SAP Acquisitions Pay Off With Record Q2 Preliminary Results
The German enterprise solutions provider SAP AG (NYSE: SAP) announced record-setting second quarter earnings on Thursday that significantly outperformed market expectations. Advancements in cloud computing, mobile enterprise and in-memory database led the way.
“We delivered double-digit growth in all regions driven by strong momentum from the core as well as SAP HANA, mobile and the cloud. The results came in at the upper end of our second quarter software revenue guidance in an uncertain macro-economic environment," said Bill McDermott and Jim Hagemann Snabe, the company's Co-CEOs.
SAP saw 26 percent increase in its software revenues, which for the first time ever surpassed €1 Billion. Its software and software-related service revenue also increased 21 percent in the second quarter. Combined revenues of €3.9 billion were up 18 percent year-over-year.
Growth was assisted by the acquisition of SuccessFactors, which the company said contributed to reported revenue starting on February 12, 2012. The acquisition and the associated onboarding costs, however, did take a toll on margins, as seen by the more temperate 7 percent year-over-year growth in operating margins. The company reported €0.92 Billion in operating profit that, at 23.6 percent, lagged last year's performance by 2.4 percentage points on the revenue base.
All in, SAP's performance came in at the upper range of analyst estimates and mirrors the performance of chief competitor Oracle (NASDAQ: ORCL), which beat estimates on its own fiscal fourth quarter last month. Both companies have leveraged a string of acquisitions that has enabled them to post strong performances amid slowing global growth.
SAP's American Depository Receipts (ADR) shares initially traded sharply lower ahead of the release, reaching a low of $54.63 in pre-market trading, but rebounded sharply and are now poised to open slightly higher compared to Wednesday's $56,73 close.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.