SAP's strong cloud growth continues, results mixed

SAP reported that its cloud business grew 32% during the second quarter and said that it is the fastest-growing enterprise cloud company “at scale,” which it considers to be an annual cloud revenue run rate of more than $1.3 billion (roughly a billion Euros).
SAP’s annual revenue from cloud services is now approaching $1.6 billion, the company said, which represents 37% year-over-year growth at constant currencies. The company has more than 38 million total cloud application subscribers. For the second quarter, SAP reported that its total revenues grew about 2% compared to the same period last year, to about $5.6 billion. Its profit after tax was down significantly, however, dropping 23% to about $752 million.
Despite the mixed results, SAP’s stock increased from around $79.50 trading on Wednesday to above $81 after its results went public.
The company launched a new business division to focus solely on the technology needs of small and medium businesses with less than 500 employees, which are being driven by the growth in mobile and cloud computing. This follows on its “Industry Cloud” launch for building cloud solutions for various industry verticals.
“We are successfully executing our shift to the cloud helping customers run simple – from total workforce management in the cloud to frictionless commerce through the world’s largest business network,” said Bill McDermott, SAP’s CEO, in a statement. He added that the company is “redefining customer engagement with our onmi-channel e-commerce platform – all of this in real time, demonstrating our clear commitment to be the cloud company powered by SAP HANA.”
SAP reported that its e-commerce platform, in combination with its Cloud for Sales offering, saw triple-digit growth in software revenue, cloud subscriptions and support revenue. SAP’s in-memory data platform for analytics, SAP HANA, now has more than 3,600 customers, as well as more than 1,200 customers for SAP’s business suite on HANA.
Regionally, SAP saw its biggest growth in the Asia-Pacific region. SAP reported software and software service growth of 12% if currencies were held constant, with cloud subscriptions and support up by 48%. The company reported that it saw 8% year-over-year growth at constant currencies in Europe, the Middle East and Africa, and “solid performance” in the Americas with a 6% year-over-year growth rate in non-international financial reporting standards revenue. The Americas is continuing a fast transition to cloud, SAP said, with 34% growth in cloud subscriptions and support revenues at constant currencies. SAP saw strong growth in Canada in terms of software revenues and says there are “tremendous growth opportunities” in Latin America. The company’s workforce is 4% larger than in the second quarter of last year.