The firm reported net income of $103.95 million for the quarter-ended March 31, the same as in the quarter a year ago.
Pretax profit fell 1 percent to $182.45 million, better than Wall Street analysts' expectations of a larger shortfall due to dampening software sales.
Results sent the firm's stock up nearly 28 percent today to $31.4375 a share. That's a recovery from yesterday, when share value dropped 6 percent, a downturn analysts blamed on investors' worries over poor results.
"The Europeans are relieved that it wasn't worse," said Andrew Roskill, analyst at Warburg Dillon Read. "There's been a lot of investors in Europe chomping at the bit to get back into the stock."
But Roskill called SAP results "more of the same," noting the SAP's software license revenue is flat to down for the quarter and the company has been banking on the strength of its consulting services revenues to offset the sales slump, he said.
The company, which trades on both the New York Stock exchange and the Frankfurt Xetra DAX, reported earnings for shareholders investing in the U.S. market of about 8 cents per share, a penny better than Wall Street analysts expectations of 7 cents a share, according to First Call.
"They delivered," said Rob Schwartz, analyst at SG Cowan, who estimated the company would earn just 3 cents a share. But Schwartz said SAP's earnings are confusing as the company pads its license revenue numbers with customer software upgrades, instead of splitting the two into "license" and "maintenance" categories as other enterprise resource planning vendors do.
"It hides the fact that licenses are down," he said, noting that SAP's new license growth, an important indicator of how well an ERP company is doing, down about 8 percent from the year-ago quarter.
On the bright side, he said, SAP is reporting that strong sales of its new New Dimension product line, specifically the firm's data warehouse and advanced planning and scheduling products, which contributed up to $60 million of the quarter's revenues. Overall, SAP reported $1.14 billion in first quarter sales, an increase of 22 percent.
SAP, which decided to announce results earlier than the April 28 date slated for earnings, said results were a positive sign.
"The first quarter results are better than expected, taking into account the effects of adopting U.S. GAAP, (generally accepted accounting principals) careful management of expenditures and headcount increases, as well as several major contracts in Europe signed during the last week of the quarter," Henning Kagermann, SAP CEO, said in a statement.
Analysts said SAP adopted U.S. accounting rules in January and applied them to this quarter's results, which gave the company a boost. Under German accounting standards, the firm's profits fell 19 percent.
For the quarter, SAP said sales in Europe, the Middle East, and Africa generated the biggest revenue growth, increasing 36 percent, compared to American sales, which rose 14 percent. In Asia-Pacific, first quarter sales growth reached just 3 percent.
Industry observers have blamed the recent downturn in the enterprise resource planning (ERP) market not only on Asia Pacific economic woes, but also on delays in IT projects as corporations scramble to prepare their computer systems to handle the Year 2000.
In March, SAP warned that its pretax profit would be "considerably lower" than expected. SAP's rivals PeopleSoft, Baan, and J.D. Edwards have all suffered from weaker sales as well. But unlike PeopleSoft and Baan, which have been laying off employees, SAP's workforce increased by 36 percent to 20,406 in the first quarter.
Before the downturn last year, SAP had been reporting growth of more than 40 percent, driven by demand for its core R/3 software, which helps companies manage and automate personnel, manufacturing, and accounting applications.
But SAP's net income rose just 14 percent in 1998 as Asia's economic slump hit earnings.