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Friday 14 January 2022

Positive cloud readings from SAP Q4/FY21 prelims

SAP logoWe can envisage happy faces at SAP this morning based on preliminary Q4 and FY21 results that show convincing cloud progress. 

Preliminary figures indicate that In Q4 (to 31 December 2021) cloud revenue rose 28% yoy (24% cc) to €2.61bn with strong execution across the cloud portfolio, including S/4HANA cloud where the backlog increased 84%. Importantly, much of the S/4HANA cloud performance gain was due to adoption of “RISE with SAP” which aims to ease cloud adoption and deliver results through outcome-driven services from both SAP and partners. SAP is still on its journey however as even with a 65% increase, S/4HANA cloud revenue was €329m. Total revenue for the quarter is expected to be €7.98bn, which would be a respectable 6% increase. Cloud revenue was c.33% of total revenue.

Cloud progress was clear across the full year too, with SAP reaching the high end of its revised 2021 cloud revenue outlook, up 17% (19% cc) to €9.42bn, including S/4HANA cloud revenue of €1.09bn, a strong 46% increase. Total revenue saw a modest 2% increase however, to €27.84bn. Cloud revenue represented c.34% of total revenue across the year.

Operating profits were impacted by share based compensation expenses related to the Qualtrics IPO, resulting in a 45% decline in Q4 to €1.47bn and a 30% across the year to €4.66bn.

There will be more context when the full results are released on 27 January but so far the preliminaries indicate confident cloud performance which is on an upward trajectory (see SAP: cloud driven Q321 prelims provide welcome contrast to last year and SAP debuts RISE, IPO's Qualtrics, acquires BPO, releases FY results - phew), putting SAP on the pathway to its FY22 cloud revenue outlook of €11.5bn-€11.85bn (non-IFRS cloud revenue at constant currencies) which would be a 23% to 26% improvement on FY21. At the start of 2021 SAP shook up its leadership team as it prepared to play a major cloud card during the year; based on these prelims, it is winning. 

Posted by: Angela Eager at 09:27

Tags: cloud   software   tradingupdate  

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