Fueled by strong sales in the U.S.,


(SAP) - Get Report

broke the string of bad news from software vendors, saying Thursday that net income in the first-quarter was up 11%.

The German company earned $330.2 million, or $1.07 a share, in the quarter, compared with $297.7 million, or 96 cents a share, last year. The company's American depositary shares represent four common shares, and at about 27 cents an ADS, the earnings were a penny ahead of estimates.

Revenue in the first quarter was $2.25 billion, up from $2.03 billion a year ago, reflecting a 17% jump in year-over-year software license revenue. Analysts had been forecasting revenue of $2.21 billion in the quarter.

Shares of SAP were recently trading up $2.17, or 5.8%, to $39.66.

Already the world's largest seller of business software, SAP claims to have increased its market share against U.S. rivals. Basing software revenue on a rolling four-quarter basis, SAP commands 41% of the market compared with 34% a year ago, at the end of the previous quarter and 54% a year ago, the company said. It wasn't immediately possible to verify those claims.

The share numbers are based on a comparison with the revenue of


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Siebel Systems




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business solutions group.

"The continued strength of SAP's results is just another example of how far we have distanced ourselves from other software companies, and the gap continues to widen," SAP said. "Our winning position in the industry has been demonstrated by continually outperforming our competitors and delivering double-digit growth rates in software revenues and quarter-to-quarter share gains," said CEO Henning Kagermann.

In the U.S., software revenue soared 27% from a year ago to about $170 million. The gain would have been 35% in constant currencies.

But there were still reasons for caution. "SAP gives the impression they are immune to the same forces that affect other software companies -- and they are not," said analyst Richard Williams of Garban Institutional Equities.

Williams, whose firm does not have a banking relationship with the companies mentioned in this article, analyzes SAP on a rolling four-quarter basis. He found that when currency fluctuations are stripped out, the company actually showed nearly 1% slower growth than it did in the previous fourth-quarter period, when it grew by 6.5%.

SAP reiterated its guidance for the full year, saying software license revenue would increase 10% to 12% compared with 2004. Adjusted operating margin, which excludes stock-based compensation and acquisition-related charges, is expected to increase by zero to 50 basis points as compared with 2004.

Adjusted earnings per share -- which excludes stock-based compensation, acquisition-related charges and impairment-related charges -- are expected to be in the range of 4.70 euros to 4.80 per share.

SAP did not give quarterly guidance.