Cloud computing allows businesses to cut costs by ditching bulky
servers for network-based systems using remote data centres run by
The company said it expected revenue from cloud subscriptions and
support of between 1 billion and 1.05 billion euros in constant
currency terms this year, up from a previous forecast for 950
million to 1 billion euros.
Revenue from its cloud business jumped by 32 percent to 242 million
euros in the second quarter, helping overall revenue grow 2 percent
to 4.2 billion euros.
Chief Executive Bill McDermott said he expected to snatch business
from pure cloud service providers such as Salesforce.com and Workday
SAP shares were up 3.2 percent at 0800 GMT (4.00 a.m. EDT), at the
top of a European technology share index, which was up 0.7 percent.
The stock has fallen 4 percent so far this year.
"Cloud growth is encouraging," said Harald Schnitzer, analyst at DZ
Bank. "SAP seems to perform better than some of its competitors."
Schnitzer said he was keeping his "buy" rating on SAP. A
Frankfurt-based trader said the news should be good enough for a
relief rally in the stock.
Global business spending on cloud services is expected to jump 20
percent this year to $174 billion, research firm IHS estimates. By
2017, spending will be at more than $235 billion, triple the 2011
level, they expect.
SAP's smaller German peer Software AG is also making the transition
to the cloud but has difficulties offering a fully integrated
platform the way SAP does. Earlier this week, Software AG warned
sales would disappoint, sending its shares to their lowest in almost
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SAP aims to boost its annual cloud revenues to as much as 3.5
billion euros by 2017, from 787 million in 2013.
McDermott said SAP's smaller rivals faced a big challenge because
company CEOs wanted to integrate multiple cloud software
applications into one platform but those providers could not provide
enough security for that to happen.
"I think (smaller cloud players) are getting more and more tough
questions on security and encryption and that is why I think the
banks, that I personally dealt with, are thinking of moving them out
as quickly as possible," McDermott told reporters on a conference
call. "I see them in a lot of trouble in the market."
SAP, which is competing with global rivals including IBM and Oracle
to exploit surging demand for web-based software, reported a 4
percent rise in second-quarter operating profit, excluding some
special items, to 1.24 billion euros.
That was slightly below the average forecast of 1.26 billion euros
in a Reuters poll.
SAP said it still saw full-year operating profit of between 5.8
billion euros and 6 billion euros, up from 5.51 billion last year.
Analysts polled by Reuters are broadly more pessimistic, seeing
operating profit of 5.74 billion, with individual estimates ranging
from 5.59 billion euros to 6.03 billion.
(Reporting by Harro ten Wolde; editing by Maria Sheahan and Tom
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