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VIDEO: ‘A Radical Transformation’ in IT Buoys SAP’s Q1 Results

Software and cloud delivered 25 percent growth to SAP worldwide in Q1, according to the company’s quarterly earnings, and operating income was up by 11 percent. And SAP is leading a fundamental change in the IT industry, co-CEO Jim Hagemann Snabe made the media rounds Friday.

SAP Q1 Earnings 04-22-13-1
“We’re winning in the market,” SAP co-CEO Jim Hagemann Snabe told CNBC.

“Overall, when you look at the quarter, we’re very pleased,” Snabe told CNBC’s Squawk Box Europe. “Everyone else is showing negative growth rates, so in many ways we’re winning in the market.”

The first quarter of 2013 was SAP’s 13th consecutive quarter of double-digit growth for non-IFRS software and software-related revenue. But many analysts had expected Q1 earnings and revenues to be even higher, as Reuters noted Friday, despite the departure of key sales managers in the Asia-Pacific region.

Gaining Radical Market Share

“We had some execution issues in Asia,” Snabe said on Squawk Box. “We’re changing leadership in markets that are growing rapidly — and that caused some short-term impact — but the pipeline in Asia-Pacific remains ever strong.”

The tripling of SAP HANA revenue was evidence of that pipeline strength in Asia and elsewhere, as Snabe pointed out to Reuters television. Rapid uptake of such ground-breaking technology also indicates a sea change in IT priorities.

“What’s happening is a radical transformation of the industry,” Snabe said. “There is a shift into innovative business solutions, like HANA, [and] we are gaining radical market share.”

The Sky Isn’t The Limit

Cloud technology is another frontier in the IT industry’s transformation, Snabe told Bloomberg Television’s Countdown that SAP is committed to giving customers the choice of advanced technology they’d like to use, be it on- or off-premises.

SAP Q1 Earnings 04-22-13-2
“The market is ready for enterprise-ready cloud solutions,” Snabe told Bloomberg Television.

“This quarter we’re seeing a massive shift in cloud,” Snabe said. “We’re growing our business by 380 percent in the cloud, which really shows you that the market is ready for enterprise-ready cloud solutions.”

Snabe also reconfirmed SAP’s guidance for 2013, back on Squawk Box, and indicated that SAP is on track to deliver on its 2015 goals. He also offered some shorter-term guidance for next month.

“We’re looking at moving our position ahead,” Snabe said, smiling. “We’ll be very strong in our position at SAPPHIRE [NOW] in Orlando.”

A transcript of the earnings call is available on investment research platform Seeking Alpha’s Web site.

Follow Derek on Twitter: @DKlobucher

Related Media:

‘SAP Taking Massive Market Share’” on CNBC’s Squawk Box Europe

Radical IT spend shift helps SAP steal share – co-CEO Snabe” on Reuters

SAP Says Asia Business Is ‘Extremely Solid’” on Bloomberg Television’s Countdown

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