The software group from Walldorf is growing in the cloud, but is currently not very profitable.
(Photo: dpa)
Frankfurt Europe’s largest software house cannot convert increasing sales into higher profits. Operating profit fell in the third quarter currency-adjusted by eight percent to 2.1 billion euros, SAP announced on Tuesday. The reason for this is lower contributions from software licenses and higher expenses in research and development as well as marketing. Earnings per share collapsed by 36 percent to EUR 1.12. Here the weaker financial result of the venture capital division Sapphire Ventures burden.
Consolidated sales, on the other hand, increased by five percent to EUR 7.84 billion, as in the previous quarter. The driver was again the promising cloud business, which recorded a currency-adjusted increase of 25 percent to 3.29 billion euros. The outgoing SAP CFO Luka Mucic predicted that growth would accelerate in 2023. Then the operating result will also increase in double digits.
However, SAP’s figures for the third quarter missed market expectations. Analysts had hoped for an increase in total revenues from 6.3 to 8.49 billion euros and a surplus of 1.62 euros per share. The company had already lowered its full-year targets in July due to a decline in operating profit.
Share under pressure for months
In view of the rising interest rates and the uncertain economic outlook, technology providers have been under pressure on the stock market for several months, including SAP. The shares of the German software manufacturer even slipped below the 80 euro mark for a short time this year. In the past few weeks, the price has recovered somewhat, on Monday evening it was quoted at EUR 91.80.
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Recently, a report by JP Morgan created new demand for SAP shares. Analyst Toby Ogg assumes that the macroeconomic difficulties are already too heavily priced into the price and that the market is also not correctly assessing the change in the business model. He upgraded the software manufacturer to “overweight” and raised the price target by 10 euros to 115 euros.
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