SAP sees strong cloud growth for FY 2014

Vendor reports 45% jump in cloud subscriptions in annual earnings report

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SAP sees strong cloud growth for FY 2014 The software giant said that cloud revenue reached €1.1bn by the end of the year
By  Tom Paye Published  January 25, 2015

SAP achieved a 45% jump in cloud subscriptions and support revenue in 2014, the company announced in preliminary fourth-quarter and full-year earnings results released last week.

In its report, the software giant said that cloud revenue reached €1.1bn by the end of the year, with the fourth quarter experiencing 72% growth.

The company reported a solid software and software-related service revenue performance despite the accelerated shift from upfront software revenue to more subscription-based cloud revenue.

Non- IFRS software and software-related service revenue grew 7%, achieving the full year target of 6% to 8% growth at constant currencies, SAP said. Non- IFRS operating profit increased by 3% at constant currencies to €5.63bn, achieving the full year outlook of €5.6bn to €5.8bn at constant currencies.

Meanwhile, SAP HANA, the in-memory computing platform, continued to be a growth engine for the vendor. SAP said that it saw continued broad market adoption of HANA across all industries and regions. The vendor reported that it had 5,800 HANA customers and more than 1,850 customers for SAP Business Suite on HANA.

"We had exceptional growth in our cloud business and have significantly lifted the total of cloud backlog and non-IFRS deferred cloud revenue to more than €3bn. This is committed business that will drive strong cloud growth in the future," said Luka Mucic, CFO of SAP.

"We expect cloud subscriptions to exceed software license revenue in 2018. At that time SAP expects to reach a scale in its cloud business that will clear the way for accelerated operating profit expansion."

In the EMEA region, despite the macroeconomic conditions weighing on the business in Russia and Ukraine, SAP reported decent growth. Non-IFRS software and software-related service revenue increased 5%. with a strong software revenue performance in the UK. Non-IFRS cloud subscriptions and support revenue in EMEA grew 85%, SAP said.

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