Ladies and gentlemen, thank you for standing by. This is your Chorus Call operator. Welcome to SAP 2014 Second Quarter Earnings Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and answer session.
And your telephone for
operator assistance.
I now hand over to Stephan Gruber. Please go ahead, sir.
Yes. Thank you. Good morning or good afternoon. This is Stephan Gruber, SAP Investor Relations. Thank you all for joining us to discuss SAP's results for the Q2 2014.
I'm joined here in Waldorf by CEO, Bill McDermott and Luka Modic, our CFO, who We'll both make opening remarks on the call today. Also Executive Board members Rob Enslin, who leads Global Customer Operations and Bernd Leuchart, who leads Development and Delivery of all products call, operator. The company across SAP's product portfolio are on the call today and will join us for the Q and A. Before they get started, I want to say a few words about forward looking statements. Any statements made during this call that are not call, operator.
And similar expressions as they relate to SAP are intended to identify such forward looking statements. SEP undertakes no obligation to publicly update or revise any forward looking statements. While forward looking statements are subject to various risks and uncertainties This could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results, plus more fully in filings with the U. S.
Securities and Exchange Commission, the SEC, including SAP's Annual Report on Form 20 F for 2013 filed with the SEC on March 21, 2014. Participants of this call are cautioned not to place undue reliance on these forward looking statements, which speak only as of their dates. Please keep in mind that unless otherwise noted, all numbers referred to on this conference call are non IFRS and growth rates are non IFRS on a constant currency basis. With that, I'd like to turn the call over to Phil Magdalena.
Thank you, Stefan, and thanks to everyone on the call for your time today. I really appreciate it. Before I begin, I'd like to congratulate SAP Ambassador Oliver Beerhoff and the German national football team on their thrilling March to the 2014 World Cup. I'm proud this is not only a winning team, but they co innovated with SAP and they served as a showcase for Match Insights powered by SAP HANA. But instead of giving you my take, I thought it would be better to give you Oliver's own words.
And before the tournament, Oliver was quoted a few Once was in the media in Brazil where he said, imagine this, in just 10 minutes, 10 players with 3 balls can produce over 7,000,000 data points. With SAP HANA, our team can analyze this huge amount of data to customize training and prepare for the next match. Bierhoff went on to tell ESPN this week the same techniques were used to study opponents. Jerome Boateng asked to look at the way Cristiano Ronaldo moves in the box to use another example. And before the game against France, we saw that the French were very concentrated in the middle, but left spaces on the flanks Because their fullbacks didn't push up properly.
So we targeted those areas. When you think about What they accomplished with their smart use of big data, it amounts to making a complex game look simple. And now we know that simple helps win the World Cup. I'd like to offer congratulations again to the Deutsche Busball Bund. Earlier in this year, we launched a new strategy to become the cloud company powered by SAP HANA.
And the focus of this strategy is to make our customers run simple. This means providing our customers with simple and easy to Keeping the complex simple, I'll keep today's remarks as brief as possible, so we can get to your questions. After Q1, We reported that SAP was successfully transitioning into the cloud company powered by SAP HANA. Today, I'm pleased that our Q2 performance Furthers that success. We're winning in the market because we're more focused than ever on helping our customers succeed and grow.
With the unique combination of the SAP Cloud powered by HANA, the largest business network and our omnichannelecommerce platform, Our customers across 25 distinctly different industries and over 180 countries Can defeat complexity and do highly sophisticated things well simple. In Q2, we saw the RunSimple strategy resonating with customers. We delivered very strong growth of 39% in cloud subscription And support revenue with calculated billings increasing 37%. At the same time, We saw solid performance in the core with 2nd quarter software and software related services our broad shift to the cloud while improving our operating profit. I'd like to touch briefly on each of the key drivers of this growth story.
First, let's take a closer look at the cloud. We have the most enterprise cloud users in the world now More than $38,000,000 and our cloud run rate is approaching €1,200,000,000 or in U. S. Dollar terms 1,600,000,000 We're growing our cloud 1.5 times faster than our closest competitor and faster than most all of the SaaS peer group. And we are the fastest growing enterprise cloud company at scale.
We have the breadth and depth of functionality that allows to run their entire business in the cloud and no other competitor could do this. For example, with the addition of Fieldglass, We're the only company that offers total workforce management in the cloud, enabling our customers to manage their permanent employees and flexible workforce Employees in one place. Because of our depth and global reach, companies are selecting SAP Cloud over PurePlay Cloud Vendors. Telefonica, a leading international telecommunications company with more than 120,000 employees Selected the SAP SuccessFactors Enterprise Suite, including Employee Central over Workday. Bombardier Recreational Products, a global leader in the powersports vehicles and propulsion system selected SAP Success Factors Including employee central over Workday to optimize their HR solutions And delivery.
And Weir Minerals, a mining machinery manufacturer and division of Weir Group chose SAP Cloud for sales over salesforce.com. At SAPPHIRE, we announced that we are bringing our over 40 years of unrivaled expertise across 25 industries to the cloud. We are running industry specific mission critical processes in the cloud, which other cloud vendors Simply can't do. Companies like eBay and BSH Bosch and Siemens are choosing our industry solutions. BSH, the largest manufacturer of home appliances in Europe purchased and went live with industry solutions powered by SAP HANA on the HANA Enterprise Cloud.
The migration to SAP HANA provides the foundation for extremely fast calculations, real time reporting And breakthrough innovations. We also recognize the increasing opportunity for small and medium businesses to run simple in the cloud. I'm very pleased to report to you today that we have named Dean Mansfield, a strong leader and former President at NetSuite to lead SAP's SMB Solutions Group. This division will focus solely on the needs of small and medium sized businesses, an area in which we generation industry cloud solutions, it's clear that customers of all sizes are accelerating their moves to RunSimple in the SAP cloud Powered by SAP HANA. Another piece of the RunSimple growth strategy is redefining enterprise value chain collaboration.
The next big opportunity in enterprise applications is the enormous potential of the network economy. Driven by the connectivity of people, machines and business processes, the network will drive unparalleled collaboration Both inside a company and between companies, companies will transact real time frictionless commerce and nurture new trading relationships To drive sustainable growth, SAP is at the core of this network economy. We have the world's largest business network connecting approximately 1,500,000 businesses and driving call operator. An annualized transaction volume of $540,000,000,000 This is 2 times the size Amazon and eBay combined, if it were a country unto itself, the Aruba network would be in the top 25 by measure of GDP. General Electric, an existing SAP SuccessFactors and Fieldglass customer Selected the Ariba network to replace manual time consuming error prone processes.
With Ariba, GE's Water and Process division expects to streamline its business interactions with suppliers and simplify the buying processes for its customers. The addition of Fieldglass further expands our network capabilities and increases our addressable market to cover materials, Services and flexible workforce. The network is a highly attractive business model for SAP Due to the network effects, every additional customer has the potential to bring in hundreds of trading partners and the related commerce to the network. This means that we can scale revenues at a lower cost compared to a traditional cloud application model. And speaking of customers, the essence of RunSimple is delivering true customer engagement that goes beyond the sales force automation nature of traditional commodity CRM.
The future of customer engagement Shapes the customer journey in real time from customer insight to targeted marketing to sales promotion to commerce and service All with focus on simplifying the customer experience. With our Hybris omnichannelecommerce platform And SAP Cloud for sales, we are redefining customer engagement and creating a new category of software, which is seeing explosive Triple digit growth. For example, Samsung Electronics is rolling out Hybris. So when you make a purchase on Samsung's e store In the future, you are using SAP. Each and every one of these growth drivers revolves around a single platform.
HANA is at the core of RunSimple and integrates all SAP solutions on one business platform in the cloud. Customers are broadly adopting the HANA platform to give them real time insight and simplification they need to gain an edge. We now have over 1200 customers on SAP Business Suite powered by SAP HANA, Exceeding our internal expectations for a product launch just over 1 year ago. Shell, a longstanding SAP customer is accelerating its transition to SAP HANA in the cloud. Shell recognizes the value and co innovation with suppliers to help them maintain competitive advantage and Specific to SAP to leverage technologies like HANA and cloud.
HANA also embraces an open and vibrant ecosystem. 1500 start ups are now building on HANA and in Q2 we added new strategic partnerships around HANA with HP and VMware. Let me share a few details with you about our regional performance in Q2, starting with a strong performance in EMEA. Despite continuous uncertainty due to the Ukraine crisis, we achieved 51% growth in cloud subscription And support revenue in the EMEA region as well as strong double digit software license growth in countries like The U. K.
And France to name a few. Customers like Carlsberg and ePlus have chosen SAP this past quarter. Giorgio Armani, the Italian high fashion house went live with SAP IS Retail powered by SAP HANA replacing Oracle Anne now plans to roll out SAP Fashion Management solutions globally. Co innovating with SAP, Armani aims at increasing and call operator. Speed and flexibility in the ultra competitive retail space with a unique solution for its vertically integrated fashion processes From product to storefront, Americas continued the fast transition to the cloud with strong double digit growth in cloud subscription and support revenue.
Canadian software license revenue was particularly strong. We continue to expand and deepen our large customer base in North America with Cirque du Soleil, U. S. Army, New York Life to name a few. And we continue to see strong demand with tremendous growth opportunities in Latin America with customers like Central Bank of Costa Rica and Tafogasta Minerals and others.
APJ also saw solid performance with 48% growth in cloud subscription and support revenue. Australia and Malaysia were highlights with triple digit software license growth. China continued to perform strongly With double digit software and software related services growth, customers like Singapore Health, Cathay Pacific and Tat call operator. So to summarize it all, we are delivering on our run simple strategy With strong growth in cloud, HANA and the network. As we head into the second half of the year, we are really confident In our overall 2014 outlook for software and software related services revenue and profitability And as Luca will detail in a moment, we are raising the outlook for cloud revenue for the year.
As the cloud company powered by SAP HANA, We strongly believe our momentum will continue and we are on the right path to achieve our 2017 midterm ambitions. As always, I'd like to thank our 67,600 women and men of SAP For the hard work they put into achieving this success. None of this would have been possible without their diligence, Hard work, creativity and commitment to this company. I'd like to thank you all. And now I'll turn it over to our CFO, Luka Muchic, also my good friend.
Luka, over to you.
Thank you very much, Bill. As you just 3rd, Bill spoke about our strong second quarter results with excellent growth in the cloud and a very solid performance in our core business. Before I get into further details on those, let me address a couple of technical topics upfront. First on currency. We saw again a strong currency effect on the top line in the second quarter.
Our cloud subscriptions and support revenue was negatively impacted by 7 percentage points the provision of €289,000,000 for the Versata litigation in Q2. To ensure That our non IFRS numbers are comparable over time, we changed the definition of our non IFRS numbers to exclude the effects from the Versa litigation. Before I go into the quarter's results, on a semi personal note, I wanted to say a few words about SAP's implementation of Simple Finance that Bill mentioned before. SAP deployed this revolutionary solution powered by SAP HANA in just 10 weeks from February to end of April without any disruption to our business. We cut more than 4:20 hours from our financial close processes and we reduced the data footprint from 7 terabytes before HANA to under 2 terabytes.
SAP now has one common platform for both regulatory and managerial accounting. With further real time processing And most importantly, unlimited reporting capabilities across all dimensions and a significant potential to optimize our processes. What I'm particularly proud of is that Simple Finance was developed in close cooperation between our stellar development organization And our internal finance organization. So in a nutshell, it's simple finance from finance for finance. It reflects our own simple approach.
Our close process was optimized. We are among the fastest tax companies to publish our quarterly results. Now to those results for the Q2. We continue to have a stable and growing core With solid single digit growth in software and support revenue, 9% growth in support revenue was certainly again a highlight As it has been for a number of quarters now. Our support contracts renewal rate is consistently in the high 90% range.
Growth in enterprise support and premium support again was especially strong. Once again, our enterprise support offering had an adoption rate in the mid-ninety percentage range and continues to be the de facto standard. As a consequence, the combination of support revenue End cloud subscriptions and support revenue as a share of total revenue increased again by 3 percentage points year over year in Q2 To 61%, improving our overall predictability of our business performance for the future. In the Q2, we saw fast growth in the cloud with cloud subscriptions and support revenue up 39% year over year, as Bill mentioned. Calculated cloud billings increased 37% year over year.
Deferred cloud subscriptions and support revenue was €448,000,000 as of June 30, a year over year increase of 29%. As you know, transitioning to the cloud profitably is a top priority for SAP. Bill has alluded to that. And indeed in the Q2, our operating margin increased 60 basis points to 29.5% On the back of an operating income growth of 7%. Looking to IFRS now.
The IFRS operating margin was down 7.5 percentage points to 16.8%. This was due to a one time effect that resulted in a significant provision for the Versata litigation. Our SSRS margin was down by 100 basis points to 82.4%. This decrease was primarily driven by the strong investment into cloud delivery and our efforts to meet increasing customer demand for our premium support offerings. Our cloud subscriptions and support margin was down 8.8 percentage points to 63.9%.
As expected and as we shared during our Q1 call, our cost of cloud subscription and support increased significantly year over year in the quarter as we continue to ramp up our cloud infrastructure delivery and expand our HANA Enterprise Cloud Data Center footprint.
Ladies and gentlemen, please hold the line. Please continue. Ladies and gentlemen, please go to the line. We will continue. Ladies and gentlemen, please hold the line.
We will continue.
Okay. Excuse me. We were cut out for a moment. So I think I left it at talking about the cloud subscription and support margin. As expected, our cost of cloud subscription and support increased significantly year over year in the Q2 as we continue to ramp up our cloud infrastructure delivery And expand our HANA Enterprise Cloud data center footprint from 14 to 20 locations by year end.
We expect this margin to improve in the second half of the year Compared to the first half. The professional services margin decreased by 4.3 percentage points year over year to 17%. As mentioned in the previous quarter, there is an ongoing structural change in the demand for consulting services. We have been and will continue to adapt to this changing market environment. We still expect this transformation to take some time and as such still expect the services profitability to be negatively impacted throughout the rest of the year.
As a result, Our overall gross margin was 71.8%, a decrease of 30 basis points year over year. The IFRS tax rate in the 2nd quarter was 22.6%, down 2.2 percentage points year on year. The non IFRS tax rate in the 2nd quarter was 25.4%, down 1.4 percentage points year over year. We are maintaining our effective tax rate outlook for the full year. In the Q2, our non IFRS EPS was $0.79 Up from $0.71 per share compared to the prior year, resulting in 10% growth.
Now let's cover cash flow and liquidity. Operating cash flow for the 1st 6 months of the year was €2,580,000,000 This is an increase of 4% year over year. Net liquidity at the end of the quarter was a net debt of €1,060,000,000 an improvement of more than €400,000,000 compared to the end of 2013. This is a strong result given the dividend payout that we had in Q2 and cash payouts for acquisitions of around €730,000,000 As Bill has said, we are updating our full year guidance for cloud subscription and support revenue, Well, we now expect to be in a range of between €1,000,000,000 to €1,050,000,000 at constant currencies. Previously, this range was indicated between €950,000,000 to €1,000,000,000 at constant currencies.
We continue to expect non IFRS software and software related service revenue to increase by 6% to 8% at constant currencies As well as non IFRS operating profit to be in a range of between €5,800,000,000 to €6,000,000,000 at constant currencies. Before I finish, let me make a few ending comments about currency, which should help you to more accurately model SAP for the remainder of the year. If exchange rates remained at the June 2014 level for the rest of the year, we would call operator. Non IFRS software and software related service revenue and non IFRS operating profit growth rates at actual currency To experience a negative currency impact of approximately 2 percentage points and 2 percentage points respectively for the Q3 of 2014 End of approximately 2 percentage points and 2 percentage points likewise for the full year 2014. Thank you.
And Bill and I as well as my colleagues on the board will now be happy to take your questions.
Thank you, Luca. I want to hand it back to the operator. We can all start the Q and A session.
Thank you, ladies and gentlemen. At this time, we will begin the question and answer And the first question is from the line of Walter Prechard of Citi. Please go ahead.
Thanks. You talked about simplified financials on the call here in your prepared remarks. And I'm wondering if you could give us an update on early Customer traction there and what you're seeing in terms of sales cycles on that product, it does sound like SAP itself got some significant benefits. Is that something customers are seeing pretty quickly? Or is that something that you envision the sales cycle to be fairly long given it's at the core of the customer's operations?
Walter, this is Rob Ensign. No, I think what we'll see with simple finance is that the sales cycles will be shorter. And generally for net new customers, clearly a quick win. And for existing customers, you will see them take advantage as Luca said. So you'll see smaller and shorter sales cycles.
Thank you very much. Let's move to the next question please.
Next question is from the line of Adam Wood of Morgan Stanley. Please go ahead.
Hi. Thanks very much for taking the question. Just 2 if I could. Just first of all on the SMB high that sounds like a pretty good move and obviously a big opportunity for you. Could you maybe just help us on the product side of things?
And there's obviously There was a cloud initiative with Business by Design there that's been deemphasized. What will be the main product focus on that SMB opportunity in terms of go to market? And then secondly, on the investments around HANA Enterprise Cloud, I think there's a lot of debate in the market on multi tenant SaaS First is kind of quasi hosted SaaS and obviously some of the deals there will be more hosted than multi tenant. Could you maybe just on two things, do clients do you think Care about the difference on that? And secondly, from your cost point of view, does it make a big difference to you?
And can you be profitable delivering that service as you're going to? Thank you.
Hi, this is Bill McDermott Adam. How are you? With regard to Dean Mansfield, we wanted a proven operator to go into that space, a guy that knows it well. By Design is still part of our product portfolio and we now have By Design on SAP HANA, which is absolutely a game changer Because everything is faster and better on HANA as you know. We also believe strongly that V1 has been going through And indirect channel now and has proven itself to be a very successful high growth double digit business with good margin.
So we'll continue that. But we also put B1 up on HANA in the cloud and we go global. And we think that can be a very serious category killer. Once it gets into the marketplace and people see what it can do on Hana and we'll continue to innovate in that space now with a defined Agenda underneath Dean Mansfield. So it's a combination of things we're going to go after the market with.
Related to the HANA Enterprise Cloud And the multi tenant debate, the bottom line is the HANA Enterprise Cloud and each customer Once their solutions, they want them beautiful, they want them to work and yes, we can make money on it because Anna is the great simplifier. When you radically simplify the IT stack, I mean SAP used to run on 8 terabytes of data. Now it's like closer to 1.5. You dramatically lower your cost of operation and improve the speed of everything in the operation. So it's perfect for Unsimple.
It doesn't matter whether it's Single or multi tenant, what matters is the customer gets what they want at the price point and the performance and the user experience they're looking for And that's precisely what we intend to give them. Incidentally, the one thing I would tell you on the SMB market, when we looked at it, we sized this for the So the SME customer that's in the 300 ks size. So pyramid that we haven't spent a lot of time in and even not spending time there, we're doing pretty well. Can you imagine we put our mind to it?
That's great. Thanks so much, Bill.
Thank you very much, Adam.
Okay. Thank you very much. Let's go to the next question please.
Next question is from the line of Michael Priest of UBS. Please go ahead.
Great. Thank you. Good afternoon. We've obviously heard a lot of detail there and I appreciate the extra disclosure you gave around the cloud business. But can you maybe give us some more numbers around the The user base you have on products like Employee Central, Cloud for Customer, I mean one of your competitors is now giving a lot more granularity on that, so it would be helpful.
And then secondly, in terms of the simplification strategy, I think it has a lot of residency. Can you maybe talk about pricing for the on premise suite? And To what extent you'd be willing to offer subscription for an on premise product just to break down some of the complexities of The price list. Thank you.
Yes. So first things first, Michael, how are you? We tell you that we have 38,000,000 users in the cloud. We can tell you that we're operating All the things around integrated human capital management for employee central in the cloud in 28 distinctly different countries with payroll included We're workdays in 2. We can tell you that we've grown employee central from 30 to 390 customers and it's kind of on a roll.
And we can also tell you that we're beating the pants off the competition with Cloud for Customer because as Gartner said, It's a visionary product with a much more beautiful user experience. And when you combine it with omni channel e commerce, it really does get you beyond Commodity nature of salesforce.com and get you into a totally different conversation. So we tell you all those things. And as it relates to pricing On the software on premise, we'd be most happy to rent it. Actually, we already do.
In fact, The interesting thing that we've learned is our customers want to buy it, even though we've gone out of our way to keep reminding them that we're only too glad to rent it, We understand the NPV of that model is good as the other guy and we think it's a great model. But they view SAP as a strategic asset And they for now at least have behaved in a way that indicates purchase is their preferred option, but the rental is on the table And we look forward to more and more customers renting our software.
And maybe just one more comment. Nevertheless, we took significant steps This year to simplify our pricing even in the known structures, we are now bundling more solutions to value added packages that really address the different buying centers in cohesive need. And by that, we have significantly reduced the number of SKUs in our price list.
And what's interesting to Luca's point in terms of run simple, We have actually reduced our price list by 70%, seven-zero. So the whole company SAP It's not only marketing run simple because we know with the great simplify, Ahana and the cloud we can, but we're also behaving very differently within the company And the clock speed has radically picked up, especially in the last 60 days.
Thank you very much.
Thank you, Michael. Thank you. Let's move to the next question, please.
Next question is from the line of John King of Bank of America. Please go ahead.
Great. Thanks very much for taking the question. I just had 2, if that's okay. First of all, on the deal sizes, I thought one of the notable things in the quarter was that you saw a big pickup in deals above €5,000,000,000 Which seem to be up about 50%. It's the first time in some time.
Is that a function do you think of just an easing comparison year on year? Or would it be fair to link some of that to the maturity of the Suite on Hana and that's reaching a better level of maturity and allowing you to sign bigger deals? And the second one was just for Luca. On the tax guidance, you've not changed the guidance obviously, but you've beaten I think again The expectation is a couple of times. Could you just comment as to what you expect for the second half and whether there's any one offs, which would mean that you'd be In the middle of the range or whether towards the bottom end of the tax guidance would be more likely?
Thanks.
Hey, John. I'll start off on the deal size. This is Bill. Just to give you a flavor It is true that the $5,000,000 and above deals increased by about 7 percentage points on a year over year basis, which is really encouraging. And yes, the Suite on Hana It's hitting scale.
As you know, we have about 1200 customers now purchasing the Suite on HANA To complement the 3,600 customers that have made an investment in HANA and the 1500 startups that run their whole future on HANA. So HANA is becoming Standard. And I am telling you since SAPPHIRE, there is a real tailwind going on here. The RunSimple Concept, the vision of it has hit home. I think approaching the cloud from the business network and the lines of business as well as the suite on HANA in the cloud Has given the customer great confidence that we have the platform, we have the cloud solutions and we even have the network and that complements the on So you tend to, when the strategy is in the right place for the customer, increase the bill of materials because the customer wants More of a single vendor approach to their enterprise and we're seeing more of that.
And I will also tell you that the larger deals are going up Because we're going into areas we didn't used to be. The omni channel e commerce business is up 158% year over year. Cloud for customers up even higher than that. These are businesses that weren't ringing the cash register and now they are in a major, major way. So I feel fantastic about coming out of SAPPHIRE and what's happened to the overall pipeline, including large deals.
Yes. And maybe to cover your question on the tax rates. You're absolutely correct in the first half Yes, we clearly state below our stated guidance that's due mainly to 2 effects. On the one hand, We had some special effects from prior year taxes that were rolling into this first half year favorably. The second point is that the distribution Our revenues developed more favorably than our base plan, so to say, as far as the tax rate effects are concerned.
So are these all effects that we can bank on for the second half here? Not necessarily, but it's true We are on a good way. You also know that in the second half at SAP, tax rates always tend to trade A little bit higher. And of course, we have a huge second half still ahead where the revenue distribution can make a difference. But so far, we are on a good track and let's see where we stand after Q3.
And then I will be in a better position to give you a more definitive view on where We will land within or below the guidance.
Perfect. Thanks very much.
Thank you. Next question, please.
Next question is from the line of Stacy Pollard of JPMorgan.
Hi. Just a quick question on HANA. Now you said it was ahead of schedule The number of customers you've talked about that. Would you say the same about revenue generation? And I know it's hard to separate, but if there's any sort of gut feel?
And then Also just when you think about the maintenance revenues, can you talk about what portion is price increases and then what portion is kind of Maintenance contracts or separated out, a new maintenance contract, sorry.
Stacy, thanks for the question. I'll start it off and I know Luca will comment on the maintenance piece of it. We also have Rob Enslin, our Head of Global Customer Operations and Bernd Leukert, The Head of Innovation who is doing a fantastic job, both of these guys are unbelievable. But in terms of Hana, the fascinating thing is HANA is growing very swiftly. We are in a company that has everything attached to HANA.
If it's a cloud solution and it's 38,000,000 users, that means we'll soon have 38,000,000 users running HANA. Can you imagine the opportunity for that hockey stick? So everything is Hana. There was no point in breaking it out other than the account, The number of accounts, the suite on HANA and what we're doing with startups, etcetera. Having said that, you should feel very confident That Hana is embedding itself as a standard in the marketplace.
Yesterday, I was with one of the largest chemical companies in the world. So they can be viewed in a control center in real time. They couldn't believe that all you have to do is feed data into HANA and bam, you have new business models. A large manufacturer met with me yesterday in Germany. We're doing machine to machine and preventative maintenance and they're reinventing their services business model.
So what you see here is the ultimate simplification of IT with HANA, but also brand new business models being simulated on the fly Where companies can see a whole new way to run their business. So HANA has now taken hold. We don't have to prove that it works. Everyone knows Works. And now in the stage of how do I do it.
And it's really taking off very nicely. And yes, it's ahead of our internal goals.
Yes. Now a few words on the maintenance. The strong performance in maintenance is a function of 2 primary drivers. The one being that we have virtually no churn in maintenance. We have renewal rates that are between the 97%, 98% ranges.
With every new license that we sell, we add typically 22% enterprise support on top of that. So it just is a self enforcing mechanism there. The second one is that our offerings Are performing extremely strongly in terms of adoption. Premium Support has very, very nice double digit growth rates. So Max Attention, active embedded offerings, they're extremely strong.
And secondly, among the established standard support models, Enterprise support is more and more dominating as the de facto standard. Price increases have really only a very minor role to play because We said that for enterprise support, we keep the prices at 22% until 2016 for any new licenses sold And for existing licenses increases for standard support and enterprise support are kept at CPI indexes. And in many Countries, these actually don't result in an increase or only a minor tiny increase because typically the consumer price indexes remain We're relatively stable. So it's really a function of virtually non existent churn as well as growth in premium support and high adoption rates for enterprise support.
Okay. Thank you very much. Let's move to the next question please.
Next question is from Rick Schallend of Nomura. Please go ahead.
Yes. Thank you. I wonder if I can get some clarification on Simple. It seems ironic, I'm confused by Simple, but we've got Run Simple, Which I presume is right now mostly running the business suite on HANA, but then you've got simple financials to be followed by simple HCM, simple ERP. So I'm kind of excited about the opportunity for the simple suite of products because it's Simpler, it's got a nicer interface.
It's hosted by you guys on HANA. But I'm not hearing much about that. I'm hearing more about RunSimple, which I think is more Which I think is more business suite on HANA. Is there kind of reluctance to talk too much about it until it's fully out because it could The current business suite on HANA, just maybe some clarification how I should be thinking about this.
Yes, Rick. First of all, it's Bill. That's an Excellent question. Let me clarify it. First of all, RunSimple is an absolute movement within our company To simplify our company, it also happens to be the new identity for the SAP brand.
And therefore, when I speak of RunSimple, I'm speaking as the architect of RunSimple for a corporation to abide by in every single way, whether it's our brand and how it impacts our customers or how we run our company And streamline everything, so we can do anything for our customers. So that is a movement. It's an identity. And there'll be lots of things that you'll be seeing on that in the days weeks ahead. In terms of simple financials And other products that might take on the simple moniker, they're doing so on the basis of brand and that is a building block And there'll be more of them.
So that's pretty much it in a nutshell. Bernd, did you want to add anything?
Yes. Maybe just from the product side. Well, as Bill outlined, it's a strategy for the company. It has significant impact on How we develop, what is the architecture of product and then that resonates how we can deliver innovations to the market. Of course, the fact that we delivered the innovations to the cloud first is significantly accelerating the Adoption of the value by our customers and that is great to see that resonates as well in the financial numbers.
Number 2, it addresses as well a need from our customers to consolidate a very fragmented heterogeneous landscape Into a homogeneous landscape where the platform is the key enabler. And that is coming back to a previous question before That behind this success is a strong platform with capabilities, not just a traditional relational database has, With capabilities that outperform any competitive offering in any dimension.
Very good. Thanks a lot. Let's move to the next question please.
Next question is from the
line of Knut Waller of Baader Bank. Please go ahead.
Yes. Thank you for taking my questions. It's basically 2. First one, on the margin expansion, we have seen a 10 basis point margin expansion in the Q1 at constant currency And now an acceleration by to 60 basis points in the Q2. So when we look at your full year targets, should we Think about an ongoing margin expansion at the same extent as we have seen in the Q2 or will that moderate somehow?
And then simply on Fieldglass, we have seen historical growth rates as far as I remember, you mentioned 30% to 40%. Now it's in the group, you've got a much Broader scale of sales force, how should we think about the growth of Fieldglass going forward after you've integrated it? Will growth rates likely accelerate Compared to historical rates or what's your expectation here? Thank you. Yes.
So first of all on the margin, as I From 10 to 60 basis points that after Q3 we will be at 110 basis points and after Q4 at 160 basis points. Think we have a guidance out there to land between €5,800,000,000 to €6,000,000,000 operating income corridor and that's what we are still committed And what we'll then drive whatever we'll achieve on the margin side. And in terms of the field class acceleration, Please, colleagues chime in there. I mean we have a guidance out there and we have just increased it and Any acceleration of Fieldglass as part of the SAP Group for 2014 is in that guidance. And any further Acceleration will be in next year's guidance.
Perfect. Thank you. The one thing I would tell you about Fieldglass is The focus that we have on the business network and the ability of SAP to scale things on an international and global level It's not trivial. So we didn't buy it to maintain its existing growth rate. Whenever we buy an asset, it's the best in the business And we do something special with it to accelerate growth and we expect that to happen with Fieldglass.
That's very clear. Thank you.
Thank you. Thank you.
We have time for one final question, please.
And the next question is from the
line of Philip Winslow. Please go ahead.
Hi. Thanks guys for taking my questions and congrats on a good quarter. Bill, good question. Bill, good question. Just digging through the numbers here and just Looking across the geographies, it looks like you guys had a solid pickup in EMEA and also APJ.
I'm wondering if you could give us some color of just sort of what you're seeing across regions, sort of what trends you're seeing? And as you kind of look into the second half, just what are your thoughts based on sort of the first half and then the pipeline Sure.
Well, thank you very much for the question, Phil. We're really proud of what's going on in EMEA. I think the team is doing a fantastic job under the leadership of Rob Enslin. The same is also true for APJ. Whether you look at mature markets like Australia just doing unbelievable things or you look at Markets like China, which we've declared as a second home taken off, we're just solid.
And in the Americas, the Transition to the cloud particularly in the United States accelerates and that's the number one focus For the United States is really to bear down with everything we've got on the cloud. In Latin America, We think there's a lot of opportunity for all lines of business, especially in places like Brazil, Mexico, Colombia and others. So we see a new tailwind here, Phil. I think that it would be safe to say That we're starting to see SAP cylinders, raring to fire on multiple dimensions now. As opposed to a 6 cylinder car hitting on 3, we're now revving it up and we can see all of the cylinders starting to move in the right direction And that bodes well for our second half and full year confidence, not to mention our midterm 2017 and beyond strategy.
Thank you very much. Got it. Thanks guys.
Thank you. This was the last question. Thank you. So this concludes our financial analyst call for today. Thank you all for joining and goodbye.