Conflict in Ukraine affects SAP’s balance sheet and order book

SAP reported strong first quarter results despite pulling out of Russia and Belarus due to the ongoing invasion. The European tech giant recorded revenues of around 7.07 billion euros in the first quarter of 2022, up 11% compared to the previous year, while its operating profits amounted to 1 .05 billion euros, up 10% year-on-year.

Despite this positive start to the year, SAP management is watching the coming months with caution due to the ongoing conflict in Ukraine. “In the first quarter, SAP’s business was impacted by the war in Ukraine. At the beginning of March, SAP stopped all new sales in Russia and Belarus. cloud computing and intends to stop the support and maintenance of its products on site in Russia”, explains one on the side of the European giant.

As a result, SAP’s current cloud business backlog has been reduced by approximately EUR 60 million due to the termination of existing cloud commitments, and operating profit by approximately EUR 70 million due to due to reduced on-site revenue, accelerated depreciation of data center assets and capitalized sales commissions. SAP forecasts an overall revenue impact and loss of around 300 million euros due to a “lack of new business” and the “termination” of existing business relationships in Russia and Belarus.

Waiting is in order

“Additional impacts from this rapidly evolving situation are currently unknown and could potentially subject our business to adverse material consequences should the situation escalate beyond its current scope,” the company adds. SAP S/4HANA added more than 500 customers to its roster in Q4 2022, an 18% increase over the prior year. SAP S/4HANA now has more than 19,300 customers, of which approximately 13,900 are active. The cloud branch of SAP estimates its order book at 9.73 billion euros, revenues up 23% at constant exchange rates.

In its outlook for the full year, SAP expects cloud revenue to reach between 11.55 and 11.85 billion euros at constant exchange rates. Cloud and software revenue, at constant exchange rates, is now estimated at between 25 and 25.5 billion euros. In addition, SAP expects to make between 7.8 and 8.25 billion euros in operating profit.

“We are off to a solid start to the year and our outlook remains strong,” commented Luka Mucic, SAP’s chief financial officer, when presenting these results. “Despite the current macro environment, cloud revenue growth has further accelerated, fueling total revenue growth. The current cloud backlog has grown at a healthy pace and continues to support our confidence in our long-term plans and outlook for the year.”


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