It’s cloudy business as usual for SAP as first quarter figures are revealed
SAP’s first quarter 2014 figures, released last week, revealed that while the tech giant’s cloud subscription numbers were going up, its software revenues continue to stall.
This will come as no surprise to those who have been following events with the German firm, who indirectly prophesised this outcome back in January with the Q413 numbers sheet.
At the time, SAP said in a statement that the ‘fast-growing cloud business along with growth in support revenue will drive a higher proportion of more predictable, recurring revenue in the future.’
As CloudTech reported, SAP VP cloud strategy Sven Denecken noted that the goal was to provide customers with “the right mix” between mobile, cloud and on-premise.
The numbers published last week reflect this. Revenue for cloud subscriptions and support went up to €219m, up 60% from Q113’s €137m (£112.8m). On-prem software revenues went down 5% to €623m (£513.1m), while total money for support went up 5% to €2.213bn (£1.822bn). Figures for software and support combined showed a 3% spike. In other words – fewer customers are buying the on-prem, but SAP is keeping it ticking over thanks to maintenance costs.
In a statement, SAP said it was ahead of its outlook growth range – bearing in mind the software giant moved the goalposts with its cloud revenue and operating margin targets in Q413 – with accelerated cloud revenues and ‘slightly’ improved margin.
SAP’s co-CEOs, Bill McDermott and Jim Hagemann Snabe, added: “We are well on our way to becoming THE cloud company powered by SAP HANA with fast growth in the cloud and broad adoption of HANA as the real-time business platform.”
Yes, you’ve read that right – the word ‘the’ was capitalised. It’s certainly a statement of intent, and SAP had other numbers to back it up. The company claims to have more than 3,200 SAP HANA customers, and close to 1000 customers for SAP Business Suite.
By region, the software firm had a ‘solid’ run in both EMEA and the Americas, but a ‘mixed’ performance in APJ (Asia Pacific Japan), claiming that whilst Japan’s figures were a miss, China was a “particular highlight” with “strong double-digit software revenue growth.” There was also “strong” software revenue growth in Africa, southern Europe and France, while EMEA displayed 39% growth in cloud subscription and support revenue.
This is an interesting piece of the results – SAP may still claim that in less developed regional markets, the appetite for on-prem is still there. But the key statistics show little change in the company’s business plan – operation cloud is firmly go.
Read the full documents on SAP’s investor page here.
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