SAP revenue plummets

"Slower than expected" growth in emerging markets hit software giant badly

SAP: despite signs of recovery, the software market remains difficult

Revenue at software giant SAP plummeted 31 per cent during its third fiscal quarter and the company is now forecasting lower income percentages by year-end.

The German firm posted software revenue of €525m (£477m) for the period compared with €763m (£691m) in the third quarter of 2008 and €543m (£491.8m) in the second quarter of 2009.

Previously, the company had predicted a decline of four to six per cent in service revenues by the end of the year, however the figure has now risen to six to eight per cent due to slower than expected growth in emerging markets.

SAP’s US GAAP operating income fell by one per cent compared with the same period a year go from €614m (£555m) to €606m (£508m), while non-GAAP operating income also slid eight per cent from €731m (£662m) to €674m (£611m) in the same quarter 2008.

The firm partly blamed the decline on operating income to the acquisition of Business Objects earlier this year.

By comparison, SAP’s biggest rival Oracle has announced a six per cent drop in sales for the third quarter, beating market expectations.

“While we are seeing signs of stabilisation 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,” said SAP’s chief financial officer, Werner Brandt.