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SAP Q2 2021: Customer demand for RISE program bolsters cloud revenue

SAP has reported second-quarter earnings results revealing strong demand for RISE and cloud services — even as the company continues to grapple with a drop in operating profit. 

SAP’s Q2 2021 earnings (statement) (.PDF), ending June 30, 2021, reports revenues of €6.67 billion IFRS, down 1% year-over-year (or up 3% at constant currencies) with basic earnings per share (EPS) of €1.15 (IFRS), or €1.75 non-IFRS.

In Q1 2021, SAP reported €6.35 billion IFRS revenue with basic EPS of €0.88.

SAP reported an operating profit of €0.98 billion IFRS, down 23% year-over-year. Operating cash flow for Q2 2021 remained flat at €3.77 billion and the firm’s operating margin has decreased by 4.3% to 14.8%.

The vendor says that this steep drop in operating profit is due to “higher share-based compensation expenses (primarily related to Qualtrics).”

Cloud revenue grew by 11% year-over-year, to €2.28 billion (IFRS), and up 17% at constant currencies. In the first quarter, SAP reported IFRS cloud revenue of €2.14 billion.

The RISE program has secured a further 250 customers. Software license revenue decreased by 16% year-over-year to €0.65 billion (IFRS and non-IFRS) and down 13% (at constant currencies).

Overall cloud and software license revenue increased by 1% year-over-year to €5.75 billion (IFRS) and up 5% at constant currencies.

SAP S/4HANA added an additional 600 customers to the roster in Q2 2021, up 16% year-over-year. SAP S/4HANA now accounts for over 17,000 customers, of which approximately 10,100 are now live.

A current cloud backlog of €7.77 billion has been reported, with revenue up 17% IFRS and up 20% at constant currencies. S/4HANA cloud revenue was up 33% to €257 million and up 39% (at constant currencies).

SAP reports on three main business segments, “Applications, Technology & Services,” “Qualtrics” and “Services.”

Applications, Technology & Services revenue was reported as flat, at €5.62 billion year-over-year, or up 4% at constant currencies.  

Qualtrics revenue was €211 million, an increase of 25% year-over-year, or up 37% at constant currencies. 

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The Services segment, including digital transformation and the Intelligence team, reported revenue of €796 million, down 7% year-over-year and down 3% (at constant currencies). 

The firm added that Concur, SAP’s travel arm, has “stabilized its sequential performance for the first time since the pandemic began.”

“We’re seeing strong adoption of our cloud portfolio as customers select SAP for their business transformation,” commented Christian Klein, SAP CEO. “Our strategy is working; This is the third straight quarter of strong execution, and we continue to deliver unparalleled customer value through the strength of our platform and applications.”

SAP has also released a half-year management report (.PDF). SAP has raised its outlook for the full 2021 financial year and expects customers to keep shifting to the RISE program; raising revenue for the SAP subscription service whilst also reducing standard software licenses revenue. 

SAP predicts overall cloud revenue of between €9.3 billion and €9.5 billion; €23.6 billion to €24 billion in cloud and software revenue, and €7.95 billion to €8.25 billion in operating profit. All of SAP’s predicted figures are based on constant currencies. 

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