SAP’s 2021 second-quarter financial report reflected the continuous momentum of customers’ adoption of SAP cloud solutions, including the Business Transformation as a Service offering RISE with SAP.
Enterprise software giant SAP released its quarter two financial performance ended June 30, 2021, showing strong growth in the current cloud backlog and, sequentially, growth in revenue across its cloud portfolio. SAP S/4HANA Cloud, which represents SAP’s cloud offering for core ERP processes, along with other intelligent solutions Business Technology Platform, Business Process Intelligence, Qualtrics, and Customer Experience contributed to the German company’s remarkable quarter financial results.
“This has been another strong quarter with accelerating growth for SAP’s cloud portfolio. We saw excellent customer momentum and adoption and are raising our outlook for revenue and profit,” stated SAP CFO Luka Mucic.
SAP Cloud Solutions Driving Q2 Performance
Continuing on the first quarter’s momentum of SAP cloud solutions performance including the strong customer demand and adoption RISE with SAP, SAP’s second-quarter achieved 17{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €7.77 billion (non-IFRS) and 20{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (at constant currencies) increase in current cloud backlog followed by an 11{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €2.28 billion and up 17{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (at constant currencies) cloud revenue growth.
SAP S/4HANA’s current cloud backlog was up 45{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (Non-IFRS) to €1.13 billion and up 48{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (at constant currencies), with the US driving its strong momentum. Consistently, S/4HANA cloud revenue increased by 33{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €257 million and 39{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (at constant currencies) and is anticipated to further accelerate growth in the second half of 2021.
Moreover, SaaS/PaaS cloud revenue outside the Intelligent Spend business grew by 20{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} and 25{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (at constant currencies).
SAP CEO Christian Klein said that the company’s cloud strategy is paving the way for its respectable performance. He detailed:
“We’re seeing strong adoption of our cloud portfolio as customers select SAP for their business transformation. Our strategy is working; This is the third straight quarter of strong execution, and we continue to deliver unparalleled customer value through the strength of our platform and applications.”
Following the successful debut of RISE with SAP in January, the report stated that SAP has seen strong demand of RISE with SAP from companies of all sizes, drawing in 250 customers in the second quarter. Some of the large customers that adopted RISE with SAP are AMD, Coop Switzerland, Etihad Airways, and Siemens Energy. However, as anticipated, software licenses revenue decreased as more customers transition to the ‘RISE with SAP’ subscription offering.
The second quarter welcomed over 600 SAP S/4HANA customers (50{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} of which were net new), taking total adoption to more than 17, 000 customers, up 16{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} year over year.
First Half 2021 Milestones
Halfway through the year, SAP has made several strategic initiatives that created significant impact on its financial performance and other business objectives. Here are some of the highlights of SAP’s first six months of 2021:
- RISE with SAP. In January, SAP launched its “business transformation as a service” cloud offering RISE with SAP to help enterprises of all sizes achieve a holistic business transformation. It has become the key theme of SAP’s flagship customer event SAPPHIRE NOW, which was attended by 52,000 participants from 158 countries in June. During the event, human experience management (HXM) and procurement capabilities were added to RISE with SAP as well as transformation packages for industries, focusing on retail, consumer products, automotive, utilities, and industrial machinery and components (IM&C).
- Qualtrics IPO. Also in January, Qualtrics International Inc. successfully issued 12{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} of its shares on the Nasdaq Stock Market (NASDAQ)– with SAP still as the controlling shareholder. The IPO-related cash inflow amounted to €1,847 million and the initial value of non-controlling interests in net assets was €909 million.
- Acquisition and Joint Venture. In March, SAP’s acquisition of Business Process Management (BPM) specialist Signavio was officially completed. The acquisition is anticipated to deepen SAP’s business process intelligence (BPI) capabilities.
Advancing SAP’s position in the Finance Sector Industry (FSI), the tech company formed a strategic alliance in April with Dediq GmbH, an entrepreneurial investor focused on information technology and digital businesses. The aim of the joint venture, which will be called SAP Fioneer upon closing, is to build agile solutions for FSI using SAP technologies as a basis, such as SAP HANA, SAP S/4HANA, and SAP Business Technology Platform.
- Sustainability Summit. SAP held the Sustainability Summit in April, an event dedicated to unveiling opportunities for businesses to drive positive impact, reshape traditional business decision-making, and explore proven practices and future solutions. SAP Product Footprint Management, a solution that helps customers assess product footprints across the entire product life cycle, was launched at the event.
- Pledge to Flex. Though SAP has been embracing virtual, location-agnostic, and mobile ways of working even before the pandemic, the company has further strengthened its commitment to supporting a flexible workplace. In June, SAP pledged to a 100{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} flexible and trust-based global framework designed to support employee’s productivity, creativity, and inspiration while running the business responsibly and meeting business requirements.
As the global vaccine rollout promises to recede that impact of COVID-19 and as SAP cloud solutions continue to gain momentum, SAP is raising its business outlook for 2021 with the expectation of further improvements in global demand in the rest of the year.
