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SAP FY 2022 Results, Business Highlights Announced

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SAP FY 2022 results show that all performance expectations have been fulfilled, with cloud revenue, cloud and software revenue, and operating profit meeting the company’s financial outlook. This is a significant achievement for the organization, demonstrating its capability to effectively manage its business operations and provide shareholders with strong returns.

The German tech giant saw a high-performing third quarter, significantly bolstered by its strong cloud business. This positive momentum has carried into the fourth quarter as SAP recently shared financial results that suggest a promising year-end performance in 2022. SAP technologies have been widely used by enterprises across the globe, not only as a way of ensuring business continuity but also to facilitate digital business transformation in the face of the ever-growing disruption caused by the COVID-19 pandemic. 

Commenting on the SAP FY 2022 financial results, SAP Chief Executive Officer and Member of the Executive Board Christian Klein expressed his satisfaction with the company’s overall financial performance in 2022. Describing the company as “more resilient than ever,” he said:

“We end 2022 with continued strong cloud momentum and a return to operating profit growth in the fourth quarter, marking an important inflection point. Heading into 2023, this gives us great confidence in delivering on our promise of accelerating topline and double-digit non-IFRS operating profit growth.”

And as SAP enters the next chapter, Klein expressed his gratitude to SAP Chief Financial Officer Luka Mucic for the support he has provided throughout the company’s journey. Mucic’s partnership has been integral in helping SAP reach its current success. As he moves on from this role in the coming months, Dominik Asam will be taking up the mantle as his successor on March 7, 2023 – a date that marks a new era for the German multinational IT company.

“In my 37th and final earnings for SAP, I am proud that the SAP team is announcing excellent results and continued cloud momentum. We are on track to deliver our growth and profitability commitments for 2023. I am extremely confident in the continued success of SAP’s most exciting transformation in its history. Thank you to the wonderful SAP family that I have been part of for 27 years,” Mucic shared in a statement.

SAP Q4 2022 Highlights

According to SAP, revenue from the cloud grew by 30% year over year in the fourth quarter, reaching €3.39 billion. There was even more growth in SAP S/4HANA cloud revenue, which surged 101% to €0.66 billion (or 90% in constant currencies).

On the other hand, the software licensing business had a 38% drop in revenue, to €0.91 billion, or 39% at constant currencies. Revenue from the cloud and software rose by 4% to €7.29 billion and was steady when adjusted for currency fluctuations. Overall services revenue increased by 15% to €1.14 billion and by 10% at constant currencies.

In terms of customer wins, Lockheed Martin was just one of several global clients in the fourth quarter to select the Business Transformation as a Service (BTaaS) offering RISE with SAP to power their organization-wide digital transformations. The fourth quarter was also especially notable because many major clients, including Accenture and Zespri, went live on SAP S/4HANA Cloud.

Year-End SAP FY 2022 Results

SAP’s current cloud backlog grew to €12.03 billion at year’s end, up 27% and 24% at constant currency. The divestment of the SAP Litmos business and the winding down of the company’s business activities in Russia and Belarus reduced current cloud backlog growth by about 1.5 percentage points. The current cloud backlog for SAP S/4HANA increased 82% to €3.17 billion, or 86% when adjusted for currency fluctuations. Total cloud backlog, which is the contractually committed cloud earnings SAP anticipates to realize in future quarters, increased 35% as of December 31 to €34.2 billion.

Cloud revenue increased 33% year-over-year to €12.56 billion, or 24% in constant currencies, thanks to double-digit growth in every Software as Service (SaaS) and Platform as a Service (PaaS) product line. Additionally,  SAP S/4HANA Cloud revenue was up 79% at constant currencies, bringing the total to €2.08 billion, a 91% increase compared to the previous year.

Moreover, the software licensing business had a 37% drop in sales to €2.06 billion, or a 39% drop at constant currencies. Cloud and software sales increased 10% to €26.52 billion, or 4% when adjusted for currency fluctuations, despite a decline in software licensing revenue. With an increase of 16% to €4.35 billion or 9% in constant currency, sales from services saw impressive growth.

Key Announcements

During the year 2023, SAP plans to implement a strategic program of corporate restructuring across a subset of the business. The company is revamping its operations and its approach to the market in preparation for its rapid transition to the cloud.

In addition, SAP plans to bolster its core business and enhance process efficiency overall. The company said that about 2.5% of SAP’s workforce will be affected by the program. And in an effort to consolidate its holdings, the German tech giant has opted to evaluate potential buyer interest in its Qualtrics share — consistent with SAP’s plan from the time of Qualtrics’ IPO in 2021.

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