IBM and SAP’s cloud financials continue to impress – but bigger hitters still to come

IBM has delivered its third consecutive quarter of growth – with cloud revenue up 20% and now representing almost a quarter of the company’s total revenue.

The company posted total revenues of $20 billion (£15.4bn) for the most recent quarter, up from $19.3bn this time last year, with six month revenues of $39.1bn, compared with $37.4bn from the year before.

Alongside cloud – which has hit $18.5bn in revenue over the past 12 months – IBM cited AI, analytics, blockchain and security as key strengths to its ecosystem. On the earnings call, Jim Kavanaugh, SVP and chief financial officer, told analysts that IBM was exiting the quarter with ‘as a service’ annual run rate of more than $11bn.

“This reflects our success in helping enterprise clients with their journey to the cloud and we’re becoming the destination for mission-critical workloads in hybrid environments,” said Kavanaugh. “We’re capturing this high-value growth with our unique differentiation of the innovative technology combined with deep industry expertise underpinned with trust and security, all through our integrated model.”

Among IBM’s cloudy highlights in the past quarter include a partnership with CA Technologies for the mainframe side, as well as European expansion. The latter was a momentum announcement with IBM having secured several Europe-based customers, including those in healthcare, logistics, and energy.

Meanwhile, SAP’s results saw cloud and software revenue going up to €4.94bn (£4.1bn) in Q218, up from €4,76bn this time last year – and the company has raised its ambitions for 2020 as a result.

At the start of this year, the company praised ‘stellar cloud bookings’ in Q417 causing them to reiterate its 2020 vision. By 2020, the company is aiming for non-IFRS cloud subscriptions and support full year revenue at a top point of €8.5bn, and ‘more predictable revenue’ – cloud support and software support revenue – to be between 70% and 75%.

Now, the company expects a top point of €8.7bn, with CEO Bill McDermott saying the company is presenting a ‘clear strategy’ and that raised guidance shows a ‘new wave of growth has been unleashed.’

“The fourth generation of enterprise applications has taken another major step forward with [in memory suite] C/4 HANA. Together with S/4 HANA, SAP customers are finally able to focus their entire business on delivering a personalised experience to their customers,” said McDermott. “The intelligent enterprise is the elixir to bridge silos inside fractured businesses and beyond so CEOs get a single view of the customer.”

Among the company’s highlights in the previous quarter included the launch of SAP’s Digital Manufacturing Cloud, helping manufacturing providers to deploy Industry 4.0 technologies in the cloud.

While these figures are impressive in isolation, it is worth noting that Alphabet, Amazon, and Microsoft are all declaring in the next week. According to Synergy Research, Amazon Web Services (AWS) leads across all geographies, with Microsoft second and Google third. The only exception is in APAC, where Alibaba secured the silver medal position.

You can read the IBM report here and the SAP report here.

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