SAP off to a slow start in the US, but cloud revenue grows in Q1

Company also says it signed 300 new S/4 HANA customers during the quarter.
Written by Steve Ranger, Global News Director

SAP said its cloud revenue growth is "ahead of its mid-term aspirations".

Image: KochPhoto

SAP said it had a sluggish start to the year in the US and has seen some deals pushed back into April.

In its preliminary results for the first quarter, SAP described what is traditionally its quietest quarter of the year as one of "solid growth". However according to Bloomberg, the software and services giant missed financial analysts' estimates for revenue and profit. SAP blamed this shortfall on its performance in the Americas, with SAP CEO Bill McDermott telling Bloomberg that contracts in the region had been pushed into April.

SAP said continuing political and macroeconomic instability in Latin America, in particular in Brazil, had an impact. Its North America division also had a "slower than anticipated" quarter. But it said the second quarter got off to a strong start, with several software and cloud deals closing in early April.

Releasing its preliminary financial results for the first quarter ended 31 March, the company said total revenue for the quarter reached €4.73bn, operating profit stood at €810m, and cloud and software revenue increased to €3.85bn.

SAP said its cloud growth is "ahead of its mid-term aspirations": cloud subscriptions and support revenue grew 33 percent year-over-year and new cloud bookings grew 22 percent.

It said it now has 3,200 customers for its S/4HANA software and added more than 500 customers for the in-memory database technology in the quarter -- roughly one third of which are new SAP customers.

SAP still makes most of its money from software licences and support, although the company is gradually shifting to a more cloud-based revenue model.

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