SAP Q2 momentum motivates share buyback
24 Jul 17
“This strong quarter is the latest in SAP’s eight-year run of consistent, profitable growth. Our winning strategy is again validated by fast adoption of S/4HANA and our full portfolio of cloud solutions. We expect continuing momentum in the second half and confidently raise our guidance for the full year. SAP has never been better positioned,” said SAP CEO Bill McDermott.
In Q2 of 2017, new cloud bookings grew by 33 per cent, reaching €340 million. Cloud subscriptions and support revenue grew 29 per cent year over year to €932 million, while software revenue was €1.09 billion, up 5 per cent year over year. New cloud and software license order entry grew by more than 20 year over year in the second quarter. Cloud and software revenue was €4.76 billion, an increase of 9 per cent.
On a solution basis, in the second quarter, S/4HANA adoption grew to more than 6300 customers, up over 70 per cent year over year, with 500 additional customers signing up, of which around 30 per cent were net new customers for SAP. Google, Centrica and Mercadona were among those to select S/4HANA.
The quarter also brought SAP’s announcement of its reshaped Leonardo portfolio, with CITIC Pacific Mining among those to adopt these solutions following the announcement.
SuccessFactors Employee Central, SAP’s core HCM offering, and more than 1800 customers at the end of the second quarter, while SAP’s Customer Engagement and Commerce solutions achieved double-digit new cloud bookings growth, as well as double-digit growth in software revenue. Revenue in the SAP Business Network, encompassing Concur, Ariba and Fieldglass grew 22 per cent in the second quarter to €570 million.
By region, Asia-Pacific Japan was a standout performer for SAP, with cloud and software revenue up 13 per cent, driven largely by Japan and Australia, and cloud subscriptions and support revenue growing by 52 per cent, with China a strong contributor.
Other regions also recorded solid performance, with Germany and Russia providing particularly strong impetus for cloud subscription and support revenue growth in EMEA, up 48 per cent.
“Our fantastic momentum continued with double-digit growth in total revenue. Our cloud and software revenue growth rate in the first half of the year is at the upper end of our full-year guidance range. Based on our strong growth and cash generation we are pleased to share SAP’s success with our shareholders by initiating a share buyback of up to €500 million in the second half,” said Luka Mucic, SAP SE CFO.
Based on these results, SAP has also raised its guidance for the 2017 full year. Cloud subscriptions and support revenue is now expected to be in a range of €3.8 billion to €4.0 billion at constant currencies – up from €2.99 billion in 2016, representing growth of 34 per cent. Similarly, cloud and software revenue is expected to increase by 6.5 per cent to 8.5 per cent, on 2016’s full year figure of €18.43 billion. Full year operating profit is expected to be in a range of €6.8 billion to €7.0 billion, up from €6.63 billion in 2016. Reflecting SAP’s focus on and market demand for cloud solutions, software license revenue is expected to be approximately the same level in 2017 as in 2016.
Article courtesy of Inside SAP. For the SAP News Release Click HERE