With CEO Christian Klein predicting “further cloud revenue acceleration in the years to come,” SAP is expecting to get that party started later this month by meeting its Q4 guidance targets of $4.58 billion in cloud revenue, up 24% from Q4 of 2022.
Klein, who last month was named the Cloud Wars CEO of the Year for 2023, cited the ongoing strength of SAP’s innovative RISE go-to-market program — called by SAP “business transformation as a service” — as a primary reason the company’s impressive cloud growth will continue well into the future.
SAP will report its Q4 results in a couple of weeks, and on its Q3 earnings call in late October, Klein offered this outlook on why he believes SAP is positioned well for continued cloud-revenue growth in the range of 23% or 24% for the next couple of years.
“With regard to 2025, you also have to consider that — especially for our large transactions — we foresee a ramp. So when we are looking at the current cloud backlog of [$13.4 billion], obviously there is a ramp included in the contracts, which are also going to help us in 2024 and 2025,” Klein said on the call.
“And now that RISE has been out there for three years, the ramp will now go up. And with the BTP [Business Technology Platform] adoption we’re seeing, we are also going to see further cloud revenue acceleration in the years to come.”
In Q4 of 2022, SAP posted cloud revenue of $3.7 billion. For this year’s Q4, SAP will need to boost cloud revenue by 24% to about $4.58 billion to stay on track for hitting its long-promised goal of $23.44 billion in cloud revenue for calendar 2025.
To reach that target at the end of next year, SAP will have to deliver a very strong 2024 with cloud revenue up 23% or 24% throughout the year, finishing 2024 at about $19.0 billion.
Final Thought
As I noted above, I chose Christian Klein as the Cloud Wars CEO of the Year for 2023 because, since taking over as sole CEO about four years ago, Klein has delivered on every single commitment he’s made to customers for helping them move their deeply mission-critical SAP workloads and business processes into the cloud.
As I wrote in my CEO of the Year article describing Klein’s accomplishments and my rationale in choosing him for that award from among a group of truly world-class CEOs, Klein has overseen a masterful transformation of one of the world’s most-strategic enterprise-tech companies — and he’s done so fearlessly. This excerpt from that article captures the primary focus Klein has maintained over that very tumultuous four-year period: customers.
“That, I believe, was a defining moment for Klein, when in the face or intense and relentless pressure to talk about big growth that SAP customers at the time were simply unwilling to deliver, the SAP CEO instead stayed fully committed to his top priority: “We need to have our value story right for the customers.”
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