SAP AG / Quarter Results
Ad hoc announcement according to § 15 WpHG transmitted by DGAP - a company
of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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WALLDORF – January 11, 2007 – SAP AG (NYSE: SAP) announced today that after
a preliminary review of its 2006 fourth quarter results, it expects fourth
quarter product revenues to be approximately €2.20 billion, representing an
increase of around 8% (around 12% at constant currencies*) compared to
fourth quarter 2005 product revenues of €2.04 billion. Full-year 2006
product revenues are expected to be approximately €6.64 billion,
representing an increase of around 11% (around 13% at constant currencies*)
compared to product revenues of €5.96 billion reported for the full-year
2005.
In the fourth quarter 2006, the Company expects software revenues to
contribute approximately €1.26 billion to product revenues, representing an
increase of around 7% (around 12% at constant currencies*) compared to
fourth quarter 2005 software revenues of €1.18 billion. Accordingly, the
Company expects full-year 2006 software revenues to be approximately €3.10
billion, representing an increase of around 11% (around 13.5% at constant
currencies*) compared to full-year 2005 software revenues of €2.78 billion.
2006 represented another year of strong share gains for SAP. Based on the
2006 preliminary software revenue results, SAP’s worldwide share of Core
Enterprise Applications vendors**, which account for approximately $16.4
billion in software revenues as defined by the Company based on industry
analyst research, on a rolling four quarter basis is expected to be around
24.2% at the end of the fourth quarter of 2006, representing around 3.0
percentage points of share gain for 2006 compared to 2005.
Total revenues for the fourth quarter of 2006 are expected to be
approximately €2.95 billion, which is an increase of around 7% (around 12%
at constant currencies*) compared to €2.75 billion reported for 2005. Total
revenues for the full-year 2006 are expected to be approximately €9.43
billion, which is an increase of around 11% (around 12% at constant
currencies*) compared to €8.51 billion reported for 2005.
On the basis of these figures, SAP expects its full-year 2006 adjusted
operating margin* to increase between 0.6 and 0.7 percentage points
compared to 2005 (28.3%). The 2006 adjusted operating margin* can be
reconciled to the operating margin by adjusting operating income for
stock-based compensation (approximately €99 million) and
acquisition-related charges (approximately €43 million).
Adjusted earnings per share* for the full-year of 2006 are expected to
reach at least €1.59 (based on the share count after the previously
announced issuance of new shares***) or €6.36 (based on the share count
before the previously announced issuance of new shares***. Earnings per
share for the full-year of 2006 are expected to reach at least €1.50 (based
on the share count after the previously announced issuance of new
shares***) or €6.00 (based on the share count before the previously
announced issuance of new shares***). Full-year 2006 earnings per share and
adjusted earnings per share* were positively impacted primarily by some
one-time effects in both the second and the fourth quarters of 2006
reducing the Company’s effective tax rate.
The following table provides information comparing the previously disclosed
full-year 2006 outlook and the full-year 2006 actual results:
SAP's Outlook Actual Performance
FY 2006 FY 2006
Product revenue growth 13% - 15% Around 13%
(at const. currencies*) 'less likely
that growth
will reach
the upper end
of the range'
- based on software revenue 15% - 17% Around 13.5%
growth 'less likely
(at const. currencies*) that growth
will reach the
upper end of
the range'
Adjusted operating margin Increase of 0.5- Increase of 0.6 -
increase* 1.0 percentage 0.7 percentage
points points
'less likely that
the adjusted
operating margin
will reach the
upper end of the
range'
Adjusted earnings per €1.45 to €1.50 Expected to reach
share* per share (based at least €1.59
on the share (based on the share
count after the count after the
previously previously
announced announced
issuance of new issuance of new
shares ***) shares***)
'Slightly above positively impacted
the previously primarily by some
comunciated one-time effects in
range' both the 2nd and 4th
quarter of 2006
reducing the
Company´s effective
tax rate.
Share of Core Enterprise Not provided 24.2%
vendors** (increase of
around 3.0
percentage points
for the full year
of 2006)
SAP will provide further details of its 2006 preliminary results and
outlook for the full-year 2007 on January 24th.
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Information and Explaination of the Issuer to this News:
Additional information:
Regional Performance
FY 2006 Q4 2006 FY 2006 Q4 2006
Software Software Software Software
Revenue Revenue Revenue Revenue
Approx. Approx. Approx. Approx.
Constant Constant Actual Actual
Currency* Currency* Growth Growth
Growth Growth Rate Rate
Rate Rate
EMEA 10% 14% 10% 13%
Germany 7% 8% 7% 8%
Americas 18% 10% 15% 0%
U.S. 17% 15% 13% 4%
Asia-Pacific 12% 9% 8% 2%
Japan 17% 14% 8% 4%
All regional growth rates are preliminary, rounded numbers
The EMEA region, including Germany, performed well in the fourth quarter
and for the full-year as renewed customer buying in the second half of 2006
pushed constant currency* software revenue growth into double digits for
the EMEA region and higher than expected upper single digits for Germany.
Like EMEA, Japan also reported a resurgence in software revenues in the
second half of the year leading to a robust, full-year 2006 constant
currency* software revenue growth of 17%. Meanwhile, the U.S. reported
another year of strong double digit software revenue growth.
Footnotes
*) Non-GAAP Measures:
This press release may disclose certain financial measures, such as
adjusted operating income, adjusted operating margin, adjusted expenses,
adjusted net income, adjusted earnings per share (EPS), and
currency-adjusted year-on-year changes in revenue and operating income,
which are not prepared in accordance with U.S. generally accepted
accounting principles (U.S. GAAP) and are therefore considered non-GAAP
measures. These non-GAAP measures were formerly referred to as 'pro forma',
but are now referred to as 'adjusted;' however, there has been no change in
the manner in which those measures are calculated. The non-GAAP measures
that SAP reports may not correspond to non-GAAP measures that other
companies report. The non-GAAP measures that SAP reports should be
considered as additional to, and not as a substitute for or superior to,
operating income, operating margin, cash flows, or other measure of
financial performance prepared in accordance with U.S. GAAP. The non-GAAP
measures included in this report are reconciled to the nearest U.S. GAAP
measure.
Adjusted operating income, adjusted operating margin, adjusted expenses,
adjusted net income, adjusted earnings per share (adjusted EPS)
SAP believes that adjusted operating income, adjusted operating margin,
adjusted net income, and adjusted EPS, all based on adjusted expenses,
provide supplemental meaningful information that can help investors assess
the financial performance of the Company using the same measures that SAP
uses in its internal management reporting.
The following expenses are eliminated from adjusted expenses, adjusted
operating income, adjusted operating margin, adjusted net income, adjusted
EPS, and other adjusted measures:
- Stock-based compensation, including expenses for stock-based compensation
as defined under U.S. GAAP, as well as expenses related to the settlement
of stock-based compensation plans in the context of mergers and
acquisitions. SAP excludes stock-based compensation expenses because it has
no direct influence over the actual expense of these awards once it has
entered into stock-based compensation commitments.
- Acquisition-related charges, including amortization of identifiable
intangible assets acquired in acquisitions of businesses or intellectual
property. Although acquisition-related charges include recurring items from
past acquisitions, such as amortization of acquired intangible assets, they
also include an unknown component relating to current year acquisitions for
which the Company has not yet finalized its purchase price allocation and
therefore, cannot accurately assess the impact of the acquisition related
charges.
- Impairment-related charges include other-than-temporary impairment
charges on minority equity investments. These charges are excluded because
they are outside the control of the Company's management.
The adjusted measures disclosed are the same measures that SAP uses in its
internal management reporting. Adjusted operating income is one of the
criteria, alongside the software revenue increase, for performance-related
elements of management compensation.
In addition, SAP gives full year and long term guidance based on non-GAAP
financial measures. The guidance is provided on adjusted operating
performance excluding stock-based compensation expenses and
acquisition-related charges to focus on components that reflect the
operational performance that management can directly influence and
reasonably forecast for the periods covered by the guidance.
Constant-Currency Period over Period Changes
SAP believes it is important for investors to have information that
provides insight into its sales growth. Revenue amounts determined under
U.S. GAAP provide information that is useful in this regard.
Period-over-period changes in such revenue amounts are impacted by both
growth in sales volume as well as currency effects. Under its business
model SAP does not sell standardized units of products and services.
Therefore SAP cannot provide relevant information on sales volume growth by
providing data on the growth in product and service units sold. In order to
provide additional information that is useful to investors in evaluating
sales volume growth SAP presents information about its revenue and income
growth adjusted for foreign currency effects. SAP calculates
constant-currency period over period changes in revenue and income by
translating foreign currencies using the average exchange rates from 2005
instead of 2006. Constant-currency period over period changes should be
considered in addition to, and not as a substitute, or superior to, changes
in revenues, expenses, income or other measures of financial performance
prepared in accordance with U.S. GAAP.
**) Core Enterprise Applications Vendor Share
In previous quarters, worldwide peer group share was provided based on a
peer group of Microsoft Corp. (business solutions segment only), Oracle
Corp. (business applications only) and Siebel Systems, Inc. The Company
believes that after the large amount of consolidation that has occurred
among the larger companies in the software industry, the peer group has
become too small to provide an adequate metric for the purpose of measuring
growth of sales share. Therefore, the Company will now be providing share
data based on the vendors of Core Enterprise Applications solutions, which
account for approximately $16 billion in software revenues as defined by
the Company based on industry analyst research. For 2006, industry
analysts project approximately 4% year-on-year growth for core Enterprise
Applications vendors. For its quarterly share calculation, SAP assumes
that this approximate 4% growth will not be linear throughout the year.
Instead, quarterly adjustments are made based on the financial performance
of a sub set (approximately 30) of Core Enterprise Application vendors.
***) See Company’s press release dated December 15, 2006, 'SAP Announces
Timeline for ‘Bonus’ Shares'.
Stefan Gruber, +49 6227 744872
DGAP 11.01.2007
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Language: English
Issuer: SAP AG
Dietmar-Hopp-Allee 16
69190 Walldorf Deutschland
Phone: +49 (0)6227 - 74 74 74
Fax: +49 (0)6227 - 75 75 75
E-mail: investor@sap.com
WWW: www.sap.com
ISIN: DE0007164600
WKN: 716460
Indices: DAX
Listed: Amtlicher Markt in Berlin-Bremen, Frankfurt (Prime Standard),
Stuttgart; Freiverkehr in Hannover, Düsseldorf, Hamburg,
München; Terminbörse EUREX; Foreign Exchange(s) NYSE
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