SAP Lives Up To Earnings Preview

Software revenue increased 15% from the second quarter of 2003, and the vendor expects overall software revenue in 2004 to increase by around 10% compared with 2003.



As expected, SAP delivered healthy second-quarter earnings. The company reported an operating income of $305 million for its quarter ended June 30, compared with $269 million for the same quarter in 2003.

SAP's overall software revenue increased 15% to $609 million, and it continued strong growth in North America, boosting software revenue there to $172 million, compared with $137 million the same quarter a year ago. Total revenue came in at $2.2 billion, a 9% increase compared with revenue of $2 billion in the second quarter of 2003.

The news is no surprise. Two weeks ago, SAP previewed its earnings because, according to the company, it wanted to offer some good news during a time when other enterprise software vendors, including Computer Associates, PeopleSoft, Siebel Systems, and Veritas, were reporting profit downturns.

SAP said in its earnings announcement that the company's growth will continue: It expects overall software revenue in 2004 to increase by around 10% compared with 2003, and the pro forma operating margin, which excludes stock-based compensation and acquisition-related charges, is expected to increase about 1% over last year.

In a statement released Thursday, SAP CEO Henning Kagermann said customers want software partners that are reliable, financially strong, and innovative and that have broad product portfolios. Said Kagermann, "Our ability to deliver on all four of these qualities along with the investments we have made in expanding our product offerings and technology have all contributed to our continued share gains against our peer group."

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