SAP’s Q215 financial results: Strong cloud growth alongside profit warnings

Picture credit: SAP

It’s that time of year again. Companies are issuing their latest quarterly financial figures, and SAP’s Q215 numbers see continued growth in cloud services, but overall profits remaining relatively stagnant.

Cloud subscriptions and support for the German software giant stood at €552 million for the second quarter of 2015, a more than 100% change from the previous year. Other software licenses and support saw a 13% change at €3.51 billion. Total revenue hit €4.97bn, at an increase of 20%, yet operating profit of €701m was a mere 1% rise, and profit after tax dropped 16% year over year.

Despite this the company is reiterating its 2015 business outlook, expecting full year non-IFRS cloud subscriptions and support revenue to be in a range of €1.95bn to €2.05bn, full year non-IFRS cloud and software revenue to increase by 8% to 10%, and full year 2015 non-IFRS operating profit to be in the range of €5.6-€5.9bn.

SAP’s modus operandi, as any regular reader of CloudTech will know, is to migrate its mammoth legacy on-premises software revenues to the cloud. It is by no means the only company attempting that – IBM and Oracle instantly spring to mind – but all three companies are suffering to some degree.

For SAP, everything is going in the right direction; just not at the pace it would like. SAP shifted its long term goals again at the start of this year, predicting a 2017 operating profit target of between €6.3bn and €7bn, from a previous total of €7.7bn.

All three companies have had the Campaign for Clear Licensing (CCL) on its tail, with the organisational body fighting against obfuscatory software practices. Oracle was lambasted for its “arms length, impoverished” relationship with customers, while SAP told this publication in February it would “welcome any customer feedback” following the CCL audit.

Bill McDermott, SAP CEO, is unrepentant in his cloud vision. He said: “Our business is thriving because we have the most complete vision for how to make this transition to digital business a simple one. I am confident that our strategy to deliver a platform, applications and business networks is exactly what customers need from SAP.”

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