SAP fared less well in EU than the Americas

SAP results were solid

Software giant SAP’s second-quarter results were solid and outperformed many analysts' expectations. However, there was some weakness in Europe by comparison with the Americas.

The company saw a total revenue increase of 12 per cent to €2.89bn (£2.42bn) on the same period last year. Operating profit was €774m, an increase of 21 per cent year on year and profit after tax was €491m (compared with €426m in 2009), an increase of 16 per cent.

Growth in Europe was less strong than it was in the Americas, at just three per cent compared with 21 per cent for the US and 29 per cent for the rest of the Americas.

It is possible that this was the result of the sovereignty debt crisis. It is also possible, according to research director Tomas Otter at Gartner, that the issues faced by SAP last year around maintenance charges affected uptake of products in the EU more than the US. “Politically this was a bigger issue in Europe, and the lower growth may be a hangover from that,” he said. He added that companies in the EU were carrying more legacy SAP technologies which may have prevented their taking up new products.

Otter argues that results over the next two quarters will be more interesting. The company will begin to integrate mobile operator Sybase, which Otter argues is far more complicated than the company’s integration of business analytics firm Business Objects. “There are more moving parts, and it is not just a mobile company. There is a big database element to Sybase, and it will be interesting to see what SAP does with that,” he said.

In addition, the company will launch Business By Design, its SME software-as-a-service (SaaS) solution on 31 July; a product which has seen a long period of development.

“SAP needs to prove that it can deliver this product, that it will be taken up and that it has the right channels in place to be able to deliver it. SAP has said that despite it being a SaaS offering it won’t hit margins, but this will not be proven until there are customers and an understanding of the costs of delivery,” added Otter.

Commenting on the results, Bill McDermott, co-CEO of SAP, said: “Customers continue to invest for growth across large, mid-sized and small enterprises and within many industries. We had outstanding growth in strategic markets such as the US and we saw continued double-digit growth in key emerging markets in Latin America and Asia. This solid performance is due to renewed customer confidence, an ever-expanding ecosystem and a focused execution on our go-to-market strategy.”