SAP Reports 18% Software Revenue Growth For 2005

Company Gained Seven Percentage Points of Worldwide Share and Ten Percentage Points of U.S. Share Against Its Peer Group for 2005

WALLDORF, Germany, Jan. 25 /PRNewswire-FirstCall/ -- SAP AG (NYSE: SAP) today announced its preliminary financial results for the fourth quarter and full-year ended December 31, 2005. Highlights of the results are as follows.

    HIGHLIGHTS - Full-Year 2005

    Revenues
    - Software revenues were euro 2.78 billion for 2005
      (2004: euro 2.36 billion), representing an increase of 18% compared to
      the same period in 2004.  This exceeded the Company's 2005 software
      revenue guidance of an increase in a range of 12% - 14%.  At constant
      currencies(1), software revenues increased 15%.
    - Total revenues for 2005 were euro 8.51 billion
      (2004: euro 7.51 billion), which was an increase of 13% compared to
      2004.  At constant currencies(1), total revenues increased 12%.
    - Software revenues in the U.S. increased 31% to euro 820 million for
      2005 (2004: euro 625 million).  At constant currencies(1), software
      revenues in the U.S. increased 28%.
    - Software revenues in the EMEA region grew 8% to euro 1.39 billion for
      2005 (2004: euro 1.29 billion).  At constant currencies(1), software
      revenues in the EMEA region increased 7% compared to 2004.  Software
      revenues in Germany were flat year-over-year.
    - Software revenues in the APA region increased 25% to euro 363 million
      (2004: euro 289 million) for 2005.  At constant currencies(1), software
      revenues in the APA region increased 22%. Software revenues in Japan
      increased 6% for 2005 to euro 122 million.  At constant currencies(1),
      software revenues in Japan were 8% higher.

    Peer Group Share
    - The continued strong growth in software revenues for 2005 enabled the
      Company to gain significant share against its peer group(2)(3) worldwide
      and in the U.S.  On a rolling four quarter basis, the Company's
      worldwide share against its peer group(2) based on software revenues was
      62% at the end of 2005.  This represents a gain of two percentage points
      compared to the third quarter of 2005 and seven percentage points
      compared to the fourth quarter of 2004.  In the U.S., on a rolling four
      quarter basis, the Company's share against its peer group(3) based on
      software revenues was 47% at the end of 2005.  This represents a gain of
      three percentage points compared to the third quarter of 2005 and ten
      percentage points compared to the fourth quarter of 2004.

    Income
    - Operating income for 2005 was euro 2.33 billion
      (2004: euro 2.02 billion), which was an increase of 16% compared to
      2004.  Pro forma operating income(4) was euro 2.41 billion (2004: euro
      2.09 billion) for 2005, representing an increase of 16% compared to
      2004.
    - The operating margin for 2005 was 27.4%, which was an increase of 0.50
      percentage points compared to 2004.  The pro forma operating margin(4)
      for 2005 was 28.3%, which was an increase of 0.50 percentage points
      compared to 2004.  This was the high end of the range of the Company's
      2005 pro forma operating margin guidance of an increase in a range of
      0.00 - 0.50 percentage points.
    - Net income for 2005 was euro 1.50 billion (2004: euro 1.31 billion), or
      euro 4.83 per share (2004: euro 4.22 per share), representing an
      increase of 14% compared to 2004.  2005 pro forma net income(4) was euro
      1.55 billion (2004: euro 1.36 billion), or pro forma euro 5.01 earnings
      per share(4) (2004: euro 4.37 per share), representing an increase of
      14% compared to 2004.  This exceeded the Company's 2005 pro forma
      earnings per share guidance of euro 4.85 - euro 4.95 per share.

    Cash Flow
    - Operating cash flow for the full year of 2005 was euro 1.51 billion
      (2004: euro 1.83 billion).  Free cash flow(4)(6) for the full year of
      2005 was euro 1.25 billion (2004: euro 1.64 billion), which was 15% as a
      percentage of total revenues in 2005 (2004: 22%).  At December 31, 2005,
      the Company had euro 3.4 billion in liquid assets (December 31, 2004:
      euro 3.2 billion).

    Share Buy-Back Program
    - In 2005, the Company bought back 3.21 million shares at an average price
      of euro 129.77 (total amount: euro 417 million).  This compares to
      1.14 million shares bought back in 2004.  At December 31, 2005, treasury
      stock stood at 6.68 million shares.  SAP's current share buy-back
      program allows the Company to purchase up to 30 million shares.  Given
      the Company's strong free cash flow(4)(6) generation, SAP plans to
      further evaluate opportunities to buy back shares in the future in order
      to increase the buy-back activities in 2006.

"2005 was an excellent year for SAP," said Henning Kagermann, CEO of SAP. "We accelerated peer group share gains as well as the adoption of our Enterprise Services Architecture; we delivered the first services enabled business software suite in the industry. Most notably, we continued to demonstrate that organic growth is a very effective way to achieve success in this industry, and that it benefits our customers, partners and shareholders."

Mr. Kagermann continued, "We expect 2006 to be a cornerstone year for SAP characterized by a series of new product launches; our product pipeline for 2006 is one of the strongest in our history. New product launches will support our Enterprise Services Architecture Roadmap, place a greater emphasis on attracting the business user and are focused more than ever on the midmarket. These products will be the foundation from which we expand from our current $30 billion addressable market to a $70 billion addressable market by 2010."

    HIGHLIGHTS - Fourth Quarter 2005

    Revenues
    - Software revenues increased 18% to euro 1.18 billion
      (2004: euro 1.00 billion) for the fourth quarter of 2005.  At constant
      currencies(1), software revenues increased 12%.
    - Fourth quarter 2005 total revenues were euro 2.75 billion
      (2004: euro 2.40 billion), which was an increase of 15% compared to the
      fourth quarter for 2004.  At constant currencies(1), total revenues
      increased 9%.

    Income
    - Operating income for the fourth quarter of 2005 euro 980 million (2004:
      euro 833 million), which was an increase of 18% compared to the same
      period last year.  Pro forma operating income(4) for the 2005 fourth
      quarter was euro 1.01 billion (2004: euro 851 million), representing an
      increase of 19% compared to fourth quarter of 2005.
    - The operating margin for the 2005 fourth quarter was 35.6%, which was up
      by 0.90 percentage  points  compared  to  the  same  period  in  2004.    The  pro
            forma  operating  margin(4)  was  36.8%  for  the  fourth  quarter  of  2005,
            which  was  an  increase  of  1.40  percentage  points  compared  to  the  same
            period  in  2004.
        -  Net  income  for  the  fourth  quarter  of  2005  was  euro  619  million  (2004:
            euro  542  million),  or  euro  2.00  per  share  (2004:  euro  1.74  per  share),
            representing  an  increase  of  14%  compared  to  the  fourth  quarter  of  2004.
            Pro  forma  net  income(4)  for  the  2005  fourth  quarter  was  euro  642  million
            (2004:  euro  554  million),  or  pro  forma  euro  2.07  per  share(4)  (2004:
            euro  1.78  per  share),  representing  an  increase  of  16%  compared  to  the
            same  period  in  2004.

        BUSINESS  OUTLOOK

        The  Company  gave  the  following  outlook  for  the  full  year  2006.
        -  To  provide  additional  transparency,  the  Company  is  providing  for  the
            first  time  an  outlook  for  product  revenues,  which  is  comprised  of
            software  and  maintenance  revenues.    The  Company  expects  full-year  2006
            product  revenues  to  increase  in  a  range  of  13%  -  15%  compared  to  2005.
            This  growth  rate  is  based  on  the  Company's  expectation  for  full-year
            2006  software  revenue  growth  in  a  range  of  15%  -  17%  compared  to  2005.
        -  The  Company  expects  the  full-year  2006  pro  forma  operating  margin,  which
            excludes  stock-based  compensation  and  acquisition-related  charges,  to
            increase  in  a  range  of  0.5  -  1.0  percentage  points  compared  to  2005.
        -  The  Company  expects  full-year  2006  pro  forma  earnings  per  share,  which
            exclude  stock-based  compensation,  acquisition-related  charges  and
            impairment-related  charges,  to  be  in  a  range  of  euro  5.80  to  euro  6.00
            per  share.
        -  The  outlook  is  based  on  an  assumed  U.S.  Dollar  to  Euro  exchange  rate  of
            $1.23  per  euro  1.00.


        BUSINESS  REVIEW  -  Full-Year  2005 


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