) reported total revenue of €3.97 billion ($4.95 billion) in the
third quarter of 2012, up 16.4% year over year on constant
currency. Earnings per share for the quarter were €0.70 (65
cents), down 2.3% year over year on constant currency, and 6.7%
below the Zacks Consensus Estimate.
Operating profit, representing 31.2% of revenue, dropped 4%
year over year to €1.2 billion in the quarter.
Revenue by Segment
Software Revenue (25.8% of 3Q12 revenue):
This segment includes Software and Maintenance
revenue. The segment revenue in the quarter was €1.0
billion, up 12% year over year.
revenue (53.0% of 3Q12 revenue):
The segment reported revenue of €2.1 billion, up 10.0% year over
year (on constant currency basis).
Cloud subscriptions and support revenue
(2.0% of 3Q12 revenue):
Revenue in the specified segment stood at €80.0million
during the reported quarter. Strong revenue in the quarter
demonstrated continuous retention and adoption of enterprise
support within SAP's customer base and new customers,
respectively. Further, the acquisition of SuccessFactor and Ariba
helped drive top-line growth.
Software and software-related service revenue
(80.9% of 3Q12 revenue):
This sub-segment includes Support, Subscription, and other
software-related services revenue. Total revenue in the third
quarter was €3.2 billion, up 13% year over year on constant
Revenue by Region
During the third quarter of 2012, revenue from the EMEA grew
3.2% year over year to €1.7 billion. EMEA software revenue grew
22% and the emerging markets such as Middle East and Africa
The Americas surged 28.8% year over year during the reported
quarter, driven by a 37% growth in software. In addition, Latin
America also reported strong growth on the back of robust
performances in Brazil and Mexico.
APJ expanded 26.1%, driven by an 18% improvement in software,
attributable to growth in two of the largest economies in the
region, namely, Japan and China. Software in China grew 40% and
is the sixth largest market for SAP.
Reporting Segment Reclassification
Driven by SAP's increased focus on the cloud business, the
company now formed two new divisions: On Premise and Cloud. ON
Premise (reported a revenue growth of 14% in the third quarter to
€3.8 billion). This division has two sub segments ON Premise
Products (revenue of €3.2 billion) and ON Premise Services
(revenue of €736 million).
Cloud segment reported revenue of €101 million in the third
Cash and Balance Sheet
Year to date, operating cash flow was €3.1 billion, up 3.1%
year over year, primarily driven by better working capital
management. Cash and cash equivalents was down 20% year over year
while bank loan increased €900 million, primarily driven by the
Concurrent with the earnings release, management provided
guidance for the fourth quarter and full fiscal 2012.
The current guidance includes Ariba's expected revenue and
profit contribution from the acquisition (October 1, 2012) until
December 31, 2012.
Including Ariba, SAP now expects full-year 2012 non-IFRS
software and software-related service revenue to increase in a
range of 10.5% to 12.5% at constant currencies. This guidance
includes a combined contribution of approximately 2.5% from
SuccessFactors and Ariba.
Full-year 2012 non-IFRS operating profit is expected to be in
the range of €5.05 billion to €5.25 billion at constant
SAP primarily competes with giants such as
). Oracle missed the Zacks Consensus Estimate by 2 cents and
revenue also fell 2.3% during the first quarter of fiscal
Microsoft also missed the Zacks Consensus Estimate by 4 cents
during its latest reported quarter (first quarter 2013). SAP
currently has a Zacks Consensus Estimate of Zacks #2 Rank, which
implies a short-term Buy rating on the stock.
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