As is customary, SAP provides a significant amount of detail (PDF) about its results and this quarter was no exception. In common with other vendors, SAP prefers to talk non-IFRS when it suits it. I don't. IFRS is the accounting standard to which I pay attention. Anything else is make believe in my book.
Software sales, often viewed as an indicator of future maintenance revenues fell for the second successive quarter, declining five percent to €975 million from a tad over €1 billion in the same period of 2012. This was offset by increases in cloud and subscription services so that for the whole period, total revenue for software and software related services rose five percent to €3.35 billion. Consulting revenue fell sharply by 10 percent leaving total revenue up two percent to €4.045 billion.
The company maintained a good control over costs, despite increased headcount and some restructuring costs leaving the operating profit up 13 percent to €1.043 billion.
In their commentary on the results, SAP talks about strong headwinds from currency and the macroeconomic environment. If you look at the table below, it is clear that there was a significant impact from the weakening US dollar against the Euro although in the three months under review, there were significant swings.
Revenue by region
Also in the commentary, SAP says:
2013 revenue and profit figures include the revenue and profits from Ariba, SuccessFactors and hybris. The comparative numbers for 2012 do not include SuccessFactors until February 21, 2012, Ariba until October 1, 2012.The hybris acquisition closed on August 1, 2013.
This makes direct comparisons with 2012 a little awkward. On the basis of what we know, it is clear that the core ERP business and especially the Business Suite in general is in decline. That is despite a solid performance from EMEA. My estimates peg that decline at around seven percent.
On HANA, the company reported a significant uptick:
SAP HANA, the platform for real-time business applications, continues to be a major growth engine, with accelerating software revenue growth of 90% year-over-year at constant currencies (79% at actual currencies to €149 million) and over 2,100 customers. SAP Business Suite powered by SAP HANA is the best-in-class platform for high-performance applications and in fact SAP has now over 450 customers. Customers are showing strong interest in SAP HANA Enterprise Cloud.
This was something of a surprise. Even so, SAP reiterated year end guidance of HANA generating in the region of €650-700 million in contributed revenue with the company looking forward to achieving €1 billion in HANA related revenue in the medium term. Using the Q3 number, SAP pegs annual cloud revenue run rate at over €1 billion.
More to come once the analyst call is out of the way, later in the day.
Disclosure: SAP is a premier partner
Featured image via dahowlett