'

SAP Q2 2018: Strong cloud adoption raises financial outlook

SAP has managed to beat Wall Street expectations as cloud business revenue continues to grow.

SAP has reported strong financial results in the second quarter of 2018 and has raised the firm's financial outlook for the year.

SAP announced its financial results for the second quarter and half-year results ending 30 June 2018 on Thursday (statement).

In Q2 2018, total revenue was reported as €5.99 billion ($6.95bn), or €6.014bn non-IFRS, up four percent year-over-year or 10 percent non-IFRS at constant currencies.

SAP reported earnings per share of €0.60 IFRS, an increase of eight percent year-over-year, or €0.98 non-IFRS.

SAP beat Wall Street earning expectations of €5.86 billion.

TechRepublic: SAP revamps its pricing model to account for indirect access: Here's what you need to know

Net profit reached €720 million ($835 million) or €1.173 bn ($1.361 million) non-IFRS at constant currencies. SAP reported net profit of €666 million last year.

Operating profit based on IFRS rose 13 percent to 1.04 billion euros in comparison to 926 million in Q2 2017. Non-IFRS results were reported as 1.64 billion euros. New cloud bookings grew by 24 percent -- or 29 percent at constant currencies -- in Q2 2015, resulting in financial results of €421 million.

Cloud subscriptions and support revenue grew 30 percent year-over-year to €1.213 billion, or €1.227 billion, up 40 percent non-IFRS.

Cloud and software revenue reached 4.944 billion euros, an increase of four percent on 4.757bn euros year-over-year, or 4.959 billion euros non-IFRS.

SAP announced the expectation of positive impact on revenue from the adoption of IFRS 15 this year. In Q2, SAP enjoyed an increased reported operating profit of approximately €54 million due to IFRS 15.

In the six months ending 30 June 2018, basic earnings per share were €1.20 IFRS, based on a total revenue of €11.26 billion and profit after tax of €1.428 billion.

Cloud subscriptions and support revenue was reported at €2.283 billion, while software licenses and support revenue reached €7.012 billion.

The strong financial report has also led to an increase in SAP's business outlook. For the full fiscal year, SAP now expects non-IFRS cloud subscriptions and support revenue to be in the range of €5.050 billion to €5.200 billion at constant currencies, in comparison to 2017's results of €3.77 billion.

Previously, SAP expected results to fall within the range of €4.95 billion to €5.15 billion.

Non-IFRS cloud and software revenue is now expected to be in the range of €21.025 to €21.250 billion at constant currencies, up 7.5 percent to 8.5 percent. SAP's earlier outlook suggested revenue would fall between €20.85 to €21.25 billion at constant currencies.

Total revenue over 2018 is expected to be in a range of €24.975 billion to €25.300 billion non-IFRS at constant currencies, an increase of €23.46 billion in 2017.

Non-IFRS operating profit is expected to settle within the range of €7.4 billion to €7.5 billion at constant currencies, up nine to 11 percent. This is an increase from SAP's previous estimate of €7.35 billion to €7.50 billion.

Beyond 2018, SAP has also updated the firm's outlook heading into 2020. SAP now expects non-IFRS results in 2020 to reach €28 to €29 billion non-IFRS in total revenue and €8.5 to €9.0 billion in operating profit.

In addition, SAP expects non-IFRS cloud subscriptions and support revenue to reach between €8.2 and €8.7 billion.

screen-shot-2018-07-19-at-09-21-28.jpg
screen-shot-2018-07-19-at-09-21-34.jpg

CNET: SAP says business can solve the world's problems (really)

Previous and related coverage