SAP is Europe's most valuable technology company, with revenues up 10 percent at constant exchange rates to €6 billion (about $6.96 billion). Analysts surveyed by Bloomberg were expecting 5.88 billion euros. SAP also beat analysts' average sales expectations in a Reuters poll, with operating profit up 13 percent to 1.04 billion euros.
But sales in SAP's traditional software licensing division fell 5 percent to €996 million, which somewhat put a dent in SAP's earnings, with SAP shares sliding nearly 4 percent at one point. But the decline in on-premise software sales was only brushed aside on the SAP earnings call, which focused on the transition to a cloud subscription model.
SAP is benefiting from driving the transformation. In the second quarter, SAP Cloud Division revenues (in constant currency) grew by a respectable 40 percent to €1.23 billion. New booking revenue was a key indicator of the good performance of the cloud business, which climbed 29% to €421 million.
SAP's growth is driven by two software-as-a-service suites built on the HANA in-memory database. One of the earlier and most profitable products to launch is S/4HANA, a collection of so-called enterprise resource planning applications for managing back-office operations such as billing. In the second quarter, S/4HANA's user base grew to more than 8,900 enterprise organizations, a 41 percent increase year-over-year.
The other was the C/4HANA customer relationship management product package, a new addition to SAP's existing customer experience business, which grew 65 percent in the second quarter on revenue of €242 million.
Even though C/4HANA was officially launched only six weeks ago, SAP CEO Bill McDermott called the suite a game changer during the earnings call. "We're taking the market by storm," he continued, predicting triple-digit growth in sap crm revenue.
SAP has raised its full-year profit and sales guidance by 0.5 percentage points. SAP expects cloud revenue to grow 34%-38%, compared to previous expectations of 31%-36.5%.
In a statement, McDermott added, "The fourth generation of enterprise applications has taken another big step toward C/4HANA. Coupled with S/4HANA, SAP customers are finally able to focus their entire business on delivering a personalized experience to their customers. SAP has set out a clear strategy, which customers have validated in the second quarter, and we are raising our revenue guidance as an indication of a new wave of growth. "
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