German business application software developer SAP AG is proving to be the silver lining to the gloomy earnings cloud hanging over the enterprise software market at the moment.
The Walldorf-based company says it expects second quarter revenue to grow 9%, exceeding analyst estimates posted earlier this year.
SAP expects to report revenue of $2.2bn (1.78bn Euros). Analysts had forecast $2.16bn. Software revenue, a significant indicator of financial health for the company, is set to grow 15% to $613m, again topping consensus analyst forecasts. SAP’s operating income for the quarter is estimated at between $471m and $483m.
Excluding charges related to stock compensation and acquisition, earnings for the quarter are estimated at between $521m and $533m, against analyst estimates of $528m
The results come as a surprise to tech investors weary of a string of profit warnings issued by software firms over the past few weeks.
This concern has prompted SAP to issue its own preliminary results announcement.
Given the series of pre-announcements in the industry during the past week, SAP decided to release this preliminary information, a SAP company statement read.
While SAP’s results are by no means spectacular, they do go against the general market sector grain. Last week Veritas Software Corp, PeopleSoft Inc, Siebel Systems Inc, FileNet Corp, and BMC Software Inc all issued preliminary statements warnings of shortfalls in the second quarter.
Encouraged by the news, SAP shares climbed 5% to $39.98 following the announcement last Friday.
However, one Wall Street analyst noted that SAP’s software business is heavily weighted toward the fourth quarter and that its first half results are by no means indicative of a trend and less crucial to its overall fiscal year.
SAP will announce its full second quarter results on July 22.