Software Sales Rebound at ERP Giant SAP

May 2, 2011 Timothy Prickett Morgan

The recovery in IT spending seems to be coming along if the sales at ERP software juggernaut SAP are any indication. But the company is spending more money to make more money, and that means its profits are not keeping pace, much less growing faster than revenues as investors like to see. The profit pressure might mean, however, that SAP is giving customers some good deals to make deals, and that is good for customers.

In the first quarter of 2011 ended in March, SAP’s software license revenues rose by 26 percent, to €583m; software and related services revenues increased by only 20 percent to €2.33 billion. Total revenues at the German software giant were up 21 percent, to just over €3 billion. Total operating expenses rose by 24 percent, to €2.43 billion, and another €2m in costs were added to the balance sheet for the litigation between Oracle and SAP over the defunct TomorrowNow third-party support business. Profit after taxes was up only 4 percent, to €403m.

Software license sales in the EMEA region were sluggish, up only 15 percent to €251m. The Americas region is starting to pull level with EMEA, with sales up 35 percent, to €231m. Sales in the Asia/Pacific-Japan region rose by 36 percent, to €101m. Across all revenue types, SAP’s sales in Germany were up by 7 percent, to €331m, with the rest of Europe bring in €795m, up 15 percent. The United States raked in €620m for SAP, an increase of 32 percent, while the rest of the Americas region accounted for €222m, up 16 percent. Japan pulled in €124 (up 27 percent), while Asia/Pacific did €236m (up 28 percent).

SAP has had a couple of rough years, but says that it can grow revenues by 10 to 14 percent this year, and still wants to double revenues to €20 billion by 2025 or so.