Germany’s SAP reported last Monday a positive shift by most business customers in to software that is internet-delivered via cloud. SAP reported a 1% increase in overall operating profit during the year’s fourth quarter due to recent stable demand for the company’s classic software.
Analysts from a Reuters poll also reported an operating profit amounting to 2.13B euros or $2.5 billion (excluding special items), approximately in the average line of forecast that was around 2.15B euros.
Last October, SAP unnerved many investors because of a lower profit forecast, which the company blames on the high initial costs that is required in order to deliver their software via cloud, wherein overall revenue is realized after some time compared to packaged software which is more upfront.
The company’s recent shift in sales via loud software cut margins of overall profit for the year’s fourth quarter by about 2.1 points which is 38.9%, lower than company and analysts’ forecasts. Thomas Becker, a Commerzbank analyst noted that that SAP was successful in keeping the balance between the company’s recent cloud upgrade, and making sure software and support for businesses is stable.