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SAP SPENDS MORE, CLOUD BOOMS Featured

Bill, McDermott, SAPNot mentioned prominently in SAP's ebullient pronouncements about its cloud software was that the company increased spending by 22 percent for the third quarter ended September 30. But for the moment let's concentrate on the fact that after-tax earnings were about $988 for the most recently ended quarter, up 2 percent from a year earlier. Revenue was roughly $5.5 billion, up 17 percent—10 percent in constant currencies.

CEO Bill McDermott, who always sounds like he's declaring victory, noted in the recent earnings webcast that this was "The second quarter in a row we expanded all margins sequentially." And the company noted that cloud subscription and support revenue was approximately $660 million, an increase of 116 percent over a year ago; 90 percent in constant currencies. SAP said new cloud bookings were up 102 percent. Software and license revenue reached roughly $3.88 billion, an increase of 11 percent, 6 percent in constant currencies. The main theme remained S4 Hana—remember when SAP once talked about its small business offerings. McDermott tossed out performance numbers including a statement about systems being "1,800 times faster than any system on the market. My read is that SAP chose to invest a lot of the revenue—one reason for the single-digit increase in the bottom line. R&D spending was about $727 million for the recent quarter, 21 percent over a year earlier.

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