Money Matters - Simplified

SAP reports 97% rise in net profit in Q1

For the first three months this year, company’s software revenue stood at 464 million euros, compared to 418 million euros earned in the same period a year earlier.

Benefiting from global market recovery and rise in corporate spending on software, SAP AG (NYSE: SAP), a market and technology leader in business management software, reported rise in profit for the first quarter this year.

The Walldorf, Germany-based company reported 97 percent rise in income to 387 million euros or $511 million for the quarter ended March 31.

In a statement, Werner Brandt, CFO of the company, stated, “We are excited by our strong momentum and our return to growth in the first quarter.

“A solid top-line performance in combination with an increasing operating margin puts us on track to achieve our financial objective of profitable growth over the long term.”

First quarter highlights
For the first three months this year, company’s software revenue stood at 464 million euros, compared to 418 million euros earned in the same period a year earlier.

Revenue from software and software-related services, like consulting, training etc., were 1,947 million euros, which is higher than 1,741 million euros earned in first quarter of 2009.

Optimistic about the business opportunities, the company is anticipating full-year non-IFRS software and software-related service revenue to be in the range of 4 percent to 8 percent at constant currencies.

The company’s sales also rose 5 percent to 2.51 billion euros.

SAP's operating profit rose 81 percent to 557 million euros. The company had last year posted 307 million euros as operating profit.

Further, profit before tax also jumped 82 percent to 521 in the first quarter this year.

At the end of the first quarter, net liquidity, total group liquidity excluding bank liability, stood at 2.30 billion euros.

Upbeat economic outlook
SAP, which had witnessed a drop in sales last year and had to go through tough times due to conflict with customers over proposed changes related to contracts, believes that crisis is nearing end.

Optimistic about the business opportunities, the company is anticipating full year non-IFRS software and software-related service revenue to be in the range of 4 percent to 8 percent at constant currencies.

Further, the non-IFRS operating margin is expected to be in the range of 30 percent to 31 percent.

Confident about strong growth ahead, Jim Hagemann Snabe, co-CEO of SAP, said, “As the environment improves and customers begin to invest for growth again, SAP is extremely well-positioned because of our broad and consistently integrated portfolio of products supporting business processes and enabling business insight through analytics.”