SAP said its third quarter cloud revenue growth was 16% and the company reaffirmed its outlook for 2023.
The enterprise software giant is in the middle of migrating customers to its SAP S/4HANA platform, so cloud revenue is closely watched.
SAP delivered total third quarter revenue of €7.74 billion, up 4% from a year ago. Cloud revenue was €3.47 billion, up 16% from a year ago. Of that sum, SAP S/4HANA cloud revenue was €914 million, up 67% from the same quarter a year ago, and approaching a €4 billion annual revenue run rate. Software license revenue fell 17% in the third quarter compared to a year ago.
- SAP launches Joule generative AI copilot, goes to 2-year S/4HANA Cloud major release cycle
- SAP buys LeanIX, aims to couple it with Signavio, system transformation
- SAP's AI ambitions depend on migrating customers to cloud, S/4HANA
- SAP user group DSAG rips S/4HANA innovation plans, maintenance increases
- SAP aims to infuse generative AI throughout its applications: Here's everything from SAP Sapphire 2023
As for profit, SAP reported a profit of €1.27 billion after tax. SAP ended the quarter with 106,495 employees, down slightly from a year ago.
CEO Christian Klein said the third quarter results highlight how it is accelerating its cloud growth and focusing on AI and innovation.
SAP said 2023 cloud revenue will be between €14.0 billion and €14.2 billion with total cloud and software revenue of €27 billion to €27.4 billion. A non-IFRS operating profit between €8.65 billion to €8.95 billion are expected. The guidance is in constant currencies.
Key items from the SAP conference call
- RISE with SAP customers now top 4,300.
- "We are removing the data silos with RISE with SAP and build one strong data layer to allow us to steer the business 360 with real-time data. RISE and GROW are also very exciting opportunities for SAP. The two offerings result in net new customers and an installed base maintenance conversion of more than 2x," said Klein.
- "Business transformation is much more than the pure technical migration of ERP legacy landscapes to the cloud. It's key to connect end-to-end processes and the entire data and system landscape to drive tool transformation. In 2021, we acquired Signavio, covering the process perspective, and in Q3, we announced our intent to acquire LeanIX to cover the overall enterprise architecture perspective, making sure processes, systems and data are yielding the wide outcome for every SAP customer. Together, LeanIX, Signavio and SAP Cloud Application Lifecycle Management create a unique business transformation suite," said Klein.
- Klein added that he met with Microsoft CEO Satya Nadella in Berlin. "Microsoft is extremely interested on how can we join forces to also further combine our data. And what is also very important in the B2B world, I already mentioned it. I mean, in the B2C end, you can ask ChatGPT for a question for speech and you get a proposal for a speech. In the B2B world, accuracy and data quality is of utmost importance," said Klein.
Here are the details behind SAP's cloud revenue.
