SAP's cloud sales beat forecasts in the third quarter, a sign that business software is moving fast to subscriptions. Here is what that means for companies that use it.
SAP, the German software company, reported that its cloud business grew 25% in the third quarter, beating what analysts expected. Cloud revenue came in at €6.67B, compared with the €6.57B analysts had predicted. Bloomberg reported the figures, which SAP gave in constant currencies.
Total revenue rose 12% to €10.27B. That means cloud is growing about twice as fast as the company overall. Cloud products are programs that customers use over the internet and pay for as a subscription, instead of installing and running on their own computers.
Constant currencies means the growth rates strip out the effect of exchange rate swings. It gives a cleaner view of real demand.
Current cloud backlog is a measure of future sales that customers have already booked. At €24.1B and up 26%, it grew slightly faster than cloud revenue itself. That suggests the momentum is not fading yet.
Companies that run on SAP or similar business software are the most exposed. Vendors have a clear reason to keep steering customers toward cloud subscriptions rather than software they run themselves.
The material does not say which products drove the growth, what SAP expects for the next quarter, or whether prices are changing for customers. Those details will matter to anyone planning a software budget.
If your business uses SAP or similar software, expect more pressure to move to cloud subscriptions and plan for that cost.
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