Announcing preliminary first-quarter results, SAP said total revenue was up 18% on the year, or 13% in terms on a constant currency basis, from 1.73bn euros ($ 2.14bn) to 2.04bn euros ($2.52bn). Within that, license revenue was up 22% (14% at constant currency rates) from 434m euros ($536m) to 528m euros ($652m). Net income was up 11% from 252m euros ($311m) to 282m euros ($348m). Analysts had expected a profit of 293m euros ($362m) on total revenue of 1.97bn euros ($ 2.43bn), with license revenue of 512m euros ($632m).
Again, license revenue in the US was the engine for growth. Software revenue in the Americas region rose 47% to 226m euros ($279m). US software revenues grew by 25% to 165m euros ($204m). Asia-Pac also contributed to the overall growth with software revenue rising 12% to 73m euros ($90m). However, Japan saw an 18% dip to 19m euros ($23m). The EMEA region saw a 7% increase to 229m euros ($283m).
Although there is nothing of real concern within the preliminary figures, and the year-on-year comparison is positive, there has been a dip in the rate of license growth on a sequential quarterly basis when compared with the fourth quarter 2005 when license revenue rose 31% and 8% respectively for the US and EMEA compared to 25% and 7% this quarter. Leo Apotheker, who heads up the America’s operation pointed out that growth rates of 40% to 50% quarter over quarter were unsustainable and that there was no reason for concern. With the next-generation technologies and SAP’s mid-market initiatives coming on stream, he said the US will continue to be an engine for growth.
As far as the new technologies are concerned, CEO Henning Kagermann said NetWeaver sales generated 107m euros during the quarter, 21% of which were standalone sales. He said buyers tend to be existing customers using the integration components to integrate non-SAP applications with their SAP systems, rather than non-SAP customers using NetWeaver to bring legacy systems together. The prime buying motive is the XI integration component. He also confirmed that Mendocino is on target to ship in June.
