Walldorf, Germany — Beginning in the first quarter of 2007, and also provided for the full-year 2006 for comparative purposes, SAP AG (NYSE: SAP) will realign its income statement to provide additional transparency for reporting potential new product revenue streams. Although currently not material, the Company added a new revenue line item called “subscription and other software related services revenue” as the basis of the realignment, in addition to changing the name of the line item “product revenues” to “software and software related services revenue.” Therefore, “software and software related services revenue” equals the total of “software revenue” plus “support revenue” (formerly called “maintenance revenue”) plus “subscription and other software related services revenue.” Total software and software related services revenue in 2006 were €6,605 million. SAP’s 2007 outlook is based on this realignment. In addition, the operating margin outlook for 2007 is based on U.S. GAAP numbers. In previous years, SAP provided its outlook for operating margin on an adjusted basis.
The Company provided the following outlook for the full-year 2007.
- The Company expects full-year 2007 software and software related services revenue to increase in a range of 12% – 14% at constant currencies¹ compared to 2006 growth of 12% at constant currencies¹.
- In order to address additional growth opportunities in new, untapped segments in the midmarket, the Company will invest an additional €300 million – €400 million over eight quarters to build up a new business.
Depending on the exact timing of these accelerated investments, this is equivalent to the Company reinvesting approximately one to two percentage points of margin in 2007 into additional future growth opportunities.
Therefore, the Company expects the full-year 2007 operating margin to be in the range of 26.0% to 27.0% compared to the 2006 operating margin of 27.3%.
- The Company is projecting an effective tax rate of 32.5% – 33.0% for 2007.
Webcast/Supplementary Financial Information
The press conference of the SAP senior management is available for replay purposes at http://www.sap.com/investor. Supplementary financial information pertaining to the quarterly results and the realigned income statement is here also available.