SAP profit climbs 8% on new licence growth

SAP has reported an 8% jump in its second-quarter net income on, helped by a sharp increase in revenue from new software licences.

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SAP has reported an 8% jump in its second-quarter net income on, helped by a sharp increase in revenue from new software licences.

The company also disclosed that a manager at its TomorrowNow subsidiary has been suspended in connection with Oracle Corp.'s lawsuit accusing SAP of corporate theft.

Net income for the quarter was €449m (£303m), up from €415m (£280m) in the second quarter last year. That was equal to earnings of €0.37 (25 pence) per share, up from €0.34 (23 pence) per share a year earlier.

Revenue from new software licences climbed 18% to €715m (£482m), from €604m (£407m) last year. Total revenue, including maintenance fees, support and other services, climbed 10% to €2.4bn (£1.6bn), up from €2.2bn (£1.48bn) in the second quarter of 2006.

The results were better than some analysts had expected and showed that SAP is continuing to add new customers even while its main rival, Oracle, grows its applications business through acquisitions. For the comparable period, its financial quarter ending 31 May, Oracle increased revenue from new applications licences by 13%, to $641m (£313m).

In SAP's biggest market – Europe, the Middle East and Africa – total revenue was up by 12%, to €1.27bn (£860m). Growth in the Americas, dragged down by the strong euro against the US dollar, was just 6 %. SAP continues to grow fastest in Asia, where revenue climbed 20% to €304m (£205m).

In a conference call with press and analysts, CEO Henning Kagermann said the company had "an excellent quarter." SAP continues to invest heavily in new products for the midmarket. It is spending up to €400m (£269m) over two years to develop a new suite of on-demand applications, code-named A1S, that are intended to offset slower growth from large enterprises.

The company will provide more information about A1S, including its proper name and some reference customers that have been using it, in September, Kagermann said. The software is designed for what SAP says is an untapped market, for smaller companies that want a full suite of hosted ERP (enterprise resource planning) applications that can be set up and used easily.

Customers are adopting SAP's Netweaver infrastructure software at a fast pace, according to Kagermann. Revenue from Netweaver products grew 50% from a year earlier, and SAP now has 9,000 customers running production applications on the software. "It shows you it is being accepted by the market," he said.

The results come as SAP continues to battle Oracle in US court for alleged corporate theft. Oracle charged that SAP's TomorrowNow subsidiary hacked into Oracle's customer support web site and downloaded software fixes and support materials for Oracle's PeopleSoft and JD Edwards applications. SAP planned to use the materials to offer cut-rate services to Oracle customers, according to Oracle's lawsuit.

In its response last month, SAP admitted that TomorrowNow employees had made some "inappropriate" downloads of Oracle materials. But it played down the extent of the transgressions and said SAP itself did not have access to the materials. A case management conference is set for September.

On Thursday, Kagermann said the SAP Americas executive appointed to take charge of TomorrowNow, Mark White, has terminated or suspended some employees involved in the matter.

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