SAP Raises Full-Year Guidance; Third-Quarter Net Profit Slides--Update
October 21 2016 - 3:41AM
Dow Jones News
By Christopher Alessi
FRANKFURT-- SAP SE Friday raised its guidance for 2016, even
after it reported a 19% slide in net profit for the third
quarter.
The German business software provider said it now expects
full-year operating profit to be in a range of EUR6.5 billion to
EUR6.7 billion ($7.1 billion to $7.3 billion), compared with
EUR6.35 billion in 2015. That estimate, based on calculations not
recognized under international financial reporting standards, is up
from a previous forecast of EUR6.4 billion to EUR6.7 billion.
SAP said it also now expects non-IFRS cloud subscription and
support revenue to be in a range of EUR3 billion to EUR3.05
billion, compared with EUR2.3 billion in 2015, in the latest sign
of Chief Executive Bill McDermott's efforts to center the company
around internet cloud-based software.
Net profit for the period ended Sept. 30 was EUR730 million,
compared with EUR898 million during the same period a year prior,
weighed down by higher share-based compensation expenses.
"This is a perfect reflection of how the share price has
increased for shareholders," Mr. McDermott said of the in an
interview Friday of the nearly EUR300 million in compensation
expenses. "We have a very happy company today," he added.
SAP's share price has risen almost 20% over the past year,
closing at EUR79.31 on Oct 20.
Mr. McDermott said capital markets had started to value the
company as a leading cloud player, rather than just an on-premise
software company.
"Investors have said these guys are doing what they said they
would do, and there has been a consistent growth trajectory in the
cloud," he said.
SAP performed "quite well in terms of profitability and growth"
in the third quarter and is on a "good course" to continue growing,
according to Harald Schnitzer, an analyst at Germany's DZ Bank.
Revenue rose by 8% to EUR5.38 billion, driven by a solid uptake
of the company's cloud-based offerings. Cloud subscriptions and
support revenue climbed by 28%, to EUR769 million. But the
company's traditionally core on-premise software licenses also
continued to grow, with licensing and support revenue rising 5%, to
EUR3.67 billion.
"We kept our core business strong and still got a really strong
cloud number," Mr. McDermott said.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
October 21, 2016 03:26 ET (07:26 GMT)
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