SAP: Business AI delivered 33 percent cloud revenue growth in APJ

⇨ APJ region delivered fastest cloud revenue growth, buoyed by growth from India, Japan and South Korea

⇨ Secured Auckland Council and Powerlink Queensland as RISE with SAP customers, while La Trobe University was a GROW with SAP customer

⇨ Global cloud revenue up 25 percent, while total revenue was up 10 percent

SAP has reported a 33 percent increase in cloud revenue in the Asia-Pacific and Japan region in its second quarter of 2024, with deals enabled by its Business AI offering. 

SAP Chief Executive Officer Christian Klein said, “Our cloud growth momentum remained strong in Q2, with Business AI enabling many deals. We continue to execute on our transformation with great discipline, leading to an increase in our operating profit ambition for 2025.”  

“At the same time, we continue to invest into our transformation to be the leader in Business AI. Given our progress and strong pipeline, we are confident to achieve accelerating topline growth through 2027.” 

SAP APJ cloud revenue – which the company said was buoyed by growth from India, Japan and South Korea – was 566 million euros (A$928 million) for the period, up from 427 million euros (A$700 million) from the second quarter of 2023. Like in Q1, APJ was also the fastest growing region for SAP’s cloud revenue for the period.

Cloud revenue for the first half was 1.1 billion euros (A$1.79 billion), up 30 percent from 841 million euros (A$1.38 billion). APJ total revenue for the period was 1.17 billion euros (A$1.9 billion), up 6 percent from 1.1 billion euros (A$1.8 billion). 

SAP also announced its customer wins for the period, in ANZ naming Auckland Council and Powerlink Queensland as new RISE with SAP customers while La Trobe University chose GROW with SAP. Veolia Group was also named among customers that have adopted an SAP solution.

Commenting on the results, SAP Australia and New Zealand President and Managing Director Angela Colantuono told Mastering SAP, “We’re seeing continued demand for cloud transformations across all industries in Australia and New Zealand as our customers look to build organisational resilience, create operational efficiencies, and boost productivity in their organisations.

“In Q2 we saw great momentum across public sector organisations with Powerlink Queensland and Auckland Council both selecting RISE with SAP, with La Trobe University selecting GROW with SAP.

“Our results underscore the value that our customers see in the cloud, and I look forward to continuing to work with our people and partners to ensure our customers get the most value from their SAP systems and have access to the latest capabilities in Business AI.”

Cloud revenue for SAP’s global business increased 25 percent year over year in Q2 to 4.15 billion euros (A$6.8 billion), which was underpinned by a 33 percent increase in Cloud ERP Suite revenue. Cloud backlog grew 28 percent year over year to 14.8 billion euros (A$24.3 billion). 

Software licences revenue declined 28 percent during the period to 200 million euros (A$328 million), while services revenue increased 6 percent to 1.1 billion euros (A$1.8 billion). Total revenue was 8.3 billion euros (A$13.6 billion), up 10 percent year over year. 

SAP highlighted that it now has around 1,500 GROW with SAP customers, with 60 percent net new this quarter. 

SAP Chief Financial Officer Dominik Asam said the company is “staying squarely focused” on delivering its outlook for this year. 

“Our current cloud backlog growth during the second half of 2024, and especially in Q4 will be decisive to lay a solid foundation for our cloud revenue ambition for 2025,” Asam said. 

“At the same time, we’ll continue to execute against our transformation plan to achieve our 2025 free cash flow ambition despite a mid-triple-digit million cash out for restructuring spilling into next year.” 

Looking ahead, SAP anticipates cloud revenue will be between 17 to 17.3 billion euros (A$27.9 billion to A$28.4 billion) at the end of 2024. The company is aiming to reach cloud revenue of 21.5 billion euros (A$35 billion) by 2025.