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SAP beats analysts’ expectations, reports “record-setting” revenue and profit

ICE Graveyard 20/07/2016 Chris Nesi

German IT services and enterprise giant SAP reported encouraging numbers for Q2 2016, beating analysts’ expectations and spiking its share price by nearly five percent in pre-market trading Wednesday as its non-IFRS EPS increased 2 percent to €0.82 ($0.90). Analysts had predicted a quarterly EPS of $0.78.

The leap is owed in part to the strength of the company’s increasing cloud and software business, for which it reported revenue of (IFRS) €4,359 million ($4,800 million), a 7 percent jump over the year-ago quarter’s figure. Following the news, CEO Bill McDermott enthusiastically reiterated SAP’s guidance for 2016.

“Our groundbreaking new architecture is accelerating momentum across all businesses – cloud, core, and business networks. As a result, SAP delivered a unique trifecta of double digit growth in software, cloud and operating income. Our S/4HANA pipeline has never been stronger and we confidently reiterate our full year guidance,” he said in a statement.

The news builds upon SAP’s last four quarters, each of which beat expectations, and during which time the company saw a healthy uptick in its revenue, particularly in its Cloud and SAP Business Network solutions, the latter of which includes Ariba, Fieldglass, and Concur. The company’s ever-important new cloud bookings also continued to gain momentum, seeing an increase of 28% and reaching €255 million ($280 million).

SAP’s operating profit (IFRS) jumped a whopping 81 percent to €1.27 billion ($1.4 billion), and its Non-IFRS cloud subscriptions and support revenue rose 30 percent to €721 million ($794 million). It also announced its in-memory computing platform S/4HANA now has more than 3,700 customers.

Earlier this month, SAP made its first major foray into the steadily emerging Internet of Things business with its acquisition of Norwegian company Fedem Technology AS to boost its capabilities in predictive maintenance, structural integrity monitoring, and other Industry 4.0 applications.

The company has also made significant investments to its cloud portfolio so far this year with the announcement last month of products including SAP HANA smart data integration, SAP Cloud Identity Access Governance, SAP Data Services and SAP HANA smart data quality. It’s also launched SAP Exchange Media and SAP Vehicle Insights.

Stay tuned this week for earnings reports from competitors looking to eat SAP’s lunch including Oracle, Microsoft and Amazon, which will more roundly portend SAP’s status in the competitive IT/cloud services space.

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