ChannelLife NZ - SAP NZ takes massive profit hit with cloud and software revenue down, services up

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SAP NZ takes massive profit hit with cloud and software revenue down, services up

A rise in services revenue hasn't been enough to stop SAP New Zealand’s profit for the latest financial year crashing 97.5% - shaving more than $9 million off the company’s profit for the year and leaving it with profit of just $236,782.

The software and services vendor saw cloud and software revenue drop 8.4%, from $87.8 million to $80.4 million for the year ending 31 December 2016.

That decline was largely countered by an 18.1% rise services revenue, which climbed from $40.0 million to $47.3 million.

However, increased material expenses, staff costs, rent and other expenses saw the company’s operating profit for the year drop to $980,100 – down from $7.1 million a year earlier.

A $2.1 million income tax expense – up from $365,589 a year earlier – further impacted the company, which closed out the year with profit of just $236,782 – down from $9.6 million in 2015.

The declines came in a year which saw SAP doubling down on its New Zealand channel efforts. Last August, Rodolpho Cardenuto, SAP global president of global channels and general business, told ChannelLife NZ, the company was going ‘all channel, all cloud’ for the local SME market as it sought to grow its SME market share.

At the time, Sumal Karu, SAP Australia and New Zealand channels and general business manager, said the company saw a ‘massive’ opportunity across ANZ for its cloud offerings in the mid market.

The latest financial records show the company made donations to the tune of $183,411, up on 2015’s $110,000 while key management personnel received total compensation of $1.1 million, down from the $1.2 million recorded in 2015.

Total equity was nearly halved, from $60.4 million at January 01, 2016 to $30.6 million.

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