SAP software revenues drop 31%

SAP, the software giant, has reportedits software revenues have seen a dramatic 31% decline on the same period last year.

The company announced they made €525m (£477m), in software revenues in the third quarter of 2009 compared with $763m in Q3 2008 and €543m Q2 2009.

The German company slashed its revenue outlook for 2009 after missing third quarter expectations. The company blamed the drop in predicted revenues on slower than expected growth in emerging markets such as Japan.

SAP had previously forecast a 4%-6% decline in service revenues by the end of the year with that figure now rising to 6% - 8%.

Total revenues for the company dropped by 9% compared to the same period last year. Q3 2008 had total revenues of €2,147m compared with €2,508m this quarter.

The company said its US GAAP operating income fell by 1% compared to Q3 2008 from €614m to €606 and its non-GAAP operating income fell from €731m in 2008 to €674m on the same period this year, a decrease of 8%.

The company has said its decline operating income can in part be attributed to the acquisition of Business Objects earlier this year.

A statement by the company said: "Revenue line items are adjusted for the Business Objects support revenue that Business Objects would have recognised had it remained a standalone entity but that SAP is not permitted to recognize as revenue under U.S. GAAP as a result of business combination accounting rules."

Werner Brandt, CFO of SAP said: “While we are seeing signs of stabilization in the general environment, the market remains difficult. Third quarter software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan.”

US GAAP operating margins grew 2% from 22% in 2008. Income from continuing operations grew from €410m to €436m.

Other announcements in the results include the recent partnership, in September that SAP is now working with Microsoft and Accenture to develop a global carbon reporting, system for the Carbon Disclosure Project, the global reporting initiative for large enterprises.

The company also signed a €1.5bn three year revolving credit facility refinancing its previous €1bn facility.

Last month Oracle, the biggest competitor to SAP, announced a 6% drop in sales for the third quarter, higher than analysts' estimates.

Further reading:

SAP Q2 results show plunge in software revenues