SAP boosted by strong demand for cloud

European software giant says cloud subscriptions and support revenue could overtake its software licence revenue by 2018.

SAP has said that by 2018 it expects its cloud subscriptions and support revenue to overtake its software licence revenue.

Europe's biggest software vendor said new cloud bookings -- one of its key success measures -- increased 103 percent in the full year 2015 to €883m and 75 percent in the fourth quarter to €344m. Cloud subscriptions and support revenue was €2.30bn, while operating profit was €6.35bn. For the full year, cloud and software revenue grew by 20 percent.

The company said that by 2017 it expects its "rapidly growing" cloud subscriptions and support revenue to be close to software licence revenue, and to overtake the next year -- at which point its cloud business will have reached a scale that "will clear the way for accelerated operating profit expansion."

SAP said that it is raising its 2017 forecast to reflect "excellent business momentum" and now expects cloud subscriptions and support revenue in a range of €3.8-€4.0bn in 2017, with total revenue now expected to be €23.0-€23.5bn. For 2015, total revenue was €20.81bn and operating profit was €6.35bn.

The company said that adoption of SAP S/4HANA "continues to accelerate sharply", with more than 2,700 customers at the end of 2015 -- more than doubling quarter over quarter.

"Our strength in 2015 shows that the S/4HANA innovation cycle is well underway," said Bill McDermott, CEO of SAP.

SuccessFactors Employee Central, the core of SAP's HR system, has now hit 1,000 customers, and SAP said that cloud bookings for Customer Engagement and Commerce saw triple-digit growth in 2015.

New cloud bookings for the business network -- which comprises Ariba, Fieldglass and Concur -- increased 187 percent in the full year to €309m, said SAP. According to the company, around two million companies trade over $740bn on the Ariba network; more than 32 million end users process travel and expenses with Concur; and customers managed over 1.9 million flexible workers in approximately 130 countries with the Fieldglass platform over the past 12 months.

SAP said its EMEA region saw an 11 percent increase in cloud and software revenue, including strong double-digit software licence performance in Germany and Russia. Cloud subscriptions and support revenue grew by 53 percent. The Americas region saw cloud and software revenue rising 27 percent:, with cloud subscriptions and support revenue growing 89 percent and new cloud bookings seeing double-digit growth. SAP's Asia Pacific Japan region saw cloud and software growth of 18 percent, while cloud subscriptions and support revenue grew 55 percent.

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