(Bloomberg News) -- SAP SE reported first-quarter sales that topped analysts’ estimates as a weaker euro boosted revenue from markets including the U.S.
Revenue rose 22 percent to 4.5 billion euros ($4.8 billion), and operating profit adjusted for some items was 1.06 billion euros, the Walldorf, Germany-based business-software maker said Tuesday. Analysts had estimated 4.3 billion euros in sales and currency-adjusted operating profit of 1.07 billion euros, according to data compiled by Bloomberg.
Chief Executive Officer Bill McDermott is positioning the company for growth and a transition from software installed on businesses’ server computers to programs customers get online and rent through cloud-computing arrangements. Online software contracts deliver less money up front, which is suppressing long-term profitability at SAP.
“Our plan is to be a growth company,” McDermott said on a conference call. “We have no interest in announcing that we didn’t grow and then detailing the costs we cut to hold expenses in line.”
SAP shares added 2.5 percent to 69.10 euros at 9:07 a.m. in Frankfurt. They had gained 16 percent this year through yesterday.
The rising dollar is giving SAP a boost as it engages in a fight for cloud-computing contracts with business-software suppliers Workday Inc., Salesforce.com Inc. and its traditional rival Oracle Corp. Companies benefiting from a weaker euro also include cosmetics maker L’Oreal SA, which reported a sales increase; and ad agency owner Publicis Groupe SA, which said first-quarter revenue soared.
The dollar has gained about 13 percent against the euro since the start of the year. About 28 percent of SAP’s 17.6 billion euros in sales last year came from the U.S.
Excluding the boost from currency swings, operating profit and profit margins declined during the quarter. That’s mainly due to acquisitions including Concur Technologies Inc. and Fieldglass Inc. Essentially, SAP is trading some profitability for the ability to spur growth.
“You start to see the margin flow through as the year progresses,” McDermott said.
Revenue from software licenses and support rose 16 percent to 3.15 billion euros, while sales from cloud subscriptions and support more than doubled to 509 million euros.
Amid the transition, McDermott plans to cut about 2,200 positions this year, adding to a similar reduction last year. Chief Financial Officer Luka Mucic said SAP started offering early retirements in the U.S. in the first quarter and will introduce similar programs in Europe this quarter.
SAP reiterated its full-year forecasts. The company has predicted a 14 percentage point boost in operating profit this year as the euro slides in value against the dollar and other currencies. That make overseas sales more valuable when converted into euros.
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