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SAP reports strong growth in cloud amid slow overall revenue growth

The company had a dip in software revenue in the first quarter as the cloud business took off

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SAP reported a strong growth in cloud revenue and fast adoption of its HANA platform in the first quarter, while its software revenue dipped from the same quarter in the previous year.

The business software company said Thursday its revenue grew 3 percent to €3.7 billion (US$5 billion), while its cloud subscriptions and support revenue grew 60 percent to €219 million in the quarter under IFRS (International Financial Reporting Standards).

Its net profit grew 3 percent to €534 million in the quarter.

SAP's annual cloud revenue run rate is now approaching €1.1 billion, and subscribers of its cloud applications now exceed 36 million, the company said.

Reflecting the transition in the market from on-premises software and services to applications delivered through the cloud on a subscription model, SAP's software revenue in the quarter fell 5 percent to €623 million. Its support revenue was up 5 percent to €2.2 billion.

Software and software-related service revenue, which includes the cloud business, grew 5 percent to €3 billion.

The 2014 revenue and profit figures include revenue and profits from SAP's acquisition of Swiss e-commerce software vendor Hybris. The comparative numbers for 2013 do not include Hybris' revenue and profits until Aug. 1, 2013.

The company did not change its forecast for 2014 at constant currencies that it provided in January. But it warned that its non-IFRS software and software-related service revenue and operating profit growth at actual currency could be hit in the second quarter and the full year if exchange rates stay at March levels for the rest of the year.

In the first quarter, growth in software and software-related service revenue in actual currency was down 5 percent from growth at constant currencies.

SAP's HANA in-memory database is seeing growing acceptance by users. Since launch in June 2011, the company claims more than 3,200 HANA customers, including close to 1,000 customers for SAP Business Suite powered by HANA, launched a year ago. Over 1,200 startups across 57 countries are building applications on HANA, with over 60 having products available commercially, SAP said.

The company saw double-digit software revenue growth at constant currencies in China, and had solid performance in the EMEA (Europe, Middle East and Africa) region despite uncertainties arising from the crisis in the Crimea.

In the Americas, SAP reported in the quarter 10 percent growth in non-IFRS software and software-related service revenue at constant currencies and 37 percent growth in non-IFRS cloud subscriptions and support revenue at constant currencies.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com



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