SAP Continues To Soar, Despite Earnings Miss

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Photo Credit: Paul Downey/Flickr.com

Enterprise services provider SAP (NYSE: SAP) continues to ride high on the success of Hana and its Cloud initiative. In the recent result announcement, SAP missed its earnings expectations. But the market is not worried and the stock has soared to a record high. Nothing appears to be stopping this stock.

SAP’s Financials
SAP’s first quarter revenues grew 12% over the year to €5.285 billion (~$5.63 billion) compared with the market’s forecast of €5.08 billion (~$5.5 billion).

Revenues from Cloud and Software grew 12% to €4.33 billion (~ $4.61 billion) with cloud Subscriptions & Support revenues growing 34% to €905 million (~$963 million) and software licenses & support revenues growing 8% over the year to €3.42 million (~$3.65 billion). EPS of €0.69 (~$0.74) was short of the Street’s forecast of €0.72 (~$0.77) for the quarter.

For the current year, SAP reaffirmed its forecast of revenues of €23.2-€23.6 billion (~$25-$25.4 billion), marginally shy of the analyst estimates of €23.65 billion (~$25.5 billion).

SAP’s Enterprise Offerings

During the quarter, SAP continued to expand its enterprise offerings. Growth was driven by S/4Hana in-memory database which saw an addition of 400 customers. SAP now has more than 5,800 customers for its Hana platform which includes global companies like Energy SE and Citrix Systems. Within the private cloud, the HANA Enterprise Cloud also is a fast-growth business for SAP. The company has improved its offering with the release of SAP Digital Boardroom, a reinvigorated analytics portfolio that saw strong double-digits growth across cloud and software in the quarter.

Within human capital management, SuccessFactors delivered another strong quarter. SuccessFactors’ Employee Central now has more than 1,700 customers worldwide. Gartner awarded SAP the highest rankings in cloud HCM for core HR for global organizations with more than 5,000 workers.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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