SAP has announced a 29% jump in cloud service revenue in preliminary results covering the first quarter ended 31 March. Total group sales were up 7% and operating profits jumped 100%.
The company said: “Business activity in the first two months of the quarter was healthy. As the impact of 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.”
Luka Mucic, CFO, added: “Our multi-year emphasis on building a strong base of more predictable revenue has made SAP more resilient than ever. Combined with an even more prudent expense management and a continued focus on innovation, we will weather the pandemic crisis and emerge stronger than before as we have done in past downturns.”
The company said it had “quickly responded to the new environment” by adopting a virtual sales and remote implementation strategy. To protect profitability SAP said it is slowing hiring and reducing discretionary spend in addition to natural savings like reduced travel activity and virtualised events. In the first quarter, SAP incurred a cost of around €36m in relation to the cancellation of its in-person annual SAPPHIRE NOW show in the US and other customer events.
In the first quarter, cloud revenue grew 29% year-over-year to €2.01bn. Software licenses revenue was down 31% year-over-year to €450m. Total cloud and software revenue grew 7% annually to €5.40bn and total group revenue also grew 7% to €6.52bn.
The share of “more predictable” recurring revenue grew by 4% to around 76% in the first quarter.
As expected, said SAP, the IFRS operating profit in the first quarter increased significantly, primarily due to a lower impact from both restructuring expenses (from previously announced and widely implemented job cuts) and share-based compensation expenses. Operating profit increased more than 100% to €1.21bn. At the beginning of this year, the UK & Ireland SAP User Group (UKISUG) launched its SAP Business One Academy to help address the “lack of SAP implementation skills in the channel”.
In collaboration with SAP education and academic partners, the SAP Business One Academy provides customers and partners with classroom-based and online training to help them achieve SAP Business One Associate Certification.
