Google revenue

Turnover up 11%, impact of the war in Ukraine estimated at 300 million euros

SAP reported first quarter revenue of 7.077 billion euros, up 11% from 2021. Cloud revenue was 2.820 billion euros, up 31%, and nearly 40% of the supplier’s overall sales.

The war in Ukraine had a negative impact on the supplier’s income. The impact should amount to 300 million euros for the year.

Its CEO, Christian Klein, released a statement on March 2, Standing together, which expressed support for the Western government’s economic sanctions against the Russian Federation, and announced a battery of humanitarian aid efforts, including the opening of SAP offices as a refuge for refugees. The press release also announced the cessation of operations in Russia, and was updated on March 9 with the announcement of the suspension of sales in Russia and its ally Belarus.

In the quarterly release, the company said, “In the first quarter, SAP’s business was impacted by the war in Ukraine. In early March, SAP stopped all new sales in Russia and Belarus. Additionally, SAP has begun shutting down its cloud operations and intends to discontinue support and maintenance of its on-premises products in Russia.

“The current cloud backlog was reduced by approximately €60 million due to the termination of existing cloud engagements, and operating profit by approximately €70 million due to lower revenues on the site.”

SAP expects “a total negative impact on revenue of approximately EUR 300 million due to the lack of new business and the discontinuation of existing business, in particular software, support and services.”

This is the second year of the vendor’s Rise with SAP service, launching in late January 2021. Rise was billed as a “business transformation” service. It bundles managed cloud infrastructure and managed services into a single contract, and it provides the S/4 Hana ERP system, based on the Hana columnar in-memory database, on the cloud – variously and primarily AWS, Google Cloud Platform and Microsoft Azure.

Rise has been at the forefront of vendor messaging for the past 15 months, and in the earnings statement, it has highlighted customer adoption.

Accenture, Canon Production Printing, Daimler Truck AG, Grupo Estrella Blanca, NEC Corporation and Wipro Limited were among the international customers cited as having adopted Rise.

In the UK, logistics company Unipart recently joined a list that also includes Twinings Ovaltine; Briggs of Burton, a process engineering company; Inchcape, a London-based automotive company; EG Group, a gas station and food retailer; and Asda.

SAP also noted in its statement that Microsoft announced it would become the first public cloud provider to adopt Rise along with SAP and SAP S/4Hana to transform its own SAP ERP deployment.

SAP’s flagship ERP system, S/4Hana, launched in February 2015, attracted 500 customers in the quarter, bringing total adoption to over 19,300 customers, up 18% year-over-year . 13,900 are live, or 72% of the total under contract.

Cloud revenue

S/4 cloud revenue was confirmed at 404 million euros, up 78% compared to the same quarter of the previous year.

“Customers drove another quarter of strong cloud growth by turning to us for solutions to make their businesses more sustainable, their supply chains more resilient and their businesses more future-proof,” Klein said.

“Our flagship ERP offering, SAP S/4Hana, has experienced record growth, demonstrating the trust customers place in us to support their business transformations.”

And Luka Mucic, Chief Financial Officer, said: “We have started the year well and our outlook remains strong. Despite the current macroeconomic environment, cloud revenue growth has accelerated further, fueling total revenue growth. The current cloud backlog has grown at a healthy pace and continues to support our confidence in our long-term plans and outlook for the year.

We also note in the press release a partnership, announced on March 22, between the supplier and the BCG strategy consulting firm, oriented towards sustainable development. This, it is said, will “help companies transform their business models, become sustainable businesses and achieve the data transparency they need to embed sustainability into their core business”. This activity is in a pilot phase, with a wider launch planned for the third quarter of 2022.