SAP shines with cloud revenue in Q3 2017, raises outlook

SAP revenue Q3 2017Business software major SAP posted revenue of €5.59 billion (+4 percent) and operating profit of €1.314 billion (+19 percent) in the third quarter 2017 ended September 30, 2017.

SAP recorded cloud and software revenue of €4.657 billion (+5 percent) and Cloud subscriptions and support revenue of €937 million (+22 percent) in Q3.

SAP said digital core business soars with over 6,900 S/4HANA customers – achieving around 70 percent growth.

“Led by S/4HANA, we are delivering intelligent business applications built on the most data rich architecture ever created. We see growth in every corner of the business, which is why we are again raising our guidance for the full year,” said Bill McDermott, CEO of SAP.

Kelsey Mason, analyst at TBR, said SAP’s cloud revenue growth stalls in Q3 ahead of expected gains in Q4 fueled by transformational engagements

Kelsey Mason said SAP has turned its focus to high-value digital transformation engagements over point-product sales. The company has a compelling portfolio in SAP Leonardo that lends itself to a more approachable and differentiated “digital evolution” strategy, but more tuned messaging and help from partners will be critical to the strategy’s success.

Digital transformation deals come with greater fourth-quarter seasonality due to enterprise buying patterns, which caused a slowdown in SAP’s Q3 cloud subscription and support revenue growth.

Regional Revenue

EMEA region

Cloud and software revenue +8 percent
Cloud subscriptions and support revenue +42 percent

MENA region

Strong double-digit software revenue growth

Americas region

Cloud and software revenue +2 percent
Cloud subscriptions and support revenue +13 percent

APJ region

Cloud and software revenue +2 percent
Cloud subscriptions and support revenue +30 percent

The German software company said S/4HANA adoption grew to more than 6,900 (70 percent) customers. SAP S/4HANA added approximately 600 additional enterprise customers of which more than 40 percent were net new. Shell and China International Marine Containers are the latest customers of S/4HANA.

SAP said SuccessFactors Employee Central, which is the core of HCM offering, had more than 2,000 customers at the end of the third quarter.

La Liga (Spanish Football League) and Bancolombia, a commercial bank in Colombia, selected SAP’s workforce management solutions.

Concur, using the Ariba Network, helps close to 50 million end users effortlessly process travel and expenses.

SAP Fieldglass customers manage over 3.9 million contingent workers in more than 180 countries. SAP Business Network revenue rose 19 percent to €578 million.

SAP said that Japan and Australia had very strong in cloud subscriptions and support revenue. Australia had triple digit growth and China had strong double-digit growth in software revenue.

The company expects cloud subscriptions and support revenue to be in a range of €3.8 billion to €4 billion in 2017 against €2.99 billion in 2016.

SAP said Cloud and software revenue will increase by 7 percent to 8.5 percent against €18.43 billion achieved in 2016.

SAP expects total revenue of €23.4 billion to €23.8 billion in 2017 as compared with €22.07 billion in 2016.

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