SAP Q1 2022: Ukraine-Russia conflict hits the balance sheet, impacts cloud backlog


SAP has reported strong first-quarter earnings despite pulling out of Russia and Belarus due to the ongoing invasion.

SAP’s Q1 2022 earnings (statement) (.PDF), ending March 31, 2022, reports revenues of €7.077 billion IFRS, up 11% year-over-year (up 7% at constant currencies) with basic earnings per share (EPS) of €0.63 (IFRS), or €1.00 non-IFRS.

In Q4 2022, SAP reported €6.84 billion IFRS revenue with basic EPS of €1.19 (€1.74 non-IFRS).

SAP reported an operating profit of €1.05 billion IFRS, up 10% year-over-year (non-IFRS down 4% to €1.67 billion). Cloud revenue grew by 31% year-over-year, to €2.82 billion (IFRS). Free cash flow is reported as €2.16 billion.

See also: SAP Q4 2020: Steady results as the firm pivots to enterprise transformation solutions

However, SAP has noted the ongoing Russia-Ukraine conflict as an influence on the balance sheet. SAP says:

“In the first quarter, SAP’s business was impacted by the war in Ukraine. At the beginning of March, SAP stopped all new sales in Russia and Belarus. In addition, SAP started to shut down its cloud operations and intends to stop the support and maintenance of its on-premise products in Russia.

Current cloud backlog was lowered by approximately €60 million due to the termination of existing cloud engagements, and operating profit by approximately €70 million due to reduced on-premise revenues, accelerated depreciation of data center assets and capitalized sales commissions.”

SAP expects an overall revenue impact and loss of roughly €300 million from a “lack of new business” and “discontinuing” existing business relationships in Russia and Belarus.

“Other impacts due to this rapidly evolving situation are currently unknown and could potentially subject our business to materially adverse consequences should the situation escalate beyond its current scope,” the company added.

SAP S/4HANA added over 500 customers to the roster in Q4 2022, up 18% year-over-year. SAP S/4HANA now accounts for over 19,300 customers, of which approximately 13,900 are now live.

A current cloud backlog of €9.73 billion has been reported, with revenue up 23% at constant currencies. SAP S/4HANA cloud revenue was up 78% (up 71% at constant currencies), with the SAP S/4HANA cloud backlog up 86% (79% at constant currencies).

SAP reports on two main business segments, “Applications, Technology & Services (AT&S),” and “Qualtrics.”

Applications, Technology & Services (AT&S) revenue was reported as €6.70 billion year-over-year, up 10% or up 6% at constant currencies.

Qualtrics revenue was €320 million, an increase of 58% year-over-year, or up 48% at constant currencies.

SAP’s full year outlook includes the expectation of expects non-IFRS cloud revenue to reach between €11.55 – €11.85 billion at constant currencies. Cloud and software revenue, at constant currencies, is now estimated as between €25 and €25.5 billion. Furthermore, SAP expects to achieve €7.8 to €8.25 billion in non-IFRS operating profit.

“We are off to a solid start to the year and our outlook remains strong,” commented Luka Mucic, SAP CFO. “Despite the current macroeconomic environment, cloud revenue growth accelerated further, fueling total revenue growth. Current cloud backlog grew at a healthy rate and continues to support our confidence in our long-term plans and outlook for the year.”

screenshot-2022-04-28-at-06-54-43.png

Previous and related coverage


Have a tip? Get in touch securely via WhatsApp | Signal at +447713 025 499, or over at Keybase: charlie0




Source link

Leave a Comment

Your email address will not be published.