SAP pushes back targets to capture cloud growth

Sales and margin goals put back two years in order to capitalise on cloud

Software giant SAP has given itself another two years to meet its sales and profit goals in order to reap the benefits of its cloud investment.

The Germany-based firm had planned to boost its total sales to €22bn (£18.14bn) by next year, as well as grow its cloud sales alone to between €3bn and €3.5bn by the same time.

But in its financial results released today, it said it was pushing these targets back until 2017. Its goal for operating margin to reach 35 per cent has also been delayed by two years too.

For the 12 months to 31 December last year, SAP's operating profit jumped 10 per cent to €4.48bn on sales which climbed four per cent to €16.8bn. Its operating margin stood at 26.7 per cent.

The company said by holding off on its targets it can better embrace opportunities presented by the cloud.

"In order to capture the growth opportunities in the cloud, SAP now expects this target to be reached by 2017 rather than in 2015 as previously stated," it said.

"[We] anticipate the fast-growing cloud business along with growth in support revenue will drive a higher proportion of more predictable, recurring revenue in the future."

In its last fiscal year, SAP's cloud business exceeded its full-year guidance as subscription and support revenue topped €787m - €37m better than it forecast for the year and up from €343m for 2012.

The firm's leaders said its cloud investment was a key highlight of its last fiscal year.

"We are proud of having delivered another year of double-digit growth, outperforming the market and expanding our margin, while at the same time investing in innovation and the cloud," said co-chief executives Bill McDermott and Jim Hagemann Snabe.

"Based on our strong global momentum from 2013 we will accelerate the transition to the cloud by offering customers choice."

In May this year, Hagemann Snabe is set to leave McDermott in charge as CEO as he stands down and joins the supervisory board after the pair led together since 2010.