Home PC News Gains in cloud, digital transformation boost SAP 2021 Q1 revenue outlook

Gains in cloud, digital transformation boost SAP 2021 Q1 revenue outlook

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(Reuters) — German software group SAP on Tuesday nudged its outlook for 2021 revenue higher after reporting first-quarter results showing gains in cloud sales, following the launch of a new business transformation initiative.

SAP said it now expects cloud and software revenue this year of between 23.4 billion euros and 23.8 billion euros ($28 billion to $28.4 billion) at constant currency, up 100 million euros from prior guidance and a rise of 1-2% year-on-year.

Its forecast for adjusted annual operating profit was unchanged at 7.8 billion euros to 8.2 billion euros, representing a decline of 1-6% from last year’s outturn.

The company, based in Walldorf, Germany, prereleased what it called “stellar” first-quarter results that showed CEO Christian Klein’s new focus on selling business transformation as a service via its Rise with SAP package gaining traction.

New cloud business, measured as current cloud backlog, rose 19% at constant currencies in the first quarter to 7.63 billion euros — the fastest in five years — while adjusted cloud revenue gained 13% at constant currency.

Total revenue, which includes SAP’s traditional mainstays of license sales and service revenues, rose by 2% in the quarter at constant currency to 6.35 billion euros.

Reported operating profit was depressed by executive share compensation, which SAP accounts for as a cash expense. After stripping out that effect, adjusted operating profit rose by 24% to 1.74 billion euros at constant currency.

SAP prereleased the results, as German stock exchange rules require when results diverge from expectations or management adjusts guidance. The company is due to report full quarterly results on April 22.

($1 = 0.8370 euros.)

Reporting by Douglas Busvine, editing by Sam Holmes.

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