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SAP Reports 56 Percent Cloud Application Growth In 2014

The company also reports operating profits in fourth-quarter and fiscal year 2014 drop 3 percent while sales of traditional software products decline.

SAP grew its cloud subscriptions and support revenue 68 percent in the final quarter of 2014, the software company said Monday, pushing the vendor's annual cloud subscription sales over 1 billion euro for the first time.

But while the company's overall sales for the fourth quarter grew 7 percent to 5.46 billion euro ($6.45 billion), operating profit for the period declined 3 percent to 1.75 billion euro ($2.07 billion)

SAP, Walldorf, Germany, is in the midst of an evolution, transforming itself from a developer of on-premise ERP and CRM applications to a provider of cloud-based business applications that run on the company's HANA high-performance compute platform. In 2014 those efforts included the $8.3 billion acquisition of Concur, a developer of cloud-based travel and expense management applications.

[Related: SAP Set To Wrap Up $8.3B Concur Acquisition]

"In 2014 we continued to deliver on our winning growth strategy," CEO Bill McDermott said in a statement. "We are the fastest-growing enterprise cloud business at scale with the most users in the world. SAP HANA is delivering massive simplification for our customers. With the widespread adoption of the SAP HANA platform, 2015 is all about accelerating the introduction of next-generation applications on HANA and scaling the world's largest business network."

SAP has "stepped up investments in the cloud in response to higher-than-expected demand for our new cloud offerings," CFO Luka Mucic said in the company statement. "With the powerful shift to the cloud and our growing support revenues, we are building a larger, more predictable business over the long term."

For the fourth quarter ended Dec. 31, SAP reported that cloud subscription and support revenue was 350 million euro ($413.6 million), up 68 percent (under International Financial Reporting Standards).

But sales of SAP's traditional software products dropped 2 percent in the quarter to 1.87 billion euro ($2.21 billion), presumably as new and existing customers transition to cloud applications. Revenue from software and software-related services grew 8 percent in the quarter to 4.72 billion euro ($5.58 billion).

For all of fiscal 2014 SAP posted revenue of 17.56 billion euro ($20.77 billion), up 4 percent year over year. But operating profit declined 3 percent to 4.33 billion Euro ($5.12 billion).

Cloud subscription revenue and support revenue was 1.09 billion euro ($1.29 billion) in fiscal 2014, up 56 percent from fiscal 2013.

But software sales for the entire year declined 3 percent to 4.40 billion euro ($5.20 billion). Software and software-related service revenue grew 6 percent to 14.85 billion euro ($17.56 billion).

PUBLISHED JAN. 12, 2015

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