Cloud Wars Live with Bob Evans
SAP Still #1 in Apps Growth, but Big Backlog Slowdown
Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
In today’s Cloud Wars Minute, I take a closer look at SAP’s Q2 cloud performance—24% revenue growth and a 22% rise in current cloud backlog—slower than past quarters, but still dramatically outpacing rivals like
Highlights
00:13 — One of the leaders in the Cloud Wars Top 10, SAP, has been the fastest-growing enterprise apps company for several straight quarters, far outperforming all of its competitors, which include Oracle, Workday, Salesforce, and Microsoft Dynamics 365. And they reported recently—SAP did—a very strong Q2. But there were a couple wrinkles in there.
01:02 — The cloud revenue was up 24% to $6 billion. But in Q1, the growth rate was 25%, so a slight dip in the growth rate in Q2. Current cloud backlog in Q2 was 22%; that 22% is well down from Q1’s 28%. It expected the backlog growth to moderate through the rest of the year. But this is a pretty big drop. It saw a re-emergence of uncertainty in the market in the second quarter.
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02:08 — He noted in the U.S., in the public sector, the DOGE impact has slowed things down a little. On the flip side, Klein said, Now, we’ve got some mega deals that are out there. He said, I don’t think they’re going to disappear, but they have been postponed . . . There’s a little more rigor in getting approvals for those. But he said, I think that will come through.
03:20 — I would also say that at the size that SAP is at now, it’s a $24 billion run rate,r 24% growth is quite good. And this current backlog growth of 22% in itself is also very strong. But a couple of quarters ago, its backlog grew 32%, then 25%, now 22%. So it’s fair to say, is a trend.
04:10 — Overall, it is an interesting time now for buyers, I think more broadly, since some of this uncertainty that Klein referred to around tariffs—I think a lot of that uncertainty is going away. We just heard this announcement of the U.S. and Japan in a $550 billion deal. I think this is going to alleviate some of the concern that SAP customers expressed and that Klein referred to.
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