SAP revenue grows 13% to €6.79 bn in third quarter

Business software supplier SAP said its revenue grew 13 percent to €6.791 billion during the third quarter of 2019.
SAP HANA business customers

“Our third quarter results reflect the momentum we’ve built entering the final quarter of the year and more broadly where we are on our journey of growth and operational excellence,” said Jennifer Morgan and Christian Klein, co-CEOs of SAP.

New cloud bookings rose 39 percent to €572 million and grew 51 percent excluding Infrastructure-as-aService (IaaS). A partnership with Microsoft contributed 18 percentage points to the 39 percent Q3 new cloud bookings growth. The deal has a term of 3 years, with revenue recognition starting in the fourth quarter 2019.

Cloud revenue grew 37 percent to €1.79 billion. Software licenses revenue was down 1 percent to €932 million. New cloud and software order entry was up 20 percent in the third quarter.

Cloud and software revenue grew 12 percent to €5.63 billion. Total revenue grew 13 percent to €6.79 billion. The share of more predictable revenue grew by two percentage points to 69 percent in the third quarter.

Cloud gross margin increased 5.9 percentage points to 64.5 percent. Operating profit increased 36 percent to €1.68 billion. Operating margin increased 4.2 percentage points to 24.7 percent.

SAP said the business software company’s operating profit in the third quarter benefitted from disciplined hiring and accelerated operating efficiency gains.

SAP has added over 500 S/4HANA customers in the quarter. SAP has more than 12,000 S/4HANA customers. 40 percent of the additional S/4HANA customers were new.

The latest S/4HANA customers are State of Nevada, Grupo Crystal and BrandX, Dow Jones, Callaway Golf, Daewoong Pharmaceutical and Breitling. British Telecom and CIE Automotive have chosen S/4HANA in the Cloud. McDonald’s UAE and Xinjiang Daming Mining Group have gone live on S/4HANA Cloud.

SAP SuccessFactors Employee Central, the flagship of SAP’s HCM offering, added more than 150 customers in the quarter and has now more than 3,500 customers. Vonovia SE was one of many competitive wins and the International Committee of the Red Cross went live on SAP SuccessFactors this quarter.