by CIO Staff

SAP: Strong Q2 Earnings But Lower Than Expected Sales

Jul 20, 20062 mins

Net income at SAP soared 43 percent in the second quarter, with software license revenue up 8 percent thanks to strong U.S. demand, the business application vendor said Thursday.

Net income increased to 414 million euros (US$519.6 million as of June 30, the last day in the period reported), or 1.35 euros per share, compared with 289 million euros, or 0.93 per share, in the same period a year earlier.

Revenue for the quarter totalled 2.2 billion euros, up 9 percent from 2.02 billion a year earlier.

Software license revenue, a key measure of future growth, rose 8 percent to 621 million euros from 576 million a year earlier.

At constant currency rates, based on the average exchange rates of 2005 instead of 2006, software revenue increased 10 percent compared with the same period a year earlier. SAP provides constant currency measures to show how the company would have performed if not affected by changes in exchanges rates.

Second-quarter software revenue was slightly below the company’s expected full-year growth range, primarily due to order phasing and delayed contracts, the company said.

However, the company maintained its forecast that software license revenue will increase by 15 percent to 17 percent for the year. The customer spending environment is stable, putting SAP on track for another successful year, the company said.

Demand for SAP’s business applications continues to grow steadily in the United States, the home base of the company’s major competitor, Oracle. Second-quarter software revenue jumped 16 percent to 201 million euros.

Software revenue in the Europe, Middle East and Africa region was up 3 percent to 296 million euros, while sales in the Asia-Pacific region remained flat at 86 million euros. Japan remained a troubled market, with software revenue down 4 percent.

Kagermann will hold a news conference at 12 p.m. GMT. The conference will be webcast here.

-John Blau, IDG News Service (Dusseldorf Bureau)

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