SAP had “exceptional momentum” in the fourth quarter with fast growth in cloud and double-digit growth in its core license business, it has confirmed, updating guidance earlier this month. For the full year, cloud and software revenue grew by 20% or 12% at constant currencies and exceeded the outlook of 8% - 10% growth at constant currencies. New cloud bookings increased 103% in the full year to €883m and 75% in the fourth quarter to €344m.
"Our strength in 2015 shows that the S/4HANA innovation cycle is well underway," said Bill McDermott, CEO of SAP. "Our completeness of vision in the cloud has distinguished SAP from both legacy players and point solution providers. We beat on cloud and software, we beat on operating income and we are ever confident that SAP will remain a profitable growth business well into the future."
"Our tremendous 2015 results validate our strategy of innovating across the core, the cloud and business networks to help our customers become true digital enterprises," said Luka Mucic, CFO of SAP. "We have transformed our company and made it leaner by shifting investments from noncore activities to strategic growth areas enabling us to capture the tremendous growth opportunities in the market. This puts us on a strong path for the future reflected in an increase of our 2017 ambition."
EMEA region had an outstanding performance in the fourth quarter, it says, with an 11% increase in cloud and software revenue including a strong double-digit software license performance in Germany and Russia. Non-IFRS cloud subscriptions and support revenue in EMEA grew by 53% with very strong double-digit growth in new cloud bookings.
Looking beyond 2016, SAP is raising its 2017 ambition to reflect both the current exchange rate environment and excellent business momentum. By 2017 SAP continues to expect its rapidly growing cloud subscriptions and support revenue to be close to software license revenue and is expected to exceed software license revenue in 2018. Assuming a stable exchange rate environment going forward SAP now expects non-IFRS cloud subscriptions and support revenue in a range of €3.8bn - €4.0bn in 2017. The upper end of this range represents a 2015 to 2017 CAGR of 32%.
SAP continues to anticipate that the fast-growing cloud business along with growth in support revenue will drive a higher share of more predictable revenue. Given the current software license revenue momentum it now expects the total of cloud subscriptions & support revenue and software support revenue to be in a range of 63% - 65% of total revenue in 2017.