Revenue grows 3% at constant currencies
In light of the sluggish growth in the economy and in SAP’s own industry, the Company did not expect to grow strongly in 2003. That is why, at the beginning of the year, the Company anticipated only a moderate increase in total revenue and spotlighted its commitment to improving profitability. At that time, the steady rise of the euro on the foreign exchanges over the year was not foreseeable. It reduced the reported euro value of revenue generated in other currencies. While the same currency effects reduced the euro value of expenses incurred in other currencies, this was not sufficient to balance the effect on reported revenue.

Under these pressures, SAP’s total revenue declined 5% from the previous year to stand at €7,025 million in 2003. However, if currency effects are excluded, SAP’s total revenue grew 3%.

Constant-currency software revenue growth outshines rivals’
Customers’ cautious approach to spending affected the software market. Nominally, SAP’s software revenue decreased 6% in 2003 to €2,148 million. But that decrease resulted substantially from the growing strength of the euro. On a constant currency basis, software revenue grew 1%. Translated into U.S. dollars and compared with competitors’ disclosed dollar figures for business software revenue, SAP’s software revenue grew faster in 2003 than any that of any member of its peer group.

Based on received orders, 74% of SAP’s 2003 software revenue was attributable to its existing customer base (77% in 2002) and 26% was attributable to new customers (23% in 2002). It is thus clear that SAP won many new customers in 2003 despite the prevalence of tight budgets.

As in previous years, SAP asked its customers in 2003 how they intended to use their newly acquired software licenses. The Company used the answers to break software revenue down by solution. The results show, among other things, that customers’ budget stringency had its greatest impact on mySAP Financials and mySAP Human Resources. Software revenue from these solutions declined 13% to €802 million in 2003. Software revenue from mySAP CRM also declined. The decline was however less than the software revenue decrease suffered by the incumbent CRM leader, Siebel Systems, Inc. SAP believes that its 2003 CRM software revenue exceeded Siebel Systems’ CRM software revenue, making SAP the company with the highest CRM software revenues.

mySAP SCM generated software revenues of €477 million – 3% more than in 2002 – despite the difficult economic environment. Both of the competitors SAP regards as having the largest revenues in the SCM segment, i2 Technologies, Inc. and Manugistics Group, Inc., reported decreases in software revenue. SAP therefore believes it has moved further ahead as SCM segment leader.