SAP profit slips but cloud business on the rise

Profits at SAP declined from a year ago, but the company said its “soaring growth” in new cloud bookings picked up momentum.

The German enterprise software giant reported Tuesday that profit after tax fell 7 per cent from a year ago to €530m, while operating profit fell 17 per cent to €673m.

However, top-line growth was strong as SAP shifts from on-premise services to cloud-based offerings.

New cloud bookings — the key measure for sales success in the cloud – soared 49 per cent to €215m. Cloud subscription and support revenue rose 34 per cent to €905m, ahead of an average analyst estimate of €893m.

Total revenue was up 12 per cent to €5.285bn, ahead of estimates at €5.16bn.

“This outstanding achievement further validates our investment decisions to drive future growth,” said chief financial officer Luka Mucic.

S/4 HANA, its flagship suite of business software designed to help companies engage in the ‘digital economy’, added 400 customers in the quarter, placing the total at 5,800.

The company said 2017 cloud subscriptions and support revenue is on track to reach €3.8bn to €4.0bn, representing a growth rate of up to 34 per cent at constant currencies.

In January the company lifted its 2020 total revenue estimate to a range of €28-€29bn, with cloud subscriptions and support revenue accounting for €8 to €8.5bn.

So far this year shares are up 12.7 per cent.