Riding the wave of booming business software sector
SAP has claimed double digit growth despite economic uncertainty in Europe, spurred by demand for its software services.
The German business software company claimed its “best ever” second quarter, pushing past the $1 billion software revenue mark for the first time, and marked the tenth successive quarterly double digit growth in a row for SAP. Total revenues grew to $3.8 billion in the second quarter.
“We beat market expectations delivering results at the high end of guidance, with 26 percent growth,” Co-CEO Bill McDermott said in a conference call.
SAP attributed this to growth across the range of services such as HANA, which was recently released through the channel, as well as services based around the cloud. This meant cloud subscription and support revenues grew by a factor of twelve compared to the previous year.
SAP’s operating margin was down slightly compared to the previous year, hit by the buyout of SuccessFactors, McDermott said.
The strong growth overall came despite slowing growth across much of the world, particularly in Europe.
“We delivered double digit growth across all regions, despite the volatile global economy,” he said.
McDermott claimed “excellent results in EMEA” with 22 percent growth in software revenue, which he considered to be an “outstanding” performance, given the “macroeconomic uncertainty”.
He claimed that SAP has added over 2,000 customers in EMEA, many of which came from the SMB sector, as well as grabbing some business from the competition – such as Oracle.
“We saw a strong contribution from the UK, France, Austria and Switzerland in particular,” McDermott claimed, highlighting Germany in particular for its double growth.
While many tech firms are posting slower growth, particularly in the hardware industry, SAP is reaping the benefits of being at the forefront of one of the few areas seeing solid growth.
“The business software market is the fastest growing segment in the IT industry,” said co-CEO Jim Hagemann Snabe during the call.
“While the total IT spend is likely to grow by a maximum of five percent per year in the coming years, the area of business software, our segment, is growing by more than 11 percent.”