INTERNATIONAL - SAP SE’s $10billion (R139.9bn) bet on its cloud business hit a bump after order entry slowed in the second quarter.
The decrease in growth in new cloud bookings, a keenly watched metric because it indicates future revenue, underscores the difficult transition to internet-based software as chief executive Bill McDermott challenges rivals such as Salesforce.com and Oracle, while pushing to improve profitability.
The stock fell 6.5percent in pre-market trading. SAP’s new cloud bookings rose 15percent at constant currencies, a drop from the 26percent gain in the first three months of 2019.
But SAP said the increase would be 27percent excluding infrastructure-as-a-service, as the company farms out lower margin business on the computing back-end to the likes of Amazon Web Services and Microsoft. Walldorf, Germany-based SAP, spent over $10bn to buy US cloud start-ups Qualtrics International and Callidus Software to bolster its portfolio. The Qualtrics acquisition will prove to
be a “growth catalyst,” McDermott said.