SAP revenue growth beats estimates, flags hit from Russia exit

German business software group SAP reported on Friday a first-quarter revenue growth of 11%, beating estimates on a boost from its cloud business, but flagged a revenue hit of 300 million euros ($325.26 million) because of its exit from Russia.

Earlier this week, the company said it plans to exit Russia completely in response to Moscow’s invasion of Ukraine.

SAP said its annual adjusted profit will drop nearly 350 million euros and it will take restructuring charges of about 80 million to 100 million euros.

Despite the impact on its Russian business, SAP affirmed its 2022 forecast for cloud revenue of between 11.55 billion euros and 11.85 billion euros at constant currency rates.

Total quarterly revenue rose to 7.08 billion euros at constant currency from 6.35 billion euros. Analysts had expected 6.87 billion euros, a Refinitiv poll showed.

The company’s cloud and software revenue climbed 12% to 6.06 billion euros in the first quarter ended March 31.

“Current cloud backlog grew at a healthy rate and continues to support our confidence in our long-term plans and outlook for the year,” Chief Financial Officer Luka Mucic said in a statement.

In the first quarter, current cloud backlog, which measures incoming business, was up 28% at 9.73 billion euros. The war in Ukraine cut the backlog growth at constant currency rates by 0.8 percentage points.

Adjusted earnings per share were 63 euros, below estimates of 1.07 euros, mainly due to lower contribution from investments in venture capital firm Sapphire Ventures.

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