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  • SAP Credits Cloud, HANA For A Terrific Year

    January 20, 2014 Dan Burger

    With celebratory back-slapping for its fast-growing cloud business, SAP delivered good news during its preliminary Q4 and 2013 year financial report.

    Based on the unaudited numbers, the company increased its annual software and cloud subscription revenue by 10 percent to €5.21 billion. The complete software and software-related service revenue grew 11 percent to €13.94 billion. By SAP’s reckoning, which seems a little over zealous, this marks the fourth year in a row that SAP has posted double-digit growth.

    Overall, SAP software revenue slipped 2 percent to €1.9 billion in Q4 compared to the prior year’s quarter. Those decline is driven in part by the success of cloud sales, which are now at a €1.06 billion annualized run rate. Just a year ago SAP was reporting double digit growth in software revenue.

    Other software companies will no doubt be taking note of the decrease in software revenue and overall growth brought on by SAP customers moving to the cloud. The long-term effect of this shift is that it will even out with time, but until then there will be some worries.

    HANA, SAP’s much heralded data processing engine, generated software revenue totaling €664 million, a big gain of 62 points, and smack dab in the middle of the expected sales range of €650 million to €700 million. Exchange rate fluctuations were blamed for HANA not doing better than it did.

    In the press release that accompanied SAP’s preliminary report, much credit is showered on the continuing success of its cloud subscription and support revenue. In a statement for the press, the co-CEOs of the company, Bill McDermott and Jim Hagemann Snabe, boast that SAP is “one of the few global tech companies that has successfully managed the transition to the cloud while growing our core business and improving our profitability at the same time.”

    A closer look at total revenues attributable to the cloud shows it to be less than 5 percent of the SAP’s total revenues. That takes a bit of the shine off those triple-digit growth rates.

    The company will report audited fourth quarter and full year 2013 results January 21, including its outlook for 2014.

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Volume 24, Number 2 -- January 20, 2014
THIS ISSUE SPONSORED BY:

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