Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
In today’s Cloud Wars Minute, I share my projections for SAP’s Q3 results.
Highlights
00:13 — SAP’s Q3 results are going to come out later this afternoon. I’m offering here are my projections. I think for Q3, SAP’s going to report that the Cloud ERP Suite business was up 33% and total cloud revenue was up 25% This is a great validation, I think, of Christian Klein’s strategy.
01:13 — I want to look at three critical financial metrics for SAP: total cloud revenue, Cloud ERP Suite revenue and growth rates, and its current cloud backlog. Total cloud revenue in Q1 was up 24% to $4.3 billion. In Q2, revenue was up 25% to $4.5 billion. I’m projecting for Q3, it’s going to maintain that 25% total revenue growth rate and total cloud revenue will be $4.7 billion.
02:22 — The Cloud ERP Suite in Q1 was up 31% to $3.5 billion. The Cloud ERP suite is, of course, financials, some things around supply chain, procurement, and other key areas. More customers are buying these as a suite now, because they’re modular. In Q2, that growth rate accelerated up to 33%— $3.7 billion. I believe they will maintain that torrid pace — 33% to $4.1 billion.
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03:06 — Now, the final numberis the current cloud backlog. So, very strong pipeline indications here for SAP. In Q1, it was up 27% to $15.6 billion. Q2 rose again, 28% to $16.1 billion. I am betting that in Q3, it’s going to rise up to 29% for the current cloud backlog, totaling $16.7 billion.
04:03 — Very, very good numbers here for SAP, and it’s particularly interesting in light of what we heard earlier this year from both Workday and Salesforce on their quarterly earnings calls. They were saying that they feel that customers are pulling back on enterprise spending, especially with their investments in cloud applications. SAP has seen none of that happen.
04:40 — We’ll find out later today what the real numbers are. Those are my projections. I think that SAP, though, without question, will remain the world’s largest, fastest-growing major enterprise applications vendor.
