Though SAP (SAP +2%) missed Q2 revenue estimates (while beating on EPS), it's reiterating its forecast for 6%-8% constant currency software and software-related service revenue growth. Cloud subscription/support revenue is now expected to make up €1B-€1.05B of that total, up from €950M-€1B.
2014 constant op. profit guidance of €5.8B-€6B is being reiterated. If currency rates remain at June levels, forex is expected to have a 2% 2014 impact on revenue and op. profit growth.
Cloud subscription/support revenue rose 32% Y/Y (to €242M) in Q2, even with Q1's clip. Traditional software license revenue (hurt by cloud competition) fell 2% (to €957M), an improvement from Q1's 5% decline. Support revenue (based on past deals, fairly stable) rose 4% (to €2.28B) vs. 5% in Q1.
Cost controls helped drive the EPS beat: Opex only rose fractionally Y/Y to €2.92B, even as headcount rose 4% to 67,651.
SAP's annual cloud revenue run rate rose to ~€1.2B from ~€1.1B at the end of Q1. ~1.2K customers are now running its core Business Suite on top of the Hana in-memory database (up from ~1K), and there are ~3.6K Hana customers altogether (up from ~3.2K). Deferred cloud subscription/support revenue rose 29% Y/Y to €448M.
Though SAP's (SAP -2.1%) non-IFRS cloud subscription/support revenue rose 32% Y/Y in Q1 (even with Q4's rate) to €221M, its traditional software license revenue fell 5% to €623M after growing 1% in Q4.
Much like archrival Oracle's 2013 license revenue misses, the latter figure is bound to trigger fears about the impact of cloud software competition.
Support revenue (driven by software licenses, relatively steady) rose 5% Y/Y to €2.21B, and all other revenue fell 8% to €643M. Opex rose just 2% Y/Y.
A strong euro took a toll: Whereas revenue and op. profit each rose 2% Y/Y at current exchange rates, they've would've risen 6% and 7% at constant currency. SAP expects a similar forex impact for the whole of 2014.
SAP now has 3.2K+ Hana customers, up from 3K+ at the end of 2013, and nearly 1K customers now run its core Business Suite on Hana (up from 800). But no Hana revenue figure is given; Hana revenue rose 61% in 2013 to €633M.
Cloud billings rose 23% Y/Y to €228M (36% exc. forex), and the cloud deferred revenue balance 20% to €454M (29% exc. forex).
In spite of the Q1 miss, SAP is reiterating its full-year revenue and op. profit forecasts.
SAP (SAP) expects 2014 adjusted operating profit of €5.8-6B vs €5.9B in 2013 and consensus of €6.06B.
The company also forecasts that revenue from software and software-related services will increase 6-8% after four years of double-digit growth.
SAP has put back its profit goals by two years as part of its transition to cloud-based services from its traditional licensing model. "We choose not to harvest the margin in the short run but to go for share in the cloud," co-CEO Bill McDermott says.
SAP now expects its adjusted operating profit to reach 35% of sales by 2017 rather than by 2015. The company also predicts that sales will rise to at least €22B ($30B), with cloud revenue €3-3.5B. SAP may make acquisitions in order to hit the cloud target.
Sales from license sales declined for the second quarter in a row and dropped 5% to €975M vs expectations of €988M, hurt by sharp currency swings in Asia and the Americas.
Sales from cloud subscriptions more than doubled to €197M, while revenue from SAP's Hana database software jumped 79% to €149M. Over 2,100 customers use the product.
SAP reiterated its July forecast that it expects double-digit percentage growth in revenue for software and software-related services, excluding forex fluctuations. However, the company expects currency swings to hurt its overall earnings. (PR)