Frankfurt - SAP reported third-quarter sales and operating profit that beat analysts’ estimates, boosted by sales of cloud-computing programs and demand for its revamped financial management tools.
Non-IFRS revenue rose 17 percent to 4.99 billion euros ($5.7 billion), SAP said in a statement on Tuesday, citing preliminary numbers. Non-IFRS operating profit climbed 19 percent to 1.62 billion euros. Analysts had predicted operating profit of 1.53 billion euros on sales of 4.93 billion euros, according to data compiled by Bloomberg. Walldorf, Germany-based SAP had been scheduled to release earnings October 20.
Chief Executive Officer Bill McDermott in January lowered the company’s profitability forecast through 2020 while giving investors a clearer view of sales resulting from new cloud-computing tools. SAP is adding more software delivered as an online service to respond to the way IT departments are buying, even as those subscriptions squeeze short-term profit.
Cloud subscription and support sales during the quarter more than doubled to 600 million euros, compared with the 577 million-euro average estimate of six analysts.
Customer upgrades
Software license sales grew 4 percent in constant currency to 1.02 billion euros, a respectable showing at a time when sales of licensed programs installed on customers’ servers are under pressure industry wide. As it adds cloud-computing software to its lineup, SAP is also pushing customers to upgrade to S/4, an update to its core financial and manufacturing planning software released earlier this year.
Chief Financial Officer Luka Mucic said in the statement that cloud and traditional software sales were “mainly driven by excellent results in mature markets. SAP’s global resilience helped us also sail through stormy waters in emerging markets where we expect to continue to see volatility and economic challenges.”
SAP is also undertaking a second consecutive restructuring this year that’s eliminating about 2 200 jobs while pushing to hire younger workers.
The company Tuesday reiterated its financial targets for this year, including operating profit between 5.6 billion euros and 5.9 billion euros, excluding currency fluctuations.
Earlier on Monday, SAP said it bought Paris-based human-resources software company Multiposting for an undisclosed amount.
BLOOMBERG