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July 20, 2017

SAP’s cloud business boosts second quarter financial results

SAP second quarter financial results show an increase from a boost in its cloud business, which shows an increase of 70% year-over-year.

By Hannah Williams

SAP has reported a substantial growth in its cloud business for the second quarter, as revenue and bookings increased by 33%.

The tech giant reported an increase in revenue which rose by 10.4 percent from last year to €5.78 billion in Q2 2017.

In cloud and software the company posted, growth of over 20 percent year-over-year and according to the company, the majority of the revenue (63%) stems from a rise in cloud subscriptions.

SAP S/4HANALuka Mucic, CFO, SAP said: “Our fantastic momentum continued with double-digit growth in total revenue. Our cloud and software revenue growth rate in the first half of the year is at the upper end of our full-year guidance range.”

Research and sales also boosted the company’s business growth, as well as income from the digital core business. This saw its S/4HANA customer base rise to over 6,300, a 70% increase year-over-year.

Read more:SAP share price targeted at explosive 300 per cent increase

However, despite this the company saw a decrease in operating profit which fell by 27 percent from stock costs. This brought core profits to €1.57 billion instead of the €1.59 billion expected by analysts.

Bill McDermott, CEO, SAP said: “This strong quarter is the latest in SAP’s 8-year run of consistent, profitable growth. Our winning strategy is again validated by fast adoption of S/4HANA and our full portfolio of loud solutions.”

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In its second quarter alone, almost 500 customers joined S/4HANA. This includes companies such as Google, Centrica and Mercadona which all selected SAP’s service in Q2.

In May 2017, the company unveiled its plans to receive a market capitalisation of $273.45 billion based on its high position in the European market.

The German company has since then raised its business outlook for the whole of 2017, with an expected increase in cloud subscriptions between €3.8 to €4.0 billion.

This is predicted from the boost in its cloud business so far, in which McDermott said: “We expect continuing momentum in the second half and confidently raise our guidance for the full year. SAP has never been better positioned.”

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