The German software company started the financial year with strong cloud revenue, but it recognized that exiting the Russian market will impact its bottom line. Credit: Peter Sayer/IDG German software group SAP reported first-quarter revenue growth of 11% for 2022 on Friday, driven in large part by its cloud business. The company’s cloud revenue climbed 31% to €2.8 billion (US$3.02 billion) in the first quarter of 2022, while revenue for its S/4HANA cloud software was €400 million, up 78% year-on-year. Total revenue for the quarter rose to €7.1 billion from €6.4 billion in 2021, which was also above analyst expectations of €6.9 billion. However, SAP’s recent exit from Russia will see the company take an expected revenue hit of around €300 million Impact of the war in Ukraine In early March, SAP publicly announced it was suspending operations in Russia after Ukrainian vice prime minister Mykhailo Fedorov publicly appealed for it to do so. Earlier this week, the company released another statement, saying it was taking further steps toward an orderly exit from the country, having already halted all sales in both Russia and Belarus and begun the process of shutting down all cloud operations in Russia. Despite the impact on its Russian business, SAP confirmed its 2022 forecast for cloud revenue is expected to be between €11.5 billion and €11.9 billion. On an earnings call with analysts, SAP CEO Christian Klein said that despite the challenging political and macroeconomic environment, the first quarter had been strong, before acknowledging that the decision to exit the Russian market will have “a financial impact, both on the top and bottom line.” On the same call, SAP’s CFO Luka Mucic told analysts the company was taking steps to absorb the expected impact of approximately €300 million on its revenues. “This is possible because of our increased cloud momentum, the initiation of disciplined expense management measures and the benefits associated with the streamlining of our portfolio that we expect to execute in the coming months as we continue to focus on strategic growth drivers,” Mucic said. Related content brandpost Sponsored by VMware How to build a successful agile development culture - and why your business needs one Mastering agile: Addressing familiar challenges and common misconceptions for successful software development. By Mike Freedman, Senior Director, and Michael Coté, Senior Member of Technical Staff, VMware Tanzu by Broadcom May 20, 2024 6 mins Devops Software Development brandpost Sponsored by Broadcom Driving digital transformation success: Serge Lucio's insights on Value Stream Management Navigating the VSM landscape: Strategies for seamless digital transformation—a chat with Serge Lucio, General Manager of the Agile Operations Division at Broadcom By Marla Schimke, Head of Product and Growth Marketing, Broadcom's ValueOps Software Division May 20, 2024 4 mins Digital Transformation feature 10 projects top of mind for IT leaders today From embracing AI to modernizing infrastructure, IT leaders are focusing more on key business differentiators, risk mitigation, emerging issues, and transforming IT to accelerate change. By Mary Pratt May 20, 2024 11 mins Business IT Alignment Data and Information Security IT Strategy opinion Assembly required: 8 myths about knowledge management debunked Business leaders intent on fostering innovative cultures must differentiate between knowledge management and knowledge assembly. One involves systems, data, and collaboration; the other, insights, dialogue, serendipity, and courses of action. By Daniel Forrester and Jerold Zimmerman May 20, 2024 13 mins Content Management Systems Document Management Systems Staff Management PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe