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SAP Q2 2016: cloud revenue edges forward, 3,700 S/4 Hana customers

Second-quarter results show 3% growth in cloud revenue to reach 14% of the €5.2bn revenue total, as operating profit jumps 10%

SAP’s second-quarter 2016 results show 3% growth in cloud revenue as a proportion of its overall revenue of €5.237bn. Operating profit jumped from 14% to 24%, compared with Q2 2015, with the company employing 5,465 fewer people.

The results show cloud revenue to be 14% of the €5.2bn total, compared with 11% of the total in the second quarter of 2015.

New cloud bookings increased from €199m to €255m in Q2 2016 compared with a year ago – an increase of 29%.

In the EMEA region, the company increased its cloud and software revenue by 7%. It reported double-digit growth in software licence revenue in France, the Netherlands, Switzerland, southern Europe and Germany, and that it had “successfully navigated through the post-UK referendum uncertainty”.

In its quarterly results in recent years, the supplier has pointed first to sales of its in-memory columnar database Hana, and the full ERP [enterprise resource planning] system that runs on it, S/4 Hana, which was launched in February 2015.

In the latest quarter, it said it had added more than 500 SAP S/4 Hana customers, of which about 40% are new SAP customers. It reported that the Hershey Company in the US, the Targin Group in Russia, Cathay Pacific in Hong Kong and Roy Hill Holdings in Australia had selected SAP S/4Hana in the second quarter. And it confirmed 3,700 customers for the suite, compared with 900 a year ago.

In the Americas, SAP increased its cloud and software revenue by 8%, and cloud subscriptions and support revenue by 26%. It reported double-digit growth in software licence revenue in Brazil and Mexico, despite what it called “political and macroeconomic instability”.

Read more 2016 enterprise IT results

In the Asia-Pacific and Japan region, SAP’s cloud and software revenue was up 7%, with cloud subscriptions and support revenue leaping by 44%.

Bill McDermott, SAP CEO, said: “SAP delivered a unique trifecta of double-digit growth in software, cloud and operating income. Our S/4 Hana pipeline has never been stronger.”

In a press and analyst call, McDermott said 10% of the company’s ERP customer base had “signed on to S/4 Hana”, and that its adoption rate was four times that of R3 in the 1990s.

“SAP delivered a unique trifecta of double-digit growth in software, cloud and operating income. Our S/4 Hana pipeline has never been stronger”

Bill McDermott, SAP

With respect to one of SAP’s acquired cloud businesses, Success Factors, McDermott highlighted the fact that Accenture had adopted the software. The earnings release also noted that the customer count for SuccessFactors Employee Central exceeded 1,250 at the end of the second quarter.

McDermott said the company had seen “no effect from Brexit” on its revenue.

Luka Mucic, chief financial officer at SAP, reiterated this, adding: “Our financial liquidity was not impacted either. We increased the hedge ratio of our balance sheet exposure to almost 100% for the British pound ahead of the vote.”

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