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A Look at SAP’s Cloud Growth

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Company raises outlook as cloud growth impresses

SAP SE (SAP) is seeing strong growth momentum in its cloud computing business, and its management believes the cloud momentum will continue. In a show of confidence in its cloud roadmap, SAP has raised its performance outlook for 2018 and 2020.

SAP expects to generate cloud revenues of $5.9 billion–$6.0 billion in 2018. The company previously guided cloud revenues of $5.7 billion–$5.9 billion. Its cloud revenues reached $4.4 billion in 2017.

SAP expects gains in its cloud division to lift the overall business, with the company upgrading its overall 2018 revenue outlook to $28.8 billion–$29.2 billion. It previously guided 2018 revenues of $28.6 billion–$29.2 billion. SAP generated revenues of $27.1 billion in 2017.

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2020 outlook upgraded

SAP raised its cloud revenue outlook for 2020 to $9.5 billion–$10.0 billion. The previous outlook called for cloud revenues of $9.2 billion–$9.8 billion. The company expects its overall 2020 revenues to reach $32.3 billion–$33.5 billion.

Cloud revenues soared 40%

SAP reported strong second-quarter results, supported by accelerating growth in its cloud business. Its cloud revenues rose 40.0% YoY on a constant currency basis to ~$1.4 billion, increasing from 18.0% YoY in the first quarter.

Amazon (AMZN) and Microsoft (MSFT) also reported gains in their cloud divisions in the latest quarter. Revenues for Amazon’s Amazon Web Services jumped 49.0% YoY. Revenues for Microsoft’s Azure rose 89.0% YoY in the second quarter.

The gains in the cloud division led to SAP’s overall second-quarter revenues rising 3.8% YoY to ~$6.9 billion. Oracle (ORCL) and Adobe (ADBE) grew their revenues by 3.3% and 23.9% YoY, respectively, in the same period as SAP’s second quarter.

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