FRANKFURT (Dow Jones) - SAP AG (SAP), the world's largest maker of business software, Thursday posted an 11% increase in first-quarter net profit as it continued to expand market share amid strong growth in Asia and the U.S.

The Walldorf, Germany-based company also reiterated its 2005 outlook, quashing investors' fears of a profit warning. Downbeat comments recently from rivals like Oracle Corp. (ORCL), International Business Machines Corp. (IBM) and Siebel Systems Inc. (SEBL) had fueled concern over SAP's prospects.

Net profit rose to EUR254 million, or EUR0.82 a share, in the quarter ended March 31 from EUR229 million, or EUR0.74 a share, a year earlier. Analysts had predicted profit of around EUR252 million.

License sales - key for future business as SAP then generates follow-on revenues from maintenance and consulting - grew 17% to EUR434 million, exceeding analysts' estimates of around EUR414 million.

"We are pleased to report another strong quarter for SAP," Chief Executive Henning Kagermann said in a statement. The gap between SAP and its rivals " continues to widen," he said.

Growth in license revenues was crimped by the strength of the euro - at constant currencies, software sales would have been up 20%, spurred by 45% growth in Asia-Pacific and 28% in the Americas, SAP's smaller regions.

SAP, which recently was beaten out of the bidding for U.S. software provider Retek Inc. (RETK) by arch-rival Oracle, said the U.S. activities in particular drove growth.

The company said its U.S. market share based on software revenues was 41% at the end of the first quarter, up from 38% at the end of the fourth quarter of 2004.

SAP, which makes software that helps large enterprises with payroll, inventory and budget planning, appears to have fared better than some of its rivals over the quarter.

Earlier in April, IBM's first-quarter results fell short of its own and analysts' expectations, while Siebel, a maker of customer-relations management software, warned it expected a loss for the first quarter. At the end of March, Oracle reported a weak quarter for its business software application business.

Analysts had broadly discounted SAP being hit by the sluggish technology market, but speculation the company could issue a profit warning has weighed on the shares, which have fallen 7.4% since the start of April. The stock closed at EUR115.50 Wednesday.

One Frankfurt-based trader said the first-quarter license revenues came in just ahead of expectations, while the remaining figures were broadly in line. He said the reiteration of the 2005 outlook was positive given the downbeat noises from other big industry players.

SAP repeated its 2005 outlook of a flat to 0.5 percentage point higher pro- forma operating margin from 2004's 28%, pro forma earnings in the range of EUR4.70 to EUR4.80 per share, up from EUR4.37 in 2004, and a 10% to 12% increase in license sales, excluding currency effects.

First-quarter group sales rose 11% to EUR1.73 billion from EUR1.56 billion.

Free cash-flow was EUR832 million in the quarter, declining to 48% of revenues from 53% a year earlier due to increased investments. SAP has said it will step up investment in 2005, meaning it will sacrifice some profit growth for market- share gains.

Company Web site: http://www.sap.com

-By Joon Knapen, Dow Jones Newswires; +49-69-29725509; joon.knapen@ dowjones.com Dow Jones Newswires 04-21-05 0452ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.