SAP Australia posts AU$22.5m loss as cloud and software revenue tip AU$557m

The local arm on the German software giant raked in AU$557.7 million from its cloud and software-related products for the 12-months to December 31, 2016.
Written by Asha Barbaschow, Contributor

SAP Australia has made its 2016 financial results available to the Australian Securities and Investments Commission (ASIC), reporting a net loss after tax of AU$22.5 million, down from its AU$18.4 million after-tax loss a year prior.

Cloud and software-related revenue totalled AU$557.7 million for the 12-month period, while services revenue was recorded as AU$343.6 million.

AU$28.7 million was also gained from the disposal of subsidiaries, SAP said.

"The company has delivered growth as it transitions from upfront software revenue to subscription-based cloud revenue," SAP Australia said in its ASIC filing. "Due to this growth, an increasing percentage of revenue is realised ratably over a three to five year period."

Expenses listed in the company's financial statement include AU$450.9 million labelled material expenses, while staff costs set the Australian arm back AU$326.2 million for the year.

SAP claimed an income tax benefit of AU$22 million for 2016.

In Australia, the principal activities of the company are to act as a distributor of SAP software, to provide maintenance and consultancy services, and to provide software-related training.

"In support of customer success, the company has invested significantly to establish its cloud capability and infrastructure in the country, including a net increase in staff, as well as the establishment of new facilities and datacentres," SAP said.

"The company expects revenue from the sale of SAP core products and the rendering of SAP services to continue to be strong."

Earlier this year, the Australian government's Department of Human Services (DHS) signed with SAP Australia to help it progress design work for the Welfare Payment Infrastructure Transformation (WPIT) Program that it is undertaking to transform Australia's 30-year-old payment system, currently responsible for processing over AU$100 billion in Centrelink payments annually.

The AU$3.4 million contract will see the software vendor work with DHS on the provision of preparatory planning and design work until May 19, 2017.

It is expected that SAP will play a large part in the WPIT project, after the company was announced as the department's software vendor of choice for overhauling the payments system when it went to tender in August.

At the time, DHS said it was yet to sign with SAP although contract negotiations were already underway. DHS then said in November it was already working very closely with SAP on what will be the co-design and building of a social protection suite.

In regards to the greater Asia Pacific region, cloud subscriptions and support revenue grew 43 percent for the year, while cloud and software revenue saw a 6 percent growth. Overall revenue for the APAC region touched €3.38 billion, which is up from €3 billion the previous year.

Globally speaking, for the 2016 financial year, SAP reported €5.12 billion in operating profit.

Cloud subscriptions and support revenue stood at €2.99 billion, with new cloud bookings increasing 31 percent to €1.15 billion. Its cloud subscriptions and support backlog, consisting of expected future cloud subscriptions and support revenue, reached €5.4 billion at year-end.

During the 12-month period, SAP's S/4HANA adoption doubled year over year to more than 5,400 customers. In the fourth quarter, SAP signed up 1,300 S/4HANA customers, which included Nike and Ameco Beijing.

In February, SAP unveiled the latest advancements to its S/4HANA ERP suite, which launched as a multi-tenant public cloud effort and includes a bevy of new features.

In its first quarter results released earlier this week, SAP reported €1.198 billion in operating profit on revenue of €5.285 billion.

For the three-months ending March 31, 2017, SAP said cloud bookings were up 49 percent in comparison to Q4 2016, reaching €215 million.

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