SAP SE, Europe’s largest enterprise software company, raised its guidance for the year after posting solid first-quarter earnings and closing its acquisition of Callidus Software Inc.

SAP said early Wednesday in Germany that its earnings before certain costs such as stock compensation jumped 33 percent, to 708 million euros ($866.5 million), from the same quarter a year ago. Total revenue for the quarter was 5.26 billion euros, down from 5.29 billion in the previous year.

More importantly, SAP Chief Executive Officer Bill McDermott (pictured) said the company was gaining ground on rivals Salesforce.com Inc. and Oracle Corp. in the cloud computing market. He added that SAP’s margin recovery was also on track.

“We’re gaining share fast and we’re outpacing our toughest competitors pretty handily,” McDermott said on a conference call reported by Reuters. SAP’s stock rose by 3.2 percent in the hours following the call, indicating that the firm’s investors agreed with McDermott’s view.

The company also had good news on the bookings front. It said bookings for cloud services rose 25 percent from the previous quarter, hitting 245 million euros. SAP’s main growth driver, cloud subscriptions and support revenues, also grew by 18 percent, topping 1 billion euros for the first time.

Thanks to the strength of the euro, Germany-based SAP has been hit by currency headwinds that have a negative impact on its bottom line, said Chief Financial Officer Luca Mucic. He pointed out that the firm’s cloud subscription and support revenues would have risen by 37 percent if not for currency issues.

The results show that SAP has finally hit upon a winning strategy for its cloud business, said Holger Mueller, principal analyst and vice president at Constellation Research Inc.

“SAP’s performance is a good sign as Q1 is usually characterized by sluggish on-premises sales, with enterprises holding back their purchases,” Mueller said. “But it’s different in a software-as-a-service world, where subscription sales come in on a regular basis. But then, all precloud era enterprise resource planning vendors have seen on-and-off performance, so the key now is what McDermott’s team can do in the second quarter.”

McDermott also said that SAP had closed on the acquisition of California-based sales and marketing software company Callidus during the quarter. That prompted SAP to raise its outlook for the full year, with an expected operating profit of between 7.35 billion euros and 7.5 billion euros at constant currencies, on revenue of between 24.8 billion and 25.3 billion euros. Of that, Callidus is expected to contribute about 200 million euros.

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