SAP AG has delivered on the first-quarter revenue growth it promised last week (CI No 3,389), reporting a 63% spurt year- over-year to DM 1.68bn ($911m). The top line growth led to pre- tax profit that surged 72% to DM 311m ($168.4m). SAP had previously projected a 62% growth in revenue led by demand for its flagship R/3 software, which saw 65% sales growth in the quarter, although a specific dollar value was not available. The strength of the US dollar and other key currencies relative to the deutsche mark accounted for 5% of revenue growth and 2% of pre-tax profit growth. New customers accounted for 59% of business for the quarter, driven by a growing penetration of the small to mid-size enterprise market, another positive sign. SAP warns, however, that the strong start to 1998 won’t necessarily be indicative of the rest of the year and therefore it’s maintaining its forecast of 30-35% revenue growth for the year, according to Henning Kagermann, Co-Chairman of SAP AG. Year 2000 and Euro conversion concerns have boosted sales of R/3, which was developed with the two problems in mind. Kagermann explains that although the year 2000 issue had a 10% positive effect on revenue during the quarter, that momentum will slow toward the second half of the year – although he won’t guess how much – as companies look for a quick-fix from elsewhere to compliance problems. He sees a return boost to revenue from the Y2K issue at the beginning of next year. Kagermann is more cautious about Euro conversion, though, and says that it had a less significant impact on the quarter’s sales and won’t necessarily do so this fiscal year. Product sales comprised the majority of first quarter revenues, rising 57% to DM 1.07bn and representing 63% of total sales – down from 66% in the year-ago quarter. Revenues from consulting and training grew 69% to DM 408m and 91% to DM 197m, respectively. In the Americas, sales grew by 68% to DM 749m. In Europe (excluding Germany), sales rose 75% to DM 385m, while sales in Germany increased 53% to DM 352m. Asia-Pacific sales climbed 67% to DM 179m. SAP says Asian sales have generally been unscathed by the ongoing financial crisis as the lion’s share of revenue comes from Japan, where its customers have prioritized the deployment of Y2K compliant software. Figures were converted at a rate of DM 1.8468 to the dollar.
