SAP Reports 20% Growth in Software Revenues for the 2005 Third Quarter

• Software revenues were €590 million for the third quarter of 2005 (2004: €491 million), representing an increase of 20% compared to the same period in 2004. At constant currencies1, software revenues increased 19% year-over-year.
• Total revenues for third quarter of 2005 were €2.01 billion (2004: €1.78 billion), which was an increase of 13% compared to the third quarter of 2004. At constant currencies1, total revenues increased 12% year-over-year.
• Software revenues in the U.S. increased 34% to €199 million for the third quarter of 2005 (2004: €149 million). At constant currencies1, software revenues in the U.S. increased 34% year-over-year.
• Software revenues in the EMEA region grew 6% to €263 million for the third quarter of 2005 (2004: €249 million). At constant currencies1, software revenues in the EMEA region increased 6% compared to the third quarter of 2004. Software revenues in Germany rose by 12% year-over-year.
• Software revenues in the APA region increased 18% to €81 million (2004: €69 million) for the third quarter of 2005. At constant currencies1, software revenues in the APA region increased 15% compared to the same period last year.

• The strong software revenue results ($710 million globally and $240 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 group2 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 60% at the end of the third quarter of 2005, compared to 58% at the end of the second quarter of 2005 and 55% at the end of the third 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 44% at the end of the third quarter of 2005, compared to 41% at the end of the second quarter of 2005 and 36% at the end of the third quarter of 2004.

• Operating income for the third quarter of 2005 was €517 million (2004: €461 million), which was an increase of 12% compared to the third quarter of 2004. Pro forma operating income4 was €520 million (2004: €475 million) for the quarter, representing an increase of 9% compared to the same period in 2004.
• The operating margin for the third quarter of 2005 was 25.7%, which was down by 0.30 percentage points compared to the same quarter in 2004. The pro forma operating margin4 for the third quarter of 2005 was 25.8%, which represented a decrease of 0.90 percentage points compared to the same period in 2004.
• Net income for the third quarter of 2005 was €334 million (2004: €291 million), or €1.08 per share (2004: €0.94 per share), representing an increase of 15% compared to the third quarter of 2004. Third quarter 2005 pro forma net income4 was €337 million (2004: €302 million), or pro forma €1.09 earnings per share4 (2004: €0.97 per share), representing an increase of 12% compared to the third quarter of 2004.

• Software revenues increased 18% to €1.60 billion (2004: €1.36 billion) for the 2005 nine month period. At constant currencies1, software revenues increased 18% for the first nine months.
• Nine month 2005 total revenues were €5.76 billion (2004: €5.11 billion), which was an increase of 13% compared to the same 2004 nine month period. At constant currencies1, total revenues for the first nine months of 2005 increased 13%.

• Operating income for the 2005 nine month period was €1.35 billion (2004: €1.19 billion), which was an increase of 14% compared to the same period last year. Pro forma operating income4 for the first nine months of 2005 was €1.40 billion (2004: €1.24 billion), representing an increase of 13% compared to the first nine months of 2004.
• The operating margin for the 2005 nine month period was 23.5%, which was up by 0.30 percentage points compared to the same period in 2004. The pro forma operating margin4 was 24.3% for the first nine months of 2005, which increased by 0.10 percentage points compared to the same period in 2004.
• Net income for the first nine months of 2005 was €877 million (2004: €769 million), or €2.83 per share (2004: €2.47 per share), representing an increase of 14% compared to the first nine months of 2004. Pro forma net income4 for the 2005 nine month period was €910 million (2004: €804 million), or pro forma €2.94 per share4 (2004: €2.59 per share), representing an increase of 13% compared to the 2004 nine month period.

• Operating cash flow for the first nine months of 2005 was €1.02 billion (2004: €1.34 billion). Free cash flow4,6 for the first nine months of 2005 was €832 million (2004: €1.22 billion), which was 14% as a percentage of total revenues in 2005 (2004: 24%). At September 30, 2005, the Company had €3.1 billion in liquid assets (December 31, 2004: €3.2 billion).

• The Company raised its software revenue outlook and now expects full-year 2005 software revenues to increase in a range of 12% - 14% compared to 2004. Previously, the Company expected an increase in a range of 10% - 12%.
• The Company continues to expect 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. This has not changed from the previously issued outlook.
• The Company raised its pro forma earnings per share outlook and now expects full-year 2005 pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, to be in a range of €4.85 to €4.95 per share. The Company previously expected a range of €4.70 to €4.80 per share.
• The Company changed its assumed average U.S. Dollar to Euro exchange rate for the above outlook to $1.25 per €1.00. The Company previously assumed an average U.S. Dollar to Euro exchange rate of $1.30 per €1.00.

• 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 nine months of 2005, the Company bought back 2.8 million shares at an average price of €126.07 (total amount: €347 million). This compares to 1.1 million shares bought back in the first nine months of 2004. At September 30, 2005, treasury stock stood at 6.7 million shares. Given the Company’s strong free cash flow4,6 generation, SAP plans to continue to evaluate opportunities to buy back shares in the future.