SAP Announces 2000 First Quarter Results -- mySAP.com Momentum Continues in a Challenging Quarter.
Business Editors
WALLDORF, Germany--(BUSINESS WIRE)--April 19, 2000--SAP AG
(NYSE: SAP), the leading provider of inter-enterprise software
solutions, today announced its results for the quarter ended
March 31, 2000. In the first quarter of 2000, total revenue rose 10%
over the first quarter of 1999 to E1.18 billion (1999 Q1: E1.08
billion). Pre-tax profit in the quarter before charges for the
employee stock appreciation rights program (STAR) was up 114% to E334
million (1999 Q1: E156 million); pre-tax profit including STAR
decreased 45% to E95 million (1999 Q1: E172 million). Financial and
other non-operating income was E206 million (1999 Q1: E -2 million).
Net income for the quarter was down 43% to E56 million (1999 Q1: E98
million).
"SAP was prepared for a challenging first quarter -- and we got
it. While we are satisfied with the numbers, we are committed to
moving even faster and executing even more effectively," remarked
Henning Kagermann, Co-Chairman and CEO of SAP AG. "Competition for
web-based products, particularly in the US, has been fierce and we
will continue to invest considerable resources to strengthen the
mySAP.com momentum. Looking forward, our overall pipeline is healthy
and we expect a stronger software sales activity in the second and
third quarters."
Continued Strength in Europe
In the first quarter, revenues in the Europe, the Middle East and
Africa (EMEA) region increased 15% to E608 million (1999 Q1: E529
million). The Americas region decreased 3% to E436 million (1999 Q1:
E448 million) and in the Asia-Pacific region (APA), revenues were up
40% to E139 million (1999 Q1: E99 million).
Product revenues in the quarter rose 21% to E742 million (1999
Q1: E615 million) including a 4% increase in software license revenue
to E369 million (1999 Q1: E355 million); mySAP.com contributed E80
million or 22% of license sales (1999 4Q: 16%). Of the total license
sales New Dimensions products comprised E68 million or 18% of license
revenues (1999 Q4: 11%). Consulting revenues decreased 3% to E332
million (1999 Q1: E343 million) while training revenues slipped 14% to
E95 million (1999 Q1: E110 million).
Building on the mySAP.com Foundation
Alongside many new developments on the product side (see `First
Quarter Highlights' below), SAP made several strategic moves in the
first quarter to accommodate the rapidly growing market for its
Internet offerings. In particular, SAP announced the formation of two
new subsidiaries to address the growing markets of business-to
business marketplaces and application hosting; the company launched a
global marketing campaign.
The new marketplace company, SAPMarkets, will consolidate all of
the mySAP.com Marketplace efforts to provide customers with the
technology and cross company integration expertise they need to
rapidly bring marketplaces to fruition. The aim of SAPHosting, the new
applications service provider (ASP) company is to offer ASP services
from SAP and to provide support and quality benchmarks to the
expanding network of mySAP.com ASP and hosting partners. SAPHosting
will initially focus ist efforts in Europe.
"SAP is building the Internet structure for business-to-business
collaboration which is the most complete solution available. In the
first quarter, we had almost 100 mySAP.com deals, which shows SAP's
focus on improving our customers' business performance," commented
Hasso Plattner, Co-Chairman and CEO of SAP AG and interim CEO of
SAPMarkets. "By forming separate businesses to address our growing and
changing markets, we have afforded ourselves the resources and
flexibility we need to maintain our market leadership."
In March 2000, SAP launched a multi-million Euro print,
television and web-based mySAP.com marketing campaign to demonstrate
the unique advantages and ease of use which mySAP.com delivers to an
increasing number of non-R/3 users. The message "you can. it does."
has been well-received by the rapidly-expanding mySAP.com ecosystem.
First Quarter 2000 Highlights
Continuous success of mySAP.com:
The momentum of mySAP.com continued in the first quarter.
New mySAP.com customers in the quarter include: in the US, eBay, State
of Arkansas; in Europe, Buderus, Eurotunnel, Hubwoo.com; in Asia/
Pacific, Kawasaki Heavy Industry and Sanyo Electric.
mySAP.com comprises the following four elements:
-- mySAP.com Workplace: is a role-based enterprise portal that
provides single, unified Web-based access for users' needs in
their business role. It empowers users to perform effectively
in dynamic, fast-paced, market-driven work environments by
putting the exact application, information and services at
their fingertips through an interface that is easy to learn,
tailor and use.
-- mySAP.com Business Applications: come in the e-commerce, Customer
Relationship Management, Supply Chain Management, Business
Intelligence, and Enterprise Resource Planning applications area.
mySAP.com Business Applications are fully integrated between
enterprises and between providers and end consumers.
-- mySAP.com Marketplaces: are business hubs on the Internet
that provide an infrastructure for collaborative business.
More than 5,600 companies have registered with the mySAP.com
Marketplace. Together with Deutsche Bank SAP will jointly
provide financial and trading services to facilitate
collaborative electronic business based on the technology
infrastructure of mySAP.com Marketplaces. Deutsche Bank and
SAP also plan to jointly create and operate industry-specific
marketplaces based on mySAP.com Marketplace technology. SAP
and a group of leading global chemical companies announced
that they will form an independent joint venture with the
goal of creating the leading electronic marketplace for the
chemical and pharmaceutical industries using mySAP.com
e-business and marketplace technology. Danone and Nestle S.
A., world leaders in the food industry, announced the
creation of Europe's first Internet marketplace for
e-procurement in the consumer goods sector. This marketplace
is scheduled to go live in July this year and will be based
on the mySAP.com e-business platform.
-- Application Hosting with mySAP.com: provides access to
mySAP.com applications and solutions via networks. Companies
of all industries and of various sizes are embracing the SAP
hosting business model to take advantage of the lower cost of
ownership and rapid deployment of Internet business
solutions.
you can. it does.
SAP launched a major global advertising campaign during the first
quarter. The campaign, which includes a strong mix of TV, print and
on-line media, is part of SAP's communication programme developed to
build mySAP.com into a powerful brand. The new tag line - "you can. it
does." - is designed to encapsulate the real empowerment provided to
both businesses and individuals through the use of mySAP.com and the
Internet. The campaign will run throughout 2000.
SAPMarkets
SAP announced in March the formation of a new subsidiary -
SAPMarkets - dedicated to creating and powering globally
interconnected Business-to-Business marketplaces on the Internet.
Following the successful introduction of mySAP.com last year, this
move underlines a new quality in developing, marketing and operating
Internet-based marketplaces and providing collaborative business
solutions. The new company will operate globally with headquarters in
Palo Alto, California and is expected to open for business in May
2000.
CeBIT
mySAP.com was the central theme for SAP at this year's CeBIT in
Hannover, the world's largest information technology trade fair. At
CeBIT, SAP announced the creation of a new company, SAPHosting, which
will be dedicated to the rapidly growing Internet application service
provider (ASP) and application hosting business.
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First Quarter Key Figures
----------------------------------------------------------------------
Q1 2000 Q1 1999 % Change
----------------------------------------------------------------------
Revenues (E mill.) 1,183 1,076 10
Income before taxes
(E mill.) 95 172 - 45
Net profit (E mill.) 56 98 - 43
Headcount as of
Mar. 31 22,298 20,406 9
- in Germany
(operational) 3,497 3,050 15
----------------------------------------------------------------------
-0-
Any statements contained in this document that are not historical
facts are forward-looking statements as defined in the U.S. Private
Securities Litigation Reform Act of 1995. Words such as "believe,"
"estimate," "intend," "may," "will," "expect," and "project" and
similar expressions as they relate to the Company are intended to
identify such forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements. All forward-looking statements are subject to various
risks and uncertainties that could cause actual results to differ
materially from expectations. The factors that could affect the
Company's future financial results are discussed more fully in the
Company's filings with the U.S. Securities and Exchange Commission
(the "SEC"), including the Company's Annual Report on Form 20-F for
1999 filed with the SEC on April 7, 2000. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of their dates
SAP AG preference and common shares are listed on the Frankfurt
Stock Exchange as well as a number of other exchanges. In the US,
SAP's American Depositary Receipts (ADRs), each worth one-twelfth of a
preference share, trade on the New York Stock Exchange under the
symbol `SAP'. SAP is a component of the DAX, the index of 30 German
blue chip companies.
Information on the SAP AG preference shares is available on
Bloomberg under the symbol SAP3 GR, on Reuters under SAPG_p.F or DE
and on Quotron under SAGVD.EU. Information on the SAP common shares is
available on Bloomberg under the symbol SAP GR, on Reuters under
SAPG.F and on Quotron under SAGR.EU. Additional information is
available on SAP AG's home page: http://www.sap.com
EDITOR'S NOTE - E = EURO DOLLAR
-0-
SAP GROUP
PRELIMINARY INCOME STATEMENT - First Quarter
(in E millions)
----------------------------------------------------------------------
2000 1999 D
----------------------------------------------------------------------
Software revenue 369 355 4%
Maintenance revenue 373 260 43%
Product revenue 742 615 21%
Consulting revenue 332 343 -3%
Training revenue 95 110 -14%
Service revenue 427 453 -6%
Other revenue 14 8 75%
----------------------------------------------------------------------
Total revenue 1,183 1,076 10%
----------------------------------------------------------------------
Cost of product -126 -97 30%
Cost of service -366 -394 -7%
Research and development -194 -140 39%
Sales and marketing -288 -228 26%
General and administration -74 -47 57%
Other income/expenses, net -7 -12 -42%
----------------------------------------------------------------------
Total operating expense
excl. STAR -1,055 -918 15%
----------------------------------------------------------------------
STAR expense -239 16 -1594%
----------------------------------------------------------------------
Total operating expense
incl. STAR -1,294 -902 43%
----------------------------------------------------------------------
Operating income -111 174 -164%
----------------------------------------------------------------------
Other non-operating
income/expenses, net -32 -6 433%
Financial income, net 238 4 5850%
----------------------------------------------------------------------
Income before income taxes 95 172 -45%
----------------------------------------------------------------------
Income taxes -38 -74 -49%
Minority interest -1 0
----------------------------------------------------------------------
Net income 56 98 -43%
----------------------------------------------------------------------
Basic earnings per share
(in E)
----------------------------------------------------------------------
Ordinary shares 0.53 0.92 -42%
Preference shares 0.56 0.95 -41%
----------------------------------------------------------------------
DSO (in days) 106 108
----------------------------------------------------------------------
Figures are reported according to US-GAAP.
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SAP GROUP
PRELIMINARY CONSOLIDATED BALANCE SHEET - FIRST QUARTER
(in E millions)
ASSETS
----------------------------------------------------------------------
03/31/2000 12/31/1999
----------------------------------------------------------------------
Intangible Assets 122 120
----------------------------------------------------------------------
Property, plant and equipment 807 794
----------------------------------------------------------------------
Financial Assets 455 610
----------------------------------------------------------------------
FIXED 1,384 1,524
ASSETS
----------------------------------------------------------------------
Inventories/Accounts 1,919 2,157
receivables
----------------------------------------------------------------------
Liquid Assets 1,566 810
----------------------------------------------------------------------
CURRENT ASSETS 3,485 2,967
----------------------------------------------------------------------
DEFERRED TAXES 392 284
----------------------------------------------------------------------
PREPAID 88 52
EXPENSES
----------------------------------------------------------------------
TOTAL 5,349 4,827
ASSETS
----------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
----------------------------------------------------------------------
SHAREHOLDERS' 2,525 2,559
EQUITY
----------------------------------------------------------------------
MINORITY 9 9
INTEREST
----------------------------------------------------------------------
RESERVES AND ACCRUED 1,326 1,278
LIABILITIES
-----------------------------------------------------------------------
OTHER LIABILITIES 621 671
----------------------------------------------------------------------
DEFERRED 868 310
INCOME
----------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES 5,349 4,827
----------------------------------------------------------------------
Figures are reported according to US-GAAP.
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--30--eb/ny*
CONTACT: Gundolf Moritz
SAP AG
+49-6227-7-44872
-or-
David Lowy
Taylor Rafferty, New York
+1-212-889-4350
Belinda Bishop
Taylor Rafferty, London
+44-20-7936-0400
KEYWORD: INTERNATIONAL EUROPE
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS HARDWARE SOFTWARE
EARNINGS
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