Strong SAP results reveal record cloud performance

SAP has reported record cloud revenues in its Q4 and preliminary full year 2021 results, with continued cloud acceleration reported across the board.

For the fourth quarter, the company saw rapid expansion of current cloud backlog to €9.45bn, up 32 percent. Driven by strong adoption of RISE with SAP, S/4HANA current cloud backlog is up 84 percent to €1.71bn, while cloud revenue increased by 28 percent to €2.61bn.

SAP’s preliminary full year results surpassed the high end of its revised 2021 outlook for cloud and software revenue and operating profit, with IFRS cloud revenue up 17 percent, non-IFRS cloud revenue up 16 percent, and cloud and software revenue up by 4 percent.

This accelerating cloud growth is reflected in SAP’s 2022 outlook, which is targeting up to 26 percent non-IFRS cloud revenue growth at constant currencies.

Most encouraging of all is the rate at which SAP is selling S/4 licences. Whilst the RISE proposition is not necessarily an accelerator for S/4HANA, the new commercial package that effectively delivers ‘Transformation-as-a-Service is clearly gaining momentum.

After raising its 2022 outlook, and being mindful that it is SAP’s 50th anniversary in June, we expect to see SAP’s performance continue its upwards trajectory and reach a crescendo by early summer. However, there are a number of things happening in the background with SAP at the moment that may impact its sales and conversions: there’s a big change to discounts for anything other than RISE with SAP and a new deal for PMCs (partner managed clouds) that effectively allows the intermediary to sign up to RISE terms rather than the consumer. Both of these tactics are likely to push more people towards RISE, even if a little reluctantly by some.

Christian Klein, CEO at SAP, said: “The magnitude of our cloud strength is evident. More and more companies are choosing SAP to help them transform their businesses, build resilient supply chains and become sustainable enterprises as they move to the cloud. This momentum is reflected in the tremendous success of “RISE with SAP”, our signature cloud offering, as well as excellent growth across our entire portfolio. Our growth acceleration points to even greater potential ahead.”

Luka Mucic, CFO at SAP, added: “I am proud that our team has delivered an exceptional year with strong results, far exceeding our expectations. After three quarters of home runs with our cloud momentum, we hit it out of the park this quarter. We are confident that we will continue our Q4 current cloud backlog growth in 2022. This is reflected in our accelerated cloud guidance for 2022 as we make great progress towards our mid-term ambition.”

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