SAP Q3 2021: Cloud year-on-year revenue up one-fifth, S/4 Hana adoption steady
SAP’s third quarter 2021 showed 20% year-on-year growth in cloud revenue and steady, incremental growth in S/4 Hana adoption
SAP has reported third-quarter 2021 revenue of €6.845bn, up 5% on the equivalent quarter last year. Its cloud revenue for the quarter increased by one-fifth to €2.386bn, representing 35% of the total, up 1% as a share, on the previous quarter.
The supplier said it detected continued strong demand and adoption of its “Rise with SAP” package, 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.
SAP said that as “more customers adopt this holistic subscription offering, software licences revenue decreased as anticipated”.
Christian Klein, chief executive officer at SAP, said: “Our strategy is clearly working. Customers are choosing SAP for their business transformation in the cloud. We see record adoption of our applications and our platform. This has resulted in strong acceleration of our cloud growth.”
CFO Luka Mucic added: “This has been an excellent quarter across all key financial metrics. We are seeing sustained, strong progress in SAP’s transformation. Our cloud business is growing at an accelerating pace and has led to our improved full-year outlook.”
The company highlighted the Rise with SAP service in its statement. “This continued to gain traction after a successful launch in January,” it said. “SAP saw strong demand from companies of all sizes and closed deals with more than 300 customers in the third quarter. Large customers such as Asda Stores and EG Group selected ‘Rise with SAP’. Additional wins included Cirque du Soleil, Philips Domestic Appliances Netherlands, HCL, Röhm, Etihad Water and Electricity, Tate & Lyle Americas, KTM Fahrrad, Ingram Micro and Sky Italia.”
The firm reported that 500 more customers had signed up to its flagship ERP system S/4 Hana, taking the total to 17,500 customers, 11,400 of whom are live. In the previous quarter, it added 600 new customers for S/4. Growth in Q3 was noted to be 16% year on year, which is consistent with last quarter’s growth.
The SAP Business Technology Platform (SAP BTP) was also highlighted in the statement. The platform groups SAP products into one foundation for developers, and was publicised at the supplier’s customer conference, Sapphire, in 2020. The Q3 statement mentioned its provision of a single platform for integration and extensibility across the SAP portfolio and non-SAP solutions.
The supplier referred to customer wins that it considers “key”. These included Continental, Adidas, Bayer, Robert Bosch, the US Department of Defense, Siemens Energy, the University of Florida, VMware, the Football Association, FAW-Volkswagen Automotive and the People’s Insurance Company of China (PICC).
It also highlighted a closer relationship with Google Cloud. Google has been positioning itself over the past year or two as the public cloud provider of choice for SAP customers, edging out Microsoft Azure.
This financial year, the supplier has opted to provide investors with what it calls more “transparency on the transition of its core ERP business to the cloud”. In the statement, it said that in Q3, the S/4 Hana current cloud backlog was up 60% to €1.28bn year on year, and that cloud revenue growth for the ERP system based on SAP’s in-memory database Hana was up 46% to €276m.
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