SAP said that quarterly license revenue likely grew by 8% to Euro 621M. Consensus estimates were for license revenue growth of 17% to Euro 675M. Overall, revenue likely increased by 9% to Euro 2.2B, according to SAP management. The consensus estimate for 2Q06 revenue is Euro 2.29B, according to Thomson Financial. Pro forma net income should jump by 38% to Euro 432M (Euro 1.41 per share).
But SAP held firm on its 2006 outlook. The company stated that it continues to expect 15% to 17% license revenue growth this year. It also reiterated its previous earnings forecast.
Here’s a rundown of the news and what it means:
- Likely cause behind this shortfall?—SAP’s 2Q06 software sales likely rose by 16% to Euro 201M in the United States, while its core EMEA market likely stepped up by just 3% to Euro 296M. Management didn’t explain what was behind the now-flat license revenue expectation in the usually robust Asia-Pacific region.
- Outlook on the pipeline—“Our order entry is strong, and we continue to see a robust pipeline,” said CEO Henning Kagermann. In our view, SAP has a very strong pipeline of potential business, and nothing has occurred to diminish its competitiveness—it is simply feeling the effects of market nervousness.
While demand for enterprise applications remains very strong and SAP continues to execute well, we are once again seeing buyers extending the close cycles because of concerns about the economy and geopolitical instability. We have not seen evidence of budgets being reduced or projects being cancelled, but there is an additional level of caution that has caused deals to slip out and sales cycles to slow down.
No comments:
Post a Comment