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SAP’s strong second quarter boosts outlook for 2011

Warwick Ashford

SAP has improved its financial outlook for the year after reporting 35% growth in software sales and 20% growth in services revenue for the second quarter.

The German enterprise software firm said it expected 2011 operating profit to come in at the high end of the previously estimated range of €4.45bn to €4.65bn

SAP also expects full-year software and software-related service revenue to increase at the high end of the range of 10% to 14%.

Total revenue for the second quarter was up 20% on the same period a year ago at €3.3bn, support revenue was up 15% at €1.7bn, after-tax profit was up 25% and earnings per share increased 26%.

Since taking over last year, co-chief executive officers Bill McDermott and Jim Hagemann Snabe have sought to improve customer relations and increase innovation, particularly in cloud and mobile services.

McDermott said the firm's consistent results and ever-expanding ecosystem demonstrate that SAP is the better choice for customers of all sizes.

"Our innovations such as SAP HANA along with our mobility and business analytics solutions are fuelling our pipeline as customers want to grow their business and solve their most pressing industry-specific challenges," he said.

Snabe said businesses are shifting more of their investments toward software as it continues to become a larger and more important component of the overall technology stack.

"We focused our strategy on innovation at the right time and are now reshaping the industry with our mobility, in-memory and cloud solutions. Innovation is driving growth again at SAP," he said.

The strong second quarter results and bullish outlook for the year took SAP shares 3.6% higher to close at €43.49 on Tuesday.


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