SAP has reported strong financial results in the third quarter of 2018 and has once again raised the firm's financial outlook for the year.
SAP announced its financial results for the third quarter on Thursday (statement).
In Q3 2018, total revenue was reported as €6.02 billion IFRS, or €6.031 billion non-IFRS, up eight percent year-over-year or 10 percent non-IFRS at constant currencies.
SAP reported earnings per share of €0.82 IFRS, a decrease of one percent, and increased by 13 percent to €1.14 non-IFRS, beating analyst expectations as polled by Reuters.
New cloud bookings increased by 36 percent over the quarter -- 37 percent at constant currencies -- whilst cloud subscriptions and support revenue surged by 39 percent year-over-year, earning SAP €1.30 billion IFRS, or up 41 percent non-IFRS at constant currencies.
Cloud and software revenue grew by seven percent year-over-year to €5.01 billion IFRS, an increase of 10 percent non-IFRS at constant currencies.
As a facet of total revenue, SAP says that cloud subscriptions, support revenue, and software support revenue have grown by three percent in comparison to last year's financial results, reaching 68 percent in the third quarter.
Software revenue did not perform quite as well, declining nine percent year-over-year to €937 million IFRS, or eight percent non-IFRS at constant currencies.
"While SAP had a strong software revenue performance in APJ and Greater China, customers in the Americas and parts of EMEA were moving faster than expected to cloud and hybrid models," the company said.
In order to capitalize on this trend, SAP has introduced new cloud and software licenses, in which the new category has reported growth of 12 percent at constant currencies year-over-year in Q3 2018.
Operating profit has declined by six percent year-over-year to €1.24 billion IFRS and increased by 11 percent non-IFRS at constant currencies.
"The IFRS operating profit was mainly impacted by higher share-based compensation expenses," SAP says.
In addition, operating cash flow has taken a hit in the third quarter. Reported as €3.48 billion, this figure is down 16 percent year-over-year, which the cloud services provider says is due to "higher share-based compensation payments, higher tax, and insurance payments as well as currency headwinds."
SAP expects a positive impact on financial results through the adoption of IFRS 15, a new accounting and reporting standard, during the course of this year.
In Q3, SAP says the new standard has resulted in a positive impact on operating profit of approximately €74 million.
The company has raised its financial outlook for the year, expecting total revenues to increase by 7.5 -- 8.5 percent, an increase from previous expectations of 6 -- 7.5 percent.
"SAP is the fastest growing cloud company at scale in the enterprise software applications industry," SAP CEO Bill McDermott said. "Our growth drivers are firing on all cylinders, especially SAP C/4HANA and SAP S/4HANA as foundations of the Intelligent Enterprise. With a stronger than ever Q4 pipeline, we confidently raise our full year guidance."
In Q2 2018, SAP reported revenue of €5.99 billion, or €6.014bn non-IFRS, up four percent year-over-year or 10 percent non-IFRS at constant currencies.