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Must-know: SAP AG's 2Q14 earnings review

Must-know: SAP AG's 2Q14 earnings review (Part 1 of 12)

Must-know: An overview of SAP’s 2Q14 earnings

Overview of SAP AG

SAP AG (SAP) is a market leader in enterprise application software. It announced its 2Q14 results on July 17, 2014. SAP competes with Microsoft, Oracle, and IBM.

According to Gartner, Microsoft (MSFT) was the leader in the $407 billion worldwide enterprise software market. MSFT had a market share of 16%. It was followed by Oracle (ORCL) and IBM (IBM). In 2013, they each held a 7% share. SAP and Symantec (SYMC) held a 5% and 2% share, respectively.

Revenue contributionEnlarge Graph

The previous chart shows the contributions of various operating segments to SAP’s consolidated revenues.

2Q14 earnings results

In 2Q14, SAP reported that its revenues and operating profits grew by 2% and 4% compared to 2Q13. In the half year ending 2014 and in 2Q14, SAP reported revenues that grew over 6% and 5% to reach 7.85 billion Euros and 4.15 billion Euros, respectively. It missed the analysts’ estimates by 70 million Euros.

SAP reported earnings per share (or EPS) of 0.79 Euros. The EPS grew at 10% on a year-over-year (or YoY) basis. Support revenues grew 6% to 3.24 billion Euros, while revenues from software and related subscriptions grew 8% to 3.48 billion Euros. Cloud subscriptions and support revenues grew 39% over the year to reach 0.24 billion Euros.

Fast growth in cloud applications

Continued adoption and deployment to other fields of SAP’s HANA and cloud application drove its growth. The company claims that the total subscribers for its applications have exceeded 38 million—that’s yet to be achieved by any enterprise cloud vendor in the industry.

As of 2Q14, 1,200 customers are running their core Business Suite on the SAP HANA in-memory database. In total, there are ~3,600 HANA customers.

HANA is the SAP’s in-memory analytics product that allows organizations to do analyses of large volumes of data in real time. All the data that is stored in-memory or random-access memory (or RAM) is referred to as “in-memory.”

In-memory avoids wasting time loading the data from a hard disk to RAM. It’s important because with in-memory, CPU’s can have quick access to data for processing.

Global growth

Asia Pacific recorded the highest growth of 12%, followed by the Europe, Middle East, and Africa (or EMEA) region. It grew by 8%. The Americas posted growth of 6% on YoY basis.

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