SAP said its second quarter revenue dropped 1 percent to €6.66 billion or $7.85 billion during the second quarter of 2021.
SAP’s Cloud revenue increased 11 percent to €2.27 billion.
SAP’s cloud revenue growth accelerated sequentially. SAP saw the first signs of recovery in travel and expense management with the easing of global travel restrictions, which led to Concur stabilizing its sequential performance for the first time since the pandemic began.
“We’re seeing adoption of our cloud portfolio as customers select SAP for their business transformation. Our strategy is working. This is the third straight quarter of strong execution, and we continue to deliver unparalleled customer value through the strength of our platform and applications,” SAP CEO Christian Klein said.
SAP has 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 – up 150 million euros at the lower boundary.
SAP said it expected cloud revenue to grow by 15 percent-18 percent in the year, helping overall cloud and software revenue gain by 2 percent-3 percent. Operating profit was forecast in a range from unchanged to 4 percent lower for 2021.
The cloud backlog for flagship database S/4HANA was up 48 percent, confirming progress on the Rise with SAP programme. The firm said it saw momentum, particularly in the United States, where it predicted an acceleration in cloud revenue growth in the second half.
RISE with SAP gained more traction after the launch in the first quarter. SAP saw strong demand from companies of all sizes and closed deals with more than 250 customers in the second quarter. Large customers such as AMD, Coop Switzerland, Etihad Airways, and Siemens Energy selected RISE with SAP.
Additional wins included arena, Dixons Carphone, EBANX, Fujifilm Diosynth Biotechnologies, The Great Eastern Shipping Co., Inchcape, Mollie, National Basketball Association (NBA), Randstad, R. Twining & Co., and South32 Group.
More than 600 S/4HANA customers were added in the quarter, taking total adoption to more than 17,000 customers, up 16 percent year over year, of which more than 10,100 are live.
In the second quarter, more than 50 percent of the additional S/4HANA customers were net new.
Key customer wins across SAP’s solutions portfolio included: ABN AMRO, Clarins, Coca-Cola FEMSA, Florida Crystals, Florida Department of Management Services, Keolis Group, LeasePlan, Moderna, Molson Coors Brewing, Nationwide Building Society, Rabobank, Roca Sanitario, The Singapore University of Technology and Design, Stanley Black & Decker, and Tenneco. Bitburger Braugruppe, Wales & West Utilities, and Weber-Stephen Products all went live on SAP solutions in the second quarter.
The company already has over 8,000 productive SAP Business Technology Platform (BTP) customers and more than 4,000 partners within its ecosystem actively engaged. Hilti, Lenovo, NEC, and Renault chose SAP BTP offerings in the second quarter.
Current cloud backlog grew in strong double digits. Hilti, Lenovo, NEC, and Renault chose SAP BTP offerings in the second quarter. Signavio had an outstanding first full quarter as part of SAP’s Business Process Intelligence (BPI) segment.
In addition to driving innovation in and beyond our core, SAP is continuously expanding into new markets. SAP expects to expand its 2025 Total Addressable Market (TAM) by $150 billion, totaling $600 billion.
SAP’s cloud momentum continued in the second quarter with both current cloud backlog and cloud revenue growth accelerating sequentially. Current cloud backlog was up 17 percent to €7.77 billion (non-IFRS) and up 20 percent (at constant currencies).
Cloud revenue was up 11 percent to €2.28 billion and up 17 percent (at constant currencies). SaaS/PaaS cloud revenue outside the Intelligent Spend business was up 20 percent and up 25 percent (at constant currencies).
Software licenses revenue was down 16 percent year over year to €0.65 billion and down 13 percent (at constant currencies). Cloud and software revenue was up 1 percent to €5.75 billion and up 5 percent (at constant currencies). Services revenue was down 11 percent year over year to €0.92 billion and down 7 percent (at constant currencies). This revenue decline is primarily attributable to the November 2020 divestiture of SAP Digital Interconnect, which contributed approximately €80 million of services revenue in the second quarter of 2020.
Beginning in 2021, SAP expanded its financial disclosure to provide investors with transparency on the transition of its core ERP business to the cloud. Specifically, the Company discloses current cloud backlog and cloud revenue contributed by SAP S/4HANA Cloud, along with nominal and constant currencies year-over-year growth rates.
In the second quarter, S/4HANA current cloud backlog was up 45 percent (Non-IFRS) to €1.13 billion and up 48 percent (at constant currencies). S/4HANA cloud revenue was up 33 percent to €257 million and up 39 percent (at constant currencies).
SAP is seeing strong momentum with its S/4HANA current cloud backlog growth, in particular in the United States. SAP expects S/4HANA cloud revenue growth to significantly accelerate in the second half of 2021.
SAP S/4HANA Cloud represents SAP’s cloud offering for core ERP processes. It mainly includes cloud solutions for financial management, supply chain management, engineering and manufacturing, order management and asset management, as well as associated data management, analytics, development and integration capabilities.