SAP SE / Key word(s): Quarter Results/Preliminary Results
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- Third Quarter 2011 Non-IFRS Software and Software-Related Service Revenue Increased 14% (18% at Constant Currencies)
- Third Quarter Non-IFRS Operating Profit Increased by 26% at Constant Currencies Resulting in an 2.9 Percentage Point Increase in Non-IFRS Operating Margin at Constant Currencies
- Third Quarter IFRS Operating Profit and Operating Margin Positively Impacted by Reduction of TomorrowNow Litigation Provision by EUR723 million
- SAP Reiterates the High End of its Full Year 2011 Outlook
WALLDORF, Germany - October 14, 2011 - After a preliminary review of its 2011 third quarter performance, SAP AG (NYSE: SAP) today announced the following preliminary financial results for the third quarter and nine months ended September 30, 2011. All figures are approximate due to the preliminary nature of the announcement.
Third Quarter 2011
- IFRS software revenue was EUR841 million (2010: EUR656 million), an increase of 28% (32% at constant currencies).
- IFRS software and software-related service revenue was EUR2.69 billion (2010: EUR2.32 billion), an increase of 16%. Non-IFRS software and software-related service revenue was EUR2.69 billion (2010: EUR2.35 billion), an increase of 14% (18% at constant currencies).
- IFRS total revenue was EUR3.41 billion (2010: EUR3.00 billion), an increase of 14%. Non-IFRS total revenue was EUR3.41 billion (2010: EUR3.04 billion), an increase of 12% (15% at constant currencies).
- IFRS operating profit was EUR1.76 billion (2010: EUR716 million), an increase of 145%. Non-IFRS operating profit was EUR1.13 billion (2010: EUR915 million), an increase of 23% (26% at constant currencies).
- IFRS operating margin was 51.5% (2010: 23.8%), an increase of 27.7 percentage points. Non-IFRS operating margin was 33.0% (2010: 30.1%), or 33.0% at constant currencies, an increase of 2.9 percentage points (2.9 percentage points at constant currencies).
Third quarter 2011 non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of EUR1 million, acquisition-related charges of EUR110 million, profit from discontinued activities of EUR723 million, share-based compensation expenses of -EUR17 million and restructuring expenses of EUR1 million (2010: EUR36 million, EUR89 million, expenses of EUR45 million, EUR31 million and -EUR2 million). For more details on discontinued activities see separate section below.
Nine Months 2011
- IFRS software revenue was EUR2.23 billion (2010: EUR1.76 billion), an increase of 27% (31% at constant currencies).
- IFRS software and software-related service revenue was EUR7.60 billion (2010: EUR6.52 billion), an increase of 17%. Non-IFRS software and software-related service revenue was EUR7.62 billion (2010: EUR6.56 billion), an increase of 16% (18% at constant currencies).
- IFRS total revenue was EUR9.73 billion (2010: EUR8.41 billion), an increase of 16%. Non-IFRS total revenue was EUR9.76 billion (2010: EUR8.44 billion), an increase of 16% (18% at constant currencies).
- IFRS operating profit was EUR3.21 billion (2010: EUR2.05 billion), an increase of 57%. Non-IFRS operating profit was EUR2.92 billion (2010: EUR2.39 billion), an increase of 23% (25% at constant currencies).
- IFRS operating margin was 33.0% (2010: 24.4%), a increase of 8.6 percentage points. Non-IFRS operating margin was 30.0% (2010: 28.3%), or 30.0% at constant currencies, an increase of 1.7 percentage points (1.7 percentage points at constant currencies).
Nine months 2011 non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of EUR26 million, acquisition-related charges of EUR332 million, profit from discontinued activities of EUR711 million, share-based compensation expenses of EUR67 million and restructuring expenses of EUR2 million (2010: EUR36 million, EUR207 million, expenses of EUR46 million, EUR50 million and -EUR1 million). For more details on discontinued activities see separate section below.
SAP's pipeline remains very strong and companies continue to invest in IT, in particular in innovative software solutions. Due to the ongoing uncertain macroeconomic environment, the Company's outlook for the full year 2011 remains unchanged from its previous guidance reported on July 26th (except for the IFRS effective tax rate):
- The Company expects full-year 2011 non-IFRS software and software-related service revenue to increase in a range of 10% - 14% at constant currencies (2010: EUR9.87 billion), but expects to reach the high end of the range.
- The Company expects full-year 2011 non-IFRS operating profit to be in a range of EUR4.45 billion - EUR4.65 billion at constant currencies (2010: EUR4.01 billion), but expects to reach the high end of the range, resulting in 2011 non-IFRS operating margin increasing in a range of 0.5 - 1.0 percentage points at constant currencies (2010: 32.0%).
- The Company now projects a full-year 2011 IFRS effective tax rate of 28.5% - 29.5% (2010: 22.5%), whereas the projected non-IFRS effective tax rate remains unchanged at 27.5% - 28.5% (2010: 27.3%).
SAP will provide further details of its third quarter results and outlook for the full-year 2011 on October 26th.
Information and Explanation of the Issuer to this News:
Third quarter and year to date 2011 revenue, profit and cash flow figures include the revenue, profits and cash flows from Sybase. For the comparative prior year periods those numbers are only included since the acquisition date (July 26, 2010).
For a more detailed description of the Non-IFRS adjustments and their limitations as well as our constant currency and free cash flow figures see Explanations of Non-IFRS Measures online (www.sap.com/investor).
SAP has completed a review of the appropriate re-measurement of the provision recorded for the TomorrowNow litigation following the motion granted by the judge on the original jury verdict. The judge's decision vacated the original verdict of $1.3 billion but gave Oracle the choice of accepting $272 million or seeking a new trial. The deadline for Oracle to make that choice will vary depending on the outcome and timing of a ruling on Oracle's motion for an early appeal. If the early appeal is denied and Oracle rejects the reduced damages of $272 million, then there will be a new trial to determine damages.
The re-measurement of the provision additionally reflects currency exchange rate changes, changes in the estimate of related legal expenses and the fact that TomorrowNow reached an agreement in the copyright case with the United States Department of Justice in the third quarter for $20 million. As this amount was paid in the third quarter it is no longer included in the provision recorded for the litigation.
While the resulting re-measurement of the TomorrowNow litigation provision favorably impacts SAP's IFRS operating profit and margin it does not have an effect on SAP's Non-IFRS operating profit and margin.
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,' '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.
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