SAP raises outlook on stronger cloud push in Q2

SAP

German business software group SAP raised its outlook for the second time this year as a strategic push to help customers shift their IT operations to the cloud gained traction in the second quarter.

SAP now expects cloud revenue to grow by 15%-18% in the year, helping its overall cloud and software revenue to gain by 2%-3%. Operating profit is now expected to be unchanged to down 4% for the year.

SAP ditched its mid-term forecasts last October as Klein went all-in on cloud services that generate subscription revenue spread out over time, in contrast to software licences that deliver chunky up-front fees.

He launched Rise with SAP, an all-in-one digital transformation package, at the start of this year and strong take-up helped drive 20% growth in the current cloud backlog – a measure of incoming business – during the second quarter.

Revenue, up 3% to 6.67 billion euros ($7.85 billion) in the quarter, was in line with median estimates of analysts compiled by Refinitiv. Operating profit, up 3% at 1.92 billion euros, was ahead of the median view.

SAP lifted its forecast for cloud and software revenue for the full year by 200 million euros to 23.6 billion-24 billion euros, while it now sees operating profit at 7.95 billion-8.25 billion euros – an increase of 150 million euros at the lower boundary.

The company, based in Walldorf, reports financials on a non-IFRS, or adjusted, basis at constant currencies to strip out effects like the impact of share-based compensation or shifts in the dollar-euro exchange rate.

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