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SAP lifts full-year outlook as more customers shift to cloud

SAP lifts full-year outlook as more customers shift to cloud

FILE PHOTO: The logo of German software group SAP is pictured at its headquarters in Walldorf, Germany, May 12, 2016. REUTERS/Ralph Orlowski/File Photo

STOCKHOLM: German business software group SAP raised its full-year outlook for a third time on the back of a strong showing in the third quarter as more customers shift their IT operations to the cloud.

SAP now expects cloud revenue to grow by 16 to 19 per cent in the year as a whole, helping its overall cloud and software revenue to gain by 2 to 4per cent, it said in a statement late on Tuesday (Oct 12).

Operating profit is expected to be flat to down 2 per cent for the year, an improvement from its earlier forecast of unchanged to down 4 per cent.

SAP, which is moving to subscription-based cloud services from software licences with up-front fees, launched Rise with SAP, an all-in-one digital transformation package in January.

"We see record adoption of our applications and our platform," Chief Executive Officer Christian Klein said in a statement. "This has resulted in strong acceleration of our cloud growth."

SAP raised its forecast for cloud and software revenue for the full year by €200 million to €23.8 billion to €24.2 billion.

The cloud backlog for flagship database S/4HANA was up 58 per cent at constant currencies and current cloud backlog - a measure of incoming business - reported a 22 per cent growth during the third quarter.

Adjusted revenue rose 5 per cent to €6.68 billion (US$7.70 billion) for the third quarter ended Sep 30, the company reported in a preliminary earnings statement. SAP is expected to release full results on Oct 21.

Adjusted earnings per share rose 2 per cent to €1.74, backed again by its profitable venture capital investments, Sapphire Ventures.

Source: Reuters/vc

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