SAP is raising its revenue outlook for the full fiscal year 2021, reflecting its solid cloud business and the assumption that the Covid-19 crisis will subside. The company also reported early interest in its new RISE with SAP business transformation program.
SAP now expects non-IFRS cloud revenue between €9.2 billion and €9.5 billion, up 14 percent to 18 percent. Previously, SAP gave an outlook of cloud revenue between €9.1 billion and €9.5 billion.
The company is also forecasting non-IFRS cloud and software revenue between €23.4 billion and €23.8 billion, up 1 percent to 2 percent at constant currencies. The previous range was €23.3 billion to €23.8 billion at constant currencies.
Revenue from software licenses is expected to decline for the full year as more customers shift to the new “RISE with SAP” subscription offering for mission-critical core processes. The RISE with SAP program offers business transformation as a service.
In a statement, CEO Christian Klein said SAP is seeing strong growth across all applications. The RISE with SAP program is “rapidly becoming a massive accelerator to our customers’ business transformations,” he said.
“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,” Klein added.
SAP reported the following preliminary Q1 results:
Non-IFRS cloud revenue was up 7 percent year-over-year to €2.15 billion, and up 13 percent at constant currencies. Software licenses revenue was up 7 percent year-over-year to €0.48 billion (IFRS and non-IFRS) and up 11 percent at constant currencies. Cloud and software revenue was up 1 percent to €5.43 billion (IFRS and non-IFRS) and up 6 percent at constant currencies. Services revenue was down 18 percent to €0.9 billion (IFRS and non-IFRS) and down 14 percent at constant currencies. This revenue decline reflects the November 2020 divestiture of SAP Digital Interconnect, which contributed about €90 million of services revenue in Q1 2020. Total revenue was down 3 percent year-over-year to €6.35 billion (IFRS and non-IFRS) and up 2 percent at constant currencies. Non-IFRS operating profit increased 17 percent to €1.74 billion, up 24 percent at constant currencies. Operating margin increased by 4.7 percentage points to 27.4 percent, up 4.9 percentage points at constant currencies. Earnings per share increased 29 percent to €0.88 (IFRS) and increased 63 percent to €1.40 (non-IFRS).
SAP attributed its higher-than-expected operating profit and operating margin in part to the cancellation of its in-person events, including the annual Sapphire Now conference.
The company reported “significant wins” in ERP, digital supply chain and across its broader cloud solution portfolio.