Just relax, Europe’s tech leader SAP tells investors

The German software maker, SAP, is in the midst of a transition to offering cloud-based services to business customers, and management had flagged that 2017 would see a trough in profit margins as it invested in datacenters and redeployed staff.

CEO Bill McDermott said SAP was seeing more customers using its new cloud-based S/4HANA business planning products to overhaul their organisations and supply chains. Such large-scale deals tend to close in the fourth quarter.

“You can expect a dynamite Q4,” McDermott told investors on a conference call. “Don’t worry about bookings, relax, it’s going to be terrific,” he said, added that SAP would report “at least 30% year-over-year cloud bookings growth”.

The company, the biggest component of Germany’s blue-chip DAX index, has a market value of €116.5 billion ($138 billion).

Third-quarter revenue for the business planning software provider grew 8% to €5.59 billion ($6.6 billion) from a year earlier, falling short of the mean forecast of 5.71 billion from 16 analysts surveyed by Reuters.

Core profit excluding special items rose by 4% to €1.64 billion at constant currency rates, below the 1.69 billion expected.

The euro’s strength sliced 4 percentage points off core profit, which was flat after taking currency moves into account. Analysts at …read more