SAP Earnings Takeaways: Cloud Subscriptions Fuel Growth
Software giant SAP (NYSE:SAP) reported its second quarter earnings on Wednesday, July 20th. The company posted strong figures in the quarter ending June 30, with revenues growing 5% over the prior year quarter to $5.91 billion, primarily due to the strong performance of the Cloud business. Operating income increased by 85% year over year to $1.4 billion, driven by strong performance of the Cloud and Software segments and substantial reductions in restructuring costs. SAP Business Networks also performed strongly in the quarter, with the division’s revenues increasing 19.5% on a y-o-y basis to over $500 million. fueled by growth in the SAP S/4HANA customer base, which expanded by 500 during the quarter and is now at 3700.
Cloud Subscriptions & Support
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The cloud segment’s revenue witnessed a 30% rise in the quarter to $813 million. The growth was witnessed across the globe, with revenues from the Americas region rising 29% y-o-y, the European region seeing 41% y-o-y growth, and Asia-Pacific seeing stellar growth of 47% over the prior year quarter.
SAP Business Network
The SAP Business Network’s revenues grew 19.5% on a y-o-y basis, driven by greater adoption of S/4HANA and the company’s applications such as Concur and Ariba.
Outlook for the Year
Buoyed by the results in the quarter ended June 30th, the company has reiterated its guidance for the full year. The company expects its revenue from the cloud to be in range of €2.95 – €3.05 billion. The company also expects its operating profit for the fiscal year to be in the range of €6.4 – €6.7 billion.