SAP Q1 shows cloud, HANA and mobile pushing growth

Big increases in revenues from cloud and SAP HANA in-memory software have provided the growth in the vendor's first-quarter results, but on-premise sales miss expectations.
Written by Toby Wolpe, Contributor on

SAP's cloud and SAP HANA sales have jumped again, but new on-premise licence revenue has fallen below estimates in the company's first quarter results.

The business software maker has started 2013 with a 373 percent year-on-year increase in cloud subscriptions and support revenue, bringing in €137m compared with 2012's €29m.

First-quarter revenue from SAP HANA in-memory software, which speeds up data operations, has tripled over the same period in 2012, contributing €86m. The company also reported double-digit growth in its mobile business — running at some 45 percent for the EMEA region.

SAP reported operating profits of €646m up two percent, on revenues of €3.6bn. However, sales of new software licences, by far the biggest part of its business, increased to €657m, which was below analyst estimates.

SAP EMEA president Franck Cohen attributed that shortfall to the performance of the Asia-Pacific-Japan region.

"The issue in Asia-Pacific this quarter was more an execution issue related to the fact that we had a lot of changes in the management team and some government changes. So overall I think it was more to do with that," Cohen said.

"We still continue to be quite optimistic about APJ delivering according to expectations on the full-year basis."

Cohen said the performance of the cloud, mobile and in-memory technology demonstrates their importance to SAP in the longer term.

"The reason why we're still performing better than most of our competitors is because of our HANA, our mobile and our cloud strategy — much more than the typical ERP solutions," Cohen said.

"These are the growth engines that really resonate today for managers in fields who want to innovate and who want to get out of these market crisis conditions," he said.

To illustrate the importance of these new areas to the company he suggested focusing on mobile and in-memory computing. "If I look at our HANA software revenue and add our mobile revenue, which is a much smaller portion, it has represented more than 20 percent of our total software revenue in EMEA in Q1," he said.

"That's a significant growth engine that was almost not there two years ago."

However, Cohen said the take-up of cloud remains patchy, with high use in North America, the UK and Ireland, the Nordic region, and the Netherlands, but lower adoption in the south of Europe, but virtually nothing in the Middle East and Africa.

"The US is shifting massively to the cloud and I think the UK is not far behind. It's a very contrasted picture but the shift in North America to the cloud is even faster than expected," Cohen said.

The company's headcount of 64,598 is up nine percent on the figure of 59,420 in the first quarter of 2012, and marginally up on the last quarter.

SAP Q1 2013 results
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