Hybris Commerce, for years a leading name in B2B and retail e-commerce software for large, complex organizations, has all but disappeared as a brand name in SAP SE’s product information. The same goes for CallidusCloud, the cloud-based sales management software suite, including configure-price-quote technology for online sales of complex business and industrial products.
But the market presence of Hybris and CallidusCloud—now SAP Commerce Cloud and SAP Sales Cloud, respectively—continues as a growth driver within their new home, SAP’s C/4Hana suite of cloud-based “customer experience” software. SAP doesn’t break out revenue for its Commerce and Sales products in C/4Hana, which also includes cloud software for marketing, customer service and data management. For the second quarter ended June 30, Germany-based SAP said its revenue from its C/4Hana suite increased 65% year over year to 242 million euros (US$282 million).
SAP also reported strong revenue growth in its internet-based Business Network Group, which includes the SAP Ariba procurement network and related software, Concur travel and expense software, and Fieldglass workforce management software. Business Network revenue increased 21% year over year in the second quarter to 688 million euros (US$803 million). The value of all commerce transacted through the SAP Business Network, including more than 180 countries, is about $2.4 trillion annually, SAP says.
SAP SE is betting big on its cloud business for future sales growth, raising its outlook even as concerns remain about whether new bookings can keep pace.
Last week it raised its guidance both for this year and for 2020, citing accelerating cloud sales. New cloud bookings, a keenly watched metric because it indicates future revenue growth, increased 29%—off the pace of 40% overall sales growth in the cloud segment.
“While the overall headlines are positive, we suspect the debate today will be on cloud bookings,” Credit Suisse analysts led by Charles Brennan said last week in an emailed note. “Management has been flagging a growing disconnect between bookings and revenue as the company pushes more flexible pricing models like pay-as-you-go.”
SAP’s shares fell as much as 3.7% and traded 0.86% lower at 103.78 euros as of 10:23 a.m. in Frankfurt. The stock is up more than 11% this year, valuing the company at 127.6 billion euros.
Oracle, for its fiscal year ended May 31, said its cloud and license support revenue grew 7% year over year to $26.3 billion, as total revenue increased 3% to $39.9 billion. Co-CEO Mark Hurd, in a conference call with stock analysts, noted that bookings for Oracle’s cloud-based NetSuite software, which includes ERP and e-commerce software, rose 62%. “This will lead to accelerated NetSuite revenue in 2019,” he said, according to a transcript of the call from Seeking Alpha.
Salesforce, for its fiscal 2019 first quarter ended April 30, said revenue increased 25% to just over $3 billion. CEO Marc Benioff projects full fiscal year revenue to reach between $12 billion and $13 billion.
SAP this year made its biggest acquisition in more than three years when it bought Callidus Software Inc. for about $2.4 billion, gaining access to new sales analytics and customer engagement tools under the CallidusCloud brand. Europe’s biggest technology company expects cloud subscriptions to account for about 29% of total revenue by 2020, up from around 16% in 2017.
“This update reflects the strong momentum in SAP’s cloud business, the acquisition of Callidus Software as well as a more challenging currency environment compared to 2017,” the company said in a statement.
SAP’s flagship S/4 Hana enterprise resource planning software added about 600 customers in the April-June period to reach more than 8,900 users, a bigger intake than in the previous quarter. The software allows businesses to run tasks on their own machines or in a cloud-computing arrangement hosted by SAP or one of its partners.
SAP says it focuses on selling its C/4Hana customer experience software to companies that also run its ERP software for managing such operations as financial records, customer activity and inventory records. Ideally—following a strategy also followed by rivals Salesforce and Oracle—that can help its clients develop a single view of their customers through multiple online and offline selling channels and match demand to available products.
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