SAP Reports 26% Growth in Software Revenue and 20% Growth in Software and Software Related Service Revenue

-- Software Revenue Growth Rate More than Doubled in First Quarter 2011 Compared to First Quarter 2010

-- 5th Consecutive Quarter of Double-Digit Growth in Non-IFRS Software and Software Related Service Revenue

-- Non-IFRSOperating Profit Increased 26%

-- Record First Quarter Operating Cash Flow

-- SAP Reiterates Full-Year Outlook

News provided by

SAP AG

Apr 28, 2011, 01:03 ET

WALLDORF, Germany, April 28, 2011 SAP AG (NYSE: SAP) today announced its financial results for the first quarter ended March 31, 2011.

(Logo: http://photos.prnewswire.com/prnh/20110126/AQ34470LOGO)  

"We are pleased to report our fifth consecutive quarter of double-digit growth in software and software related service revenue," said Werner Brandt, CFO of SAP.  "The strong top line results coupled with a double-digit increase in non-IFRS operating profit keep us on track to deliver further profitable growth in 2011 and beyond."

"Coming off our largest fourth quarter software revenue results in our history, our strong momentum continued in the first quarter," said Bill McDermott, Co-CEO of SAP. "Our customers are embracing our innovation and open ecosystem strategy.  This is driving demand across our industry leading portfolio of business applications, analytics, and enterprise mobility solutions.  We delivered double-digit revenue growth in all regions, benefitting from an increasing contribution to software revenue from our partner and channel business."

Jim Hagemann Snabe, Co-CEO of SAP, continued, "SAP's strategy of growth through innovation is clearly paying off and we remain confident about our future outlook. We offer great value to our customers with the most modern business suite and analytics solutions in the industry. In addition, our innovations addressing new markets with in memory, on demand and mobility are rapidly gaining traction. We are innovating faster in all product areas and continue to increase operational efficiency across the company."

FINANCIAL HIGHLIGHTS – First Quarter 2011

First Quarter 2011(1)

IFRS

Non-IFRS(2)

euro  million, unless
otherwise stated

Q1 2011

Q1 2010

% change

Q1 2011

Q1 2010

% change

% change
const.
curr.(3)

Software revenue

583

464

26%

583

464

26%

24%

Software and software-related service revenue

2,327

1,947

20%

2,344

1,947

20%

17%

Total revenue

3,024

2,509

21%

3,041

2,509

21%

18%

Total operating expenses

-2,427

-1,952

24%

-2,262

-1,892

20%

17%

- thereof TomorrowNow litigation

-2

0

n/a

0

0

0%

Operating profit

597

557

7%

779

617

26%

21%

Operating margin (%)

19.7

22.2

-2.5pp

25.6

24.6

1.0pp

0.7pp

Profit after tax

403

387

4%

528

439

20%

Basic earnings per share (euro)

0.34

0.33

3%

0.44

0.37

19%

Number of employees (FTE)

53,872

47,598

13%

na

na

na

na

(1)  All figures are unaudited.

(2) Adjustments in the revenue line items are for the support revenue that would have been recognized had the acquired entities remained stand-alone entities 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, share-based compensation expenses, restructuring and discontinued activities.

(3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating income 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.

Revenue – First Quarter 2011

  • IFRS software revenue was euro 583 million (2010: euro 464 million), an increase of 26% (24% at constant currencies).
  • IFRS software and software-related service revenue was euro 2.33 billion (2010: euro 1.95 billion), an increase of 20%. Non-IFRS software and software-related service revenue was euro 2.34 billion (2010: euro 1.95 billion), an increase of 20% (17% at constant currencies).
  • IFRS total revenue was euro 3.02 billion (2010: euro 2.51 billion), an increase of 21%. Non-IFRS total revenue was euro 3.04 billion (2010: euro 2.51 billion), an increase of 21% (18% at constant currencies).

First quarter 2011 non-IFRS software and software-related service revenue and total revenue exclude a deferred support revenue write-down from acquisitions of euro 17 million.

Profit– First Quarter 2011

  • IFRS operating profit was euro 597 million (2010: euro 557 million), an increase of 7%. Non-IFRS operating profit was euro 779 million (2010: euro 617 million), an increase of 26% (21% at constant currencies).
  • IFRS operating margin was 19.7% (2010: 22.2%), a decrease of 2.5 percentage points. Non-IFRS operating margin was 25.6% (2010: 24.6%), or 25.3% at constant currencies, an increase of 1.0 percentage point (0.7 percentage points at constant currencies).
  • IFRS profit after tax was euro 403 million (2010: euro 387 million), an increase of 4%. Non-IFRS profit after tax was euro 528 million (2010: euro 439 million), an increase of 20%. IFRS basic earnings per share was euro 0.34 (2010: euro 0.33), an increase of 3%. Non-IFRS basic earnings per share was euro 0.44 (2010: euro 0.37), an increase of 19%. The IFRS effective tax rate in the first quarter of 2011 was 30.9% (2010: 25.7%).The non-IFRS effective tax rate in the first quarter of 2011 was 31.0% (2010: 25.2%).

First quarter 2011 non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of euro 17 million, acquisition-related charges of euro 112 million, discontinued activities of euro 2 million and stock-based compensation expenses of euro 52 million (2010: euro 0 million, euro 54 million, euro 0 million and euro 5 million). First quarter 2011 non-IFRS profit after tax and non-IFRS basic earnings per share exclude a deferred support revenue write-down from acquisitions of euro 11 million, acquisition-related charges of euro 76 million, discontinued activities of  euro 1 million and stock-based compensation expenses of euro 37 million (2010: euro 0 million, euro 41 million, euro 7 million and euro 4 million) net of tax.

Cash Flow – First Quarter 2011

Operating cash flow for the first quarter 2011 was euro 1.59 billion (2010: euro 772 million), which is the highest operating cash flow for a first quarter in the Company's history.  Free cash flow was euro 1.45 billion (2010: euro 715 million), an increase of 103%. Free cash flow was 48% of total revenue (2010: 28%). At March 31, 2011, SAP had a total group liquidity of euro 4.49 billion (December 31, 2010: euro 3.53 billion), which includes cash and cash equivalents and short term investments. Net liquidity at March 31, 2011 was euro 633 million, which included euro 3.85 billion of debt, of which euro 3.25 billion resulted from the proceeds of bond and private placement transactions.

Business Outlook

SAP is providing the following outlook for the full-year 2011, which is unchanged from its previous outlook reported on January 26, 2011 and then reaffirmed in the 2010 Annual Report to Shareholders published on March 18, 2011 and the Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 18, 2011.

  • 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: euro 9.87 billion).
  • The Company expects full-year 2011 non-IFRS operating profit to be in a range of euro 4.45 billion – euro 4.65 billion at constant currencies (2010: euro 4.01 billion), resulting in a 2011 non-IFRS operating margin increasing in a range of 0.5 - 1.0 percentage points at constant currencies (2010: 32.0%).
  • For the full-year 2011, the Company projects an IFRS effective tax rate of 27.0% – 28.0% (2010: 22.5%) and a non-IFRS effective tax rate of 27.5% - 28.5% (2010: 27.3%).  

Major Customer Wins

In the first quarter of 2011, SAP closed major contracts in key regions.

EMEA:

SAP - KantonsspitalAarau AG, Stadtverwaltung Biel, PIERRE & VACANCES SA, GALP ENERGIA, S.A., OJSC Promsvyazbank (PSB), OOO Rosgosstrakh

Sybase -  Ericsson, Telefonica, 1&1 Internet AG

Americas:

SAP - BancoIntermedium S.A., PrimeSource Building Products Inc., Coinstar, Inc., Interpublic Group of Companies Inc., Sedgwick County, Kansas, Mohawk Industries, Inc.

Sybase – Synnex, Fujioka EletroImagem S/A, Medical Data Systems

Asia Pacific/Japan:

SAP - Jiangsu King's Luck Brewery Co., Ltd, Texhong (China) Investment Co., Ltd., Guangzhou Liby Enterprise Group Co., Astro All Asia Networks PLC, KyungDongNavien Co., Ltd., Microelectronics Technology Inc.

Sybase - YunNan Local Taxation, Jiaxing International Creative Culture Industry Park

SAP Business ByDesign

Hartung Consulting, KAI Computer Services Limited, Tennants Fine Chemicals Ltd, Dicentra, RB-INFO Kontor, HBC, Framos, EURO RSCG, siller AG, Wildnissport, Nowis

Q1 2011 Interim Report

SAP's Q1 2011 Interim Report was published today and is available at www.sap.com/investor for download.

Webcast

SAP senior management will host a conference call today at 3:00 PM (CET) / 2:00 PM (GMT) / 9:00 AM (Eastern) / 6:00 AM (Pacific).  The conference call will be web cast live on the Company's website at www.sap.com/investor and will be available for replay.

2010 Annual Report

The 2010 Annual Report was published on March 18, 2011 and is available for download at www.sap.com/investor.

About SAP

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 170,000 customers (includes customers from the acquisition of Sybase) to operate profitably, adapt continuously, and grow sustainably. 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," "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.

© 2011 SAP AG. All rights reserved.

SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Explorer, StreamWork, 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 Software Ltd. Business Objects is an SAP company. Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Sybase, Inc. Sybase 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.

These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

Note to editors:

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For customers interested in learning more about SAP products:


Global Customer Center:

+49 180 534-34-24

United States Only:

1 (800) 872-1SAP (1-800-872-1727)



For more information, press only:

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+49 (6227) 7-50383

[email protected], CET

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For more information, financial community only:

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mailto:[email protected], ET



Follow SAP Investor Relations on Twitter at @sapinvestor.

Appendix – Financial Information to Follow

FINANCIAL INFORMATION

FOR THE FIRST QUARTER 2011

(Condensed and Unaudited)





Page


Financial Statements (IFRS)

         Income Statements

F1

         Statements of Financial Position

F2

         Statements of Cash Flows

F3



Supplementary Financial Information

         Reconciliations from Non-IFRS Numbers to IFRS Numbers

F4

         Revenue by Region

F5

Financial Statements (IFRS)

CONSOLIDATED INCOME STATEMENTS  





for the three months ended March 31



euro millions, unless otherwise stated

Note

2011

2010

Change
in %

Software revenue

583

464

26

Support revenue

1,655

1,394

19

Subscription and other software-related service revenue

89

89

0

Software and software-related service revenue

2,327

1,947

20

Consulting revenue

570

479

19

Other service revenue

127

83

53

Professional services and other service revenue

697

562

24

Total revenue

3,024

2,509

21





Cost of software and software-related services

-495

-399

24

Cost of professional services and other services

-577

-451

28

Research and development

-498

-393

27

Sales and marketing

-677

-557

22

General and administration

-177

-148

20

TomorrowNow litigation

-2

0

N/A

Other operating income/expense, net

-1

-4

-75

Total operating expenses

-2,427

-1,952

24

Operating profit

597

557

7





Other non-operating income/expense, net


0

-36

-100

Finance income

29

15

93

Finance costs

-43

-15

>100

Financial income, net

-14

0

N/A

Profit before tax

583

521

12





Income tax expense

(6)

-180

-134

34

Profit after tax

403

387

4

– Profit attributable to non-controlling interests

0

0

0

– Profit attributable to owners of parent

403

387

4





Basic earnings per share, in euro*

(7)

0.34

0.33

3

Diluted earnings per share, in euro*

(7)

0.34

0.33

3

* For the three months ended March 31, 2011 and 2010 the weighted average number of shares were 1,188 million (Diluted: 1,189 million) and 1,189 million (Diluted: 1,190 million), respectively (treasury stock excluded).

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


as at March 31, 2011 and December 31, 2010


euro millions

Notes

2011

2010

Cash and cash equivalents

4,477

3,518

Other financial assets

(8)

252

158

Trade and other receivables

(9)

3,214

3,099

Other non-financial assets

210

181

Tax assets

135

187

Total current assets

8,288

7,143




Goodwill


8,264

8,428

Intangible assets

2,218

2,376

Property, plant, and equipment

1,443

1,449

Other financial assets

(8)

446

475

Trade and other receivables

(9)

75

78

Other non-financial assets

30

31

Tax assets

124

122

Deferred tax assets

722

737

Total non-current assets

13,322

13,696

Total assets

21,610

20,839

euro millions

Notes

2011

2010

Trade and other payables

794

923

Tax liabilities

77

164

Financial liabilities

(10)

141

142

Other non-financial liabilities

1,129

1,726

Provision TomorrowNow litigation

938

997

Other provisions

360

290

Provisions

1,298

1,287

Deferred income

2,773

911

Total current liabilities

6,212

5,153




Trade and other payables

43

30

Tax liabilities

403

369

Financial liabilities

(10)

3,906

4,449

Other non-financial liabilities

91

85

Provisions

247

292

Deferred tax liabilities

562

574

Deferred income

57

63

Total non-current liabilities

5,309

5,862

Total liabilities

11,521

11,015




Issued capital

1,228

1,227

Share premium

386

337

Retained earnings

10,159

9,767

Other components of equity

-288

-142

Treasury shares

-1,406

-1,382

Equity attributable to owners of parent

10,079

9,807




Non-controlling interests

10

17

Total equity

(11)

10,089

9,824

Equity and liabilities

21,610

20,839

CONSOLIDATED STATEMENTS OF CASH FLOWS



for the three months ended March 31

euro millions

2011

2010

Profit after tax

403

387

Adjustments to reconcile profit after taxes to net cash provided by operating activities:

Depreciation and amortization

178

111

Income tax expense

180

134

Finance income and finance costs, net

14

0

Gains/losses on disposals of non-current assets

1

1

Decrease/increase in sales and bad debt allowances on trade receivables

21

21

Other adjustments for non-cash items

-11

6

Decrease/increase in trade receivables

-233

-915

Decrease/increase in other assets

-105

-11

Decrease/increase in trade payables, provisions and other liabilities

-593

-348

Decrease/increase in deferred income

1,944

1,592

Cash paid due to TomorrowNow litigation

-2

-5

Interest paid

-21

-12

Interest received

20

11

Income taxes paid, net of refunds

-204

-200

Net cash flows from operating activities

1,592

772



Purchase of intangible assets and property, plant, equipment and business combinations

-141

-57

Proceeds from sales of intangible assets or property, plant, and equipment

10

9

Purchase of equity or debt instruments of other entities

-79

-318

Proceeds from sales of equity or debt instruments of other entities

103

122

Net cash flows from investing activities

-107

-244



Purchase of non-controlling interests

-21

0

Purchase of treasury shares

-158

-120

Proceeds from reissuance of treasury shares

141

81

Proceeds from issuing shares (share-based compensation)

29

20

Proceeds from borrowings

2

1

Repayments of borrowings

-504

0

Purchase of equity-based derivative instruments (hedge for cash-settled share-based payment plans)

0

-14

Proceeds from exercise of equity-based derivative financial instruments

0

4

Net cash flows from financing activities

-511

-28



Effect of foreign exchange rates on cash and cash equivalents

-15

29

Net decrease/increase in cash and cash equivalents

959

529

Cash and cash equivalents at the beginning of the period

3,518

1,884

Cash and cash equivalents at the end of the period

4,477

2,413



Supplementary Financial Information

RECONCILIATIONS FROM NON-IFRS NUMBERS TO IFRS NUMBERS

(Unaudited)

The following table presents a reconciliation from our non-IFRS numbers (including our non-IFRS at constant currency numbers) to the respective most comparable IFRS numbers. Note: Our non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles.

euro millions, unless otherwise stated


Three months ended March 31














2011





2010



Change in %





IFRS

Adj.*

Non-IFRS*

Non-IFRS

constant

currency**

IFRS

Adj.*

IFRS

Non-IFRS*

Non-IFRS

constant

currency**












































Non-IFRS Revenue Numbers




















Software revenue

583

0

583

-6

577

464

0

464

26

26

24


Support revenue

1.655

17

1.672

-50

1.622

1.394

0

1.394

19

20

16


Subscription and other software-related service revenue

89

0

89

-2

87

89

0

89

0

0

-2

Software and software-related service revenue

2.327

17

2.344

-58

2.286

1.947

0

1.947

20

20

17


Consulting revenue

570

0

570

-14

556

479

0

479

19

19

16


Other service revenue

127

0

127

-3

124

83

0

83

53

53

49

Professional services and other service revenue

697

0

697

-17

680

562

0

562

24

24

21

Total revenue

3.024

17

3.041

-75

2.966

2.509

0

2.509

21

21

18












































Non-IFRS Operating Expense Numbers


















Cost of software and software-related services

-495

77

-418



-399

41

-358

24

17


Cost of professional services and other services

-577

13

-564



-451

1

-450

28

25


Research and development

-498

23

-475



-393

2

-391

27

21


Sales and marketing

-677

38

-639



-557

13

-544

22

17


General and administration

-177

12

-165



-148

3

-145

20

14


TomorrowNow litigation

-2

2

0



0

0

0

N/A

0


Other operating income/expense, net

-1

0

-1



-4

0

-4

-75

-75

Total operating expenses

-2.427

165

-2.262

45

-2.217

-1.952

59

-1.892

24

20

17












































Non-IFRS Profit Numbers


















Operating profit

597

182

779

-30

749

557

59

617

7

26

21

Other non-operating income/expense, net

0

0

0



-36

7

-30

-100

-100


Finance income

29

0

29



15

0

15

93

93


Finance costs

-43

0

-43



-15

0

-15

>100

>100

Finance income, net

-14

0

-14



0

0

0

N/A

N/A

Profit before tax

583

182

765



521

66

587

12

30


Income tax expense

-180

-57

-237



-134

-14

-148

34

60

Profit after tax

403

125

528



387

52

439

4

20


Profit attributable to non-controlling interests

0

0

0



0

0

0

0

0


Profit attributable to owners of parent

403

125

528



387

52

439

4

20













































Non-IFRS Key Ratios




















Operating margin in %

19,7

25,6

25,3

22,2

24,6

-2,5pp

1,0pp

0,7pp

Effective tax rate in %

30,9

31,0



25,7

25,2

5,2pp

5,8pp

Basic earnings per share, in euro

0,34

0,44



0,33

0,37

3

19


* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities 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, share-based compensation expenses, restructuring expenses and discontinued activities.


** Constant currency revenue figures are calculated by translating revenue 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.


Differences may exist due to rounding.

REVENUE BY REGION

(Unaudited)

The following table presents our IFRS and non-IFRS revenue by region based on customer location. The table also presents a reconciliation from our non-IFRS revenue (including our non-IFRS revenue at constant currency) to the respective most comparable IFRS revenue. Note: Our non-IFRS revenues are not prepared under a comprehensive set of accounting rules or principles.

euro millions


Three months ended March 31









2011





2010

Change in %




IFRS

Adj.*

Currency

impact**

IFRS

Adj.*

IFRS

Non-IFRS*


































Software revenue by region














EMEA

251

0

251

-2

249

218

0

218

15

15

14

Americas

231

0

231

1

232

171

0

171

35

35

36

Asia Pacific Japan

101

0

101

-4

97

74

0

74

36

36

31

Software revenue  


583

0

583

-6

577

464

0

464

26

26

24

















Software and software-related service revenue by region




























Germany

331

0

331

0

331

310

0

310

7

7

7


Rest of EMEA

795

5

800

-19

781

691

0

691

15

16

13

Total EMEA

1.126

5

1.131

-19

1.112

1.001

0

1.001

12

13

11


United States

620

9

629

-2

627

471

0

471

32

34

33


Rest of Americas

222

1

223

-11

212

192

0

192

16

16

10

Total Americas

842

11

853

-14

839

663

0

663

27

29

27


Japan

124

1

125

-12

113

98

0

98

27

28

15


Rest of Asia Pacific Japan

236

1

237

-15

222

185

0

185

28

28

20

Total Asia Pacific Japan

360

1

361

-26

335

283

0

283

27

28

18

Software and software-related service revenue

2.327

17

2.344

-58

2.286

1.947

0

1.947

20

20

17

















Total revenue by region















Germany

485

0

485

0

485

444

0

444

9

9

9


Rest of EMEA

997

5

1.002

-25

977

859

0

859

16

17

14

Total EMEA

1.482

5

1.487

-24

1.463

1.302

0

1.302

14

14

12


United States

819

9

828

-3

825

620

0

620

32

34

33


Rest of Americas

292

1

293

-14

279

247

0

247

18

19

13

Total Americas

1.111

11

1.122

-18

1.104

867

0

867

28

29

27


Japan

140

1

141

-14

127

111

0

111

26

27

14


Rest of Asia Pacific Japan

291

1

292

-19

273

229

0

229

27

28

19

Total Asia Pacific Japan

431

1

432

-32

400

340

0

340

27

27

18

Total revenue  

3.024

17

3.041

-75

2.966

2.509

0

2.509

21

21

18

* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS Measures for details.


** Constant currency revenue figures are calculated by translating revenue 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.


Differences may exist due to rounding.

For a more detailed description of these 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/about/investor/index.epx ).

SOURCE SAP AG