SAP raises full-year forecast on strong Q3 sales
- 20 October, 2005 08:38
Strong third-quarter license revenue has prompted SAP AG to raise its full-year forecast, as the German business application vendor continued to grow its market share in the U.S.
SAP is now targeting between 12 percent and 14 percent growth in license revenue, up from its previous forecast of between 10 percent and 12 percent, the company said Thursday.
Part of that growth is linked to an adjusted currency exchange rate. SAP had previously based its revenue forecasts on a dollar-to-euro exchange rate of $1.30. It has now changed this rate to $1.25.
But the lion's share of that growth is coming from rising sales. Software license revenue in the third quarter increased 20 percent to Euro 590 million (US$711 million as of Sept. 30, the last day in the period reported) from Euro 491 million in the same period last year. Total revenue, including revenue from consulting, maintenance, training and other services, rose 13 percent to Euro 2.01 billion in the third quarter from Euro 1.78 billion.
License revenue is a key indicator of demand for a company's current product portfolio. Typically, rising license revenue means that maintenance and service revenue will also increase moving forward.
Software revenue in the U.S., home of SAP's arch-rival Oracle Corp., soared 34 percent to Euro 199 million from Euro 149 million a year earlier. SAP said it now has 44 percent market share in the U.S., compared with 36 percent at the end of the third quarter last year.
The Walldorf, Germany, software vendor, which makes software to help customers such as Home Depot Inc. and JPMorgan & Chase Co. with a number of business processes including payroll and accounting, is relying heavily on the U.S. for growth.
In Europe, the Middle East and Africa (EMEA), software revenue grew 6 percent to Euro 263 million in the third quarter from Euro 249 million the year before. And in Asia Pacific and Australia, software revenue rose 18 percent to Euro 81 million from Euro 69 million.
Net income for the third quarter was up 15 percent to Euro 334 million, or Euro 1.08 per share compared to Euro 0.94 per share the year before.