German Software Giant SAP Reveals Q3 Earnings, Sees A 20 Percent Jump In Cloud Revenue

On Thursday, German Software company SAP posted its third-quarter earnings and its cloud revenue which saw a major increase stood out for us. Its booming cloud unit helped boost how the company performed in this quarter. The company saw a 20 percent increase in its third-quarter cloud revenue from the previous year to 2.4 billion euros ($2.8 billion). Its backlog of cloud contracts was also up by 58 percent and amounted to about $1.3 billion.

The figure for overall adjusted revenue stood at 6.8 billion euros ($7.9 million) and was up 5 percent YoY. This figure saw a major boost from the growth of the company’s cloud unit. The company posted adjusted earnings per share of 1.74 euros which climbed by 2 percent and can be attributed to profitable start-up bets at spinoff firm Sapphire Ventures.

Shares of the German company soared 0.7 percent in the European markets trading session. Speaking about the earnings, SAP’s CEO Christian Klein told CNBC’s Squawk Box Europe that “we pivoted this company to the cloud. We are changing our business model by our own, shifting from upfront licenses on-premise to a subscription-based business model in the cloud”.

SAP first mentioned plans to shift from on-premise IT infrastructure to remote computing facilities and is going head to head with software companies like Oracle and Salesforce as it continues to place more focus on the cloud.

SAP had earlier mentioned that it expected cloud revenue to climb up between 16 and 19 percent this year. The company seemed sure about its ability to still have a good performance irrespective of challenges spearheaded by the coronavirus pandemic and the disruption in global supply chains.

SAP saw its shares plummet in October last year after it halted sales guidance as a result of the impact that the coronavirus pandemic had on its business spending. The company has, however, made its recovery and has climbed more than 11 percent so far this year.

Speaking about its performance and how technology has been a major part of the company’s growth, the company’s CEO said that “Technology helps to overcome these challenges. When you talk about the future of work, you need to drive collaboration; technology is needed. When you talk about resilient supply chain, look at all the container ships that are in front of the harbours that cannot come in; that is where technology — where our business network — can help”.