million. One key growth driver was the sale of software licenses in the Industrial segment that will provide contractually guaranteed revenue over the next few years, significantly improving the visibility of our business performance during this period.

We also expect closer worldwide integration and globalized sales of our European and US products to deliver another noticeable boost to growth in the Industrial segment as early as 2027. Our appearances at major trade fairs in the USA and Europe in November will focus on the components developed by Softing Inc. for our key customer Rockwell Automation’s core product. Additional applications of our products developed in Europe, for which we have successfully demonstrated proof of concept to our major clients in the USA, will generate significant growth as early as next year.

The Automotive segment currently operates in a market where traditional automotive manufacturers are undergoing an unprecedented process of adjustment. While we are responding to this trend by maintaining strict cost discipline, we also managed to secure new orders in our traditional existing business as well as technically related markets. We set up a service business based in Ingolstadt to fill the gap left by major automotive service providers reducing their local presence. Although start-up costs caused this business to record a loss in the first nine months of the year, we expect it to at least break even by year-end. Existing demand for our services will make a significant contribution to revenue and earnings in the coming year, while several major long-term projects for a provider of forestry and landscaping products and a leading manufacturer of special-purpose vehicles in the civil engineering sector will provide a significant additional boost to growth.

Although Automotive recorded negative operating EBIT and revenue around 23% lower than the previous year at EUR 18.6 million in the first three quarters of 2026, we expect this segment to record a clearly positive full-year operating EBIT that is at least on a par with the previous year’s figure. This is primarily due to licensing and project services from the aforementioned projects that will only be invoiced in the fourth quarter.

The IT Networks segment made a difficult start to the year in the first quarter due to weather conditions in Europe. While revenue then rose considerably in the next two quarters, this was not enough to offset the revenue lost experienced at the start of the year, especially as we were only able to finish development of a key product by mid-year. This segment generated revenue of EUR 4.7 million in the first nine months, down from EUR 5.4 million in the prior-year period. Operating EBIT stood at EUR –2.4 million due to persistently high costs, including one-time costs associated with switching the business’s focus from the core development of new devices to pure product maintenance. The traditionally strong fourth quarter has the potential to improve earnings by up to EUR 0.5 million.

We responded to the indisputable need for restructuring in the IT Networks segment. After completing several major core developments, we introduced a series of structural initiatives that will become fully effective next year and will reduce costs by around EUR 1.5 million per year. The IT Networks segment will become profitable over the coming year due to a combination of revenue growth from significant market demand for our new product LinkXpert SQ, completion of development for our WireXpert certifier, and the aforementioned reduction in costs.

We are heading into the final quarter of the current year with new products and having just started several major projects. At the same time, our targeted structural initiatives on the cost side have created the conditions needed to eliminate our existing losses in every segment, especially IT Networks, and achieve profitability from the outset by delivering seven-figure cost savings in 2027. Almost all of our markets have experienced extreme volatility during the current year.

We have adjusted our market positioning and opened up new sources of income to create a foundation for growth and return to stable income. We look forward to your continued support and to sharing the fruits of our labor with you.

Sincerely yours,

Dr. Wolfgang Trier

(Chief Executive Officer)

 

Interim statement on the 3rd quarter/first 9 months of 2026

STATEMENT ON NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

The economic environment in Softing’s most important markets remained challenging in the first nine months of 2026, with industrial companies’ reluctance to invest and subdued consumer sentiment continuing to weigh on markets. Like others, Softing was only partially able to avoid the impact of these macroeconomic developments in the first nine months of 2026. The outlook, however, is encouraging.

Revenue at Group level totaled EUR 57.8 million in the first nine months of this year. In the prior-year period, revenue was EUR 62.9 million, or 8.1% higher, after adjustment for approximately EUR 3 million from the sale of non-strategic operations in Italy.

While revenue in North America increased by almost 20% during this period, business in Europe continued to be dominated by weak mechanical engineering and IT infrastructure markets, particularly in the first few months of the year. The outlook tells a different, more encouraging story, with clear signs of a recovery, particularly in our industrial target markets, which are prepared to make new investments. Incoming orders rose by 20% year-on-year to EUR 66.7 million, compared with EUR 55.7 million in the prior-year period. We expect to generate significant revenue from these orders in 2027. Orders on hand also increased by EUR 9.3 million year-on-year, or more than 50%, from EUR 17.5 million to EUR 26.8 million, with the primary boost coming from Industrial Automation.

The cost of goods sold fell significantly from EUR 26.1 million in the prior year to EUR 19.2 million, while the cost of materials ratio declined from 39.4% to 33.2%, reflecting both the growing share of software revenue and the use of artificial intelligence. Personnel expenses were more or less level with the prior-year period.

The Group’s EBITDA fell slightly from EUR 3.6 million to EUR 3.3 million in the first nine months of 2026, whereas the EBITDA margin improved from 5.4% in the prior-year period to 5.7%.

Operating EBIT (EBIT adjusted for capitalized development services and amortization on these as well as effects from purchase price allocation), the Group’s main performance indicator, was EUR –1.5 million in the first nine months of 2026 after EUR 0.4 million in the previous year. EBIT fell marginally from EUR –3.2 million to EUR –3.5 million.

The resulting consolidated loss of EUR 3.2 million was on a par with the previous year. Earnings per share after the first nine months of 2026 were almost unchanged from the previous year at EUR –0.31.

Cash flows from operating activities after nine months totaled EUR 0.5 million after EUR 1.5 million in the previous year. Capital expenditures on property, plant and equipment and on intangible assets primarily concerned replacements and investments in a new Group-wide ERP system. Please refer to the Research and Product Development section for information on investments in products.

Cash flows from financing activities in the amount of EUR 2.0 million were primarily attributable to new short-term bank financing totalling EUR 5.9 million and cash inflows from a capital increase of EUR 3.2 million. These inflows were offset by scheduled loan repayments of EUR 5.2 million, repayments of lease liabilities of EUR 1.2 million, and interest paid of EUR 0.7 million.

As of September 30, 2026, the Group had cash and cash equivalents of EUR 4.5 million. The equity ratio rose slightly to 50.7%, up from 49.8% as of December 31, 2025.

Industrial, Softing’s most important segment, made a weak start to the year due to the economic environment before quickly gaining momentum, driven by the acquisition of new customers for our software products. Rather than generating revenue in a one-off transaction, these products are increasingly sold under a software-as-a-service model that establishes revenue streams over several years at the time of signing. Compared with a one-off sale, this reduces revenue on the initial sale but builds a secure level of orders on hand in subsequent years. This enabled us to achieve book-to-bill ratios of between 1.2 and 1.5.

After adjusting for the sale of non-strategic operations at our Italian subsidiary last year, revenue in the comparative prior-year period was EUR 32.3 million. In the first nine months of the current year, revenue in the Industrial segment increased by just over 7% to EUR 34.4 million. Industrial substantially increased its orders on hand on the back of strong book-to-bill ratios.

The positive trend following the weak start to the year is reflected in earnings: EBIT improved significantly by EUR 2.5 million, from EUR –0.7 million to EUR 1.8 million, while operating EBIT rose from EUR 0.4 million to EUR 0.7 million.

The Executive Board expects this business to continue its recovery in the final quarter of the year. While revenue figures for the past few months do support this trend, continued uncertainty in the traditional automation market means that further progress remains dependent on our customers‘ continued willingness to invest again.

The picture in the Automotive segment is extremely mixed. As has been widely reported, the automotive industry is undergoing an unprecedented adjustment process including job cuts and plant closures. This has led to a widespread reluctance to invest, cost-cutting programs involving substantial layoffs, and massively reduced budgets at traditional automakers.

Although Softing Automotive successfully secured a new major project, revenue initially fell by 23% year-on-year, from EUR 24.3 million to EUR 18.6 million. This was primarily because a peak in deliveries from a large-scale project for a southern German automaker had significantly boosted revenue in the first half of 2025, while the remaining orders under that project will not be called off until the final quarter of this year. Without this one-off effect, the decline in the first nine months would have been considerably smaller.

Start-up costs associated with the establishment of Softing Automotive GmbH in Ingolstadt and the subsequent acquisition of a business in April 2026 still continued to weigh on earnings. The acquisition was made in April and resulted in one-off expenses amounting to a six-figure sum. Due to strong demand from local customers, we have hired and will continue to hire staff in Ingolstadt. The Executive Board expects the newly acquired business to make a slightly positive contribution to earnings in the current financial year.

EBIT in the Automotive segment totaled EUR –1.2 million after EUR 1.2 million in the previous year. Overall, the segment’s operating EBIT contracted from EUR 2.2 million year-on-year to EUR –0.5 million.

A major project for a global market leader in forestry and grounds maintenance, which is expected to generate revenue of EUR 10 million to EUR 13 million over the coming years, had little opportunity to contribute to revenue and earnings in the first nine months as it was launched toward the end of the reporting period. Softing signed a further landmark agreement with a company that supplies specialized vehicles to the civil engineering industry. Both projects will not make significant contributions to revenue and earnings before the final quarter. Combined with strict cost discipline, we expect revenue in the Automotive segment to decline for the full year, but anticipate positive operating EBIT broadly on a par with the previous year.

The IT Networks segment continues to be affected by weak construction activity in nearly all markets, with positive developments such as the construction and expansion of data centers being unable to offset this impact. The main adverse factors were weather-related declines and the resulting suspension of construction work for weeks at a time in the first few months of the year. Despite persistently difficult market conditions, business in EMEA improved significantly in the first nine months. However, this was not enough to make up for the shortfall seen in the first few months. Demand in North America, by contrast, remained well below expectations until midyear and only recovered after that point.

Revenue decreased by 13% from EUR 5.4 million to EUR 4.7 million. EBIT fell from EUR –2.3 million to EUR –3.1 million. Operating EBIT came to EUR –2.4 million after EUR –1.7 million in the same period of the previous year.

We continue to invest in expanding our sales channels in EMEA and enhancing our product portfolio organically. Given that the fourth quarter is usually the strongest of the year, we expect a significant improvement in performance during the final three months, which should also push up operating EBIT for the full year. We are also launching a new product that offers substantially more features than competing products at a lower cost. Although the full effect will not be felt until the next financial year, we were able to reduce the segment’s costs by more than EUR 1.5 million annually. We therefore expect business performance to improve in the fourth quarter of 2026 despite the persistently challenging environment.

We see significant potential in all Group segments to boost revenue and earnings in the coming year by integrating products across the Group, leveraging Softing’s global sales network, and transitioning our licensing model to recurring software revenue. The substantial increases in incoming orders and orders on hand, combined with the successful cost reductions, demonstrate the momentum built across the Group, which will have its full effect next year.

We confirm the Group’s guidance for 2026 as published in the management report of the 2025 Annual Report (p. 28 et seq.). Overall, we continue to expect revenue to come in between EUR 80 million and EUR 85 million. We anticipate EBIT excluding any one-off effects to be between EUR –0.5 million and EUR 0.5 million, with operating EBIT for the full year now expected between EUR 2.0 million and EUR 3.0 million.

RESEARCH AND PRODUCT DEVELOPMENT

In the first nine months of 2026, Softing capitalized internal expenses of EUR 2.8 million (after EUR 1.1 million in the previous year) for the development of new products and the enhancement of existing ones. Further development services for product maintenance were expensed.

EMPLOYEES

As of September 30, 2026, the Softing Group had 405 employees (previous year: 404). No stock options were issued to employees in the reporting period.

SUBDUED INDUSTRIAL ACTIVITY AND RECESSION SCENARIO

The economic outlook in Germany, Europe and the United States remains uncertain. Despite initial signs of a broader economic recovery, activity in the industrial markets relevant to Softing remains subdued. High energy and labor costs, trade policy uncertainty and potential tariff increases continue to pose the main risks to economic growth. There is still no sign of a sustained recovery in industrial demand.

Geopolitical uncertainty persists as a result of Russia’s ongoing war of aggression against Ukraine, US trade measures and tariff threats, and the war in the Middle East. Softing’s customer base is essentially limited to Western countries, which are particularly affected by weak industrial activity and trade policy uncertainty.

From a risk management perspective, this means we must continue to take steps to boost profitability, in particular by continually monitoring our cost structure and maintaining a strict spending discipline. In spite of the actions taken, the existing risks cannot be fully controlled.

We do not anticipate a significant permanent loss of revenue that cannot currently be realized because most of our products cannot be replaced in the short term in our customers’ value chains. In addition, increased marketing activity is intended to boost revenue in regions where Softing has had a limited presence to date. These products and the expanded regional sales activities provide a key foundation for the expected stabilization of revenue, particularly in the Industrial segment.

Despite the current economic and political environment, we anticipate the procurement situation to remain stable. As part of our risk management efforts, we have focused on inventory levels and their development, with the aim of releasing additional liquidity through inventory reductions.

Softing continues to take cybersecurity and the potential expansion of geopolitical conflicts into this area very seriously. We review the current recommendations of the relevant authorities for their relevance to Softing and implement them as appropriate. Regular exchanges with other companies help us evaluate and improve our own security measures. Softing continues to invest in cybersecurity and provides regular employee training. Since cyberattacks cannot be ruled out entirely, we also focus on the resilience and recoverability of our IT systems and on raising awareness among all employees.

Hopes of a substantial improvement in the overall economic situation in the second half of 2026 in the markets relevant to Softing have not yet materialized. Despite the opportunities that exist, we expect the market environment to remain challenging.

For information on other risks and opportunities, we refer to the Group Management Report in the 2025 Annual Report, page 20 et seq.

NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS:

As of September 30, 2026, the Softing Group had cash of EUR 4.5 million, current receivables and contract assets of EUR 16.1 million, and agreed but not yet drawn down credit lines of around EUR 4.4 million at its disposal. This means that the Group has up to EUR 25.0 million in near cash funds available at short notice.

During the reporting period, some financial covenants contained in loan agreements were temporarily exceeded. We have informed the financing banks accordingly. At the time of preparing this report, we are in discussions with our main banks, with the aim of securing a waiver of any potential claims. Feedback on this has been consistently positive.

Softing continues to closely monitor its outstanding receivables, and no material deterioration in customer payment behavior has been observed so far. In addition to our receivables management, this is also due to the fact that most of Softing’s customers are large international corporations with sufficient funds.

Due to the Group’s financial strength, orders on hand, strict cost discipline at all levels, additional financing options not yet utilized, and global positioning, the Executive Board sees no danger of developments threatening the continued existence of the Group as a going concern.

EVENTS AFTER THE REPORTING PERIOD

There were no events of special importance after the reporting date of September 30, 2026.

GENERAL ACCOUNTING POLICIES

The consolidated financial statements of Softing AG as of December 31, 2025 were prepared in accordance with the International Financial Reporting Standards (IFRSs) based on the guidance of the International Accounting Standards Board (IASB) applicable at the reporting date. The interim management statement as of September 30, 2026, which was prepared on the basis of International Accounting Standard (IAS) 34 „Interim Financial Reporting“, does not contain all of the required information in accordance with the requirements for the presentation of the annual report and should be read in conjunction with the consolidated financial statements of Softing AG as of December 31, 2025. In general, the same accounting policies were applied in the interim management statement as of September 30, 2026 as in the consolidated financial statements for the 2025 financial year. This interim management statement as of September 30, 2026 was prepared without an auditor’s review.

CHANGES IN THE BASIS OF CONSOLIDATION

The changes in the basis of consolidation up to June 30, 2026 are described in detail in the half-yearly report. Since then, there have been no further changes in the basis of consolidation.

RESPONSIBILITY STATEMENT

The condensed interim management statement for the first nine months of 2026 was released for publication on November 13, 2026 by resolution of the Executive Board.

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Company, together with a description of the material opportunities and risks associated with the expected development of the Company.

Haar, Germany, November 13, 2026

Softing AG

 

KEY FIGURES FOR THE 3RD QUARTER OF 2026

      All figures in EUR million Quarterly
management statement
3/2026 Quarterly
management statement
3/2025       Incoming orders 66,7 55,7 Orders on hand 26,8 17,5 Revenue 57,8 66,3 EBITDA (IFRS) 3,3 3,6 EBIT (IFRS) –3,5 –3,2 EBIT (operating) –1,5 0,4 Profit for the period (IFRS) –3,2 –3,2 Earnings per share in EUR (IFRS) –0,31 –0,32

 

Contact:
Dr. Wolfgang Trier
CEO