SAP returns to growth as profits jump 97%

Profits at business applications vendor SAP rose by 97% to €387 million in its first financial quarter of the year, thanks to an increase in sales and the financial impact of its redundancy programme coming to end.

Revenues at the Walldorf-based company grew 5% to €2.51 billion, driven by an 11% uptick in software license sales to €464 million and an 11% rise in revenues derived from software services (i.e. maintenance) to €1.39 billion. This growth was offset by a 14% decline in the professional services business – which includes consulting and training – to €557 million.

It was SAP’s first quarter of growth after four consecutive periods of sliding revenue. The company saw a sharp fall in new license revenue as business put off significiant application investment in response to the recession.

In the same quarter of last year, SAP announced that it would shed 3,000 employees during fiscal 2009. The ensuing restructuring costs gravely affected the company’s profitabilty, but have now been paid off hence this quarter’s near doubling of net income.

"As growth is coming back on the agenda and business in IT interests are converging, SAP is uniquely positioned to help customers transform and grow," the company’s current co-CEO Bill McDermott told analysts in a conference call. "SAP is the only company in the business software industry that combines integrated business process expertise, transactional integrity, industry best practices, and a global delivery capability based on proven end-to-end solutions."

This latest quarter was the first with co-CEOs McDermott and Jim Hagemann Snabe. The two were installed as replacements for former CEO Leo Apotheker, whose contract was not renewed following SAP’s dismal showing in the final quarter of 2009.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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