SAP Aligns With Profit Expectations As Cloud Shift Steadies

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Cloud subs up 72 percent in preliminary earnings, pushing stock 4.6 percent

German software giant SAP has beat analyst cloud expectations in preliminary earnings figures released late on Monday.

The firm said that earnings from cloud subscriptions have risen 72 percent to about $360m in Q4, beating predictions of $317m.

SAP delivered ‘exceptionally strong growth’

Operating profit rose 1 percent to $2.13bn compared to the same quarter last year.

Chief executive Bill McDermott said: “For the full year 2014, SAP delivered exceptionally strong growth in the cloud and continues to lead in this industry-wide transformation.

“In 2014 we continued to deliver on our winning growth strategy. We are the fastest growing enterprise cloud business at scale with the most users in the world.”

In October, SAP lowered its earnings outlook for the current financial year on Monday, as it continues to restructure around a push into cloud services, but reported a 15 percent increase inSAP third-quarter net profit boosted by cloud subscription sales.

Cloud services are typically sold through subscriptions, bringing in revenues over a more extended time period than one-off software licences, where most of the revenue is paid up-front. SAP is also investing in data centres and is restructuring its sales and support operations around its cloud operations, but believes the cloud will bring in a higher proportion of repeat business over time.

News of the earnings pushed stocks up 4.6 percent to €57.05, but that is still 7 percent lower than stock the same time last year. Full year results are expected on January 20.

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