Data Centre

Cloud

SAP reassures market: Cloud is sustainable, just don't look at our wheezing bookings

Q3 profits and revenues up but execs grilled over cloudy future

By Rebecca Hill

4 SHARE

Enterprise giant SAP has reported an increase in both revenues and operating profits for the latest quarter – but execs were forced to explain a slowdown in cloud bookings.

The results for the quarter ended September 30, released today (PDF), showed total revenues of €5.59bn – up 4 per cent year-on-year – and an operating profit of €1.31bn, representing a 19 per cent boost.

Software revenues made up the bulk of SAP's income, €3.7bn, although this represented just a 1 per cent year-on-year increase. Cloud subscriptions and support brought in €937m, a 22 per cent increase.

But new cloud bookings only increased 19 per cent in this quarter, compared with Q3 in 2016, which is a smaller rise than in previous quarters.

New cloud bookings grew by 33 per cent in Q2 2017, and 49 per cent in Q1 2017 – and such changes risk being interpreted by investors as a sign of volatility.

Indeed, Seeking Alpha reported a fall in shares of 1.27 per cent, and analysts on today's earnings call grilled execs on the change.

In response, CEO Bill McDermott said SAP had "unwavering confidence" when it came to bookings for Q4, arguing that customers with large-scale transformations have a tendency to close in Q4.

He said the team "couldn't come up with a low [number]" for bookings, adding that the lowest was "in the 30s" and that he had "confidence with an exclamation point".

McDermott also added that the firm was "not moving or changing off" its 2020 vision of a 30 per cent growth in cloud.

Elsewhere, SAP trumpeted what it described as increasing interest in the integrated business suite S/4HANA. There was a 70 per cent year-on-year increase in customers this quarter to 6,900, which includes 600 net new customers signed up in Q3.

However, as TechMarketView analyst Angela Eager pointed out, the proportion of cloud to on-premises implementations isn't clear.

"As software licence revenue held steady at €1.03bn, this suggests on-premises and hybrid deployments," she said.

Sign up to our NewsletterGet IT in your inbox daily

4 Comments

More from The Register

Make a SAP decision: Apply these security fixes if you're using German giant's software

11 patches ship on Patch Tuesday

App-happy SAP Santa offers partners free access to Cloud Platform

All the better to lock customers into its fluffy white services

SAP 404s sap.com blog post that said it's fallen behind on SaaS subs

Partner-penned post said SAP might be as good as Google or IBM ... one day

What's in the container, Cisco? A nice, plump SAP Data Hub

One Kubernetes to rule them all

SAP claims French robo minnow Contextor slurp will slash clicks needed in its ERP software

Automated mercy for those knobbly pointers

SAP faces further South African corruption probe

Reports of $2m kickback for deal with water ministry

SAP slaps down Teradata's 'trade secret' sueball with sick burn

ERP giant: You're just mad because you've 'fallen behind'

Screwed SAP salesman scores $660,000 jury award

Steven Serabian beats software company soundly

SAP can't thwack away Teradata's copyright infringement, antitrust sueball

But US firm must get specific on which trade secrets it claims were nicked – judge

SAP slurps up Qualtrics for a cool $8bn, persuades firm not to IPO

As UK and Ireland user survey suggests awareness of 4-year-old S/4HANA finally on the up