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January 30, 2019

SAP CEO Waves “Xs and Os” as Cloud Soars 40%

"Don't be surprised if I sign my e-mails XO, Bill"

By CBR Staff Writer

SAP cloud revenues soared 38 percent in 2018, its quarterly results show, with CEO William McDermott saying he “couldn’t be happier with the state of the company” after reporting buoyant earnings. Operating profit was also up a healthy 10 percent.

New cloud bookings through 2018 topped €1.8 billion.

In an earnings call with analysts on Tuesday afternoon, the CEO of the German enterprise – Europe’s largest technology company – highlighted SAP Cloud’s scale; with 180 million users, it claims to be the world’s largest cloud provider.

McDermott added: “It’s also why there’s 3 trillion in commerce running through our business networks. Just to give you a sense of scale, a wonderful company like Amazon has 250 billion running through its network.”

The Q4 earnings report came a week after SAP closed its acquisition of Qualtrics (the Utah-based “experience management”, or “XM” company) after agreeing an $8 billion (£6.2 billion) cash deal in November last year and the CEO was keen to emphasise the “highly synergistic combination of X plus O” across SAP’s portfolio

Read this: IP-Oh? SAP Snaps Up Qualtrics for $8 Billlion, Days before Planned Floatation

He was referring to Qualtrics’ experience or “X” data with SAP’s operational or “O” data.

SAP Qualtrics

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“By combining X and O-Data, SAP will help businesses revolutionize how they compete in the experienced economy. So what’s the takeaway? Remember, your Xs and Os. And don’t be surprised if I sign my e-mails XO, XO Bill, it’s not just because I like you, although I do,” McDermott said.

He added: “This is the only strategy for SAP as we look at our bright future. And we know it’s where the world is going. Experienced management is the future and SAP owns it. Because we consistently embrace new innovation, our underlying business model is rock-solid.”

SAP Cloud: Booming

Overall cloud revenue grew 40 percent in Q4 and 38 percent for the full year.

Total SAP revenue was up 13 percent in Q4 and 11 percent for the full year. SAP’s customers include Prada, Volvo, Dyson, Uber, Cargill, Sonos, Volkswagen, Hitachi, Infosys, Haribo, Verizon Wireless, JetBlue Airways.

SAP cloud

Image Source:  SAP Q4 Results

Restructure on Horizon

SAP also said it will be undertaking a restructuring within certain sections of the business. The company said it will largely reassign employees internally, while also offering early retirement to those who wish to take it.

Despite these changes SAP said it expects its workforce to surpass 100,000 by the end of next year, adding roughly 3,500 employees through 2019.

In an interview with Reuters McDermott stated that: “This is not a cost-cutting move. We are a growth company.”

Despite some ongoing issues with the company’s recent move to a new licensing model, the company’s leadership sees a future of stability and grow in the financial year of 2019. Luka Mucic, SAP’s CFO concluded: “SAP remains a beacon of growth and stability. New order entry surged 18% in Q4, taking the total for the full year to over €10 billion for the first time ever. This stellar business momentum sets us up perfectly for continued strong profitable growth in 2019 and beyond, while we expect our cloud growth will continue to outperform our business software cloud peers.”


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