German business software group SAP raised its outlook for the second time this year as a strategic push to help customers shift their IT operations to the cloud gained traction in the second quarter.
SAP now expects cloud revenue to grow by 15%-18% in the year, helping its overall cloud and software revenue to gain by 2%-3%. Operating profit is now expected to be unchanged to down 4% for the year.
“We’re seeing strong adoption of our cloud portfolio as customers select SAP for their business transformation. Our strategy is working,” Chief Executive Officer Christian Klein said on Wednesday.
SAP ditched its mid-term forecasts last October as Klein went all-in on cloud services that generate subscription revenue spread out over time, in contrast to software licences that deliver chunky up-front fees.
He launched Rise with SAP, an all-in-one digital transformation package, at the start of this year and strong take-up helped drive 20% growth in the current cloud backlog – a measure of incoming business – during the second quarter.
