SAP Asia Pacific Japan Q2 2009 earnings results show strong margin growth and enhanced competitive positioning for SAP across the Region

SINGAPORE– SAP Asia Pacific Japan (“APJ”) continued to perform strongly in the second quarter of 2009, delivering improved Operating Margins and demonstrating sustained Customer Support.

While SAP APJ Software and Software Related Services Revenue and Total Revenue growth slowed by 9 per cent and 12 per cent respectively, SAP APJ managed to significantly improve its operating margin. SAP APJ operating margin increased directly in line with global margin growth of 3.5 percentage points in Q2 2009. All growth figures in this release are expressed in non-GAAP constant currency terms and are measured against the previous comparable period.

“SAP APJ delivered a sound second quarter result, underpinned by our closer alignment with Customer needs, resulting in an even stronger competitive position across the Region. We are consistently transforming the business to produce profitable growth,” said Geraldine McBride, President, SAP Asia Pacific Japan.

Small and midsized enterprises in particular, helped contribute to a strong performance, with the public services and financial services sectors also significantly outperforming more established market sectors in the Asia Region.

Customers prefer SAP in Asia Pacific Japan

A key pillar of SAP’s success in the APJ region is the attraction and retention of high quality Customers. In the first half of 2009, SAP gained more than 7,000 new Customers globally, with more than 17 per cent of its order entry coming from new Customers.

SAP also continued to demonstrate financial strength with recurring revenues comprising 55 per cent of total global revenue – a strong indication that Customers continue to see the value associated with SAP support.

“SAP continues to grow its market share in APJ. When we look at our portfolio of more than 2,000 Customer wins across the region in the first half of 2009, we see that SAP lost not a single deal, in its larger deal-size segments, to its next largest competitor. Markets such as China, India and Japan are also exhibiting tremendous potential and we are continuing to invest and grow our leadership position in these markets,” said McBride.

SAP’s commitment to helping Customers to “see clearly; think clearly and act clearly” allows Customers to realize tangible benefits from their investment in SAP software and assists them to become ‘Best-Run Businesses’.

Surbana Corporation (“Surbana”), a Singapore based MNC, explains why they chose SAP over Oracle in a recent decision to invest in an Enterprise Resource Planning (ERP) system. “We believe that SAP’s integrated ERP system meets our global business needs. After enjoying six years of good business growth in both township development and consultancy services, it is timely to invest in an ERP system to support our future growth,” said Miss Chia Chay Yeow, Surbana Group CFO. “Surbana will also benefit from the deep industry knowledge and global best practices embedded in the SAP’s solutions,” she continued.

China Petroleum & Chemical Corporation (“CPCC”) is another key SAP Customer which replaced its legacy Oracle systems with SAP Business Objects solutions. Explaining their decision, CPCC’s spokesperson said, “After comprehensive evaluation and a successful pilot project in 2008, we chose to replace our legacy Oracle Hyperion and IBM Cognos with SAP Business Objects solutions. With the increasing demand for Business Intelligence (BI) from all level of business users, we decided to standardize our BI platform on SAP as we believe SAP’s leading technology and global capabilities can continue to empower Sinopec’s business performance in the future.”

China Tobacco Fujian Province Company (“CTFPC”) offers a further perspective on why SAP is the solution provider of choice across the region. “We chose SAP as our solution provider of choice because of its integrated solution. We know we are getting one solution which will seamlessly integrate with our existing and future systems deployment.”

With similar sentiments being expressed by many new SAP Customers across the region, McBride concludes, “SAP APJ and its Customers are well positioned to emerge from the current economic conditions stronger than ever, as we continue to focus on Value Delivery for every Customer in the Asia Region.”

Use of Non-GAAP Financial Measures

This press release contains certain financial measures such as Non-GAAP revenues, Non-
GAAP operating income, Non-GAAP operating margin, free cash flow, constant currency revenue and operating income measures, as well as U.S. Dollar based Non-GAAP revenue numbers. These measures are not prepared in accordance with U.S. GAAP and therefore are considered non-GAAP financial measures. Our non-GAAP financial measures may not correspond to non-GAAP financial measures that other companies report. The non-GAAP financial measures that we report should be considered as additional to, and not as a substitute for or superior to revenue, operating margin or our other measures of financial performance prepared in accordance with U.S. GAAP. See the Appendix at the end of the financial section of this press release for additional information regarding the Non-GAAP measures included in this press release and for the reconciliations to the corresponding U.S. GAAP measures.