Software Giant SAP's Q3 Revenue Drops 4% Despite Cloud Business Growth

A decline of four percent year-over-year amid global response to Covid-19 was reported by Germany-based software giant SAP.

Germany-based global enterprise application software major SAP saw its revenue reaching 6.54 billion euros ($7.76 billion) in the third quarter of this year, a decline of four percent year-over-year amid global response to Covid-19.

Operating profit of the company fell one percent to 2.07 billion euros in the quarter ending on September 30, although its cloud revenue grew 10 percent to 1.98 billion euros, the company said in a statement on Sunday.

Fall in Global Revenues

SAP (Representational Picture) Wikimedia Commons

However, revenue from software and cloud services combined slipped two percent to 5.5 billion euros, "Covid-19 has created an inflection point for our customers. The move to the cloud combined with a true business transformation has become a must for enterprises, to gain resiliency and position them to emerge stronger out of the crisis," SAP CEO Christian Klein said in a statement.

"Together with our customers and partners we will co-innovate and reinvent how businesses run in a digital world." SAP said it will accelerate growth in the cloud and that the company is targeting more than 22 billion euros in cloud revenue in 2025.

Increasing Investments for R&D

The company plans to accelerate the modernization of its cloud delivery, arriving at a harmonized delivery infrastructure earlier than planned. As a result, SAP will significantly increase the efficiency and resiliency of its cloud delivery operations.

Further, SAP said it will increase R&D investments to accelerate its customers' transformation in the cloud and to establish a leading position in new categories like Industry Cloud. "In Q3 we continued to improve our operating margin against a strong prior-year comparison amidst a challenging environment. Earnings per share and cash flow grew even more rapidly," SAP Chief Financial Officer Luka Mucic said.