SAP Earnings Fail to Impress Investors

SAP HQ - Germany
SAP HQ - Germany

SAP A.G. (NYSE: SAP) reported preliminary fourth quarter and full-year 2012 results before markets opened this morning. The enterprise software company reported adjusted quarterly operating profit of €1.96 billion on total revenues of €5.06 billion. In the same period a year ago, SAP reported operating profit of €1.78 on revenue of €4.5 billion. Fourth-quarter results compare to the consensus estimates for operating profit of €2 billion and €5.12 billion in revenue.

For the full year, SAP reported operating profit of €5.21 billion on revenues of €16.3 billion. A year ago the company reported operating profit of €4.71 billion on revenue of €14.26 billion. The consensus estimate called for revenue of €16.34 billion.

The company's CEO said:

2012 was an outstanding year where we set many new records. We continued our double-digit growth momentum and exceeded our revenue guidance. We achieved a breakthrough in the cloud and today SAP is the second largest cloud player in the world. And we overachieved on our SAP HANA revenue ambition, making SAP the fastest growing next generation database company in the market.

Fine words, but they do not mask the fact that profits did not meet estimates and that revenues were a tad light. Operating profit fell 5% year-over-year, and operating margin fell 5.5%. The company attributed the lower profit to increased share-compensation expenses that rose due to new share-based compensation plans and "the strong performance of SAP's share price in 2012."

The company offered no guidance, but the consensus estimate for fiscal 2013 revenues is €18.3 billion. SAP is expected to provide guidance later this month.

Compared with competitor Oracle Corp. (NASDAQ: ORCL), SAP's performance was just okay. Shares fell 4.3% in Frankfurt after the company's announcement this morning.

Shares are inactive on the NYSE this morning, having closed at $81.88 last night in a 52-week range of $54.01 to $82.90. Thomson Reuters had a consensus analyst price target of around $55.10 before today's results were announced.

Filed under: 24/7 Wall St. Wire, Earnings, International Markets, Software, Technology Companies Tagged: featured, ORCL, SAP