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SAP Backs FY12 Growth Forecast After Higher Q1 Results

SAP Backs FY12 Growth Forecast After Higher Q1 Results
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4/13/2012 8:21 AM ET

German business software giant SAP AG (SAP: Quote) on Friday issued a growth forecast for its second quarter and reiterated its fiscal 2012 view, as it reported a higher first-quarter revenues and operating profit, despite slight decline in margin.

While announcing its preliminary quarterly numbers, SAP said its "growth momentum continued in 2012 with a record first quarter in Asia Pacific/Japan and double-digit growth in many markets including Latin America and Germany."

Meanwhile, software revenues in the Americas region declined, as the company had sales execution issues in North America. SAP resolved these issues and has taken necessary steps to ensure that North America is back on track.

For its first quarter, total revenues on International Financial Reporting Standards or IFRS basis grew 11 percent to 3.35 billion euros from prior year's 3.02 billion euros. The growth reflected a 4 percent increase in software revenues and a 13 percent increase in software and software-related service revenues.

Excluding certain acquisition-related and other items, total revenues were 3.36 billion euros, 10 percent higher than last year. At constant currencies, adjusted revenues grew 8 percent.

In the quarter, adjusted software revenue rose 4 percent and software and software-related service revenues went up 12 percent.

On a geographical basis, software revenues in the EMEA region increased 4 percent and that of Asia Pacific/Japan or APJ climbed 19 percent. These were partly offset by a 4 percent drop in Americas region.

In the software and software-related service segment, all regions recorded good growth.

Operating profit increased 6 percent to 0.63 billion euros, while operating margin edged down 0.9 percentage points to 18.8 percent. Adjusted operating profit grew 7 percent to 0.83 billion euros, while margin declined 0.8 percentage points to 24.8 percent.

SAP's biggest rival Oracle Corp. (ORCL: Quote) in late March reported that its third-quarter profit rose 18 percent from last year, helped by higher sales of its software. New software license revenues grew 7 percent, the tenth consecutive quarter of growth.

Looking ahead, SAP expects strong second quarter based on its robust pipeline, with software revenue increasing in a range of 15 percent to 20 percent at constant currencies from prior year's 838 million euros. The company also project adjusted software and software-related service revenue to increase in a range of 14 percent to 16 percent at constant currencies from last year's 2.59 billion euros.

Regarding its fiscal 2012 forecast, the company continues to expect adjusted software and software-related service revenue to increase in a range of 10 percent to 12 percent at constant currencies from last year's 11.35 billion euros. The forecast includes a contribution of up to 2 percentage points from SuccessFactors' business.

The company also maintained its adjusted operating profit forecast in a range of 5.05 billion euros to 5.25 billion euros, in comparison to 4.71 billion euros a year ago.

SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe said, "We are confident we will deliver a strong second quarter and we confirm our full-year outlook."

SAP shares are currently trading at 51.34 euros, up 0.67 euros or 1.32 percent on Frankfurt's Xetra. On the NYSE, SAP shares increased $1.27 or 1.93 percent in pre-market activity, and currently at $67.12.

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by RTT Staff Writer

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