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SAP AKTIENGESELLSCHAFT (SAP - Analyst Report)reported second-quarter earnings per share of €0.73 ($0.95), which increased 4.0% year over year and beat the Zacks Consensus Estimate of $0.91 a share by 4.4%. The company’s flagship innovation SAP HANA continued to be a growth driver. Total revenue was €4.1 billion ($5.3 billion) in the second quarter of 2013, up 8% year over year on constant currency.

Revenue by Segment

Software & Could Subscriptions:  This segment includes Software and Maintenance revenues.  The segment revenues in the quarter were €1.16 billion ($1.52 billion), up 7% year over year in constant currency.

Support revenue:The segment reported revenues of €2.2 billion ($2.9 billion), up 11% year over year (on constant currency basis).

Software and software-related service revenue:  This sub-segment includes Support, Subscription and other software-related services revenues. Revenues in this segment grew 10.0% year over year to €3.3 billion ($4.3 billion).

Revenue by Region

The company witnessed strong growth in the EMEA region with 3% growth in non-IFRS software and cloud subscription revenue, which is very impressive in the light of the continued market uncertainty in Europe and a very tough year-over-year comparison. Germany reported high single-digit software revenue growth. Revenues for the segment in Asia Pacific Japan fell 7% due to continued macroeconomic challenges, but Southeast Asia and India performed strongly.

The Americas region reported a strong second quarter with software and cloud subscription revenue increasing 18% year-over-year. This increase was driven by excellent software revenue performance in Latin America, especially Brazil and strong cloud subscription and support revenue growth in North America.

Cash and Balance Sheet

Operating profit grew 10% year over year to €1.22billion ($1.3 billion) in the quarter.

Exiting the year, the company’s operating cash flow increased 3% year over year to €2.48 billion ($3.2 billion), due to efficient working capital management. Cash and cash equivalents grew 36.7% year over year to €3.3 billion ($4.4 billion).

Outlook

Concurrent with the earnings release, management provided guidance for full year 2013.

The company expects full year 2013 software & cloud subscriptions revenues to increase in the range of 14% – 20% at constant currencies. The full-year 2013 cloud subscription and support revenue is expected to be around €750 million at constant currencies.

The company expects full-year 2013 non-IFRS software and software-related service revenues to increase in the range of 10% as against 11% – 13% growth mentioned earlier. While operating profit for the full year is expected to be in the range of €5.85 billion to €5.95 billion at constant currencies. SAP HANA software revenue is expected in the range of €650 million to €700 million.

While SAP has a Zacks Rank #3 (Hold), its competitors such as Aspen Technology Inc. (AZPN - Snapshot Report) and ACI Worldwide Inc. (ACI - Analyst Report) have a Zacks Rank of #1 (Strong Buy). Another company Cadence Design Systems Inc. (CDNS - Snapshot Report) is also worth considering and carries a Zacks Rank #2 (Buy).

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