SAP reports dip in Q2 revenue

German business software supplier SAP has reported a dip in second-quarter revenue, as enterprises continue to hold back on IT...

German business software supplier SAP has reported a dip in second-quarter revenue, as enterprises continue to hold back on IT investments.

Software licence revenue, viewed as a measure of new business, dropped 13% in the second quarter to €431m (£303m) from €496m in the same period last year. Software revenue was down 5% year on year.

Total revenue for the second quarter fell 8% to €1.6bn (£1.1bn) from €1.8bn the year before. At constant currency levels, however, total revenue increased 2% year on year.

Product revenue, including software and maintenance revenue, remained unchanged at €1.1bn (£774m) in the second quarter compared with the same period the previous year.

Maintenance revenue rose to €633m (£445m) from €595m  year on year, while consulting sales dipped to €479m (£337m) from €545m and training sales to €75m (£53m) from €115m.

Based on software revenue, SAP believed it had gained additional market share in the second quarter. On a rolling four-quarter basis, the company's worldwide share of the market for enterprise application software was 55% at the end of the second quarter, compared to 54% at the end of the first quarter of 2003 and 45% at the end of the first quarter of 2002.

For the six months ending 30 June, SAP reported an 8% drop in sales to €3.2bn (£2.3bn) from €3.4bn. On a constant currency basis, total revenue for the first six months of the 2003 finacial year increased 1% compared with the same six-month period last year.

Net income for the second quarter was €219m (£154m) compared with a loss of €232m a year earlier. Excluding stock-based compensation, acquisition and impairment-related charges, net income for the second quarter was €251m (£177m), compared with €155m for the same period the year before, a 62% increase.

Second-quarter operating income increased 6% to €340m (£239m) from €320m the year before. Operating margin, or operating profit as a percentage of sales, was up 3% in the second quarter to 21% year on year.

For the first six months, operating income increased to €638m (£449m) from €506m year on year. Excluding stock-based compensation and acquisition and impairment-related charges for the six month period, operating income rose 23% to €692m (£487m) from €562m for the same six-month period the year before.

At the end of June, SAP had 28,961 full-time employees, an increase of 307 full-time employees since 31 March 2003.

Although the business environment remains tough, the company performed better than most of its competitors and, more importantly, was able to achieve its goals of improving operating margins and gaining market share.

SAP raised its forecast for operating margin growth, excluding the effect of stock-based compensation and acquisition-related charges, projecting an increase of as much as 1.5% in 2003, compared with the year before.

John Blau writes for IDG News Service

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