The Dax group wants to significantly increase profitability in the current year.
(Photo: IMAGO/Arnulf Hettrich)
Dusseldorf Despite macroeconomic uncertainties, SAP got off to a robust start in the new year: In the first quarter, sales rose by ten percent year-on-year to €7.4 billion, slightly more than analysts had expected. The business with cloud services, in which the Dax group posted an increase of 24 percent to 3.2 billion euros, made a particular contribution to this.
Adjusted for special effects, the operating profit also increased in double digits. The “high growth momentum in the cloud business” is continuing and is thus contributing to the strong increase in sales and operating profit, said SAP CEO Christian Klein when the figures were published on Friday.
However, high costs weighed on the operating result. In view of the recent higher share price, SAP had to plan more for share-based payments. In addition, there were 260 million euros in costs for a restructuring program and 170 million euros for an unspecified compliance matter. The IFRS key figure therefore fell by 45 percent to 803 million euros.
“Our results provide a solid foundation for our full-year outlook and allow us to return to profitable growth in 2023,” said CFO Dominik Asam.
SAP excluded the business of the subsidiary Qualtrics from the result. The software manufacturer recently announced that it would sell its majority stake in the financial investor Silver Lake and the pension fund CPP. The transaction is expected to be completed in the second half of the year. SAP reports Qualtrics’ business as discontinued until sale. The company, which offers a cloud platform for online market research, generated sales of EUR 374 million in the first quarter – the majority with cloud products – and profit after tax of EUR 104 million.
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In view of the sale, SAP has adjusted its forecast for the current year downwards: cloud revenues are expected to be EUR 1.3 billion lower and in a range of EUR 15.3 to 15.7 billion. The group expects a loss of 200 million euros in operating profit.
After the figures were published, the SAP price initially fell by two percent on Friday morning to just under 113 euros. The stock had gained significantly in the last few weeks. The software manufacturer is benefiting from the fact that technology stocks are in demand again after a period of weakness.
In addition, the financial analysts are increasingly optimistic about the business of the Dax group. Goldman Sachs, for example, expects the first quarter to demonstrate the resilience of the cloud business. Several investment banks have therefore raised their price targets, which is increasing demand on the stock exchange.
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