With Q1 revenue of €6.52bn (+6.5% Y/Y) SAP results for the first quarter ended March 31, 2020 show the impact of the crisis. Activity in the first two months of the quarter was healthy, but as the impact of the COVID-19 crisis rapidly intensified towards the end of the quarter, a significant amount of new business was postponed. This is reflected, in particular, in the significant year over year decrease in software licenses revenue.
In the first quarter, current cloud backlog was up 25% to €6.65bn (24% at constant currencies). Cloud revenue grew 29% year over year to €2.01 billion and 25% (non-IFRS at constant currencies). Software licenses revenue was down 31% year over year to €451 million
Cloud gross margin increased 5.3 percentage points year over year to 66.4% (IFRS) and increased by 3.0 percentage points year over year to 69.3% (non-IFRS).
SAP moved quickly to adopt a virtual sales and remote implementation strategy to enable the large majority of its employees to work productively from home and a continuation of its focus on current customers and the addition of new ones.
To ensure financial flexibility, SAP is slowing hiring and reducing discretionary spend in addition to natural savings e.g. from lower travel and virtual rather than physical events.
SAP is focused on ensuring continuity for its customers and partners, and SAP's data centers are online with appropriate backup plans. SAP is also focused on the safety of the small number of its employees who are required to work onsite. To address massive disruptions impacting global supply chains, SAP opened up free access to SAP Ariba Discovery so that any buyer can post immediate sourcing needs and any supplier can respond. SAP has seen a more than 50% increase in buyer postings since the offering went live.
