SAP: Strong Q2 earnings but lower sales

Net income at SAP soared 43 percent in the second quarter, with software license revenue up 8 percent thanks to strong U.S. demand, the business application vendor said Thursday.

Net income increased to Euro 414 million (AUD$696 million as of June 30, the last day in the period reported), or Euro 1.35 per share, compared with Euro 289 million, or Euro 0.93 per share, in the same period a year earlier.

Revenue for the quarter totalled Euro 2.2 billion (AUD$3.7 billion), up 9 percent from Euro 2.02 billion a year earlier.

Software license revenue, a key measure of future growth, rose 8 percent to Euro 621 million from Euro 576 million a year earlier.

At constant currency rates, based on the average exchange rates of 2005 instead of 2006, software revenue increased 10 percent compared with the same year-earlier period. SAP provides constant currency measures to show how the company would have performed if not affected by changes in exchanges rates.

Second-quarter software revenue was slightly below the company's expected full-year growth range, primarily due to order phasing and delayed contracts, the company said.

However, the company maintained its forecast that software license revenue will increase by 15 percent to 17 percent for the year. The customer spending environment is stable, putting SAP on track for another successful year, the company said.

Demand for SAP's business applications continues to grow steadily in the U.S., the home base of the company's major competitor, Oracle Corp. Second-quarter software revenue jumped 16 percent to Euro 201 million.

Software revenue in the EMEA (Europe, Middle East and Africa) region was up 3 percent to Euro 296 million, while sales in the Asia-Pacific region remained flat at Euro 86 million. Japan remained a troubled market, with software revenue down 4 percent to Euro 23 percent.

"Price pressure is the same," Kagermann said in a webcast news conference. "It's one of the weapons of competition. But it's not getting any worse."

As for acquisitions, Kagermann said SAP will continue to look at companies "not to buy customers but to complete our product portfolio." He dropped no hints of whether the Walldorf, Germany, software vendor would be buying anyone soon.

Asked to comment on a recent statement by Oracle that its Fusion software was superior to SAP's Netweaver middleware, Kagermann said customers "can touch what we're doing. We're shipping products, not just talking about them."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about BillionOracleRoseSAP Australia

Show Comments