By Mauro Orru
SAP SE said Wednesday that operating profit and revenue fell in the second quarter, but the company raised its targets for the year as it expects an acceleration in cloud revenue growth.
Reporting on a non-IFRS basis, the German software company said operating profit for the quarter slipped to 1.92 billion euros ($2.26 billion) from EUR1.96 billion for the second quarter of 2020, with its operating margin falling to 28.8% from 29.1%.
However, net profit increased to EUR2.06 billion from EUR1.38 billion last year.
Total revenue fell to EUR6.67 billion from EUR6.74 billion, with cloud revenue up to EUR2.28 billion from EUR2.04 billion but software-licenses revenue down to EUR650 million from EUR773 million.
SAP is pivoting away from software-licenses sales, once its biggest revenue stream, to subscription-based cloud services, banking on a more profitable and predictable model based on recurring revenue.
"This has been another strong quarter with accelerating growth for SAP's cloud portfolio. We saw excellent customer momentum and adoption and are raising our outlook for revenue and profit," SAP Chief Financial Officer Luka Mucic said.
SAP now expects non-IFRS operating profit at constant currencies between EUR7.95 billion and EUR8.25 billion. It previously guided for operating profit between EUR7.8 billion and EUR8.2 billion.
Non-IFRS cloud revenue at constant currencies should come in between EUR9.3 billion and EUR9.5 billion. SAP previously expected cloud revenue between EUR9.2 billion and EUR9.5 billion.
Write to Mauro Orru at firstname.lastname@example.org; @MauroOrru94
(END) Dow Jones Newswires