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January 25, 2016updated 30 Aug 2016 4:56pm

SAP expects strong cloud demand to lift its prospects in 2017

News: New cloud bookings increased 75% to €344m in Q4.

By CBR Staff Writer

SAP said it expects higher profit and revenues in the year 2016 and beyond, based on the continued strong growth in its cloud and software license businesses.

The company also raised its 2017 mid-term ambition after reporting strong revenue growth in its fourth Q4 and full year results, despite a decline in profit.

Revenue rose 16% to €6.3bn in Q4, from €5.4bn during the same period in 2014. Net profit dropped 2% to €1.29bn, compared to €1.31bn for the same period last year.

Operating profit declined 3% to €1.699bn from €1.753bn reported in the year-ago period.

New cloud bookings increased 103% in the full year 2015 to €883m and 75% in Q4 to €344m. The company said new cloud bookings for customer engagement and commerce saw triple-digit growth in full year 2015.

The company said it now has more than 2,700 customers for its S/4HANA enterprise resource planning (ERP) system, up from 1,300 reported in the earlier quarter.

Earlier this month, SAP partnered with Accenture to speed the development of the SAP S/4HANA business suite as well as industry and line-of-business solutions.

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SAP CEO Bill McDermott said: "Our strength in 2015 shows that the SAP S/4HANA innovation cycle is well underway.

"Our completeness of vision in the cloud has distinguished SAP from both legacy players and point solution providers. We beat on cloud and software, we beat on operating income and we are ever confident that SAP will remain a profitable growth business well into the future."

For fiscal 2016, SAP expects non-IFRS operating profit in a range of €6.4bn to €6.7bn at constant currencies, compared to €6.35bn in the prior year.

The company expects non-IFRS cloud subscriptions and support revenue in a range of €2.95bn to €3.05bn at constant currencies.

Looking beyond 2016, the company expects non-IFRS total revenue in a range of € 23bn to €23.5bn in 2017, and operating profit in a range of €6.7bn to €7bn.

Non-IFRS cloud subscriptions and support revenue is expected in a range of €3.8bn to €4bn in 2017.

SAP said by 2017 it continues to expect its cloud subscriptions and support revenue to be close to software license revenue and cross software license revenue in 2018.

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