Balance sheet explanations:
All figures are preliminary and unaudited, and are based on the current status of the purchase price allocation for the Business Objects acquisition, which is not yet final.
U.S. GAAP =
SAP operating income/total revenues
SAP operating income/total revenues, excluding a non-recurring deferred support revenue write-down from the acquisition of Business Objects
Constant currency revenue: The results of the current period are translated using the average exchange rates from the previous year’s respective period.
At his final annual press conference after 27 years with the company, SAP CEO Henning Kagermann summed up the last year as a positive one – without concealing the current difficulties. “2008 was a year with two completely opposite halves. A strong first half performance was greatly disrupted late in the third quarter by the beginning of the worst economic and financial crisis the world has witnessed in decades,” Kagermann said.
The developments in 2008 have prompted a cautious outlook. Product sales grew 28 percent in the first half-year, 22 percent in the third quarter, and just eight percent in the fourth quarter – meaning a rise in non-GAAP total revenues of 19 percent at constant currencies for the year overall compared to 2007.
2008 – overall
U.S. GAAP operating income for the full-year period 2008 increased four percent compared to 2007 (€2.84 billion). The full-year non-GAAP operating income, which excludes a non-recurring deferred support revenue write-down, was €3.31 billion, representing an increase of 18 percent compared to 2007. The U.S. GAAP operating margin was 24.6 percent, while earnings per share increased 16 percent.
As well as the large enterprise market, Kagermann named other growth drivers in 2008:
- Sales: SAP Business All-in-One
- Innovation: SAP Business ByDesign
“We posted full-year, double-digit growth in software and software-related service revenues and gained additional share against core applications vendors,” Kagermann said. At the end of 2008, SAP’s market share in this area and among all vendors was almost one third (32.8 percent).
The fourth quarter 2008
With an increase of eight percent compared to the fourth quarter of 2007, the last three months of 2008 represented a significant slump. Nevertheless, this period was not dictated by the economic and financial crisis alone, but also contained many highlights, revealing the company’s sustained innovative strength. Some of the examples Kagermann cited were:
- The fourth enhancement package for SAP ERP (SAP enhancement package 4)
- The start of the Best-Run Now initiative
- The partner add-ons for SAP Business ByDesign
- SAP EcoHub, the online marketplace for SAP partner solutions
- The integrated business intelligence platform from SAP BusinessObjects
Business outlook 2009
The SAP Executive Board expects market conditions to remain tight in the coming months. The cost containment measures introduced in October 2008 will therefore be continued. Among other things, the number of employees will be reduced this year by 3,000 to 48,500 “by consistently taking advantage of natural fluctuation.”
Due to the uncertainty surrounding the economic and business environment, SAP will not provide a specific outlook for software and software-related service revenues. Assuming that non-GAAP product revenues will be flat to a decline of one percent compared to last year, it expects its full-year 2009 non-GAAP operating margin to be in the range of between 24.5 and 25.5 percent at constant currencies.
“This is not the first time we have experienced tough economic times and we believe we are well prepared to endure them,” said Léo Apotheker, CEO of SAP. “We will continue to deliver to customers products to alleviate pain points caused by the challenging environment, because customers need flexibility, agility, and visibility into their businesses – now more than ever.”