German business software maker SAP posted double-digit growth in first quarter sales and operating profit but missed analysts expectations. While total sales were slightly below analyst estimates, operating profit clearly missed average forecast, which had anticipated a 39 percent rise.
Operating profit in the first three months of the year grew 26 percent to 779 million euros and its key software and software-related service revenue rose 20 percent to 2.38 billion euros ($3.49 billion).
SAP, whose more than 109,000 customers include Apple, Audi, GE, McDonald's and Pepsi bills itself as the world's leading provider of software for managing supply chains and customer relations.
The company reiterated key non-IFRS software and software-related service (SSRS) revenue, which includes revenue from license sales and maintenance services, was expected to rise 10-14 percent this year at constant currencies.
It also reiterated full year operating profit is expected to be in a range of 4.45-4.65 billion euros and operating margin was expected to rise 0.5-1.0 percentage points. SAP bases its key outlook figures on non-international financial reporting standards, which exclude acquisition-related charges for example, because, SAP says, it allows investors a better comparison of year-on-year operating performance.
Analysts had expected SAP to do well after US technology bellwethers Oracle and IBM showed strong results signalling unimpaired global tech spending. "We continue to be optimistic about the development of demand for IT and the price situation," DZ Bank analyst Oliver Finger said ahead of the results. According to database StarMine, SAP trades at 16.9 times estimated 12-month forward earnings, a premium to its fiercest rival Oracle, which is valued at 14.7 times. Software maker Microsoft is also scheduled to publish earnings on Thursday.
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