SAP Announces Preliminary 2007 First Quarter Results

Feature Article | April 20, 2007 by admin

Revenues

  • Software and software related service revenues for the 2007 first quarter were €1.52 billion (2006: €1.39 billion), which is an increase of 9 percent (15 percent at constant currencies1) compared to the same period in 2006.
  • Software revenues for the first quarter of 2007 were €563 million2 (2006: €514 million), representing an increase of 10 percent (16 percent at constant currencies1) compared to the first quarter of 2006.
  • Total revenues were €2.2 billion for the first quarter of 2007 (2006: €2.0 billion), which represented an increase of 6 percent (11 percent at constant currencies1) compared to the first quarter of 2006.

Income

  • Operating income for the first quarter of 2007 was €433 million (2006: €409 million), which was an increase of 6 percent compared to the first quarter of 2006.
  • The operating margin for the first quarter of 2007 was 20.0 percent, which was flat compared to the first quarter of 2006.
  • Net income for the 2007 first quarter was €310 million (2006: €282 million), or €0.26 per share (2006: €0.23 per share), representing an increase of 10 percent compared to the first quarter of 2006.

Core Enterprise Applications Vendor Share

SAP continued to gain share for the first quarter of 2007. Based on software and software related service revenues on a rolling four quarter basis, SAP’s worldwide share of Core Enterprise Applications vendors3, which account for approximately $34.8 billion in software and software related service revenues as defined by the Company based on industry analyst research, increased to 25.1% for the four quarter period ended March 31, 2007 compared to 24.5% for the four quarter period ended December 31, 2006. Compared to the four quarter period ended March 31, 2006, the year-over-year share gain was 2.4 percentage points.
“We are pleased with our first quarter results. On a constant currency basis, we achieved a strong increase in software and software related service revenues and reported double digit growth rates in each region,” said Henning Kagermann, CEO of SAP.
Mr. Kagermann continued, “As we enter the SAPPHIRE season, we look forward to building on the success we have already achieved in our established business for both the large enterprise and small businesses and midsized companies. The traction we have seen in our flagship solution SAP ERP has been tremendous and the adoption of our Enterprise Services Oriented Architecture continues to grow as measured by the strong acceptance of the Business Process Platform (BPP).
“To gauge the wide acceptance of the BPP you only need to look at the robust pace of SAP ERP and SAP NetWeaver sales. At the end of the first quarter, we had over 8,500 customers on SAP ERP, which is an increase of 122% compared to the same time last year and SAP NetWeaver sales were €156 million in the first quarter, which represented a gain of over 40% compared to the first quarter of 2006. Additionally, we are right on schedule with our roadmap to deliver the entire SAP Business Suite on the BPP by the end of this year and we expect to continue to bring additional enterprise services to market throughout the year on top of the 1,000 already delivered.”

Cash Flow

Operating cash flow for the first quarter was €848 million (2006: €858 million). Free cash flow1 for first quarter of 2007 was €769 million (2006: €795 million), which was 36% of total revenues (2006: 39%). At March 31, 2007, the Company had €3.8 billion in cash and cash equivalents and short-term investments (March 31, 2006: €4.2 billion). The year-over-year decrease is primarily the result of increased share buy-backs in 2006.

Share Buy-Back

In the first quarter of 2007, the Company bought back 9.6 million shares at an average price of €35.16 (total amount: €339 million). This compares to 10.1 million shares (total amount: €423 million) bought back in the first quarter of 2006. Of the total shares purchased in the first quarter of 2007, approximately 0.6 million shares were used to serve exercises under SAP’s share based compensation programs. The number of shares bought back in the first quarter of 2007 represented 0.76% of the total shares outstanding.
As of March 31, 2007, the Company held Treasury stock in the amount of 58.3 million shares (approximately 4.6% of total shares outstanding) at an average price of €35.33. SAP’s current share buy-back program allows the Company to purchase up to 120 million shares. All prior year share related numbers above have been adjusted to account for the capital share increase that took effect in December 2006 that effectively increased the number of shares outstanding four-fold. Given SAP’s strong free cash flow1 generation, the Company plans to further evaluate opportunities to buy back shares in the future.
View the Detailed Results (PDF, 220 KB)
View the Detailed Spreadsheet (XLS, 140 KB)
View the Webcast and Presentation

Source: SAP AG

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