SAP Q1 2021: Revenue nudges up 2% year-on-year, S/4 adoption up 2.5% on prior quarter
SAP has reported first quarter 2021 revenue of €6.35bn, up 2% on the same year-ago quarter. Cloud revenue has increased by 1% year-on-year, and S/4 adoption is up 2.5% on the previous quarter
SAP has reported first quarter 2021 revenue of €6.35bn, up 2% on the same year-ago quarter. Its cloud revenue has increased by 1% to €2.147bn, representing 34% of the total.
The supplier has stated its flagship S/4Hana ERP system added 400 new customers in the quarter, taking total adoption to 16,400, an increase of 2.5% on the previous quarter. In that quarter, Q4 of 2020, 900 new customers were added for S/4Hana.
The quarter was notable for the January launch of the “Rise with SAP” package, described in the Q1 results statement as a “simplified pathway for customers to transform their business in the cloud”. Customers cited for the service include Carrefour Brazil, Sono Motors, KIA Chile, Hillrom, and Grupo Feromax.
Rise is a subscription service that packages managed cloud infrastructure and managed services in one contract. It is a way of bundling all the elements that make up what SAP has been calling “intelligent enterprise” for the past few years and making them available as a service. In particular, it may be a way of speeding up otherwise sluggish adoption of S/4Hana.
Christian Klein, CEO, SAP said, in the results statement: “We are seeing very strong order entry growth across our applications portfolio. And we are just getting started. Our new offering ‘Rise with SAP’ is rapidly becoming a massive accelerator to our customers’ business transformations with our platform at the centre. Together with our unique ecosystem of more than 22,000 partners and with a strong innovation pipeline for the year, we are well on track with our strategy to deliver robust cloud growth.”
Luka Mucic, chief financial officer, added: “The first quarter of 2021 was unique in many ways. We had the highest order entry growth across cloud and software in five years while posting the strongest increase in Non-IFRS operating profit [€1.741bn] and margin in a decade. In the mid-term, SAP’s expedited shift to the cloud will accelerate top-line growth and significantly increase the resiliency and predictability of our business”.
The supplier cited “customer wins” at companies including Unilever, BioNTech, IKEA, Nippon Express, BMW, Yamaha Motor Company, Toshiba Corporation, and AstraZeneca. It also highlighted go-lives at Google, Bosch Siemens Hausgeräte and Peloton.
Read more enterprise IT results
- SAP full-year 2020: Revenue down 1%, cloud growth up 17%.
- Oracle Q3, 2020-21: Revenue growth of 3% backdrop to Ellison attack on SAP.
- HPE results show demand for remote data and consumption model.
In the statement it also noted “significant competitive wins in ERP, digital supply chain and across its broader cloud solution portfolio”.
This is in the context of the litany of Oracle wins against SAP declared by Larry Ellison in the financial analyst call accompanying its most recent quarterly results in March.
At that time, SAP’s official response was: “We’ve heard this before and it’s as spurious now as it was then. Our priority is driving our customers’ success, not putting them in the middle of a public relations battle. And our numbers speak for themselves our increasing ERP market share is by now approximately double that of our closest competitor.”
In a financial analyst call, on the day of the release of the Q1 2021 results, Klein hit back at what he described as Oracle’s “unfounded claims”. He said: “I take it as a positive sign that one of our main competitors spent so much time talking about SAP on their own earnings call. We went through their customer list [that Ellison brandished] and checked their claims. I’d encourage you to do your own research. The latest IDC data also helps to put things into perspective. It shows that SAP has taken significant ERP market share since launching S/4Hana in 2015."
SAP recorded, in the results statement the completion on 5 March of the acquisition of Signavio, a business process intelligence firm, which it announced around the same time as the inception of the “Rise” service.
At the time of the announcement of Rise, Paul Cooper, chairman of the UK & Ireland SAP User Group, said: “It’s been an extremely challenging 12 months for most organisations, as they have juggled between maintaining ‘business as usual’ operations and accelerating their digital roadmaps.
“Our recent member survey revealed that 30% of organisations had delayed their plans to move to SAP S/4Hana due to the Covid-19 pandemic. We therefore welcome ‘Rise with SAP’ as a package to help customers transform their business by moving to the cloud in a sustainable way that suits them.
“It will be interesting to see if ‘Rise with SAP’ also helps customers build a strong business case to move to SAP S/4Hana. For those customers in the midst of business transformation or those worried about the 2027 maintenance deadline [for ECC6], ‘Rise with SAP’ may be an attractive choice as they evaluate their options.”