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SAP Reports Double-Digit Growth in Software and Software-Related Service Revenues for the First Quarter 2010

April 28, 2010 | SAP - SAP Investor Relations

WALLDORF - SAP AG (NYSE: SAP) today announced its preliminary financial results for the first quarter ended March 31, 2010.

View the Detailed Results (PDF)

Presentation (PDF)

FINANCIAL HIGHLIGHTS – First Quarter 2010

First Quarter 20101)
IFRS Non-IFRS2)
€ million, unless stated otherwise Q1 2010 Q1 2009 % change Q1 2010 Q1 2009 % change % change constant currency3)
Software revenues 464 418 11% 464 418 11% 7%
Software and software-related service revenue 1,947 1,741 12% 1,947 1,752 11% 10%
Total revenue 2,509 2,397 5% 2,509 2,408 4% 3%
Total operating expenses -1,952 -2,090 -7% -1,897 -2,012 -6% -6%
–thereofrestructuring charges 0 -166 -100% 0 -160 -100% -
Operating profit 557 307 81% 612 396 55% 47%
Operating margin (%) 22.2 12.8 9.4pp 24.4 16.4 8.0pp 7.2pp
Profit after tax 387 196 97% 435 263 65%
Basic earnings per share (€) 0.33 0.17 94% 0.37 0.22 68%

1) All figures are preliminary and unaudited.

2) Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures in the appendix for details.

3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating profit of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period. See Explanations of Non-IFRS Measures in the appendix for details.

Revenues

  • IFRS software and software-related service revenues were €1.95 billion (2009: €1.74 billion), an increase of 12%. Non-IFRS software and software-related service revenues were €1.95 billion (2009: €1.75 billion), an increase of 11% (10% at constant currencies).
  • IFRS software revenues were €464 million (2009: €418 million), an increase of 11% (7% at constant currencies).
  • IFRS total revenues were €2.51 billion (2009: €2.40 billion), an increase of 5%. Non-IFRS total revenues were €2.51 billion (2009: €2.41 billion), an increase of 4% (3% at constant currencies).

First quarter 2009 Non-IFRS revenue figures exclude a deferred support revenue write-down from the acquisition of Business Objects of €11 million

Income

  • IFRS operating profit was €557 million (2009: €307 million), an increase of 81%. Non-IFRS operating profit was €612 million (2009: €396 million), an increase of 55% (47% at constant currencies). In the first quarter of 2009, the IFRS operating income was impacted by restructuring charges of €166 million (Non-IFRS: €160 million) resulting from a reduction of positions.
  • IFRS operating margin was 22.2% (2009: 12.8%), an increase of 9.4 percentage points. Non-IFRS operating margin was 24.4% (2009: 16.4%), or 23.6% at constant currencies, an increase of 8.0 percentage points (7.2 percentage points at constant currencies). In contrast to the respective quarter in 2009, the first quarter 2010 was not impacted by restructuring expenses which had, in the first quarter of 2009, negatively impacted the IFRS and Non-IFRS operating margin by 6.9 percentage points and 6.6 percentage points, respectively. However, reorganizations in the first quarter 2010 resulted in severance expenses of €27 million and unused lease space expenses of €9 million, which negatively impacted the IFRS and Non-IFRS operating margin by 1.4 percentage points.
  • IFRS profit after tax was €387 million (2009: €196 million), an increase of 97%. Non-IFRS profit after tax was €435 million (2009: €263 million), an increase of 65%. IFRS basic earnings per share were €0.33 (2009: €0.17), an increase of 94%. Non-IFRS basic earnings per share were €0.37 (2009: €0.22), an increase of 68%. The impact, net of tax, of the severance and unused lease space expenses incurred in the first quarter 2010 on the first quarter 2010 IFRS and Non-IFRS basic earnings per share was €0.02. The impact, net of tax, of the restructuring expenses incurred in the first quarter 2009 on the first quarter of 2009 IFRS and Non-IFRS basic earnings per share was €0.09. First quarter 2010 IFRS and Non-IFRS profit after tax and IFRS and Non-IFRS basic earnings per share were also impacted by a lower IFRS and Non-IFRS effective tax rate in the first quarter of 2010 compared to the first quarter of 2009.

First Quarter 2010 Non-IFRS operating profit excludes acquisition-related charges and discontinued activities totaling €54 million (2009: €78 million). First quarter 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude acquisition-related charges and discontinued activities totaling €48 million net of tax (2009: €67 million).

“We are excited by our strong momentum and our return to growth in the first quarter,” said Werner Brandt, CFO of SAP. “A solid top-line performance in combination with an increasing operating margin puts us on track to achieve our financial objective of profitable growth over the long term.”

Bill McDermott, co-CEO of SAP added, “The first quarter growth was made possible by all around solid execution in both our large, well established markets and our fast growing emerging markets. We saw strong results from the rapidly expanding demand for SAP BusinessObjects solutions, as well as in our small and midsized enterprise business. We were also pleased by the strong performance in our focus industries as our customers are turning to SAP to help their businesses run better.”

“As the environment improves and customers begin to invest for growth again, SAP is extremely well-positioned because of our broad and consistently integrated portfolio of products supporting business processes and enabling business insight through analytics,” said Jim Hagemann Snabe, co-CEO of SAP. “We have the outstanding ability to innovate technology and solutions that work seamlessly together regardless of whether they are delivered on premise, on demand, or on device.”

Cash Flow

Operating cash flow was €772 million (2009: €1.39 billion), a decrease of 44%. Operating cash flow in the first quarter 2010 was below the prior year comparison, mainly due to our decision to delay billing our customers for the 2010 support fees until customers had communicated whether they chose SAP Enterprise Support or SAP Standard Support – an option offered under the introduction of SAP’s two-tiered support model. Free cash flow was €715 million (2009: €1.34 billion), a decrease of 46%. Free cash flow was 28% of total revenues (2009: 56%). At March 31, 2010, SAP had a total group liquidity of €3.00 billion (December 31, 2009: €2.28 billion), which includes cash and cash equivalents, restricted cash and short term investments. At March 31, 2010, net liquidity, defined as total group liquidity less bank liabilities, was €2.30 billion.

Business Outlook

SAP is providing the following outlook for the full-year 2010, which is unchanged from the outlook issued on January 27, 2010:

  • The Company expects full-year 2010 non-IFRS software and software-related service revenue to increase in a range of 4% to 8% at constant currencies (2009: €8.2 billion).
  • The Company expects its full-year 2010 non-IFRS operating margin to be in a range of 30% to 31% at constant currencies (2009: 27.4%).
  • The Company projects an effective tax rate of 27.5% to 28.5% (based on IFRS) for 2010 (2009: 28.1%).

Major Customer Wins

In the first quarter of 2010, SAP closed major contracts in key regions. In EMEA: Boots UK Limited, Daimler AG, Gazprom OAO, Krones AG, VESTAS WIND SYSTEMS A/S; In the Americas: Cooper Tire & Rubber Co., Dole Food Company, Inc., El Palacio de Hierro, Jabil Circuit, Inc., McCain Foods Limited, ConAgra Foods Inc.; In Asia Pacific/Japan: A-DATA Technology Co., Ltd., Hong Tu-San Bao Hi-Tech Co., Ltd., Industry And Commercial Bank of China, Nissha Printing Co., Ltd., Shaanxi Electric Power Corp.

Webcast / Supplementary Financial Information
SAP senior management will host a conference call today at 3:00 PM (CET) / 2:00 PM (UK) / 9:00 AM (Eastern) / 6:00 AM (Pacific). The conference call will be web cast live on the Company’s website at http://www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the quarterly results can be found at http://www.sap.com/investor.

About SAP
SAP is the world’s leading provider of business software, offering applications and services that enable companies of all sizes and in all industries to become best-run businesses. With more than 97,000 customers in over 120 countries, SAP is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol “SAP.” (For more information, visit www.sap.com)

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission (SEC), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

Copyright © 2010 SAP AG. All rights reserved.
SAP, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, R/3 and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.

For more information, press only:
Christoph Liedtke +49 (6227) 7-50383 christoph.liedtke@sap.com, CET
Guenter Gaugler +49 (6227) 7-65416 guenter.gaugler@sap.com, CET
Jim Dever +1 (610) 661-2161 james.dever@sap.com, ET

For more information, financial community only:
Stefan Gruber +49 (6227) 7-44872 investor@sap.com, CET
Martin Cohen +1 (212) 653-9619 investor@sap.com, ET

Appendix – Financial Information to Follow