SAP accelerates shift to the Cloud with 41% revenue growth in third quarter
SAP again delivered strong growth in the cloud and a solid overall revenue performance. With non-IFRS cloud subscriptions and support revenue increasing 41% (42% at constant currencies) SAP is the fastest growing enterprise cloud company at scale. Non-IFRS software and software-related service revenue grew 7% (7% at constant currencies). The negative effects from currency translation SAP experienced year-to-date dissipated in the third quarter and are expected to reverse in the fourth quarter 2014.
“We are accelerating our shift to the cloud with more than 40% revenue growth in the cloud. SAP is THE cloud company powered by SAP HANA helping customers run simple with over 44 million cloud users and the world’s largest business network. We are leading the next generation customer engagement with the triple digit growth of our omni-channel e-commerce platform,“ said Bill McDermott of SAP. “Our portfolio depth in the cloud, global scale and industry domain expertise are the bedrocks that separate us in the marketplace. With SAP HANA and the Business Network, SAP will continue to shape the future of the enterprise software industry.”
“We achieved a solid overall topline performance in the quarter with 7% growth in non-IFRS software and software-related service revenue. Year-to-date non-IFRS software and software-related service revenue is up 8% at constant currencies – at the high end of our full-year outlook range. Non-IFRS earnings per share increased 8% in the quarter,” said Luka Mucic, CFO of SAP. “Our order entry for new business in the cloud was more than one third of the software license revenue in the third quarter, up significantly from a year ago. With this powerful shift we are raising the cloud outlook again while adjusting the operating income range to reflect less upfront and more ratable revenue.”
SAP’s annual cloud revenue run rate now exceeds €1.3 billion or $1.7 billion . Non-IFRS calculated cloud billings increased 51% (27% at constant currencies). Non-IFRS deferred cloud subscriptions and support revenue was €498 million as of September 30, 2014, a year-over-year increase of 30% (22% at constant currencies). SAP’s cloud applications total subscribers now exceed 44 million.
SAP is driving next generation customer engagement. Its hybris omni-channel e-commerce platform in combination with Cloud for Sales had another quarter of triple-digit growth in software revenue and cloud subscriptions and support revenue.
SAP is in the lead in the transformation to the global “Network Economy” with over 1.6 million connected companies on the world’s largest cloud-based business trading community. Trailing twelve month network spend volume was close to $600 billion – more than Amazon, eBay and Alibaba all combined. The planned addition of Concur would amplify the “network effect” and ecosystem with broad reach into the US$1.2 trillion corporate travel market.
SAP saw continued broad market adoption of SAP HANA, the Real-Time Business Platform, across all industries and regions as customers realize the compelling business benefits of SAP HANA. SAP HANA is at the core of the Company’s “Run Simple” strategy: integrating all SAP solutions on ONE business platform in the Cloud. SAP now has more than 4,100 SAP HANA customers and more than 1,450 customers for SAP Business Suite on HANA.SAP HANA is also evolving into the leading development platform with more than 1,600 startup companies building applications on SAP HANA.
Third Quarter 2014 Regional Revenue
SAP had a solid performance in EMEA, despite uncertainties in the Ukraine and the Middle East. Non-IFRS software and software-related service revenue increased 8% (8% at constant currencies) with a strong performance in Germany in both software and cloud subscriptions and support revenue. Non-IFRS cloud subscriptions and support revenue in EMEA was a particular highlight, growing 59% (59% at constant currencies), showing exceptional cloud traction in Europe.
The Americas region saw a mixed performance in Latin America. Similar to other companies in the industry SAPis seeing a more difficult macro and political environment in Latin America, in particular in Brazil and Argentina, combined with execution issues. Non-IFRS software and software-related service revenue in the Americas increased 5% (5% at constant currencies). Non-IFRS cloud subscriptions and support revenue grew by 34% (34% at constant currencies).
The Asia Pacific Japan (APJ) region had a strong performance with 10% growth in non-IFRS software and software-related service revenue (10% at constant currencies). Non-IFRS cloud subscriptions and support revenue grew by 57% (56% at constant currencies). SAP achieved a turnaround in its business in Japan with solid double-digit growth.