Staff pay eats up profits from software giant's cloud expansion

Executives say they are confident that the drop in profits will not hold the group back from reaching its objectives for the full year.

German software giant SAP says it is confident of reaching its profit goals for 2017 after getting off to a good start in the first quarter

Between January and March, subscriptions to the group's cloud computing and support services grew 34 percent compared with the same period in 2016.

That helped power a 12-percent increase in revenue to 5.3 billion euros ($5.8 billion) over the first three months -- slightly higher than analysts had forecast.

But the firm's operating, or underlying profit fell 17 percent compared with the first quarter of 2016, to 673 million euros.

Meanwhile, net profit fell 7.0 percent to 530 million euros -- well short of the 608 million euros analysts had predicted.

The bottom line was "primarily impacted by an increase in share-based compensation expenses, which increased due to the strong development of SAP's share price and an increase in employee participation," the firm said in its statement.

Some 65 percent of SAP's 85,750 employees take part in the scheme.

"We're off to a good start to reach our full year targets and we are confident that we will grow our profitability in 2018 and beyond," chief financial officer Luka Mucic said in a statement.

The group aims to reach revenue of between 23.2 and 23.6 billion euros in 2017, up from 22.1 billion euros last year, with profits between 6.8 and 7.0 billion euros compared with 6.6 billion euros in 2016.

SAP only makes forecasts using non-IFRS accounting rules, which exclude certain costs.

JOIN OUR PULSE COMMUNITY!

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

COVID-19: China donates 470,000 doses of vaccine to Nigeria

Buhari asks contractors to engage in CSR, says he doesn’t need their cheques

Union of Pensioners apologises to Ngige over members’ unethical action

Zamfara govt donates N15m to families of police personnel gunned down by bandits

Public display of affluence dangerous, DSS warns Nigerians

Kano govt makes NIN compulsory for secondary school students

Buhari begs historians, intellectuals to be fair in assessment of his govt

Support fight against criminality in South-East, Irabor urges ex-military officers

Court orders DSS to produce detained Igboho's aides in court