SAP raises fiscal 2021 outlook

In a preliminary report of Q1 results, SAP said non-IFRS cloud sales were up 13 percent at constant currencies.

SAP is raising its revenue outlook for the full fiscal year 2021, reflecting its solid cloud business and the assumption that the Covid-19 crisis will subside. The company also reported early interest in its new RISE with SAP business transformation program.

SAP now expects non-IFRS cloud revenue between €9.2 billion and €9.5 billion, up 14 percent to 18 percent. Previously, SAP gave an outlook of cloud revenue between €9.1 billion and €9.5 billion.

The company is also forecasting non-IFRS cloud and software revenue between €23.4 billion and €23.8 billion, up 1 percent to 2 percent at constant currencies. The previous range was €23.3 billion to €23.8 billion at constant currencies.

Revenue from software licenses is expected to decline for the full year as more customers shift to the new "RISE with SAP" subscription offering for mission-critical core processes. The RISE with SAP program offers business transformation as a service. 

In a statement, CEO Christian Klein said SAP is seeing strong growth across all applications. The RISE with SAP program is "rapidly becoming a massive accelerator to our customers' business transformations," he said. 

"Together with our unique ecosystem of more than 22,000 partners and with a strong innovation pipeline for the year, we are well on track with our strategy to deliver robust cloud growth," Klein added. 

SAP reported the following preliminary Q1 results: 

  • Non-IFRS cloud revenue was up 7 percent year-over-year to €2.15 billion, and up 13 percent at constant currencies.
  • Software licenses revenue was up 7 percent year-over-year to €0.48 billion (IFRS and non-IFRS) and up 11 percent at constant currencies.
  • Cloud and software revenue was up 1 percent to €5.43 billion (IFRS and non-IFRS) and up 6 percent at constant currencies.
  • Services revenue was down 18 percent to €0.9 billion (IFRS and non-IFRS) and down 14 percent at constant currencies. This revenue decline reflects the November 2020 divestiture of SAP Digital Interconnect, which contributed about €90 million of services revenue in Q1 2020.
  • Total revenue was down 3 percent year-over-year to €6.35 billion (IFRS and non-IFRS) and up 2 percent at constant currencies.
  • Non-IFRS operating profit increased 17 percent to €1.74 billion, up 24 percent at constant currencies.
  • Operating margin increased by 4.7 percentage points to 27.4 percent, up 4.9 percentage points at constant currencies.
  • Earnings per share increased 29 percent to €0.88 (IFRS) and increased 63 percent to €1.40 (non-IFRS).

SAP attributed its higher-than-expected operating profit and operating margin in part to the cancellation of its in-person events, including the annual Sapphire Now conference.

The company reported "significant wins" in ERP, digital supply chain and across its broader cloud solution portfolio.