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SAP Q3 Results for 2022 Highlight Strong Cloud Momentum

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In the latest SAP Q3 results for 2022, the German enterprise software giant indicated that its cloud business continues to grow rapidly — with strong momentum in major geographies.

The cloud has been a major focus for SAP in recent years, and this has paid off in the form of accelerated growth. The company is seeing not only new customers adopting its cloud-based solutions, but also existing customers migrating to the cloud. With a strong focus on innovation and customer success, this momentum is putting the tech giant on track to reach its mid-term goal to become a leading enterprise cloud company.

It is worth noting that in its Q3 2020 Quarterly Statement, SAP reaffirmed its mid-term vision, which included a pledge to achieve double-digit increase in operating profit by 2023. SAP anticipates revising its mid-term objective in the coming quarters in light of its robust cloud momentum and the latest significant development in currency exchange rates.

Christian Klein, Chief Executive Officer (CEO) and Member of the Executive Board at SAP SE, said in the company’s recent press release:

“Our cloud solutions are the answer, as customers turn to us to help them future-proof their businesses. This trust in SAP is reflected in our accelerating cloud momentum. With a recurring revenue share of more than 80%, it’s clear that our transformation has reached an important inflection point, paving the way for continued growth in the future.”

The current cloud backlog increased to €11.27 billion, a growth rate of 38% in local currency terms and 26% in local currency terms overall. There was a 38% increase in cloud revenue to €3.29 billion, or a 25% increase when adjusting for currency fluctuations. This increase was primarily attributable to double-digit growth throughout the Software as a Service (SaaS) and Platform as a Service (PaaS) portfolio.

Meanwhile, overall revenue from the cloud increased by 44% (IFRS), 42% (non-IFRS), and 30%. (non-IFRS at constant currencies). The cloud’s gross margin increased by 2.8 percentage points year over year, reaching 69.8% (IFRS), and by 2.3 percentage points, reaching 71.7%. (non-IFRS). SaaS margin growth was largely responsible for this, as cost savings from improved operations more than offset the money being poured into developing “next-gen” cloud delivery systems.

Accelerated Cloud Growth Emphasized in SAP Q3 Results 2022

Revenue from SAP’s cloud offerings was solid throughout the quarter and in every market. Brazil, China, India, and Switzerland were especially impressive, while the United States and Germany also had excellent cloud revenue performance. Allianz Technology, Cognizant, DB Schenker, Domino’s Pizza Enterprises, Endress+Hauser, Fujitsu Limited, Grupo Energía Bogotá, Gustavo Gusto, and Hapag-Lloyd were some of the most notable customers to adopt solutions from SAP’s extensive portfolio.

On the other hand, customers including Alpargatas, Assa Atacadista, Paul-Ehrlich-Center Institute’s for Pandemic Vaccines and Therapeutics (ZEPAI), 11teamsports, Wistron Corporation, Schneider Electric, Salzburg AG, Roborock, RICOH CO., Prada, Nikon Corporation, HELLENiQ ENERGY, Fonterra, and Dabur India Limited have made the decision to leverage the Business Transformation as a Service (BTaaS) signature cloud offering RISE with SAP to achieve end-to-end business transformation in the third quarter.

Luka Mucic, Chief Financial Officer at SAP SE, who will be succeeded by industry veteran Dominik Asam in March 2023, stated that SAP has delivered a strong cloud quarter with accelerating momentum across all key cloud indicators. He further shared:

“We’re at an important inflection point in our transformation which we anticipate will lead to accelerating revenue growth and double-digit operating profit growth in 2023.”

Moreover, SAP SuccessFactors’ new functionalities announced last month are another pivotal moment for the third quarter. With the addition of these new modules, the company’s cloud-based Human Experience Management (HXM) Suite now offers a powerful way by which businesses can implement an integrated talent development plan and build a workforce that is prepared for the future.

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