SAP reported revenue growth in the second quarter driven by growth in cloud subscriptions and revenue from support and its HANA in-memory database.
However, the company lowered its growth outlook for software and software-related service revenue for the full year 2013, citing lower software revenue expectations as a result of macroeconomic challenges, particularly in Asia Pacific and Japan, and a rapid transition to the cloud.
The business software company said Thursday that its revenue grew 4 percent to €4 billion ($5.3 billion) from the same quarter last year, according to IFRS (international financial reporting standards). Profit grew 10 percent to €724 million.
Software and software-related service revenue grew 6 percent year-on-year to €3.3 billion although revenue from software dropped 7 percent to €982 million. Cloud subscriptions and support revenue increased 206 percent to €159 million, while support revenue grew 8 percent year-on-year to €2.2 billion.
Non-IFRS software and cloud subscription revenue in the Asia Pacific and Japan region declined 7 percent, although it was up 18 percent in the Americas, as the company saw strong growth in software revenue in markets in Latin America, particularly Brazil.
SAP said HANA was a major “growth engine” and contributed to €102 million in software revenue, growing 21 percent year-on-year in the quarter. The company continues to expect HANA software revenue to be between €650 million and €700 million in 2013. Strong customer interest in SAP Business Suite powered by HANA which was made generally available in May and HANA Enterprise Cloud, a new hosting service based on the platform, are expected to drive adoption of HANA, it said.
The company also reported that non-IFRS “deferred cloud subscription and support revenue” was €361 million at the end of the quarter, a year-over-year increase of 68 percent. Deferred cloud subscription and support revenue includes committed future cloud subscription and support revenue already paid by the customer for subsequent quarters of the year.
A downgraded outlook
SAP, however, forecast at least 10 percent growth in non-IFRS software and software-related service revenue at constant currencies for the full year 2013, down from 11 to 13 percent forecast in the last quarter. It, however, maintained its full year 2013 non-IFRS operating profit outlook to be in the range of €5.85 billion to €5.95 billion at constant currencies, up from €5.21 billion in 2012. SAP continues to expect non-IFRS cloud subscription and support revenue of around €750 million in 2013 at constant currencies, from €343 million last year.
The 2013 revenue and profit figures include the revenue and profit from SAP’s acquisition of cloud-based human capital management tools company SuccessFactors and cloud-based e-commerce vendor Ariba. The comparative second quarter numbers for 2012 do not include Ariba as the acquisition did not occur until Oct. 1, SAP said.