Cloud, S/4HANA gain further momentum in SAP Q1 results

SAP Q1

Bill McDermott, SAP SE

SAP’s latest results have again brought good news, with acceleration in cloud revenue and S/4HANA adoption contributing to an upgrade of the company’s full year outlook.

For the first time in a quarter, cloud revenue exceeded €1 billion, up 18 per cent (IFRS), with new bookings up 14 per cent. The number of S/4HANA customers is also up 43 per cent year-over-year.

“SAP’s momentum continues with our latest trifecta, including fast-growing cloud, strong software sales, and operating income expansion. Even against the steepest comparisons, S/4HANA led us again to major market share gains for the company. With an increasing share of predictable revenues, our beyond expectations profitability is cause for even greater shareholder confidence. From this position of immense strength, look for SAP to be bolder than ever in markets like CRM,” said Bill McDermott, SAP CEO.

Software revenue was down 10 per cent year over year to €625 million, and together, cloud and software revenue grew only 1 per cent year over year to €4.35
billion.

In the first quarter, on a product basis, S/4HANA adoption grew to more than 8300 customers, with 400 signing on in the first quarter, of which approximately 40 per cent were net new customers. In the customer experience space, SAP closed the acquisition of Callidus Software, with Jaguar Land Rover, Coca-Cola and Unilever among the companies purchasing SAP’s customer experience solutions this quarter.

While in the APJ region, overall cloud and software revenue was flat on the back of a strong previous year. Cloud subscription and support revenue grew by 38 per cent (IFRS), with China and Japan providing highlights, and software revenue in Australia, China and India grew by double digits during the quarter.

SAP’s raised 2018 full year outlook for cloud subscriptions and support revenue is now expected to be €4.95 billion − €5.15 billion at constant currencies, with cloud and software revenue expected to be €20.85 – €21.25 billion.

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