SAP Announces 2004 Third Quarter and Nine Months Results

Feature Article | October 21, 2004 by admin

Highlights – Third Quarter 2004

Revenues

  • Software revenues were €491 million (2003: €433 million), representing an increase of 13 percent compared to the same period in 2003. At constant currencies, software revenues increased 17 percent year-over-year.
  • Software revenues in the EMEA region increased 24 percent to €249 million (2003: €201 million). At constant currencies, software revenues in the EMEA region increased 24 percent year-over-year.
  • Software revenues in the U.S. increased 6 percent to €149 million (2003: €140 million). At constant currencies, software revenues in the U.S. increased 15 percent year-over-year.
  • Total revenues were €1.8 billion (2003: €1.7 billion), which was an increase of 8 percent compared to the third quarter of 2003. At constant currencies, total revenues increased 11 percent year-over-year.

Income

  • Operating income was €461 million (2003: €413 million), which was an increase of 12 percent compared to the same period last year. Pro forma operating income was €475 million (2003: €423 million), representing an increase of 12 percent year-over-year.
  • The operating margin was 26 percent, which was up 1 percentage point year-over-year. The pro forma operating margin was 27 percent, which increased by 1 percentage point compared to the third quarter of 2003.
  • Net income was €291 million (2003: €252 million), or €0.94 per share (2003: €0.81 per share), representing an increase of 15 percent compared to the third quarter of 2003. Pro forma net income was €302 million (2003: €260 million), or pro forma €0.97 per share (2003: €0.84 per share), representing an increase of 16 percent compared to the same period in 2003.

Peer group share

  • With approximately $609 million in software revenues on a quarter-end U.S. dollar exchange rate basis, SAP continued to gain worldwide share against its peer group. On a rolling four quarter basis, the Company’s worldwide share against its peer group based on software revenues was 56 perecent at the end of the third quarter of 2004 compared to 53 percent at the end of the third quarter of 2003.
  • On a rolling four quarter basis, the Company’s U.S. share against its peer group based on software revenues was 38 percent at the end of the third quarter of 2004 compared to 32 percent at the end of the third quarter of 2003.

Highlights – Nine months 2004

Revenues

Nine month software revenues were €1.4 billion (2003: €1.2 billion), representing an increase of 12 percent compared to the same period in 2003. At constant currencies, software revenues increased 15 percent for the nine month period.
Total revenues for the first nine months were €5.1 billion (2003: €4.8 billion), which was an increase of 6 percent compared to the same period in 2003. At constant currencies, total revenues increased 10 percent for the nine month period.

Income

  • Operating income for the nine month period was €1.2 billion (2003: €1.1 billion), which was an increase of 13 percent compared to the same period last year. Pro forma operating income was €1.2 billion (2003: €1.1 billion) for the first nine months, representing an increase of 11 percent compared to the same period in 2003.
  • The operating margin for the nine months ended September 30, 2004 was 23 percent, which was up 1 percentage point compared to the nine months ended September 30, 2003. The pro forma operating margin for the 2004 nine month period was 24 percent, which represented an increase of 1 percentage point compared to the same period in 2003.
  • Net income for the 2004 nine month period was €769 million (2003: €657 million), or €2.47 per share (2003: €2.11 per share), representing an increase of 17 percent compared to the 2003 nine month period. 2004 nine months pro forma net income was €804 million (2003: €713 million), or pro forma €2.59 earnings per share (2003: €2.29 per share), representing an increase of 13 percent compared to the first nine months of 2003.

Cash flow

  • Operating cash flow for the nine months ended September 30, 2004 was €1.3 billion (2003: €1.0 billion), which was an increase of 29 percent compared to last year. Free cash flow as a percentage of total revenues was 24 percent (2003: 19 percent). At September 30, 2004, the Company had €2.8 billion in liquid assets (September 30, 2003: €1.8 billion).

“SAP delivered a strong set of results this quarter as we continued to gain share against our peer group. Each of the three regions reported year-over-year growth, resulting in a more balanced performance than we have previously seen this year,” said Henning Kagermann, CEO of SAP. “Our customers and prospects are looking for solutions to help them grow, innovate and adapt to rapidly changing business environments. SAP’s unique portfolio, including the SAP NetWeaver open application and integration platform and next-generation solutions such as mySAP ERP, in addition to the transition of our products to the Enterprise Services Architecture, make us the right choice for today and tomorrow’s business challenges. SAP remains a trusted and reliable business partner.”

Business outlook

The Company provided an update on its outlook for 2004.

  • The Company continues to expect full-year 2004 software revenues to increase by around 10 percent compared to 2003. Accordingly, the Company expects fourth quarter 2004 software revenues to increase in a range of 7 percent to 8 percent compared to the fourth quarter of 2003.
  • The Company continues to expect the full-year 2004 pro forma operating margin, which excludes stock-based compensation and acquisition-related charges, to increase by around one percentage point compared to 2003. The Company continues to expect full-year 2004 pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, to be in the range of €4.20 to €4.30 per share.
  • The outlook is based on an assumed U.S. Dollar to Euro exchange rate of $1.22 per €1.00 (previously $1.25 per €1.00).

Further Information

Source: SAP AG

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