SAP SE, the German business software company, confirmed its profit and sales outlook for the year after posting higher third-quarter revenue led by growth at its cloud business.
Reporting on a non-IFRS basis, the Walldorf, Germany-based company said Tuesday that revenue jumped to 7.84 billion euros ($7.74 billion) from EUR6.85 billion, with cloud revenue up to EUR3.29 billion from EUR2.39 billion. Software-licenses revenue fell to EUR406 million from EUR657 million.
Analysts polled by FactSet had forecast overall revenue of EUR7.65 billion, and cloud revenue of EUR3.19 billion.
SAP is moving away from software-licenses sales, once its biggest revenue stream, to subscription-based cloud services, banking on a more profitable and predictable model based on recurring revenue.
Operating profit for the quarter slipped to EUR2.09 billion from EUR2.10 billion last year, with SAP’s operating margin down to 26.7% from 30.7%. Analysts polled by FactSet had forecast operating profit of EUR2 billion.
For the year, SAP continues to expect non-IFRS operating profit at constant currencies between EUR7.6 billion and EUR7.9 billion, and cloud revenue at constant currencies between EUR11.55 billion and EUR11.85 billion. However, free cash flow is now expected at roughly EUR4.5 billion against a previous forecast above EUR4.5 billion.
