SAP results: Cloud revenue grew to €12.56 billion in 2022

SAP’s cloud revenue increased by 30% in Q4 to €3.39bn, helping the firm’s total revenue for 2022 grow to an impressive €30.87bn. 

Posting its latest results, the software giant revealed revenue from its S/4HANA resource planning system was up by 101% to €0.66bn in the fourth quarter, or 90% at constant currencies.

Other Q4 results include:

• Software licences revenue down 38% to €0.91bn (down 39% at constant currencies)
• Cloud and software revenue up 4% to €7.29bn (flat at constant currencies)
• Services revenue up 15% to €1.14bn (up 10% at constant currencies)
• Total revenue increased by 6% to €8.44bn (up 1% at constant currencies)

Cloud gross profit for SAP was up by: 36% (IFRS); 34% (non-IFRS) and 27% (non-IFRS at constant currencies).

Meanwhile, cloud grass margin was up by 2.9 percentage points to 69.4% (IFRS), up 2.3 percentage points to 71.3% (non-IFRS) and up 2.7 percentage points to 71.6% (non-IFRS at constant currencies). 

SAP said this increase was driven by expanding gross margins across all cloud business models, with efficiency gains overcompensating increased investments into its next generation cloud delivery programme.

SAP has reason to celebrate successful 12 months

Looking at the full year, SAP successfully met all of its financial outlook metrics for 2022.

At the year end, current cloud backlog had expanded to €12.03bn, growing by 27% and 24% at constant currencies. 

There was, however, a negative impact on current cloud backlog - by approximately 1.5 percentage points - following the sale of its Litmos business and the winding down of operations in Russia and Belarus.

S/4HANA current cloud backlog increased 86% to €3.17bn, or 82% at constant currencies. 

As of December 31, total cloud backlog – which is defined as the contractually committed cloud revenue we expect to recognize in future periods – was up 35% to €34.2bn.

SAP has announced its cloud revenue was up 33% to €12.56bn in 2022 and 24% at constant currencies, driven by double-digit growth across the SaaS and PaaS portfolio.

More specifically, cloud revenue from S/4HANA surged by 91% to €2.08bn, or 79% at constant currencies. 

Despite software licences revenue suffering a 37% decline to €2.06bn (down 39% at constant currencies), overall cloud and software revenue was up 10% to €26.52bn (up 4% at constant currencies). 

Services revenue reached €4.35bn having grown by 16% (up 9% at constant currencies), while total revenue was up 11% to €30.87bn or 5% at constant currencies. 

Germany and Japan key to SAP’s cloud revenue performance

SAP enjoyed strong cloud revenue performance across all regions in the fourth quarter. 

Outstanding performance was recorded in Brazil, Germany and Japan, while China, India, the Netherlands, Switzerland and the United States were also notably strong.

Across the year, Germany, the United States and Japan were among the top-performing nations for cloud revenue.

Brazil, Chile, China, Italy, Saudi Arabia, South Korea and Switzerland also performed strongly. 

SAP’s outlook for 2023

SAP has outlined the following financial expectations for 2023: 

• €15.3-15.7bn cloud revenue at constant currencies (up 22-25%)
• €28.2-28.7bn cloud and software revenue at constant currencies (up 6-8%)
• €8.8-9.1bn non-IFRS operating profit at constant currencies (up 10-13%)

From a non-financial perspective, SAP is focusing on customer loyalty, employee engagement and carbon emissions. 

It expects:

• A customer net promoter score of 8 to 12
• An employee engagement index of between 76% and 80%
• To have net carbon emissions of 0kt, making the company carbon neutral