SAP up in the clouds for Q2, but profits fall

SAP has reported financial results for its Q2 2022 and half year ended 30 June 2022, revealing a 34 percent year-on-year increase in cloud revenue to €3.06bn, driven by growth across its SaaS and PaaS portfolio.

SAP’s current cloud backlog exceeded €10bn for the first time and was up 34 percent. The company’s SAP S/4HANA current cloud backlog extends its growth trend, up 100 percent to €2.25bn.

Whilst SAP saw a 39 percent increase in its cloud gross profit to €2.13bn, its IFRS operating profit was down 32 percent to €673m, primarily, it says, due to the impact of the Ukraine war. This detail places further context around the company’s recent decision to slash costs and freeze hires.

SAP has reaffirmed its full year 2022 revenue outlook and anticipates €11.55 to €11.85bn in cloud revenue, up 23 to 26 percent at constant currencies. The company expects free cash flow above €4.5bn.

Christian Klein, SAP CEO, said: “As our Q2 results demonstrate, SAP’s portfolio is more relevant than ever. Our transition to the cloud is ahead of schedule and we have exceeded topline expectations, with cloud revenue becoming SAP’s largest revenue stream. Our pipeline is strong, and we are winning market share underpinned by the very strong 100% growth of S/4HANA current cloud backlog.”

Luka Mucic, SAP CFO, added: “This quarter again proves that our strategy is resonating, even in an increasingly challenging external environment. We continued to deliver strong topline growth, exceeding revenue expectations and increasing cloud profitability. This quarter, we have recognized the main impact of the war in Ukraine. We believe that we are now able to capitalize on our substantial growth investments of the last 18 months, by delivering sustained growth and profitability expansion.”