Jan. 10 (Bloomberg) -- SAP AG, the largest maker of business-management software, reported an increase in fourth- quarter operating profit as subscriptions of on-demand software and sales of its database platform Hana picked up.
Operating profit, excluding currency swings and some items, rose 14 percent to 2.09 billion euros ($2.8 billion), the Walldorf, Germany-based company said today in a statement. Analysts predicted 2.1 billion euros, the average of estimates compiled by Bloomberg. Sales of software licenses, a source of future service revenue, gained 3.5 percent on that basis.
More customers are discarding big software installations on their premises and instead choosing programs delivered over the Internet, prompting SAP to weigh how to grab a bigger slice of the cloud market without hurting its older, more profitable license business. The company’s earnings were hurt by exchange- rate swings in the quarter.
“We are one of the few global tech companies that has successfully managed the transition to the cloud while growing our core business and improving our profitability at the same time,” co-Chief Executive Officers Bill McDermott and Jim Hagemann Snabe said in the statement.
SAP shares were little changed at 61.70 euros at 12:55 p.m. in Frankfurt.
McDermott and Snabe, during their four-year tenure, have bolstered SAP’s on-demand software arsenal with acquisitions including SuccessFactors Inc., Ariba Inc. and Hybris AG. The company has also entered the database market with its rapid Hana data-processing engine, which SAP is gradually building into its entire product range.
Revenue from cloud subscriptions was 210 million euros, in line with an average analyst estimate. Hana posted sales of 664 million euros for 2013, a 69 percent gain excluding exchange- rate effects.
Research firm Gartner Inc. projected this week that the global enterprise-software market will grow 6.8 percent to about $320 billion this year, after a 5.2 percent gain in 2013. That pace would keep it as the fastest-growing segment of the information-technology industry, according to Gartner.
SAP’s biggest rival, Redwood City, California-based Oracle Corp., last month reported software-license sales for the quarter ended in November that were little changed. Infosys Ltd., India’s second-largest software exporter, today raised its annual sales forecast for a second consecutive quarter as an economic recovery prompts clients in Europe to spend more.