SAP reports mixed bag results in Q2

SAP reports mixed bag results in Q2

Despite vendor's cloud revenue going from strength to strength, the war in Ukraine continues to negatively impact the bottom line.

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SAP has announced its Q2 2022 results, reporting revenue of €7.5 billion, which is up 12.7 per cent year-on-year but it was not all good news for the software giant.

SAP’s IFRS operating profit was down 32 per cent to €673 million and its non-IFRS profit was down 13 per cent to €1.68 billion. In comments published alongside the results, SAP said this was mainly driven by “reduced contribution from software licenses revenue”, as well as “significant bad debt expenses related to the war in Ukraine.”

Earlier this year, SAP estimated that the financial impact of the war in Ukraine would cause the company to take a revenue hit of around €300 million, due to pulling out of that market. In its Q2 statement, SAP said it still expects to see those losses.

Strong segment growth

While the geopolitical climate has had an impact on SAP’s overall revenue, the company’s two business segments performed strongly during the quarter.

The Applications, Technology and Services segment was up 11 per cent to €7.1 billion, mainly due to strong cloud revenue growth, driven by increased adoption of S/4HANA and double-digit growth across the software-as-a-service (SaaS) and platform-as-a-service (PaaS) portfolio.

Cloud revenue alone was up 34 per cent to €3.1 billion, making it the vendor’s largest revenue stream. This is despite a decrease in traditional software licenses revenue due to the shift to the cloud, as more customers adopted the company’s RISE with SAP offering.

SAP’s Qualtrics revenue was up 57 per cent to €330 million year-over-year, driven by robust renewal rates and expansions.

“Our transition to the cloud is ahead of schedule and we have exceeded topline expectations, with cloud revenue becoming SAP’s largest revenue stream,” SAP CEO, Christian Klein, said following the results. “Our pipeline is strong, and we are winning market share underpinned by the very strong 100 per cent growth of S/4HANA current cloud backlog.”

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