SAP revenue rises 11 percent in first quarter, but margin shrinks

SAP remains optimistic about growth for the rest of the year

SAP published preliminary figures for its first-quarter results on Friday, showing revenue up 11 percent year on year, but margins shrinking with operating profit up only 6 percent.

Software and software-related service revenue amounted to €2.62 billion (US$3.49 billion as of March 31, the last day of the period reported), up 13 percent year on year, while software revenue grew 4 percent, to €640 million, according to International Financial Reporting Standards (IFRS), SAP said.

Total revenue came to €3.35 billion, with an operating profit of €630 million, up 6 percent. SAP's operating margin slipped to 18.8 percent for the quarter, down from 19.7 percent a year earlier.

Excluding the effects of certain acquisitions and of currency fluctuations, total revenue for the first quarter rose 8 percent year on year, SAP said, while software revenue rose 1 percent under the same conditions.

Looking ahead, SAP expects software revenue in the second quarter -- again excluding certain acquisitions and currency fluctuations -- to grow by 15 to 20 percent compared to a year earlier, and for software and software-related service revenue for the second quarter to grow by 14 to 16 percent.

For the whole of 2012, SAP expects software and software-related service revenue to increase by 10 to 12 percent at constant currency rates, including a contribution of up to 2 percentage points from the recently acquired SuccessFactors business. It also forecast operating profit of between €5.05 billion and €5.25 billion, up from €4.71 billion for 2011.

The company has been on a recruiting spree to keep pace with its growth forecasts: excluding acquisitions, the company added the equivalent of 1,700 full-time staff over the year to March 31, ending the first quarter with 59,400 employees.

SAP's revenue grew fastest in Asia-Pacific and Japan in the first quarter, with software revenue there up 19 percent and software and software-related service revenue up 22 percent.

Software revenue fell in the Americas, dropping 4 percent to €236 million.

The company intends to publish further details of its results on April 25.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

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