Soaring cloud division turns things around for SAP after annus horribilis that was 2020

Remember those car-crash results in Q3 a year ago? No repeat collision this time round

A year after outlining horrific calendar Q3 financials that caused the share price to crash by €28bn, SAP had no nasty surprises up its sleeves this time.

In fact the company raised its full-year outlook for the third time in 2021, such is the confidence with which SAP now views its cloud biz. It is estimating sales to grow by up to 19 per cent year-on-year, and operating profit to be between flat to a decline of 2 per cent, better than the earlier projection of a 4 per cent drop.

The preliminary results for the latest quarter ended 30 September show turnover of €6.84bn, up 5 per cent on the corresponding quarter of 2020. Among the highlights, cloud revenue jumped by a fifth to €2.39bn and software licences and support fell 1 per cent to €3.52bn, so lots of customer have migrations to do.

"Our strategy is clearly working," said the breathless CEO, Christian Klein. "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."

His tone is remarkably different to October 2020 when it became apparent that COVID-19 had sped up the shift to the cloud, casting a shadow over the legacy vendors still reliant on doing business the way they always had.

SAP said today that corporations are "re-evaluating their business models with increased urgency given the dramatic changes due to the pandemic and their ongoing focus on digital transformation."

The RISE with SAP programme was introduced in January to help make it easier for customers to step into SAP's cloud.

Not everyone is convinced in the benefits of RISE but, seemingly, many are. SAP said it had a cloud backlog of €8.17bn in Q3, up 24 per cent from €6.6bn a year ago. The S/HANA cloud backlog itself was 60 per cent higher year-on-year at €1.28bn.

Not all that glitters is gold, however, and operating profit for Q3 decreased 15 per cent to €1.25bn and operating margin fell 4.3 per cent to 18.2 per cent "due to higher sharer-based compensation expenses (primarily related to Qualtrics)".

SAP decided to float Qualtrics in July 2020 less than two years after convincing the survey-monkey-with-knobs-on company not to list itself.

The numbers outlined by SAP are preliminary and so subject to change. ®

Similar topics

Narrower topics

Other stories you might like

  • Robotics and 5G to spur growth of SoC industry – report
    Big OEMs hogging production and COVID causing supply issues

    The system-on-chip (SoC) side of the semiconductor industry is poised for growth between now and 2026, when it's predicted to be worth $6.85 billion, according to an analyst's report. 

    Chances are good that there's an SoC-powered device within arm's reach of you: the tiny integrated circuits contain everything needed for a basic computer, leading to their proliferation in mobile, IoT and smart devices. 

    The report predicting the growth comes from advisory biz Technavio, which looked at a long list of companies in the SoC market. Vendors it analyzed include Apple, Broadcom, Intel, Nvidia, TSMC, Toshiba, and more. The company predicts that much of the growth between now and 2026 will stem primarily from robotics and 5G. 

    Continue reading
  • Deepfake attacks can easily trick live facial recognition systems online
    Plus: Next PyTorch release will support Apple GPUs so devs can train neural networks on their own laptops

    In brief Miscreants can easily steal someone else's identity by tricking live facial recognition software using deepfakes, according to a new report.

    Sensity AI, a startup focused on tackling identity fraud, carried out a series of pretend attacks. Engineers scanned the image of someone from an ID card, and mapped their likeness onto another person's face. Sensity then tested whether they could breach live facial recognition systems by tricking them into believing the pretend attacker is a real user.

    So-called "liveness tests" try to authenticate identities in real-time, relying on images or video streams from cameras like face recognition used to unlock mobile phones, for example. Nine out of ten vendors failed Sensity's live deepfake attacks.

    Continue reading
  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading

Biting the hand that feeds IT © 1998–2022