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By | Gavin Clarke 21st July 2015 11:01

Dancing in the fluffy white stuff ain't helping SAP's bottom line

Basically we bought too much stuff, says firm

Rampant cloud growth struggled to offset falling profits for SAP, Europe’s largest software company, during the firm’s second quarter.

Post-tax profits tumbled 16 per cent to 469m euro ($508.2m) while total revenue increased by a fifth, to 4.9bn euro ($5.3bn) for SAP’s three months to June 30, 2015. Earnings per share fell 16 per cent to 0.39 euro ($0.42) under IFRS reporting.

The fall came despite growth in cloud and on prem with cloud subscriptions and support gaining fastest.

Cloud subscriptions and support was up 129 per cent to 552m euro ($598.2m) with cloud and software up 21 per cent to 4.06bn euro ($4.39bn).

Unfortunately for SAP, cloud remains a relatively small percentage of its overall business.

Software licenses and support, still the biggest earner for this giant, grew, too, just not by as much: 13 per cent to 3.51bn euro ($3.8bn).

SAP blamed the profits fall on acquisition-related costs, higher stock-based compensation spending and restructuring.

The giant has lost 10 per cent of its workforce in the last 12-months; it copped to the latest cut, three percent, in March this year.

It denied the losses were part of cost-cutting, rather to help growth.

SAP’s current head count stands at 67,651. ®

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