Profits at SAP climbed by one-third in the first quarter even as revenue was flat from a year ago, as more customers shifted to its cloud platform.
The German enterprise software giant reported Tuesday that profit after tax rose 33 per cent from a year ago to €708m. Operating profit climbed 52 per cent to €1.03bn, though about €200m reflected new accounting measures.
Chief executive Bill McDermott said the numbers reflected the group's "trifecta" of a "fast growing cloud, strong software sales, and operating income expansion."
New cloud bookings — the key measure for sales success in the cloud – climbed 25 per cent in constant currencies to €245m. Taking currency effects into account, however, the gain was only 14 per cent. Cloud subscription and support revenue rose 18 per cent to €1.1bn.
Total revenue at SAP was flat at €5.26bn, though on SAP's preferred non-IFRS measure in constant currencies, revenue was up 9 per cent.
Software revenue fell 10 per cent year on year to €625m. Likewise, operating cash flow fell 10 per cent to €2.58bn, reflecting higher tax payments, currency headwinds and higher capital spending.
"There are two things I am particularly proud of in Q1: We faced a very strong prior year quarter comparison and still delivered cloud & software growth above our full year guidance," said chief financial officer Luka Mucic. "Moreover, we increased operating margins while continuing to invest in our people and our portfolio."
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 8,300 - up 43 per cent from 12 months ago.
In January SAP announced it would acquire front-office solutions group Callidus Software for $2.4bn. The deal has now closed and it has lifted its 2018 outlook, projecting non-IFRS cloud subscriptions and support revenue in a range of €4.95bn to €5.15bn in constant currencies, or more than 31 per cent higher than the €3.77bn recorded in 2017. Before the acquisition, the estimated range was €4.8bn to €5.0bn. Callidus is expected to contribute about €150m.
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