SAP bets big after breaking €20bn in 2018 cloud and software revenues
SAP broke €20 billion in yearly cloud and software revenues in 2018, hitting or exceeding its raised outlook metrics in the process – and the company wants more, targeting €35bn in total revenue by 2023.
The Q4 2018 financial results saw total cloud and software revenues hit €6.3 billion (£5.5bn), representing 85% of total revenues that quarter. Naturally this statistic is somewhat obfuscatory – as regular readers of this publication will recognise, many of the largest cloud providers do it – but other stats are available. New cloud bookings for the whole of 2018 hit €1.8bn, a 25% increase on the previous year, while CEO Bill McDermott said cloud revenue grew 40% in Q4, and 38% across the full year.
Speaking to analysts in an earnings call, McDermott put the figure of ‘cloud users’ SAP holds at 180 million, and was bullish at the company’s progress, particularly after the acquisition of Qualtrics for $8 billion first announced in November.
“SAP has only winning businesses in the portfolio,” said McDermott. “Every strategic asset in the company is growing. And looking back, the belief was enterprise customers would only want to rent software. But SAP embraced the software as a service business model early on and we’re growing the cloud faster than competition – and that includes Oracle, Salesforce.com and Workday to name a few.”
Chief financial officer Luka Mucic noted that public cloud, or software and platform as a service gross margin, improved solidly during 2018. “Looking forward, we expect to realise the benefits from our platform convergence in the first half of 2019 with further acceleration in the second half,” he said. “This will set us up with full scalability going into 2020 and beyond.”
McDermott joked that he might sign his emails off in future with ‘XO’, another reference to the Qualtrics acquisition. SAP sees the research management software provider as a key piece in their jigsaw to combine operational data (O), from their side, with experiential data (X) from Qualtrics.
“This is the only strategy for SAP as we look at our bright future,” added McDermott. “And we know it’s where the world is going. Experienced management is the future and SAP owns it.”
You can read the full Q4 statement here (pdf).
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