Forecast brightens for SAP as cloud rolls in

Frankfurt am Main (AFP) –


German software group SAP raised its forecasts on Thursday as it hailed a third quarter marked by continued strong growth in its cloud computing business.

Europe's biggest software maker reported a 37-percent increase in net profit to 993 million euros ($1.2 billion) in the period from July to September.

Operating, or underlying profit added 19 percent to 1.3 billion euros, on the back of a 4.0-percent increase in revenues to 5.6 billion euros -- driven by growth in sales of the group's business software suite S/4 HANA and its cloud computing services.

Revenue from the cloud shot up 22 percent to 937 million euros, but the division is still relatively small compared to SAP's traditional software licences and support services business, which added 1.0 percent to 3.7 billion euros.

"We see growth in every corner of the business, which is why we are again raising our guidance for the full year," chief executive Bill McDermott said in a statement.

The group had already upped its ambitions for the full year in July as it presented strong second-quarter results.

In 2017, SAP now expects to overall revenues to increase from 22.1 billion euros last year to 23.4-23.8 billion euros, 100 million euros higher than an earlier forecast.

Operating profit should reach 6.85-7.0 billion euros, SAP said, compared with 6.6 billion euros in 2016.

SAP always calculates its forecasts using non-IFRS accounting standards, which discount some costs.

The group added that it plans to continue its 500-million-euro share buyback programme.

Shares in SAP fell by 1.43 percent to 93.59 euros in early trading in Frankfurt, underperforming the DAX index of leading shares which was down 0.06 percent.