With Q1 cloud revenue growing faster than it did in Q4 and the current cloud backlog growing faster than ever before, SAP says its bullish performance will continue throughout 2024 with full-year cloud growth projected to be at least 24% and possibly as high as 27%.
I’ll offer some Q1 details here, and will analyze the SAP numbers later this week in more detail:
- Total cloud revenue: up 24% to $4.3 billion
- ERP Cloud Suite: up 31% to $3.48 billion
- Current cloud backlog: up 27% to $15.6 billion
- Full-year cloud-revenue projection: $18.7 billion to $19.0 billion, up 24%-27%
SAP CEO Christian Klein — my choice as the Cloud Wars CEO of the Year for 2023 — said that customers are rallying behind “powerful growth drivers” including SAP’s Business AI, cross-selling its large and now-unified cloud portfolio of applications, and more mid-market firms choosing SAP.
“The strength of our current cloud backlog reaching a record growth rate is a testament to that momentum,” Klein said in the earnings release.
Here are a few quick thoughts on these numbers:
- The growth rate of 24% for SAP’s cloud business should dispel once and for all any attempts by competitors and/or detractors to position SAP as being behind the times or unable to make the jump to the cloud.
- The current cloud-backlog growth rate of 27% shows enduring strong demand among SAP’s core customers, particularly in the context of that being the largest cloud-backlog growth figure SAP has generated.
- The RISE and GROW programs continue to differentiate SAP in the marketplace and provide great value for customers.
- For the first time, SAP did not break out numbers for its cloud ERP product, S/4HANA Cloud, and instead began offering financial details for what it calls its “ERP Cloud Suite” — later this week, I’ll have more perspective on what’s behind that change.
Final Thought
In a viciously competitive part of the market — not that there are any pushover segments — SAP continues to perform very well against archrivals Oracle and Workday, as well as against partner/competitor Microsoft. And as the company has created and launched various inducements to persuade big on-premise customers to move to the cloud with SAP that bullish outlook for the full year is not only impressive to see but very credible as well.
Well done, SAP!
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