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SAP CFO says pipeline looks very healthy

Profit after tax was pinned at €469 million euros. The operating-profit margin shrank to 28 percent, missing the 28.5 percent predicted by analysts.

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In the first six months, these software license revenues dropped by 4 percent, excluding currency effects.

SAP said second-quarter operating profit, excluding special items, rose 13 per cent to €1.39 billion ($1.50bn), the bottom of analyst estimates ranging from €1.39bn to €1.45bn in a Reuters poll.

The financial results, ending June 30 2015, revealed strong growth in SAP’s cloud sector.

Cloud subscription and support revenue from continuing operations jumped 129 per cent to €555 million from €242m in the second period of a year ago.

Total revenues climbed 20 percent to 4.97 billion euros from 4.15 billion euros.

IFRS software licenses revenue was €979 million, a small, two percent jump – or seven percent decrease at constant currencies – based on Q2 2014’s €957 million.

Full year non-IFRS cloud and software revenue is still expected to increase 8 to 10 percent at constant currencies, from 14.33 billion euros reported last year.

Growth was solid in the EMEA region, with a non-IFRS increase of 10 percent in cloud and software revenue.

SAP is battling alongside established USA software makers such as Oracle, IBM and Microsoft to boost Internet-based software sales and fend off pure cloud-based rivals Salesforce.com, Workday and, less directly, industry pacesetter Amazon.com’s web unit.

SAP shares fell more than 2 percent in early trading, though by 0945 GMT there were up 0.8 percent at 69.27 euros. The company expects full-year 2015 non-IFRS operating profit to be in a range of 5.6 billion – 5.9 billion euros at constant currencies, compared to 5.64 billion euros earned in 2014.

German business software maker SAP posted quarterly profit at the low end of forecasts, hit by weak sales of its traditional packaged software and a rapid shift by customers to lower-margin cloud software delivered via the Internet.

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However, SAP has warned that currency exchange rate changes have the potential to alter these predictions. “This momentum showed across our entire cloud and business network portfolio”. Our business is thriving because we have the most complete vision for how to make this transition to digital business a simple one.

Second Quarter Profits of Business Software Provider SAP Drops Due to Higher Expenditures