SAP shares rose more than 2% on Monday after the enterprise software giant reported strong quarterly results reflecting the growth of its cloud business.
For the third quarter, SAP’s total revenue increased 13% to 6.79 billion euros, with cloud revenue up 37% to $1.79 billion and new cloud bookings up 39% to 572 million euros.
The company made an operating profit of 1.68 billion euros, up 36% from a year ago. In the second quarter, it reported a 21% drop in profit due to hefty restructuring costs resulting from such acquisitions as the recent $8 billion purchase of Qualtrics.
Investors had been expecting a strong third quarter after SAP announced preliminary results last week. It attributed the gain in profit to “disciplined hiring and accelerated operating efficiency gains” as well as lower share-based compensation expenses.
In trading Monday, its shares rose 2.3% to $132.11 on the New York Stock Exchange.
“In April we promised a stronger focus on profits and here we go: Q3 marks yet another milestone in delivering on this commitment,” CFO Luka Mucic said in a news release, noting that the company had kept its “second promise” of continued strong top-line momentum.
“Despite continued macro uncertainties we couldn’t be more confident” that 2019 will be “another stellar year” for SAP, he added.
Those uncertainties have included the U.S.-China trade conflict, which has dampened SAP’s software license sales in the Asia region and affected other tech companies, including Apple. SAP’s cloud and software revenue rose 9% in Asia in the second quarter, with cloud alone increasing 40%.
“In the [Asia] region, SAP had a solid quarter amidst a challenging market environment,” the company said, citing an “exceptional quarter” for software license revenue in Japan.
Overall software license revenue fell 1% to 932 million euros.
“We have continued to execute extremely well on our cloud transition in the first nine months [of 2019] — a dynamic cloud business … combined with a stable core, leading to double digit topline growth,” Mucic said last week.
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