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SAP has released its latest financial figures, and it’s to be expected; cloud subscriptions up, software subscriptions down, overall numbers ticking over, and a pledge that cloud profits will exceed software license revenues by 2018.
The company has again shifted its long term goals, with a 2017 operating profit target now of €6.3bn to €7bn, from a previous total of €7.7bn – and it’s all due to the company’s aggressive shift towards cloud.
The full year figures weren’t anything to write home about, but it’s all going in the right direction. Non-IFRS operating profit stood at €5.64bn for 2014, an uptick of 3% on the year before, while total revenue stood at €17.58bn, an increase of 4%.
The meatiest figures however were in the software and support sections. Cloud subscriptions and support went up 45% year on year to €1.1bn, while traditional software numbers were down 3%, to €4.4bn.
This is committed business that will drive strong cloud growth in the future
“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 €3 billion,” commented Luka Mucic, SAP chief financial officer. “This is committed business that will drive strong cloud growth in the future.
“We expect cloud subscriptions to exceed software license revenue in 2018,” he added. “At that time SAP expects to reach a scale in its cloud business that will clear the way for accelerated operating profit expansion.”
Back in October this publication mused that SAP was doing a little better financially than its two main competitors in the race to the cloud; namely Oracle and IBM, not to mention the likes of Salesforce breathing down its neck. SAP’s recent acquisitions, including software firm Concur Technologies, as well as its ambition to move towards an agile startup mentality, shows this.
The German tech giant gained almost 8,000 employees over the course of the year, doubling down on their commitment to increasing its workforce despite fears over job cuts last year. Yet the shift to the right on operating profit predictions shows there’s still a lot of work to do.
You can read the full financial statement here.