The manager has aligned the software manufacturer to cloud computing.
(Photo: Bert Bostelmann / picture folio for Handelsblatt)
Walldorf Despite the withdrawal from Russia and the economic uncertainty, SAP is making progress with the conversion of the business model. In the second quarter, the Dax group increased revenue from cloud products by 34 percent to 3.1 billion euros, currency-adjusted by 24 percent. Sales increased by 13 percent to 7.5 billion euros. Both figures exceeded analysts’ expectations.
However, the withdrawal from Russia and Belarus is a considerable burden for the software manufacturer. The operating result fell from the beginning of April to the end of June by 32 percent to 637 million euros, mainly due to special effects from the business closure. “In this quarter, we have already captured the greatest impact of the war in Ukraine,” said CFO Mucic.
The Dax group therefore lowered its profit forecast for the year as a whole: the range for the operating result is around 250 million euros lower at the middle point. In addition to the Ukraine war, Mucic cited the strong growth in the cloud business, which is at the expense of license sales – here the group realizes the profits directly.
The second quarter was good, emphasized CEO Christian Klein, “despite the challenging geopolitical and macroeconomic situation”. The conversion of the business model is progressing faster than expected – cloud services are the largest source of revenue for the first time in a quarter.
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SAP announced another share buyback program, this time worth 500 million euros. The papers are used for share-based payment programs. Given the weakness of the markets, it is “an opportune opportunity,” said CFO Mucic.
Share has lost significantly since the beginning of the year
SAP is suffering from the weak development on the stock markets, which hits technology companies particularly hard. The share has lost almost 28 percent of its value since the beginning of the year, on Thursday it closed at a good 90 euros. With a market capitalization of currently around 112 billion euros, the software manufacturer is no longer one of the 100 most valuable companies in the world.
However, analysts see potential in the SAP share, especially after the significant decline in recent months. In view of the difficult economic environment, several financial experts have downgraded their ratings in recent weeks, but most still recommend buying the Dax group. The average price target is around 117 euros.
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