Business software maker SAP AG reported a 40 percent drop in net profit for its first quarter as license revenue dropped and losses at U.S. partner Commerce One Inc. increased.
Net profit for the quarter fell to 65 million (US$56.55 million as of March 31, the last day of the period being reported), or 0.21 a share. That compares with a 109 million, or 0.35 a share, profit a year earlier, SAP of Walldorf, Germany, said in a statement Thursday.
Overall revenue grew by 9 percent over the year-ago period to 1.66 billion, despite a 12 percent drop in revenue from license sales to 402 million, SAP said. Product sales, which includes license revenue and software maintenance revenue, were up 6 percent at 999 million, consulting revenue increased 18 percent to 539 million and training revenue was up 1 percent at 110 million.
Commerce One's losses took 52 million off SAP's earnings, 550 percent more than the 8 million last year, SAP said. Excluding the Commerce One effect and costs related to the takeover of U.S. portals company TopTier Software Inc., SAP said its net income came in at 121 million, up from 117 million. SAP owns 20 percent of Commerce One.
In Europe SAP sees a relatively strong market, with revenue for the Europe, Middle East and Africa region up 11 percent reaching 886 million. Revenue in the Asia Pacific region climbed 4 percent to 185 million. In the Americas, the most challenging market with businesses taking a deliberate and measured approach to software investments, revenue increased 7 percent to 587 million according to SAP.
Conditions for software vendors remain challenging, SAP said. However, the company expects a strong second half and said it will meet its 15 percent full year sales growth target. Also, SAP expects its operating margin excluding stock-based compensation and TopTier related charges to increase by 1 percent.