SAP software revenues
jump 10pc

26 Jan 2005

Software revenues at German enterprise applications giant SAP grew from €2.1bn to €2.4bn (10pc) in 2004, the company has reported in its fourth quarter and year-end results released this morning.

The German firm said that the growth had been achieved despite adverse currency fluctuations; at constant currencies, software revenues increased 13pc year on year. The company also predicted that low double-digit revenue growth would again be achieved in 2005.

Total revenues for the full-year 2004 were €7.5 bn, an increase of 7pc compared to 2003 (€7.0 bn).

Operating income was sharply ahead, rising from €1.7bn in 2003 to €2bn in 2004, a 17pc jump. Profit margins were widened to 27pc, up 2pc on the previous year. Net income for 2004 was €1.3bn (2003: €1.1bn), or €4.22 per share, an increase of 22pc compared to 2003.

Fourth-quarter software revenues increased 8pc to €1.0 b (2003: €931 m). This percentage growth rate was matched by total revenues, which
rose from €2.2bn to €2.4 bn.

Operating income for the 2004 fourth quarter was €833m (2003: €673m), up 24pc compared to the same period last year, while operating margin was up 3.4pc to 34.7pc. Net income was €542m or €1.74 per share, a 29pc gain compared to the fourth quarter of 2003.

The company also claimed to have increased its lead in both the US and the global markets for enterprise resource planning products — the powerful applications that organisations use to run key internal processes. The firm claimed a market share of 57pc globally and 38pc in the US at the end of the fourth quarter 2004 against key competitors Microsoft, Oracle, PeopleSoft (now part of Oracle) and Siebel Systems. This compares with 53pc and 32pc, respectively, two years earlier.

“2004 was another outstanding year for SAP,” concluded Henning Kagermann, CEO of SAP. “As promised we delivered a year of double-digit growth in software revenues, far exceeding our peer group, and we continued to improve our profitability as demonstrated by additional operating margin gains.”

Kagermann added that he felt the IT industry had finally reached a turning point, where “IT is understood and used as a competitive tool rather than simply a driver of cost efficiency”.

By Brian Skelly