SAP's first quarter 2012 software revenues increased a modest 4% (1% in constant currencies) to 637 million Euros ($831 million), less than half the 9% (7% in constant currencies) increase Nomura expected. Software and software-related service revenues were in line with analyst expectations, increasing 12% (10% in constant currencies) to 2.63 billion Euros ($3.43 billion). SAP did not project earnings per share along with the preliminary results, but Nomura expects profits to be slightly below expectations.
"Sales execution issues" diminished the performance in North America, according to a statement issued by SAP. "These issues have been resolved and the necessary steps have been taken to ensure that North America is back on track," the statement noted.
That's an apparent reference to the surprise resignation on April 5 of Robert Courteau, president of the company's North America region, who had served in that position for little more than a year. Courteau was replaced on an interim basis by his predecessor, Robert Enslin, who was promoted in 2011 to president of global sales.
[ Want more on SAP's 2012 plan? Read SAP Takes On Oracle Database, Salesforce Cloud. ]
SAP's lackluster first-quarter performance was not the signal of strength that the company wanted to see as it headed into next month's annual Sapphire Conference in Orlando, Fla. That may be why the company took the unusual step of offering quarterly guidance, forecasting 15% to 20% growth in software revenue (in constant currencies) for the second quarter.
"SAP wanted to allay fears that the March quarter miss will not carry over into future quarters," wrote equity analyst Rick Sherlund in Nomura's research note on SAP's results.
SAP accentuated positives including a record first quarter in Asia Pacific/Japan and double-digit growth in markets including Latin America and Germany. It also reiterated its guidance for a 10% to 12% full-year 2012 gain in software and software-related service revenues (in constant currencies). That projection includes a contribution of up to 2 percentage points from the recently acquired SuccessFactors business.
SAP is not alone in missing quarterly revenue targets in what is still an uneven economic recovery. Oracle late last year reported second quarter 2012 fiscal results that included a meager 2% increase in software sales where analysts were expecting a 7% gain. The performance led many enterprise software company analysts to tamp down sales expectations for 2012, but Oracle and other big software firms have subsequently reported healthy gains.
Oracle reported late last month that new software license revenues were up 7% in its third quarter ended February 29. That performance was in line with expectations.