Business software maker SAP AG (SAP) Friday reported a 17 percent increase in first-quarter profit, as revenues advanced 7 percent with a strong performance in the Software and software-related service business. The company reiterated the outlook it provided on January 23, for full year 2013.
Profit attributable to owners of parent increased 17 percent to 520 million euros ($679.5 million) from last year's 444 million euros. Results are on the basis of IFRS.
Revenues for the quarter climbed 7 percent to 3.601 billion euros from 3.350 billion euros in the prior year.
Software and software-related service revenue increased 11 percent to 2.903 billion euros, as Software and cloud subscription revenues climbed 19 percent and Support revenues rose 8 percent.
SAP generated 824 million euros in non-IFRS software and cloud subscription revenue in the first quarter, up 23 percent from last year. Revenue growth was 49 percent in the Americas, driven by excellent software revenue performance in Latin America and strong cloud subscription and support revenue growth in North America.
The EMEA region saw a 13 percent growth, amid continued market uncertainty, while such revenue in the Asia Pacific Japan or APJ region declined, as several markets started more slowly in 2013 after a record fourth quarter in 2012 and new leadership in some markets. The company expects the APJ region to be back on track in the second quarter.
Operating profit rose 2 percent to 646 million euros, while margin fell to 17.9 percent from 18.8 percent mainly due to acquisitions.
On a non-IFRS basis, operating profit grew 8 percent to 901 million euros and margin remained unchanged at 24.8 percent. SAP noted that non-IFRS operating profit and margin were affected by the acquisition of SuccessFactors and Ariba, which impacted the operating margin by around 80 basis points.
SAP said it sees continued strong growth in the cloud and its annual cloud revenue run rate is approaching 900 million euros.
SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe said, "Our industry is at a fundamental transformation point, driven by the convergence of mobile, cloud and big data. SAP's 25% growth shows that we are not only leading this change but also gaining significant worldwide market share."
SAP said it is on track to deliver on its 2015 goals and its overall financial objective of profitable growth over the long term. Looking ahead to the full year, the company still expects non-IFRS operating profit to be in a range of 5.85 billion - 5.95 billion euros at constant currencies compared to 5.21 billion euros in 2012.
The company expects full year 2013 non-IFRS software and cloud subscription revenue to increase in a range of 14- 20 percent at constant currencies compared to 5.00 billion euros in 2012.
Non-IFRS software and software-related service revenue is estimated to increase in a range of 11 to 13 percent at constant currencies in comparison with 13.25 billion euros generated in the prior year.
The stock gained 1.27 percent on Thursday to close at 59.63 euros.
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