SAP sees cloud sales increase 45 percent in first quarter

SAP saw its cloud division grow significantly during the first fiscal quarter of 2019. Nevertheless, the company had an operating loss of 136 million euros. This loss is due to a restructuring and the acquisition of Qualtrics for 8 billion dollars.

Total sales for the first three months of 2019 amounted to 6.09 billion euros. That is 16 percent more than in the same period last year, writes The Register. As mentioned before, the company’s cloud department grew considerably. Turnover amounted to 1.5 billion euros, 45 percent more than last year.

The traditional software licenses raised 650 million euros. Traditional support was able to generate 2.838 million euros in turnover, which is 6 percent more. SAP’s services accounted for just over a billion euros in sales, 15 percent more than last year.

Revenue

Most of the money was earned in the Applications, Technology & Services segment, which accounted for $4.99 billion in revenue. That’s a 9 percent increase. 719 million euros in that segment comes from cloud services, which is an increase of 37 percent.

The category also includes the company’s S/4HANA ERP software, which is available both on premise and in the cloud. According to SAP, the software now has over 10,900 customers, which is 30 percent more than a year earlier.

In the Business Network segment – which includes applications such as Ariba, Concur and Fieldglass – sales increased by 25 percent to 740 million euro. 626 million of this was for the cloud, 22 percent more than in 2018. The Customer and Experience Management segment reports a turnover of 305 million euros, a growth of more than 100 percent. 236 million euros of this is for the cloud.

Restructuring

SAP owes most of its wealth to enterprise applications such as ERP software and databases, and today also CRM solutions. The company wants to take over more of Salesforce’s market share with the recently launched C/4HANA.

However, GSP says it needs to do more for the next part of its life. The company wants to refresh skills and hire more people for the cloud. In January, the company began restructuring, with the loss of 4,400 jobs. The company states, however, that the plans for hiring new people ensure that, in the end, the same number of people will work again.

The company then said that it intended to spend between 800 and 950 million euros on restructuring. Most of the impact was expected to be felt in the first quarter. And that turned out to be the case. The quarterly figures show that 866 million euro was spent on this reorganisation. From 2020 onwards, the process is expected to generate savings of between €750 and €850 million per year.