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SAP reports positive second quarter

Software firm upbeat about software revenue growth and prospects for wider product portfolio

SAP

SAP late yesterday announced overall positive quarterly results, highlighting a 15-percent rise in software and software-related service revenues during the second quarter (Q2).

The German enterprise resource planning (ERP) software maker revealed its latest 2011 financial year figures a day earlier than scheduled, restating its expectations to meet the higher end of its 10-14 per cent full-year software and software-related service revenue growth forecasts, before standardised financial adjustments.

The quarter ended 30 June 2011 saw a 35 per cent growth in software revenue and 20 per cent growth in non-International Financial Reporting Standards (IFRS) software and software-related service revenue at constant currencies. This marked the company's

sixth consecutive quarter of double-digit growth in software and services revenues.

Werner Brandt, chief financial officer of SAP, stated that strong customer demand positioned the firm well to achieve its goal of at least 20 billion (17.6bn) in total annual revenue and a 35 per cent operating margin by the middle of the decade.

"The team delivered another outstanding quarter," added Bill McDermott, co-chief executive of SAP. "Our innovations such as SAP HANA along with our mobility and business analytics solutions are fuelling our pipeline as customers want to grow their business and solve their most pressing industry-specific challenges."

SAP's Q2 IFRS software revenue was 802 million (707m), a year-on-year increase of 26 percent (or 35 per cent at constant currencies), while software and software-related service revenue was 2.58 billion, up 14 per cent on the same quarter last year. IFRS total revenue was 3.3bn (2.9bn), an increase of 14 per cent.

IFRS operating profit was up 11 per cent year-on-year to 857m (755.7m). And non-IFRS operating profit was up 19 per cent (or 26 per cent at constant currencies) to 1.02bn (899m). But IFRS operating margin was 26 per cent, a decrease of 0.7 per cent compared to Q2 of SAP's last financial year.

The results buoyed SAP's share price, as they closed 3.6 per cent higher at 43.49 (38.85) on Tuesday. But some financial analysts have questioned whether the pipeline for SAP's in-memory computing engine, HANA, and its hosted ByDesign ERP products are paying off.

And results of a survey released Monday by the UK & Ireland SAP User Group revealed that 69 per cent of its member organisations were now using the latest version of SAP's core ERP business suite, ERP 6.0.

But only seven per cent of the SAP users said they were currently using SAP BusinessObjects, suggesting that SAP still has work to do convincing users to adopt what is now its flagship business intelligence product.

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