SAP Asia Pacific Japan Drives Solid Results Ahead of Guidance

APJ Region continues to see strong double-digit growth across key markets and business units;
reinforcing its role as SAP’s global growth engine

SINGAPORERiding on strong growth momentum established during the first half of 2010, SAP Asia Pacific Japan (“APJ”) turned in solid earnings results for the third quarter of 2010, showing good growth across key markets and business units.

Software and Software Related Services Revenue for Q3 2010 grew by 26 per cent (17 per cent including Japan) to €300 million. Total Revenue saw a corresponding 20 per cent growth (14 per cent including Japan), to €365 million, reinforcing SAP APJ’s position as the growth engine for SAP. All growth figures shown above are expressed in non-IFRS constant currency terms and are measured against the previous comparable period.

“We are very pleased with our solid double-digit performance in Q3 – nicely ahead of guidance,” said Steve Watts, President, SAP Asia Pacific Japan.

“We’ve reaffirmed SAP APJ’s role as SAP’s global growth engine. During Q3, we continued to see increased momentum in almost all segments of the business. Excellent performance in key markets in Q3, coupled with a sound pipeline for the rest of the year, has us looking forward to finishing the year strongly. In particular, the SME segment, which makes up more than three-quarters of our global customer base, is seeing strong growth in APJ and remains a key component of our strategy here.”

“Our integration with Sybase is also progressing smoothly and on plan. We are starting to see joint offerings such as Business Analytics and our new in-memory High-Performance Analytic Appliance (SAP HANA), being rolled out to Customers – putting SAP at the forefront of the mobile business analytics applications space. Together with Sybase, SAP APJ is delivering even more value to our customers as we continue to bring our broad software portfolio on device.”

In Q3 2010, China put in a strong performance with more than 60 per cent growth, testament to SAP’s continued investment in one of its key markets. The quarter saw the launch of Business ByDesign in China, effectively addressing the need for more local content and volume, as well as the strategic collaboration with Sybase, which helped leapfrog SAP APJ’s offerings from the laptop to mobile devices. Other key markets in the region, including Australia, Hong Kong, India and Southeast Asia, also put in a strong performance.

As in the previous two quarters, the Japanese market continued to be impacted by a weakening economic environment, but the large enterprise sector performed well and the outlook for the rest of the year remains optimistic. Key APJ customer wins came from the Utilities, Retail and Public Sectors, with SAP APJ winning every competitive large deal in Q3 (deal sizes of €2 million and above).

Globally, SAP also delivered another strong quarter with IFRS Software and Software Related Services Revenues growth of 20 per cent (13 per cent non-IFRS) to €2.185 billion. All the regions reported growth in Q3 2010, with particular strength in the BRIC countries which saw a 41 per cent growth in Software and Software Related Services Revenues. Deal sizes in all business segments increased, with Business Analytics remaining a principal growth driver on the product side.

SAP also released its quarterly sustainability update with a preliminary, unaudited CO2 emissions report for Q3 2010. The company’s worldwide CO2 emissions totaled 115 kilotonnes, which is on par with second quarter figures of 115 kilotonnes and below first quarter figures of 120 kilotonnes. In the third quarter, SAP saw positive trending, decreasing energy usage in buildings and reducing paper packaging usage. SAP now provides employees insight into their individual emission contributions, including air travel and fleet, via an internal dashboard, promoting greater transparency and accountability in the future.

Watts said, “We have focused SAP on three future growth engines: OnDemand, OnDevice and Analytics, and this has enabled us to double our addressable market. Our core business (OnPremise) is robust and growing in line with our guidance, and with the acquisition of Sybase, we have become the number one mobile business applications company. Through a broad and consistently integrated portfolio of products, SAP is clearly leading the market by remaining committed to helping its customers run their businesses better.”

IFRS Financial Data

SAP will discontinue its U.S. GAAP reporting and will only report financial data under IFRS from fiscal 2010 onwards. The guidance provided by SAP for 2010 is based on Non-IFRS numbers that are derived from SAP’s IFRS figures by excluding acquisition-related charges and discontinued activities.

Use of Non-GAAP and Non-IFRS Financial Measures
This press release contains certain financial measures such as Non-GAAP and Non-IFRS revenues, Non-GAAP and Non-IFRS operating income, Non-GAAP and Non-IFRS 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 or IFRS and therefore are considered Non-GAAP or Non-IFRS financial measures. SAP’s Non-GAAP and Non-IFRS financial measures may not correspond to Non-GAAP and Non-IFRS financial measures that other companies report. The Non-GAAP and Non-IFRS financial measures that SAP reports should be considered in addition to, and not as a substitute for or superior to, revenue, operating margin or SAP’s other measures of financial performance prepared in accordance with U.S. GAAP and IFRS.