SAP Reports Q2 Cloud Services Growth, Lower Software Sales

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SAP reported lower software sales in its second quarter ended June 30, but growing sales of cloud services and the company's HANA in-memory database helped make up for the shortfall.

A 7 percent decline in software and cloud subscription revenue in the Asia-Pacific region and Japan, which the company attributed to "continued macroeconomic challenges," was the main reason behind the company's lower sales.

Total revenue for the quarter ended June 30 was 4.06 billion Euros ($5.3 billion), up 4 percent from 3.90 billion Euros ($5.1 billion) in the same quarter one year before. After-tax profit was 724 million Euros ($947.3 million), up 10 percent from 661 million Euros ($864.9 million) one year earlier.

[Related: SAP Steps Up Partner Recruitment Efforts For HANA]

"SAP had a solid overall performance in the second quarter," said Werner Brandt, CFO of Walldorf, Germany-based SAP, in a statement. "We improved the profitability of our core business and see good traction in the cloud on our way towards building a profitable cloud business."

Software sales were down 7 percent to 982 million Euros ($1.28 billion) in the quarter. Revenue from cloud subscriptions and support was 159 million Euros ($208.1 million), up 206 percent from the same period one year before, while revenue from support services was 2.18 billion Euros ($2.85 billion), up 8 percent from one year earlier.

The Asia-Pacific region has been a problem for SAP this year. The company also reported a 7 percent decline in Asia- Pacific sales in the first quarter ended March 31. The company blamed that shortfall on the departure of several regional managers, as well as economic conditions in the region.

SAP said sales of its HANA software reached 102 million Euros ($133.4 million) in the second quarter, with sales growing 21 percent year-over-year. HANA is a key technology for SAP and company executives have said it is the platform for the company's software development efforts going forward.


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