SAP first quarter results: cloud up but outlook down for 2023

SAP financial results for Q1 2023 beat analysts’ expectations, with cloud revenues totaling €3.18bn, an increase of 22 percent at constant currencies. Cloud revenue for SAP S/4HANA totaled €716m, an increase of 75 percent at constant currencies.

The results for the quarter ending March 31 saw both IFRS and non-IFRS cloud gross profit increase by 27 percent at constant currencies. IFRS operating profit meanwhile was down by 45 percent, with non-IFRS operating profit up 12 percent at constant currencies.

While SAP may have trumped analyst predictions, the ERP giant adjusted its outlook for 2023. Cloud revenue and cloud/software revenue are both marked down by €1.3bn. SAP’s operating profit meanwhile will be €0.2bn less than forecast, with free cash flow to be smaller by €0.1bn.

According to the company the more wary outlook is due to the divestment of its Qualtrics unit in March, wherein 423m shares were sold in the SAP subsidiary. The forecast also reflects a nervy scene in Big Tech which has already seen SAP plan to shed around 3,000 jobs. The Q1 results show SAP to currently employ a workforce of 105,132.

SAP’s first financial quarter of the year has seen various collaborations and partnerships including University of Nottingham, Red Hat, GAMA, BMW Group, Databricks and many more. March also saw the company announce its next-gen SAP Datasphere solution, and the midsize business-focused GROW with SAP.

Amid the highs, the last quarter also saw the company lose its cloud chief Brian Duffy, who went on to join the ranks of SoftwareOne as CEO.

Christian Klein, CEO, SAP, said on the Q1 results: “We have entered a powerful new phase in our strategic transformation with topline and bottom-line results clearly demonstrating the tipping point we passed in the fourth quarter 2022. Our cloud momentum continues at a fast pace which is contributing to our strong revenue and double-digit non-IFRS operating profit growth this quarter.”

Dominik Asam, CFO, SAP, said: “The year is off to a good start. I am excited to have joined an organization which is delivering and staying on the right track. We have accelerated topline growth and have already achieved double-digit non-IFRS operating profit growth in Q1. Our results set solid groundwork for our full year outlook, thereby pivoting back to profitable growth in 2023. Saying what we do, and doing what we say, will continue to be of great importance to us.”