Following several quarters of rising growth in the cloud, SAP expects to post “our largest Q4 on record” for order-entry and new cloud business, according to CEO Christian Klein.
After posting 34% cloud-revenue growth in Q2 and then 38% in Q3, “SAP’s cloud transformation has reached a tipping point, and we’re at an important inflection point for the company after beginning our transformation two years ago,” Klein said on SAP’s Q3 earnings call late last month.
For more detail on that, please see my first-take analysis of SAP’s Q3 earnings: SAP Cloud Surge Accelerates: Cloud Revenue up 38%, ERP 98%. That piece includes my list of six primary reasons why SAP’s rise to prominence in the cloud is only beginning.
During SAP’s Q3 earnings call late last month, Klein said, “We feel very positive about the resilience we have built into our future business” and noted that predictable revenue now accounts for 80% of SAP’s total, up from 72% just two years ago when SAP became fully committed to transforming to the cloud.
And Klein sees more cloud strength coming in Q4.
“Despite the macro challenges, we see strong demand as our SaaS portfolio is especially relevant during these times,” Klein said on the call.
“And we anticipate that the flywheel effect of our Business Technology Platform, together with our partner ecosystem, will power strong cloud consumption.”
As the graphic below indicates, SAP’s cloud business delivered a very impressive Q3 across the board. Two things to note about the numbers below:
- Since SAP is based in Germany, it publishes its results in euros, not dollars. For the past few weeks, the euros-to-dollars conversion rate has been very close to parity, so the numbers in the graphic below can be converted to dollars pretty much at a 1:1 ratio.
- SAP has chosen to use growth rates in this graphic that represent constant currency, and thereby do not take into account the currency-exchange fluctuations that have rocked the global economy over the past several months. In my coverage of SAP, I use its formal numbers rather than the constant-currency numbers, and that accounts for the discrepancies you’ll see between the numbers in this graphic and other figures I’ve reported for SAP’s Q3.
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