'Our Software Tends to be Very Resilient,' SAP CEO McDermott Tells Bloomberg TV

In light of SAP reporting earnings today, CEO Bill McDermott, joined Bloomberg's 'Market Close:European Markets' to discuss the report.
By Giovanni Bruno ,


NEW YORK (TheStreet) -- SAP SE (SAP) - Get Report released 2016 second quarter earnings this morning that beat analysts' estimates. The company reported earnings of 90 cents per share for the quarter, beating analysts' consensus estimates of 78 cents by 13 cents. Profit was $1.67 billion dollars, largely based "on the company closing more software deals," Bloomberg TV's Vonnie Quinn reported today on "Bloomberg Markets: European Close."

CEO of SAP, Bill McDermott, joined Bloomberg TV's Guy Johnson and Caroline Hyde to discuss the company's earnings, and how it maneuvered its way to profitable growth.

"We saw a double digit growth in our software sales, our cloud sales, and our operating income, and that's a very pleasing trifecta. We also see an ever increasing and robust pipeline for our technology," McDermott said.

When asked how he guided the company through the uncertain and turbulent impact from Brexit, McDermott said that the vote may have actually helped give his business a boost.

"Our software tends to be very resilient in choppy waters because business executives start thinking a lot about, their customers, their inventory, business strategy, supply chains, and the real-time data to make smart decisions, McDermott said.

SAP's business in the U.K. alone grew, "in the heart of the Brexit issue," McDermott said, while noting the double digit growth in cloud services as well. Moreover, in terms of Europe, McDermott noted that it was "our fastest growing region."

McDermott remains steadfast in his mission to continue to gain customers and continue to reinvent the business as the company moves into the second half of the year.

"We now have 13 consecutive quarters (excluding M&A) of more than 30% growth in the cloud. We have a new architecture with Hana for managing all of this data. We reinvented the business suite of SAP for end to end business on Hana, with S/4Hana, which now has 3700 customers globally, 500 in the new quarter, 40% of which are brand new to SAP," McDermott explained. The platform will be used for all cross-selling of cloud solutions.

Shares of SAP are higher 4.84% to $83.16 on Wednesday afternoon. 

Separately, TheStreet Ratings rates SAP as a "Buy" with a ratings score of "B." This is driven by multiple strengths, which TheStreet Ratings believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks TheStreet Ratings covers.  

The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, reasonable valuation levels and increase in net income. Although no company is perfect, currently TheStreet Ratings does not see any significant weaknesses which are likely to detract from the generally positive outlook.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: SAP

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