SAP Q1 revenue up, but profits growth slow

The company confirmed its earlier forecast for the full year

By , IDG News Service |  Business, ERP, SAP

SAP saw revenue rise by 21% in the quarter ended March 31, with double-digit growth in all regions driven by increased software business from partners and the channel.

Profit growth was however slow at 4% when calculated to international financial reporting standards (IFRS), after a 24% growth in operating expenses, the company reported on Thursday.

Revenue in the quarter was €3 billion ($4.2 billion at the exchange rate on the last day of the quarter), while net profit was €403 million [m]. Software and software-related service revenue was €2.3 billion, up by 20% from the same quarter last year. Software revenue of €583 million [m] was up 26%.

The company's non-IFRS net profit was however up 20%, but this figure does not include a deferred support revenue write-down from acquisitions, acquisition-related charges, discontinued activities, and stock-based compensation expenses, SAP said.

The company has confirmed its forecast for the full year that it had made in January. It expects full-year 2011 non-IFRS software and software-related service revenue to increase in a range of 10 to14% at constant currencies.

Customers are embracing the company's innovation and open ecosystem strategy, which is driving demand across its portfolio of business applications, analytics, and enterprise mobility solutions, SAP said.

SAP gained technology in the final category with its purchase of Sybase last year. That business "is growing substantially," with a strong backlog of sales leads, said co-CEO Bill McDermott in an interview.

The company will have some 40 mobile applications developed by the end of this year, said co-CEO Jim Hagemann Snabe during a conference call with analysts.

SAP's on-demand Business ByDesign ERP (enterprise resource planning) suite is selling ahead of expectations, according to McDermott. The company had hoped for 400 customers to be live on the system by its Sapphire event in May, but the goal has already been met, he said. The total will reach 1,000 by year's end, he added.

The company has also been developing a number of on-demand applications based on the underlying Business ByDesign platform, which are meant to be extensions to SAP's flagship Business Suite. On-demand products for expense management and talent management will be released in the second half of this year, Snabe said.

SAP executives also discussed the company's HANA (High-Performance Analytic Appliance) software, which incorporates in-memory processing. Charter clients around the world are running HANA now, and the company plans to demonstrate its "real business benefits" at Sapphire, Snabe said.

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