SAP Q2 2014: steady growth for cloud and Hana

SAP’s second quarter 2014 results indicate steady growth for its cloud business and Hana

SAP’s second quarter 2014 results indicate 32% growth for its cloud business, which accounted, at €242m, for 5.8% of its overall revenue of €4.153bn for the period.

However, traditional software revenue was down 2% from €982m to €957m.

The supplier said it expects full year 2014 cloud revenue to be between €1bn and €1,050m, up from the previous stated expectation of €950m – €1bn.

The company also said it has 1,200 SAP Business Suite on Hana customers. In the first quarter of this year it reported nearly 1,000 customers for Business Suite [the supplier’s full ERP system] on Hana [its in-memory dataset platform], and said some 1,200 startups were developing on the Hana platform. That figure is now stated as 1,500. Hana customers overall number 3,600, up from 3,200 state in Q1.

SAP presented the results as an early vindication of its “Run simple” strategy, unveiled at its Sapphire customer conference in June. The company’s objective is to render its software simpler to use and its business easier to engage with, by moving more to the cloud as the preferred delivery mechanism and making Hana the core database platform for its business applications.

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Bill McDermott (pictured), CEO of SAP said: “We are successfully executing our shift to the cloud helping customers run simple – from total workforce management in the cloud to frictionless commerce through the world’s largest business network [the 2012 Ariba acquisition]. And we are redefining customer engagement with our omni-channel e-commerce platform [the 2013 Hybris acquisition]”.

The company reported what it sees as “a strong performance in EMEA, despite uncertainties due to the Ukraine crisis”. Revenue increased 8% year over year, a result of 51% growth in non-IFRS [International Financial Reporting Standards] cloud subscriptions and support revenue for the region as well as strong software revenue growth in the UK and France.

The Americas region revenue increased 6% year over year, with 34% growth in cloud subscriptions and support revenue.

In the Asia-Pacific and Japan region software and software-related service revenue grew by 12%, with 48% growth in cloud subscriptions and support revenue. Australia and Malaysia exhibited triple-digit software revenue growth.

Total revenue for the quarter was €4.153bn, up 2% from the same quarter last year, €4.019bn. Operating profit was €1.236bn, up 4% from Q2, 2013, €1.186.

Luka Mucic, CFO, said: “We continue to improve our profitability with operating profit up 7% on a non-IFRS constant currency basis leading to double-digit growth [10%] in non-IFRS EPS [earnings per share]” – from €0.71 to €0.79, compared with the same quarter last year.

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