SAP-owned travel and expense technology firm Concur continued its
growth trajectory for cloud subscriptions revenue in the second quarter,
according to SAP’s interim report, released Tuesday. Concur accounted for €167 million ($182 million), in cloud subscriptions and
support revenue, based on calculations outside internationally accepted
financial reporting standards. That's up from €153 million in the first
quarter. The €167 million translates to €137 million at constant currency.
The SAP Business Network—which includes
Concur, procurement management firm Ariba and vendor management system
Fieldglass—reported a 194 percent year-over-year revenue increase to €400
million, or €333 million in constant currency. SAP attributed the increase primarily
to the acquisitions of Concur and Fieldglass. The Business Network derives most
revenue from fees for using SAP’s “cloud-based collaborative business network”
and from such services as cloud applications, professional services and
educational services, according to the report.
“What we’re seeing in first few quarters of being under one
group is that the bookings growth in all three business groups continues to
climb,” Concur CEO and Business Network head Steve Singh told analysts during a
Tuesday earnings call. “We think this is a great proxy for next year’s revenue
growth.”
For the first half of 2015, the
Business Network reported €768 million in revenue, a 200 percent year-over-year
increase, or €640 million on a constant currency basis. Profit increased 368
percent year over year to €129 million. Total expenses for the first half were €391
million, up from the first half of 2014's €134 million.
SAP CEO Bill McDermott cited pharmaceutical company Merck as one of Concur’s new
customers. SAP claimed more than 3,500 TripLink customers and more than 100
Concur App Center partners.
SAP operating profit after tax for
the second quarter declined 16 percent year over year to €469 million, based on
internationally accepted financial reporting standards. The decline in profits owed
to “substantially higher” than expected restructuring expenses in the second
quarter, according to SAP CFO Luka Mucic. However, based on non-internationally
accepted financial reporting standards, operating profit after tax increased 2
percent to €960 million.
SAP maintained it’s on track for €2.05
billion in revenue from cloud subscriptions and support for 2015 based on non-internationally
accepted financial reporting standards. That represents a year-over-year growth
rate of 86 percent at constant currency. SAP still expects Concur and
Fieldglass to contribute about 50 percentage points of this growth.
Acquisition Value
About SAP's acquisition of Concur, McDermott said: “Everything
we bought has worked in conjunction with, or better with, anything we expected
in the boardroom business case. We really took a lot of people by surprise with
the concept of the Business Network.”
Singh noted that any acquisition presents challenges but
that the upside has exceeded his expectations.
His team is integrating Concur, Ariba and Fieldglass into the
SAP suite, and further, into external networks, though they're focusing on becoming
best in class in the respective markets of travel, procurement and contingent
labor.”
Singh has noticed a change in the way buyers think about their businesses. “The buyer is looking at this from the point of view of the entire solution set, from what they run their businesses on to all the underlying business applications that plug into that core,” he said. “We see that at the biggest companies in the world, and it’s a prelude to what we’ll see in every other company in the world, with time.”