Quickly rising to the top tier of the world’s hottest major cloud vendors, SAP posts impressive Q2 cloud results as Christian Klein locks in a compelling strategy for customers and SAP is entered its second half century.
Last week, I shared some high-level insight into SAP’s results and its new position as a high-growth cloud company — after all, the cloud now generates more revenue than any part of the SAP business. The Cloud Wars Minute video analysis is SAP Q2 Figures Position It With Fastest-Growing Cloud Providers, and the more detailed article is SAP Q2 Cloud Surge: Outgrowing Microsoft, Salesforce, and ServiceNow.
For now, however, let’s take a look at some of the most important numbers from SAP’s Q2 to see how they map out a growth trajectory that, just a year ago, many thought was impossible for SAP.
1. Q2 Cloud revenue increased 34% (24% in constant currency). Reaching $3.12 billion in Q2, the cloud revenue figure represents a growth rate that may be higher than all of the Cloud Wars Top 10, except for Google Cloud and Oracle.
2. Q2’s current cloud backlog also jumped 34% (25% in constant currency). Now at $10.61 billion, that backlog shows that SAP’s cloud surge has legs for the future.
3. S/4HANA Cloud revenue increased 84% (72% in constant currency). The biggest existential challenge — or, depending on how you want to look at it, the most dynamic growth opportunity — for SAP is converting its roughly 30,000 existing customers to the cloud. While only a small fraction of those migrated, those stellar growth numbers clearly show that SAP is making great progress in keeping incredibly high-net-worth customers from deviating from Oracle or Workday.
4. The S/4HANA Cloud backlog jumped 100% (87% in constant currency). As happy as Klein and his team were to see the 84% Q2 growth rate for its cloud ERP solution, I think they were even more excited about the current cloud backlog of $2.3 billion for S/4HANA Cloud and the triple-digit its growth rate.
5. Business Technology Platform operating rate is more than $1.5 billion. Klein undoubtedly made SAP a dynamic platform provider as well as an applications provider. The 40% growth rate for this critical cloud technology offers another big reason for optimism about the future. Klein said 14,000 customers are now using the platform to help build their expanded data capabilities.
6. RISE drives add-on revenue from most SAP customers. Designed to help customers migrate to S/4HANA Cloud as part of a broader business transformation, RISE has also been a catalyst for many customers to add additional cloud solutions, Klein said, with 85% of RISE customers adding other apps or solutions during the quarter and 77% using the Business Technology Platform.
7. RISE goes from nice-to-have to The Big Thing. While Klein didn’t offer a specific figure on this intriguing development, I think it was one of the most important revelations from the entire earnings call: “Since RISE launched with SAP from the beginning of the past year,” Klein said, “we’ve seen the offering go from gaining traction, to gaining momentum, to becoming the preferred choice for our customers as they move to the cloud. He offered some insight on the significant revenue impact that RISE is experiencing saying that SAP sees “continued cross-sell and upsell momentum, which means we continue to create approximately 2.5x the value from a customer after they use RISE in SAP. “
8. 600 more customers chose S/4HANA Cloud in Q2. This brings the total number of customers using SAP’s cloud ERP solution to 6,000.
9. Nearly half of SAP’s revenue in Q2 came from deals of $5 million or more. CFO Luka Mucic said, “The trend towards larger cloud transactions has also accelerated, and deals with a volume of more than €5 million contributed 48% to our cloud order entry in the quarter. This is again driven by our RISE with SAP offering.
10. The Concur business, battered during the pandemic, grew 20% in Q2. Mucic described the turnaround of the spend management solution by saying “Concur continued on the recovery path and grew 20%.”
These results reflect not only the extraordinary vitality of Cloud Wars, where a so-called “legacy” company became a hotshot growth company, but also the steadfast and assured leadership of Klein, who is one of the most -amazing leadership. turnarounds I’ve seen in the 5-1/2 years I’ve been covering Cloud Wars.