Business

SAP's Q1 solid as currency boosts revenue

The company says it has 370 early customers of S/4HANA amid a first quarter that received a nice tailwind from currency fluctuations.

Written by Larry Dignan, Contributor April 21, 2015 at 2:42 a.m. PT

SAP reported better-than-expected first quarter results as it gained a nice tailwind from a stronger U.S. dollar.

Amid technology companies bemoaning a stronger U.S. dollar, SAP is one of the few tech vendors who will take a stronger greenback and run. SAP reports its results in euro and a stronger U.S. dollar boosts its sales.

IBM has the opposite problem because two-thirds of its revenue comes from overseas and results are in the U.S. dollar. As a result, its first quarter sales were flattish in constant currency, but down 12 percent as reported.

For SAP, the first quarter earnings release had a similar theme---all cloud and all HANA for growth with licensing holding the fort.

Also see: SAP's S4/HANA master plan: The lingering questions

The company reported first quarter net income of €413 million, down from €534 million in the same quarter a year ago. Revenue for the first quarter was €4.45 billion, up 22 percent from a year ago. In constant currency, SAP reported sales growth of 10 percent.

Software licensing sales for the first quarter was up 12 percent, or 1 percent under constant currency. Cloud subscriptions and support revenue was €503 million, up from €219 million a year ago.

In a statement, SAP CEO Bill McDermott said "we are a strong growth company" and cited early traction for S/4HANA, which was launched early in the quarter, and 370 early customers.

SAP's Business Network sales were €368 million in the first quarter. SAP's Business Network is aimed at creating a commerce network and includes Ariba, Concur and Fieldglass in one unit.

As for the outlook, SAP reiterated its outlook. SAP sees cloud and support revenue of about €1.95 billion to €2.05 billion at constant currencies excluding charges for 2015. For the year, cloud and software revenue will gain 8 percent to 10 percent at constant currency. Operating profit for 2015 will be €5.6 billion to €5.9 billion at constant currencies.

SAP said that it saw strong cloud traction in Europe, primarily driven by the United Kingdom. Germany was also strong, but Russia and Ukraine struggled amid political turmoil. Americas revenue was strong led by Brazil growth and Japan sales did well.