The logo of the German software company SAP can be seen on May 12, 2016 at the headquarters in Walldorf.
Ralph Orlowski | Reuters
German software giant SAP saw a jump in revenue in its fast-growing cloud unit on Thursday, which helped boost the company’s earnings performance in the third quarter.
SAP’s cloud revenue was around $ 2.4 billion in the third quarter.
Adjusted total revenue was € 6.8 billion, up 5% year-over-year, supported by growth in the cloud, while adjusted earnings per share were thanks to profitable start-up betting at spin-off Sapphire Ventures rose by 2% to 1.74 euros.
Last year, SAP outlined plans for a major shift from on-premise IT infrastructure to remote cloud computing facilities. SAP’s renewed focus on the cloud has been a challenge for business software competitors such as Salesforce and Oracle.
SAP shares rose 0.7% as European markets opened Thursday’s trading session.
“We have swiveled this company into the cloud,” said SAP CEO Christian Klein on Thursday to CNBC’s “Squawk Box Europe”.
“We’re changing our business model under our own steam … from on-premise pre-licenses to a subscription-based business model in the cloud.”
Due to the dynamism in the cloud business, last week SAP raised its outlook for the full year for the third time this year. The company confirmed those targets Thursday, saying it expects cloud sales to grow between 16% and 19% in 2021.
Klein said the company is “very confident” in its ability to deal with the uncertainty and disruption of the coronavirus in global supply chains.
“Technology helps meet these challenges,” he said. “When you talk about the future of work, you need to drive collaboration; Technology is needed. When you’re talking about a resilient supply chain, look at all of the container ships lying outside the ports that can’t call – where our business network can help. “
SAP’s share price fell sharply in October last year after its revenue forecast was cut amid concerns about the impact of Covid-19 on business spending. It has since bounced back and is up more than 11% so far this year.