SAP Announces 2007 Preliminary Results

by Herbert Heitmann

Company Reports Record Software and Software Related Service Revenues Very Strong Performance from Established Business Double Digit Growth in all Regions

SAP AG  announced today that after a preliminary review of its 2007 fourth quarter results, it expects fourth quarter software and software related service revenues(1) to be approximately 2.48 billion euro (2006: 2.20 billion euro), representing an increase of around 13% (around 17% at constant currencies(2)) compared to the fourth quarter of 2006. Full-year 2007 software and software related service revenues(1) are expected to be approximately 7.44 billion euro (2006: 6.61 billion euro), representing an increase of around 13% (around 17% at constant currencies(2)) compared to the full-year 2006. The Company's full-year software and software related service revenue growth at constant currencies exceeded its previously published outlook.

SAP turned in another year of very strong share gains. Based on 2007 preliminary software and software related service revenues on a rolling four quarter basis, SAP's worldwide share of Core Enterprise Applications vendors(3), which account for approximately $36.7 billion in software and software related service revenues as defined by the Company based on industry analyst research, is expected to be around 28.5% for the four quarter period ended December 31, 2007 compared to 27.0% for the four quarter period ended September 30, 2007, and 24.5% for the four quarter period ended December 31, 2006, representing a year-over-year share gain of 4.0 percentage points.

The strong performance in the fourth quarter represents the 16th consecutive quarter of double digit growth in software and software related service revenues at constant currencies(2). It resulted from a well-balanced contribution from all regions and solid performances from SAP's traditional as well as its focus industries.

Fourth quarter 2007 software revenues(1) are expected to be approximately 1.41 billion euro (2006: 1.24 billion euro), representing an increase of around 14% (around 18% at constant currencies(2)) compared to the fourth quarter of 2006. Full-year 2007 software revenues(1) are expected to be approximately 3.40 billion euro (2006: 3.00 billion euro), representing an increase of around 13% (around 18% at constant currencies(2)) compared to the full-year 2006. This represents the strongest constant currency increase in software revenue since 2000.

Total revenues(1) for the fourth quarter of 2007 are expected to be approximately 3.25 billion euro (2006: 2.95 billion euro), which is an increase of around 10% (around 14% at constant currencies(2)) compared to the fourth quarter of 2006. Total revenues(1) for the full-year 2007 are expected to be approximately 10.26 billion euro (2006: 9.40 billion euro), which is an increase of around 9% (around 13% at constant currencies(2)) compared to the full-year 2006.

Despite negative currency effects of approximately 30 basis points, SAP expects its full-year 2007 operating margin to be around 26.5% (2006: 27.3%) which is in the middle of the previously published outlook range. The 2007 operating margin was mainly impacted by accelerated investments to build a business around the new SAP Business ByDesign solution to address new untapped segments in the midmarket as announced by the Company at the beginning of the year. Excluding these investments, SAP's operating margin for 2007 would have been approximately 120 basis points higher. This result demonstrates the underlying margin strength of SAP's established business.

SAP will provide further details of its 2007 preliminary results and outlook for the full-year 2008 on January 30th.

Regional Performance

In the Americas region, software and software related service revenues(1) for the fourth quarter of 2007 are expected to be approximately 0.78 billion euro, which represents an increase of around 7% (around 16% at constant currencies(2)). For the full-year of 2007, software and software related service revenues(1) in the Americas region are expected to be approximately 2.50 billion euro, which is an increase of around 9% (around 18% at constant currencies(2)).

In the EMEA region, software and software related service revenues(1) for the fourth quarter of 2007 are expected to be approximately 1.40 billion euro, which represents an increase of around 13% (around 14% at constant currencies(2)). For the full-year of 2007, software and software related service revenues(1) in the EMEA region are expected to be approximately 3.98 billion euro, which is an increase of around 13% (around 14% at constant currencies(2)).

In the Asia Pacific Japan region, software and software related service revenues(1) for the fourth quarter of 2007 are expected to be approximately 0.30 billion euro, which represents an increase of around 27% (around 32% at constant currencies(2)). For the full-year of 2007, software and software related service revenues(1) in the Asia Pacific Japan region are expected to be approximately 0.96 billion euro, which is an increase of around 19% (around 24% at constant currencies(2)).