SAP took the markets by surprise this morning when it announced its third quarter results. The markets had been expecting better off the back of results from Microsoft and Apple which pleased.
U.S. GAAP software revenues on their own were €525 million (2008: €763 million), a decrease of 31% (30% at constant currencies) dragged down total revenues from software and software related service. U.S. GAAP total revenues were €2.51 billion (2008: €2.76 billion), a decrease of 9%. Non-GAAP total revenues were €2.51 billion (2008: €2.80 billion), a decrease of 10% (10% at constant currencies).
But the company has aggressively shaved costs to preserve its margins. Operating expenses were down 11%. But the largest software company in the world still sees difficult trading ahead, especially in Japan and emerging economies.
“We are pleased to report another quarter of increasing margins despite a decline in revenues. This demonstrates our continued success in maintaining tight cost controls,” said Werner Brandt, CFO of SAP. “While we are seeing signs of stabilization in the general environment, the market remains difficult. Third quarter software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan.”
“Despite the continued tough spending environment, we are pleased to see further progress in the evolution of our volume business as a result of smaller deals,” said Léo Apotheker, CEO of SAP. “In addition, we are driving more multi-year agreements, where customers buy and consume software over many periods, which we believe is a positive transition for both SAP and our customers. We have the benefit of many years of experience in facilitating the purchase of our software in this manner, including the success we had in signing multi-year, Global Enterprise Agreements with our largest customers. We have now started to leverage this approach with a bigger group of customers. And, most importantly, our solutions are built on a highly flexible and modular architecture allowing us to easily adopt this model.”
