SAP Q2 sees 9 percent drop in Asia sales

Software giant reports a 3 percent drop globally in software license sales to US$1.3 billion in second-quarter 2013, with Asia clocking a 9 percent dip as China economy slows.
Written by Eileen Yu, Senior Contributing Editor

SAP has reported a 3 percent drop in global software sales in second-quarter 2013, with a 9 percent dip in Asia alone, but saw its overall revenue climb 8 percent to 4.09 billion euros (US$5.38 billion). 

Software revenue fell to 982 million euros (US$1.29 billion), while cloud subscriptions and support proved to be the German company's stellar performer climbing 171 percent year-on-year to 183 million euros (US$240.4 million). Support revenue also increased 11 percent to 2.18 billion euros (US$2.87 billion). For the quarter, the software vendor clocked 874 million euros (US$1.15 billion) in net profit, up 5 percent from the same quarter 2012. 

At an earnings briefing Thursday, SAP said performance in the Asia-Pacific region, including Japan, was below expectations primarily due to continued macroeconomic challenges, which it said was a trend also felt by its competitors. 

Software revenue and cloud subscription revenue for the region dipped 7 percent to 181 million euros (US$237.81 million). 

China, in particular, saw a slowdown in GDP (Gross Domestic Product) to 7.5 percent in the second quarter, which SAP said had impacted IT spending by state-owned enterprises. This resulted in revenues that were below expectations, it said. 

It also pointed to lower IT purchasing in Australia and Japan, which are two of SAP's largest markets in the Asia-Pacific region. Some markets in though, such as Southeast Asia and India, saw leadership changes which drove strong growth in software revenue, the vendor said. 

Despite the tough Asia-Pacific macroeconomic environment and the industry's "rapid transition to the cloud", which had resulted in lower-than-expected software revenue, SAP said it still expects to see a double-digit growth of least 10 percent growth in software and software-related service revenue for the full year. 

This number, however, is a lower revision of its previous forecast of 11 to 13 percent. 

SAP pointed to positive outlook for its real-time business platform, Hana, which it said "continues to be a major growth engine" contributing 102 million euros (US$134.01 million) revenue at 21 percent growth year-on-year. The in-memory based software is forecast to bring in 650 million to 700 milllion euros (US$854.02 million to US$919.72 million) revenue for 2013, fueled by "strong customer interest" in SAP Business Suite and Hana Enterprise Cloud. 

Looking at its performance in other regions, software and cloud subscription revenue grew 18 percent year-on-year in the Americas, with cloud contributing over 25 percent of SAP's overall revenue in this product category. EMEA saw a 3 percent growth.

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