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SAP Lifts Forecasts on Strong Second-Quarter Revenue

July 20, 2017
Profits dropped for the German software giant, though cloud computing helped boost its quarterly sales.

BERLIN — German software maker SAP upgraded its revenue forecast for the full year Thursday, as cloud computing boosted sales in the second quarter, while profits fell. 

Between April and June, SAP’s net profit fell by 18% compared with the same period in 2016, to 666 million euros ($774.40 million). Operating, or underlying, profit dropped 27% to 926 million euros ($1.08 billion).

Profits “were primarily impacted by a strong increase in restructuring related expenses” in the second quarter, as well as a system of paying employees in shares, SAP said in a statement. But the software maker was able to boost revenues by 10% to 5.8 billion euros ($6.74 billion), better than expected by analysts surveyed by financial data company Factset.

Continuing a trend seen in previous quarters, revenues from SAP’s cloud computing products grew the fastest, adding 29% to 932 million euros ($1.08 billion).

Cloud business remains relatively small alongside sales of the group’s traditional software licenses and support services, which grew by just 5% to 3.8 billion euros ($4.42 billion).

Encouraged by larger revenues and the expectation of a 34% boost to cloud sales, SAP marginally upgraded its full-year sales forecast to 23.3-23.7 billion euros ($27.09-27.56 billion), from 23.2-23.6 billion euros previously ($26.98-27.44 billion). 

In 2016, SAP’s sales amounted to 22.1 billion euros ($25.70 billion). 

The group always presents its forecasts using non-IFRS accounting standards, which exclude certain costs. It left its outlook for operating profit unchanged, at 6.8-7.0 billion euros ($7.91-8.14 billion).

Copyright Agence France-Presse, 2017

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