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October 24, 2016

UK software sales boost SAP Q3 revenue

Its cloud subscriptions and support revenue now account for 14% of its total revenue.

By James Nunns

Software giant SAP has reported an 8% increase in its revenue for the third quarter of this year, led by strong revenue growth from cloud services.

Revenue rose to €5.4bn ($5.8bn) in the July-September quarter compared to €4.9bn ($5.3bn) in the same quarter a year earlier.

However, SAP’s operating profit was down 9% to €1.10bn ($1.2bn) due to an increase in stock based compensation expense.

SAP CFO Luka Mucic said: “In the third quarter we demonstrated continued momentum and strong execution.

“Year to date we are tracking to the upper end of all outlook metrics set at the beginning of the year. Paired with a robust pipeline, this gives us the confidence that we will deliver yet another strong fourth quarter.”

Its cloud subscriptions and support grew 28% to €769m ($837m) in the quarter compared to €600m ($653m) in the year-ago quarter.

The company earned 14% of its revenue from cloud subscriptions and support in the three months ended 30 September. In the third quarter last year, the segment accounted for 12% of its revenues.

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New cloud bookings for the company went up 24% to €265m ($288m) in the third quarter.  Its cloud and software revenue was €4.45bn ($4.85bn), an increase of 8%.

The company said in a statement: “SAP is outpacing its main competitor in cloud and software revenue growth.”

SAP added over 400 SAP S/4HANA customers in the quarter, of which nearly 40% are net new customers.

SAP has been pushing products such as the Business One suite.

SAP has been pushing products such as the Business One suite.

It said that the HANA Cloud Platform is instrumental in the Internet of Things (IoT) revolution by offering connectivity to a large variety of devices and machines.

SAP CEO Bill McDermott said: “Strong customer adoption of the SAP portfolio is driving results beyond expectations. The S/4HANA innovation cycle is the fastest in our history and is catalyzing the performance of all SAP cloud solutions.”

The company reported a 6% increase in its cloud and software revenue from the EMEA region, while it grew 9% in the Americas region.

It witnessed double-digit growth in software licenses revenue in Brazil and Mexico despite continued macroeconomic headwinds.

The SAP User Group will be holding its annual conference in Birmingham in November. 

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