SAP has reported its third-quarter financial results, with strong cloud revenue reported and a respectable increase in new cloud bookings over the financial period.
SAP's Q3 2019 earnings (statement) reveal revenues of €6.79 billion IFRS or €6.80 billion non-IFRS, up 13 percent year-over-year with basic earnings per share of €1.04 (€1.30 non-IFRS), an increase of 28 percent in comparison to Q3 2018.
SAP reported an operating profit of €1.68 billion IFRS, which has increased by 36 percent year-over-year due to "disciplined hiring and accelerated operating efficiency gains [and] IFRS operating profit additionally benefitted from lower share-based compensation expenses," according to SAP.
Non-IFRS operating profit was up 20 percent non-IFRS percent or 15 percent non-IFRS at constant currencies.
New cloud bookings were up 39 percent, reaching €572 million -- 34 percent at constant currencies and up 51 percent excluding Infrastructure-as-a-service (IaaS). Cloud revenue grew by 37 percent year-over-year to €1.79 billion IFRS, up 37 percent non-IFRS and 33 percent non-IFRS at constant currencies.
Software license revenue reduced by one percent to €932 million IFRS or down four percent non-IFRS at constant currencies.
Cloud and software revenue grew by 12 percent year-over-year to €5.63 billion IFRS and up 13 percent non-IFRS and 10 percent non-IFRS at constant currencies.
The three main business segments SAP reports on, "Applications, Technology & Services," "Customer Experience" and "Intelligent Spend Group" performed well over the third quarter of 2019.
Applications, Technology & Services revenue increased by 9 percent to €5.52 billion year-over-year.
SAP S/4HANA added an additional 500 customers in Q3 2019. SAP S/4HANA now accounts for over 12,000 customers, up 25 percent year-over-year.
On Monday, SAP announced a go-to-market partnership with Microsoft to accelerate customer adoption of SAP S/4HANA and SAP Cloud Platform on Microsoft Azure.
Under the terms of the "Project Embrace" partnership, Microsoft will resell components of the SAP Cloud Platform alongside Azure.
"This unique offering is aimed at more easily migrating SAP ERP application and SAP S/4HANA customers from on-premise to the public cloud," SAP says.
The cloud vendor says the three-year deal contributed 18 percentage points to the 39 percent of Q3 new cloud bookings growth.
SAP's Intelligent Spend Group revenue was up 23 percent to €828 million year-over-year, or up 18 percent at constant currencies.
In the Customer Experience category, SAP reports revenue of €371 million, a boost of 75 percent year-over-year, or 69 percent at constant currencies.
"In April we promised a stronger focus on profits and here we go: Q3 marks yet another milestone in delivering on this commitment," said Luka Mucic, SAP CFO. "Q3 is also a manifesto of us keeping our second promise: continued strong top-line momentum. Despite continued macro uncertainties, we couldn't be more confident to make 2019 another stellar year for SAP."
In July, SAP reported Q2 revenue of €6.63 billion IFRS with basic earnings per share of €0.48. Operating profit of €0.83 million IFRS was reported, a decline of 21 percent due to restructuring.