Strong Euro Slows SAP's Revenue Growth

German software maker SAP AG said a stronger Euro significantly slowed the growth of its revenue and profits during the third quarter.

SAP reported third-quarter revenue of €2.4 billion (US$3.4 billion as of Sept. 30, the last day of the period being reported), up 9 percent over the same period last year. The company's net profit during the third quarter totalled €408 million, up 10 percent over last year.

SAP said its results could have been stronger, but were held back by the stronger Euro. Over the last year, the Euro has risen 13 percent against the U.S. dollar, going from an exchange rate of $1.27 on Sept. 30, 2006, to hit $1.43 on Sept. 30, 2007.

The Euro also rose substantially against the Japanese yen, rising from an exchange rate of €150 to €164 during the same period.

Excluding the impact of the stronger Euro, SAP said its revenue growth would have been four percentage points higher using constant currencies, while the increase in operating profit -- a number that excludes non-operating income and taxes used to calculate net profit -- would have been five percentage points higher, reaching 14 percent instead of 9 percent.

Despite the hit from currency exchange rates, SAP executives were bullish on the third-quarter results and said the company remains on track to post revenue growth of up to 14 percent, in constant currencies, for the full year, compared to growth of 12 percent last year.

Revenue from new software licenses in the quarter was €715 million, up 11 percent from the same quarter a year earlier, or an increase of 15 percent at constant currencies, SAP said.

Revenue from software and software related services, which includes maintenance revenue, was €1.74 billion, up 13 percent from the year before, or 16 percent at constant currencies.

To comment on this article and other PCWorld content, visit our Facebook page or our Twitter feed.
Related:
Shop Tech Products at Amazon