German business software group SAP today flagged a €300m hit to sales from its planned exit from Russia, after strength in its cloud business helped it beat first-quarter revenue estimates.
It said the plans to quit Russia announced earlier this week will have a near €350m impact on annual adjusted profit, and lead to restructuring charges of about €80-100m.
Despite the impact of the Russia closure, SAP affirmed its 2022 forecast for cloud revenue of between €11.55 billion and €11.85 billion at constant currency rates.
However it also cautioned that other effects of the situation were unknown and could potentially subject its business to "materially adverse consequences" should the situation escalate beyond its current scope.
"The strong cloud momentum supports the confirmed full-year targets despite the headwind of the war in Ukraine, while also keeping in mind that Q1 is traditionally the smallest quarter in the year," analysts said.
Adjusted earnings per share were 63 cents, below estimates of €1.07, mainly due to a lower contribution from investments in venture capital firm Sapphire Ventures. That contribution fell €300m from last year.
Total quarterly revenue rose to €7.08 billion at constant currency from €6.35 billion. Analysts had expected €6.87 billion, a Refinitiv poll showed.
The company's cloud and software revenue climbed 12% to €6.06 billion in the first quarter ended March 31.
Current cloud backlog, which measures incoming business, was up 28% at €9.73 billion. The war in Ukraine cut the backlog growth at constant currency rates by 0.8 percentage points.
That growth "continues to support our confidence in our long-term plans and outlook for the year", SAP's chief financial officer Luka Mucic said in a statement.