SAP posts strong revenue growth, meets Q3 forecast

Thanks to HANA and cloud, SAP has met its financial forecast and has posted strong Q3 performance.
Written by Charlie Osborne, Contributing Writer

SAP has posted strong Q3 financial results due to the success of its HANA and cloud-based businesses, although software sales continue to decline.


On Monday, the enterprise solutions provider announced third-quarter results including revenue of €4 billion, a increase of two percent year-on-year. In addition, IFRS profit margins reached €762 million ($1.04bn).

Non-IFRS profit after tax was €933 million ($1.27bn), in comparison to €836 million in 2012, an increase of 12 percent. IFRS basic earnings per share was €0.64, an increase of 23 percent, and non-IFRS basic earnings per share are €0.78, an increase of 11 percent.

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The company also said that in-memory database system HANA is on its way to reach €1 billion in revenue since its market launch approximately two years ago. HANA revenue rose 79 percent at actual currencies to €149 million ($204m), and has signed up 2,100 customers. According to the firm, customers are showing a "strong interest" in the SAP HANA Enterprise Cloud.

SAP says it now has the largest subscriber base in the cloud market, tallying 33 million users with an income of over €1 billion annually. Third quarter non-IFRS software and cloud subscriptions revenue increased 13 percent at constant currencies year-over-year -- 6 percent at actual currencies to €1.17 billion ($1.60bn).

The company said non-IFRS deferred cloud subscription and support revenue -- including future subscription commitments -- was €382 million ($522m) as of September 30 this year, a year-on-year increase of 79 percent.

However, it is not all good news for SAP. Non-IFRS Software revenue fell quarter-on-quarter to €977 million ($1.34bn), a decrease of two percent at constant currencies.

Werner Brandt, CFO of SAP said:

"SAP had a very strong performance in the third quarter, considering the mixed macroeconomic environment and the strong currency headwinds. Our ongoing focus on operating discipline while successfully scaling our cloud business is paying off. We continued our double-digit growth momentum and increased our Non-IFRS operating margin by 180 basis points at constant currencies."

In the nine months ending 30 September 2013, SAP reported non-IFRS total revenue of €11.78 billion, an increase of five percent. Non-IFRS software revenue was €2.62 billion, a decrease of 4 percent -- flat at constant currencies, while overall non-IFRS software and software-related service revenue reached €9.65 billion.

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Non-IFRS operating profit was €3.42 billion, an increase of five percent -- 12 percent at constant currencies. The firm's IFRS operating margin was 22.9 percent, and non-IFRS operating margin was 29 percent.

Operating cash flow was €3.04 billion ($4.15bn) a decrease of 1 percent, while free cash flow was €2.64 billion, a decrease of two percent.

SAP has not changed its outlook for the full 2013 fiscal year. The firm expected full-year non-IFRS software and software-related service revenue to increase by at least 10 percent, and non-IFRS cloud subscription and support revenue to reach around €750 million. In addition, HANA-based revenue is expected to be within the range of €650 - €700 million, and non-IFRS operating profit to be roughly €5.85 billion. However, SAP has also warned that exchange rates may have a future negative impact on the firm.

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