A Look at SAP’s Cloud Growth



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.

Article continues below advertisement

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.


More From Market Realist