Feeds

SAP trousers €1bn quarter in software sales, fumbles profit

Prelims are best ever but net income can't keep up

Providing a secure and efficient Helpdesk

Business is so good at software industry bellwether SAP that it felt compelled to pre-announce its financial results for its fiscal Q2. In the past three months, SAP broke €1bn in new software licence sales for the first time and posted its best second quarter ever.

The preliminary figures show SAP on a roll, with its tenth consecutive quarter of double-digit revenue growth (at least when reckoned using non-IFRS accounting methods). Under IFRS accounting rules, which don't exclude certain costs just like GAAP rules don't in the United States, the results nonetheless show SAP's profits are under pressure – perhaps from a number of fronts that the company will discuss when it reports its full financial results for Q2 on 24 July.

In the quarter just ended, SAP booked €1.06bn in new licence sales, up 26 per cent compared to the year-ago period. Adding software and support revenues together for the quarter came to €3.12bn, up 21 per cent. If you do the sums, then software support revenues in Q2 came to €2.06bn, up 18.4 per cent. Other revenues added up to €780m, rising only 8.3 per cent.

However, operating profits only rose by 7 per cent in the quarter to €920m, and operating margins fell by 2.4 points to 23.6 per cent of revenues. Even if you back out €18m in deferred revenue write downs, acquisition charges of €129m, €4m in restructuring expenses, €2m from discontinued activities, and €99m in stock-based compensation (which gives you the non-IFRS figures), an operating profit of €1.17bn is a rise of 15 per cent and not in keeping with the 26 per cent revenue growth.

SAP's top-line numbers in Q2 were, of course, bolstered by the addition of SuccessFactors, which the German software behemoth shelled out $3.4bn to pump up its SaaS apps biz back in December 2011.

Accounting rules in the US and Europe do not require companies to actually combine their historical financials when they merge their companies, which lets the acquirer show "inorganic" growth, in this case allowing SAP to add about $330m a year based on 2011's estimated financials for the company, which had 15 million users of its cloudy human resources apps.

In a statement, co-CEOs Bill McDermott and Jim Hagemann Snabe said that SAP's "record performance speaks for itself" and that the company delivered double-digit growth in all regions. This was put down to strong momentum from the core application software business as well as being boosted by the HANA in-memory database, mobile application extensions, and cloudy stuff.

(One wonders if the two actually chanted the quote in unison in the SAP head office.)

"The results came in at the upper end of our second quarter software revenue guidance in an uncertain macro-economic environment," they added.

For the first six months of the year, SAP has booked €7.25bn in revenues (up 15 per cent) and an operating profit of €1.55bn (up 7 per cent).

Now, all eyes will turn to Oracle, which ends its first quarter of fiscal 2013 in August, and which could pre-announce its results as well if they are considered significant enough to move the company's stock – one way or the other. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.