Business software major SAP announced its financial results for the first quarter 2017 with revenue showing 12 percent growth to €5.285 billion.
“Led by S/4HANA, we are seeing mass customer adoption of our solutions globally,” SAP CEO Bill McDermott said.
TBR in a research note said SAP Business Suite 4 SAP HANA (S/4HANA), which has more than 5,800 customers, is largely responsible for the reinvigoration of SAP’s on-premises business and creates pull-through cloud revenue around line-of-business applications such as SuccessFactors, Ariba and Concur.
Cloud subscriptions and support revenue grew 34 percent to €905 million. Software revenue grew 13 percent to €691 million. New cloud and software license order entry grew more than 30 percent in the first quarter. Cloud and software revenue was €4.33 billion (+12 percent).
SAP said total cloud subscriptions & support revenue and software support revenue was 69 percent of total revenue.
Operating profit fell 17 percent to €673 million.
S/4HANA adoption grew to more than 5,800 customers. 400 additional customers signed up of which almost 50 percent were new SAP customers. Citrix and iColor chose the S/4HANA Cloud edition. Innogy selected S/4HANA.
C&J Energy Services, a provider of oil and gas services selected SAP Cloud Platform to help build digital field ticketing applications, that allows rig supervisors to accurately capture job information and synchronize to the back-end SAP S/4HANA Finance system.
SuccessFactors Employee Central, which is the core of HCM offering, had close to 1,700 customers at the end of the first quarter. Companies like Dolce & Gabbana selected SAP’s workforce management solutions in the first quarter.
SAP’s CEC solutions achieved strong double-digit cloud subscriptions and support revenue growth as well as double-digit growth in software revenue.
On the Ariba Network, more than 2.7 million companies in over 180 countries collaborate and trade more than $900 billion in goods and services. Concur helps more than 47 million end users process travel and expenses.
With SAP Fieldglass customers manage over 3.3 million contingent workers in approximately 140 countries. Cloud subscriptions and support revenue in the SAP Business Network segment rose 24 percent.
Kelsey Mason, analyst at TBR, said SAP continues to diverge from the performance of its traditional software peers, experiencing growth in both its cloud and on-premises software businesses while maintaining relatively stable, positive corporate margins.
SAP’s reputation among customers remains tied to its legacy roots. Investments in emerging technology, such as Internet of Things, machine learning and blockchain, will help reverse that perception. SAP’s continued push down market has expanded the company’s addressable market, with more than 1,000 new SMB customers added
SAP in regions
In the EMEA region, cloud and software revenue increased 10 percent. SAP said Cloud subscriptions and support revenue grew 43 percent in Germany, France and Italy. SAP had triple-digit software revenue growth in South Africa and the Netherlands.
SAP had a strong performance in the Americas region with cloud and software revenue growing by 12 percent. Cloud subscriptions and support revenue rose 27 percent, driven by performance in Canada and Mexico with high double-digit growth. In North America, SAP had double-digit growth in software revenue. In Latin America Brazil was a highlight with strong software revenue growth.
SAP had an exceptional performance in both cloud subscription and software revenue in the APJ region. Cloud and software revenue rose 21 percent, with cloud subscriptions and support revenue growing by 65 percent.
SAP revenue from both cloud subscriptions and software was impressive in Japan and India. SAP also had strong double-digit software revenue growth in Greater China and South Korea.
