SAP SE O.N. (NYSE:SAP) Q3 2020 Earnings Conference Call - Final Transcript
Oct 26, 2020 • 09:00 am ET
response to the fundamental changes in the market caught on by the COVID-19 pandemic. COVID-19 is an inflection point for our customers. Many enterprises have real issues to produce, sell, and deliver a product in times of country lockdowns and people working from home.
For most of our 400,000 customers, resiliency is achieved not just by accelerating the move to the cloud, but more importantly by driving a fundamental change in how their business operates end-to-end. It means transforming every process for the digital world, from the customer facing go-to-market function, all the way to supply chain management. SAP is uniquely positioned to partner with our customers, to make the transformation happen, combined with a move to the cloud, which is why we are determined to reinvent how businesses run, by co-innovating with our customers and partners across the broadest cloud solution portfolio in the market. Responding decisively to the requirements of our customers in a fast-changing world, results in our new financial mid-term ambition. But before going there, let's take first a quick look at Q3 and the updated 2020 outlook.
In Q3, our resilient business model allowed us to continue to grow strongly in the cloud, and again, growing operating profit and margin. Apart from the Intelligent Spend business, our SaaS and PaaS cloud revenues were up by 26%. We continue to see a very rapid growth in categories such as commerce, S/4, supply chain, Qualtrics, and our foundation, the Business Technology platform.
Current cloud backlog is up significantly by 16% to EUR6.6 billion. At the same time, the lack of recovery from COVID-19 is visible in the lower-than-expected transactional cloud revenue, because of our travel and expense solution, Concur, which is hard to sell in times of COVID. Our Software License performance is on a similar level compared to our Q2 result. On the bottom line, the benefits of our Best Run transformation project have continued to show tremendous focus. As stated, we yet again expanded significantly, our operating margin and free cash flow.
In addition, 28,000 customer go lives over the last nine months, demonstrate our ability to deliver remotely in a challenging environment. Q3 also saw many notable customer wins, including some competitive replacements. Deals included, Lenovo for S/4HANA; Rabobank for S/4HANA Cloud. Swisscom and Barilla for Customer Experience, HP and Juniper for the business technology platform. LG for Ariba, Walgreens Boots Alliance for supply chain management. Lululemon for Qualtrics. Schwarzkopf for Industry Cloud, and Bahrain Airport for SuccessFactors.
For SuccessFactors actually, more than 4,000 customers and around 45% of the Fortune 500 are already running on our core solution Employee Central. This quarter, we added more than 500 S/4HANA customers, around 45% were net new; take us to a total of more than 15,100 customers, 20% up over last year. In Q3, we also added a new deployment option, for our private cloud service HANA Enterprise Cloud. So far, we have offered deployment in SAP or hyperscalers data center. But there is also demand