SAP Sees No Impact from Brexit as Second Quarter Tops Estimates

The German business software and cloud company reports double-digit revenue growth in software, cloud revenue and in operating profit.
By Lisa Botter ,

SAP's (SAP) - Get Report today reported robust second-quarter earnings and reiterated its full-year outlook, with CEO Bill McDermott saying the company has not seen a negative impact from last month's Brexit referendum.

The Walldorf, Germany-based company reported adjusted earnings of €0.82 per share on revenues of €5.24 billion ($5.76 billion), an increase of 9% on constant currency from last year.

For the second quarter, analysts were expecting earnings per share of €0.87 on revenue of €5.2 billion. A year earlier, SAP booked EPS of €0.80 on revenue of €4.97 billion.

The business software company, which is in the process of moving to a model based on the cloud, reported operating profit of  €1.5 billion, up 81%.

SAP reported cloud revenue was up 33% in the second quarter compared with the same time period last year.

The company expects non-IFRS cloud subscriptions and support revenue in 2016 to be in a range of €2.95 billion to €3.05 billion, with the top range representing 33% growth. SAP has forecast cloud and software revenue to increase by 6% to 8% in 2016.

McDermott told Bloomberg Television this morning that there have been no ill-effects from the Brexit vote thus far.

"Our software tends to be resilient in choppy waters," he said.

"We see a robust and increasing pipeline for our technology," McDermott added, saying that SAP's business grew in the U.K. and Europe was the fastest-growing region.

He said the company has seen 13 consecutive quarters of more than 30% growth in the cloud if you take out the effects of M&A.

"[We are] extremely well positioned to take advantage of increase in cloud computing," McDermott added.

SAP has seen momentum grow for its next generation business suite, known as SAP S/4HANA. It said customers are seeing the benefits of running a live business on simplified architecture. 

McDermott told Bloomberg that SAP is unique in what it does, adding "others do things but they don't do it in the completeness in the way we do it."

He said that the company is organically growing very fast but will consider M&A if it comes along. "We can be very opportunistic on any M&A transaction," McDermott said, adding, "we can do incremental things" as they arise, not because we have to.

Shares in the company were up 3.3% in early trading in Frankfurt as the Dax gained 0.56%.

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