SAP was today celebrating another year of double-digit growth, but adjusted its profit goal in order to fund further cloud investment.
The company retained its non-IFRS operating margin goal of 35%, but now expects it to be reached by 2017 rather than in 2015 as previously stated.
Looking beyond 2015 and introducing new 2017 targets, SAP said it now aims to increase total revenue to at least €22 billion and total revenue from its cloud business to between €3.0 billion and €3.5 billion by 2017.
Full-year 2013 non-IFRS software and cloud subscription revenue increased 11% at constant currencies (6% at actual currencies to €5.28 billion), while non-IFRS software and software-related service revenue grew 11% at constant currencies (6% at actual currencies to €14.03 billion), and non-IFRS total revenue grew 8% at constant currencies (4% at actual currencies to €16.90 billion).
“We are proud of having delivered another year of double digit growth, outperforming the market and expanding our margin, while at the same time investing in innovation and the cloud,” said co-CEOs Bill McDermott and Jim Hagemann Snabe.
“Based on our strong global momentum from 2013 we will accelerate the transition to the cloud by offering customers choice. With all solutions moving to the cloud powered by our real time platform HANA, we will simplify for our customers, extend our lead and drive growth that is more predictable and profitable for the long term.”
SAP’s CFO, Werner Brandt, drew particular attention to the company’s ‘strong’ fourth quarter.
“We significantly expanded our non-IFRS operating margin in the fourth quarter, leading to a full-year non-IFRS operating margin expansion of 150 basis points at constant currencies, and 11% growth in non-IFRS EPS for the full year 2013,” he said. “This was driven by operational excellence despite the margin impact from acquisitions and our momentum in the cloud.”
SAP demonstrated its fast cloud growth after its non-IFRS cloud subscription and support revenue exceeded its full-year 2013 guidance of €750 million at constant currencies. It achieved €787 million, more than double that of 2012 (€343 million).
Non-IFRS deferred cloud subscription and support revenue was €447 million as of December 31, 2013, a year-over-year increase of 25%. The company’s cloud subscription and support backlog as of December 31, 2013 was approximately €1.2 billion, a year-over-year increase of 50%.
SAP’s annual cloud revenue run rate now exceeds €1.06 billion, whilst its total cloud portfolio applications subscribers now exceed 35 million. The trailing 12-month Ariba network-spend volume now exceeds $0.5 trillion.
A year to remember
The growth of SAP’s in-memory platform seemingly lived up to the company’s well-structured hype. The company now boasts over 3,000 HANA customers, and full-year 2013 HANA software revenue increased 69% at constant currencies to €664 million (61% at actual currencies to €633 million).
SAP Business Suite powered by SAP HANA counted 800 customers at the end of 2013, with the company claiming demand for the platform has exceeding its expectations since launching in May 2013.
The EMEA region saw high single-digit growth with non-IFRS software and cloud subscription revenue increasing 9% at constant currencies. This was the result of high double-digit growth in cloud subscription and support revenue in this region and strong double-digit software revenue growth at constant currencies in Germany, France, Russia, the Middle East and Africa.
The Americas region grew single-digit in the fourth quarter in non-IFRS software and cloud subscription revenue at constant currencies. This was the result of the transition to the cloud and a tough year-over-year comparison in software revenue, SAP said. Non-IFRS software and cloud subscription revenue in the Asia Pacific Japan (APJ) region continued on its path of double-digit growth at constant currencies, driven by a strong performance in China.
For the full-year 2013, the EMEA region saw high-single digit growth with non-IFRS software and cloud subscription revenue at constant currencies. The Americas region delivered a ‘very strong’ full year performance in non-IFRS software and cloud subscription revenue with 15% growth at constant currencies while ‘rapidly shifting’ to the cloud.
Non-IFRS software and cloud subscriptions revenue in the APJ region increased by 3% at constant currencies in the full year 2013 after ending the year with a strong fourth quarter.
Business outlook
SAP said it expects full-year 2014 non-IFRS cloud subscription and support revenue to be in a range of €950 and €1 billion at constant currencies. The upper end of this range represents a growth rate of 32%, which is similar to the respective 2013 growth rate after adjusting for acquisitions.
The company revealed it also expects full year 2014 non-IFRS software and software-related service revenue to increase by between 6% and 8% at constant currencies, and non-IFRS operating profit to be in a range of €5.8 billion and €6.0 billion at constant currencies.
It added that it still aims to increase its total revenue to at least €20 billion and total revenue from its cloud business to approximately €2 billion by 2015.
