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 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 analysis SAP customers see S/4HANA and AI as top digital transformation drivers With SAP’s end of mainstream maintenance for SAP Business Suite 7 set for 2027, recent findings from the US SAP user group reveal that companies are increasing focus on shifting to S/4HANA and embracing AI. By Thor Olavsrud May 20, 2024 6 mins SAP Generative AI IT Skills feature State of IT jobs: Mixed signals, changes ahead Layoffs and salary plateaus in the wake of exuberant pandemic-era IT hiring has the IT talent market in flux. And while employers pay premiums for hard-to-find AI skills, IT pros seek the same for filling in-office openings. By Sarah K. White May 17, 2024 10 mins Salaries Hiring IT Jobs 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