SAP Q2: Legal charge hurts profit, 2014 outlook raised

Summary:Despite a smaller-than-expected operaiting profit, the German software maker has raised its 2014 outlook for cloud-based products.

German software maker SAP reported on Thursday Q2 2014 net income of €556 million with earnings of €0.47 per share, down approximately 23 percent year-over-year, sliding from 724 million euros, or €0.61 euros per share, in the year-ago period (statement)
. Non-IFRS earnings were €0.79 a share on revenue of €938 million.

Screen Shot 2014-07-17 at 08.59.38

IFRS total revenue was reported to be 4.15 billion euros in Q2 2014, up 2 percent from Q1 2013.

Operating profit plummeted 29 percent to 698 million euros, and non-IFRS operating profit, recorded at 1.24bn euros, fell below analysts' expectations of 1.26 million euros in a Reuters poll. Operating profit was hit by a provision for a patent litigation.

SAP says it believes everything is on track to reach a full fiscal year operating profit of between 5.8 and 6 billion euros, up from 5.51 billion in FY2013.

The cloud software provider said revenues from its cloud business jumped by 32 percent over Q2, reaching a margin of 242 million euros (non-IFRS). SAP expects overall revenue from cloud subscriptions and support revenue to arrive at between 1 billion and 1.05 billion euros, up from a previous outlook of 950 million to 1 billion euros.

SAP HANA continues to expand its client base, and now accounts for over 3,600 HANA customers and over 1,200 customers for SAP Business Suite on HANA.

Bill McDermott, CEO of SAP said in prepared remarks:

"We are successfully executing our shift to the cloud helping customers run simple -- from total workforce management in the cloud to frictionless commerce through the world’s largest business network. And we are redefining customer engagement with our omni-channel e-commerce platform -- all of this in real-time demonstrating our clear commitment to be The Cloud Company powered by SAP HANA."

SAP saw a strong performance in EMEA, despite the situation in Ukraine. Non-IFRS software and software-related service revenue increased 8 percent year-over-year at constant currencies, the result of 51 percent growth in non-IFRS cloud subscriptions and support revenue for the region as well as strong software revenue growth in the UK and France.

At the time of writing, SAP shares have risen in value by 3.31 percent.

Financial results in detail are below:

Screen Shot 2014-07-17 at 08.58.59

Topics: SAP

About

Charlie Osborne, a medical anthropologist who studied at the University of Kent, UK, is a journalist, freelance photographer and former teacher. She has spent years travelling and working across Europe and the Middle East as a teacher, and has been involved in the running of businesses ranging from media and events to B2B sales. Charli... Full Bio

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