SAP Reports Solid Q3 Growth In Cloud, S/4HANA Sales Growth

SAP accelerated sales of its cloud applications and services in the third quarter and reported strong adoption of its new S/4HANA platform, even as sales of the vendor's traditional on-premise software products showed surprising growth.

"I think we really now have turned the business model corner as it relates to becoming [a] cloud company powered by HANA," said CEO Bill McDermott in a conference call Tuesday with financial analysts.

"Now, you’re seeing not only the revenue growth in the cloud and also the sustainability of the core with S/4HANA, but as [SAP CFO Luka Mucic] said, you’ve seen the expansion of the operating profit and the operating margins of the company," McDermott said.

[Related: SAP Launches First SaaS-Only Business Analytics And Planning Applications]

For the third quarter ended Sept. 30, SAP reported total sales of 4.99 billion euro ($5.65 billion), up 17 percent from the third quarter of 2014. After-tax profit was 895 million euro ($1.01 billion), up 2 percent from the same period one year earlier.

This month also marks McDermott's full-time return to work after suffering serious injuries in an accident in July. "I am 100 percent back in action," McDermott said on the call, joking that he is also back to spending a great amount of time traveling on airplanes.

In July SAP disclosed that McDermott had been released from a hospital after the accident and was recovering, without providing details.

SAP reported that cloud subscription and support revenue in the third quarter was 599 million euro ($679 million), up 116 percent from one year before. New bookings for cloud applications, such as human capital management and customer engagement and commerce, grew 102 percent year-over-year to $216 million euro ($245 million).

The company reported that more than 1,300 customers have adopted the SAP S/4HANA application platform, the next generation of the company's flagship ERP application suite, since it debuted earlier this year.

Revenue from software licenses and support, encompassing SAP's on-premise software, remains the biggest part of the vendor's overall sales at 3.5 billion euro (just less than $4.0 billion) in the third quarter. That represented 11 percent growth from the same period one year earlier.

PUBLISHED OCT. 20, 2015