SAP Announces 2005 Second Quarter and Six Months Results

• Software revenues were €576 million for the second quarter of 2005 (2004: €497 million), representing an increase of 16% compared to the same period in 2004. At constant currencies1, software revenues increased 16% year-over-year.
• Total revenues for second quarter of 2005 were €2.02 billion (2004: €1.8 billion), which was an increase of 13% compared to the second quarter of 2004. At constant currencies1, total revenues increased 14% year-over-year.
• Software revenues in the U.S. increased 24% to €174 million for the second quarter of 2005 (2004: €140 million). At constant currencies1, software revenues in the U.S. increased 27% year-over-year.
• Software revenues in the EMEA region grew 9% to €289 million for the second quarter of 2005 (2004: €266 million). At constant currencies1, software revenues in EMEA increased 8% compared to the second quarter of 2004.
• Software revenues in the APA region increased 23% to €85 million (2004: €69 million) for the second quarter of 2005. At constant currencies1, software revenues in the APA region increased 20% compared to the same period last year.

• The strong software revenue results ($696 million globally and $210 million in the U.S. on a quarter-end U.S. dollar exchange rate basis) enabled the Company to continue to gain share against its peer group worldwide and in the U.S. On a rolling four quarter basis, the Company’s worldwide share against its peer group2 based on software revenues was 58% at the end of the second quarter of 2005 compared to 57% at the end of the first quarter of 2005 and 54% at the end of the second quarter of 2004. In the U.S., on a rolling four quarter basis, the Company’s share against its peer group3 based on software revenues was 41% at the end of the second quarter of 2005 compared to 40% at the end of the first quarter of 2005 and 36% at the end of the second quarter of 2004.
  
  Income
  • Operating income for the second quarter of 2005 was €460 million (2004: €391), which was an increase of 18% compared to the second quarter of 2004. Pro forma operating income4 was €496 million (2004: €428 million) for the quarter, representing an increase of 16% compared to the same period in 2004.
  • The operating margin for the second quarter of 2005 was 22.8%, which was up by 0.80 percentage points compared to the same quarter in 2004. The pro forma operating margin4 for the second quarter of 2005 was 24.6%, which represented an increase of 0.60 percentage points compared to the same period in 2004.
  • Net income for the second quarter of 2005 was €289 million (2004: €249 million), or €0.93 per share (2004: €0.80 per share), representing an increase of 16% compared to the second quarter of 2004. Second quarter 2005 pro forma net income4 was €314 million (2004: €273 million), or pro forma €1.01 earnings per share4 (2004: €0.87 per share), representing an increase of 15% compared to the second quarter of 2004.
  HIGHLIGHTS – Six Months 2005
  
  Revenues
  • Software revenues increased 16% to €1.0 billion (2004: €867 million) for the 2005 six month period. At constant currencies1, software revenues increased 17% for the first half.
  • Six month 2005 total revenues were €3.7 billion (2004: €3.3 billion), which was an increase of 12% compared to the same 2004 six month period. At constant currencies1, total revenues for the first six months of 2005 increased 13%.
  Income
  • Operating income for the 2005 six month period was €834 million (2004: €724 million), which was an increase of 15% compared to the same period last year. Pro forma operating income4 for the first six months of 2005 was €877 million (2004: €760 million), representing an increase of 15% compared to the first six months of 2004.
  • The operating margin for the 2005 six month period was 22.3%, which was up 0.60 percentage points compared to the same period in 2004. The pro forma operating margin4 was 23.4% for the first half of 2005, which increased by 0.60 percentage points compared to the same period in 2004.
  • Net income for the first half of 2005 was €543 million (2004: €478 million), or €1.75 per share (2004: €1.54 per share), representing an increase of 14% compared to the first half of 2004. Pro forma net income4 for the 2005 six month period was €573 million (2004: €502 million), or pro forma €1.85 per share4 (2004: €1.61 per share), representing an increase of 14% compared to the 2004 six month period.
  Cash Flow
  • Operating cash flow for the first half of 2005 was €777 million (2004: €1.2 billion). Free cash flow4,6, which was €665 million for the first six months of 2005 (2004: €1,087), as a percentage of total revenues was 18% in 2005 (2004: 33%). At June 30, 2005, the Company had €3.4 billion in liquid assets (December 31, 2004: €3.2 billion).
  “We are pleased to report another quarter of solid revenue, operating income and earnings per share growth,” said Henning Kagermann, CEO of SAP. “Due to strong software revenue results in each region, we continued to gain share against our peer group and extend our lead in the U.S. market.”
  
  Mr. Kagermann continued, “We believe that the increased investments in our technology and products have provided SAP with a sizeable competitive lead in delivering the next generation software solutions based on our Enterprise Services Architecture (ESA). SAP NetWeaver and mySAP ERP, the first Service Oriented Architecture (SOA) based solution, are both receiving strong acceptance in the market. Following our ESA roadmap we will deliver the entire mySAP Business Suite on SAP NetWeaver in the next few months. This puts SAP in the clear lead as being the first company to provide a full suite of SOA based software solutions to the market. The next step is to bring the complete Business Process Platform to the market. We expect these investments to carry us well into the next decade and to help drive future growth.”
  
  BUSINESS OUTLOOK
  
  The Company has not changed its outlook provided in April and continues to provide the following guidance for the full year 2005.
  • The Company expects full-year 2005 software revenues to increase in a range of 10% - 12% compared to 2004.
  • The Company expects the full-year 2005 pro forma operating margin, which excludes stock-based compensation and acquisition-related charges, to increase in a range of 0.0 – 0.5 percentage points compared to 2004.
  • The Company expects full-year 2005 pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, to be in the range of €4.70 to €4.80 per share.
  • The outlook is based on an assumed average U.S. Dollar to Euro exchange rate of $1.30 per €1.00.
  Share Buy-Back Program
  • SAP’s current share buy-back program allows the Company to purchase shares in the amount of up to 10% of the total shares outstanding, or approximately 30 million shares. In the first half of 2005, the Company bought back 2.2 million shares at an average price of €123.33 (total amount: €276 million). This compares to 0.4 million shares bought back in the first half of 2004. At June 30, 2005, treasury stock stood at 6.6 million shares compared to 5.4 million shares at December 31, 2004. Given the Company’s strong free cash flow generation, SAP plans to continue to evaluate opportunities to buy back shares in the future.
  
  
  Read More Here: http://www.sap.com/company/press/press.epx?PressID=1165