Published: October 14, 2011
SAP Reports Record 32% Growth in Third Quarter 2011 Software Revenue at Constant Currencies
WALLDORF, Germany, Oct. 14, 2011 /PRNewswire/ -- 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.
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FINANCIAL HIGHLIGHTS - Third Quarter 2011
Third Quarter 20111)
-------------------
IFRS Non-IFRS2)
---- ---------
Euro % change
million, % const.
unless Q3 2011 Q3 2010 % change Q3 2011 Q3 2010 change curr.3)
otherwise
stated ------- ------- -------- ------- ------- ------- -------------
----------
Software
revenue 841 656 28% 841 656 28% 32%
-------- --- --- --- ---
Software
and
software-
related
service
revenue 2,691 2,316 16% 2,692 2,352 14% 18%
--------- ----- ----- --- -----
Total
revenue 3,409 3,003 14% 3,410 3,039 12% 15%
------- ----- ----- ---
Operating
profit 1,755 716 145% 1,127 915 23% 26%
--------- ----- --- --- ----- --- --- ---
Operating
margin
(%) 51.5 23.8 27.7pp 33.0 30.1 2.9pp 2.9pp
--------- ---- ---- ------ ---- ---- ----- -----
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.
Third Quarter 2011
-- IFRS software revenue was euro 841 million (2010: euro 656 million), an
increase of 28% (32% at constant currencies).
-- IFRS software and software-related service revenue was euro 2.69 billion
(2010: euro 2.32 billion), an increase of 16%. Non-IFRS software and
software-related service revenue was euro 2.69 billion (2010: euro 2.35
billion), an increase of 14% (18% at constant currencies).
-- IFRS total revenue was euro 3.41 billion (2010: euro 3.00 billion), an
increase of 14%. Non-IFRS total revenue was euro 3.41 billion (2010:
euro 3.04 billion), an increase of 12% (15% at constant currencies).
-- IFRS operating profit was euro 1.76 billion (2010: euro 716 million), an
increase of 145%. Non-IFRS operating profit was euro 1.13 billion (2010:
euro 915 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 euro 1 million, acquisition-related charges of euro 110 million, profit from discontinued activities of euro 723 million, share-based compensation expenses of -euro 17 million and restructuring expenses of euro 1 million (2010: euro 36 million, euro 89 million, expenses of euro 45 million, euro 31 million and -euro 2 million). For more details on discontinued activities see separate section below.
"The record quarter was driven by strong results across all regions. Customers recognize the value that they get from the global leader in enterprise software. Innovation in our core products combined with breakthrough solutions such as HANA and mobility are allowing our customers to run their businesses better and to grow in uncertain times. Innovative software matters more than ever and we are at the forefront of this trend," said Bill McDermott and Jim Hagemann Snabe, Co-CEOs of SAP.
FINANCIAL HIGHLIGHTS - Nine Months 2011
Nine Months 20111)
-----------------
IFRS Non-IFRS2)
---- ---------
Euro % change
million, % const.
unless 9M 2011 9M 2010 % change 9M 2011 9M 2010 change curr.3)
otherwise
stated ------- ------- -------- ------- ------- ------- -------------
----------
Software
revenue 2,226 1,757 27% 2,226 1,757 27% 31%
-------- ----- ----- --- -----
Software
and
software-
related
service
revenue 7,597 6,521 17% 7,623 6,557 16% 18%
--------- ----- ----- --- -----
Total
revenue 9,733 8,406 16% 9,759 8,442 16% 18%
------- ----- ----- ---
Operating
profit 3,208 2,047 57% 2,924 2,386 23% 25%
--------- ----- ----- --- ----- ----- --- ---
Operating
margin
(%) 33.0 24.4 8.6pp 30.0 28.3 1.7pp 1.7pp
--------- ---- ---- ----- ---- ---- ----- -----
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.
Nine Months 2011
-- IFRS software revenue was euro 2.23 billion (2010: euro 1.76 billion),
an increase of 27% (31% at constant currencies).
-- IFRS software and software-related service revenue was euro 7.60 billion
(2010: euro 6.52 billion), an increase of 17%. Non-IFRS software and
software-related service revenue was euro 7.62 billion (2010: euro 6.56
billion), an increase of 16% (18% at constant currencies).
-- IFRS total revenue was euro 9.73 billion (2010: euro 8.41 billion), an
increase of 16%. Non-IFRS total revenue was euro 9.76 billion (2010:
euro 8.44 billion), an increase of 16% (18% at constant currencies).
-- IFRS operating profit was euro 3.21 billion (2010: euro 2.05 billion),
an increase of 57%. Non-IFRS operating profit was euro 2.92 billion
(2010: euro 2.39 billion), an increase of 23% (25% at constant
currencies).
-- IFRS operating margin was 33.0% (2010: 24.4%), an 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 euro 26 million, acquisition-related charges of euro 332 million, profit from discontinued activities of euro 711 million, share-based compensation expenses of euro 67 million and restructuring expenses of euro 2 million (2010: euro 36 million, euro 207 million, expenses of euro 46 million, euro 50 million and -euro 1 million). For more details on discontinued activities see separate section below.
Business Outlook
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: euro 9.87 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 euro 4.45 billion - euro 4.65 billion at constant currencies
(2010: euro 4.01 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.
Additional information
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.
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 172,000 customers 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.
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