SAP Q1 2019 results: 400 more S/4 Hana sign-ups, €1.5bn in cloud

SAP’s first-quarter 2019 financial results indicate cloud revenue at 26% of total, and 400 new customers for S/4 Hana. Senior executive losses, restructure and Qualtrix acquisition cost bite into profit

SAP has declared €6.091bn in first-quarter 2019 revenue, of which €1.555bn was cloud – 26% of the total.

The supplier said it now has 10,900 customers for its flagship S/4 Hana ERP (enterprise resource planning) system, up 30% year on year, and with 400 more customers than declared last quarter.

It added that in the first quarter, more than 40% of the additional S/4 customers were “net new”, and cited Puma and Bausparkasse Schwäbisch Hall as companies that went live with the product in the period.

In 2018, the supplier’s main strategic initiative was C/4 Hana, a tying together of all its customer relationship, “front-office” applications, aligned with S/4. Isuzu Motors South Africa, Groupe PSA Brazil and AmerisourceBergen were cited as customers for the C/4 Hana suite.

Last year also saw SAP’s $8bn acquisition of Qualtrics, an “experience management” software supplier. It cited CVS Health and Cirque du Soleil as new first-quarter customers in that category.

However, the company also reported an operating loss of €136m caused by a restructuring cost of €886m as well as higher acquisition-related charges and share-based compensation, primarily due to the Qualtrics acquisition.

The supplier has lost some high-profile leaders in recent months, including 27-year serving veteran Rob Enslin, president of SAP’s cloud business group; Bjoern Goerke, a 30-year veteran, who left his position as CTO in April; and Bernd Leukert, a 25-year veteran, who left his role as co-leader of SAP Digital Business Services in February. 

SAP CEO Bill McDermott said in a statement: “SAP’s results are another illustration that we are a rarity in the enterprise applications software industry. We have a strong core business, the fastest-growing cloud at scale in enterprise software and impressive non-IFRS operating profit growth. We are focused on leading a best-run SAP so we can drive significant margin expansion in the quarters ahead.”

CFO Luka Mucic added: “I am extremely pleased that we delivered rapid growth in the cloud and a rock-solid core. Non-IFRS operating profit growth saw the biggest improvement in more than three years, with both cloud gross margin and operating margin beating our expectations. This gives us the confidence to further extend our commitment to mid-term margin improvements and stronger shareholder returns, as announced today.”

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