SAP SE (ADR) (NYSE: SAP), reported today that new cloud bookings were the driving factors in its cloud business, which grew by 103% YoY in 2015. The German software maker reported that it has earned substantial computing returns and expects a bright future in thesector.
The company overall recorded growth of 18% YoY in revenues to EUR20.8 billion in FY2015. However, EBIT witnessed a decline of 2% to EUR 4.25 billion. The company stated that this drop was attributed to the tightened margin since the company was shifting its primary focus to the cloud business. This year’s profits are projected to be between EUR6.4 billion and EUR6.7 billion depending on the accounting methods.
Preliminary annual results are in line with third quarter results, which also revealed that the company saw good growth in cloud revenue and its SAP HANA database offering. Subscription and support revenue grew by 116% to a record EUR600 million while new cloud booking saw EUR216 million. SAP has a strong five-year outlook for its cloud business, which it believes will be at par with its software business by the year 2018.
Australia and New Zealand are the leading markets for the growth in SAP’s cloud business. The company seeks to penetrate newer markets and technologies to expand its business. Both Australia and New Zealend are interested in adopting new technologies, and this is driving the trend especially in the public sector.
The transformation of the company towards a cloud-based business has seen it axe over 2,000 positions globally. This move was stated as necessary if the company was to remain flexible. Management added that plans are in place for increasing SAP’s headcount by the end of 2015 after the cuts.