SAP net up 17 pct, cloud computing fuels growth
FRANKFURT, Germany (AP) — The co-CEO of business software maker SAP AG says its push into cloud computing is starting to make money — and could be heading for profits that rival or exceed those of its traditional software business.
Bill McDermott told The Associated Press that "we accelerated into the cloud in a big way about a year ago and already we're making money on it."
The cloud business — in which companies pay subscription fees to run programs on SAP servers — contributed about €28 million euros ($36.72 million) to first-quarter earnings.
SAP said Friday that net profit rose 17 percent to 520 million euros in the first quarter, on revenues that rose 7 percent to 3.60 billion euros.
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Business software maker SAP says net profit increased 17 percent in the first quarter, as its remote cloud computing business showed strong growth to complement its longstanding sales of software that runs on company premises.
Profits rose to €520 million ($678 million) from €444 million euros in the same quarter a year ago. Revenues rose 7 percent to €3.60 billion.
SAP, based in Walldorf, Germany, said cloud revenue was up 380 percent at €167 million.
The company also said its high-speed data analysis product HANA tripled revenue to €86 million. HANA enables companies to quickly see patterns in data so they can react to them.
The company said it was on track to increase cloud revenue to €2 billion in revenue by 2015.
Co-CEO Jim Hagemann Snabe said that "SAP had a very good start to 2013" and that "the business mix is working, and I see growth in all categories going ahead."
In cloud computing, companies pay a subscription fee to use software on off-site servers rather than installing it at their own offices. The approach is a shift from the company's longstanding model of selling software and then profiting both from that and the follow-up services revenue from support and training.
Revenue rose 49 percent in the Americas but fell in Asia, where the company said key country leadership positions had been vacant.