The manager is pushing the switch to cloud computing.
(Photo: Bloomberg)
Walldorf A year ago, SAP shocked shareholders with a sharp cut in its forecast. Since then, however, the software manufacturer has regularly exceeded its targets: on Tuesday, after a strong third quarter, it promised better figures for the entire financial year – for the third time this year.
The most important preliminary key figures at a glance:
• Of the sales rose by five percent to 6.84 billion euros, significantly more than analysts expected. While the license business shrank as expected, SAP recorded an increase of 20 percent to 2.39 billion euros with its cloud offerings.
• The sale of the core product S / 4 Hana Cloud is now properly starting: The incoming orders, measured on Current cloud backlog, rose by 60 percent to 1.28 billion euros. Overall, the business volume with cloud offerings increased by 24 percent to 8.17 billion euros for the next twelve months.
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• Given the robust development, SAP is raising the forecast for the revenue from the cloud business around 100 million euros, the range is now between 9.4 and 9.6 billion euros. The group is also forecasting a slight improvement in the operating result. That is not unexpected, the annual targets were considered conservative on the stock exchange.
Management sees these figures as confirmation of the strategy. “Customers rely on SAP for their company transformation in the cloud. We are experiencing record demand for our applications and our platform, ”said CEO Christian Klein in a press release.
The 41-year-old manager lowered the outlook a year ago due to the corona pandemic and also announced a faster introduction of cloud services – at the expense of the margin. The announcement resulted in a sell-off of the stock. In view of the crisis, cloud services are particularly in demand, he argued.
The changeover seems to be progressing. This is particularly evident in the S / 4 Hana Cloud program package, which customers can use to control their central business processes: The new core product, for which the group is reporting the figures, contributed 276 million euros, an increase of 46 percent.
Positive surprise for shareholders
The high order intake indicates that SAP continues to hope for significant growth in the cloud business. As a result of the changeover, on the other hand, classic software licenses are less in demand, and revenue fell by eight percent to 660 million euros. Including maintenance, to which customers have committed themselves over the long term, SAP recorded a slight decrease to 3.52 billion euros.
However, the changeover has a negative impact on the margin, on the one hand because of the investments, and on the other because of the changeover to a pro-rata model. In the third quarter there were even higher expenses for stock options, especially at the subsidiary Qualtrics.
The operating result fell by 15 percent to 1.25 billion euros, the operating margin by 4.3 percentage points to 18.2 percent. Adjusted for one-off effects, SAP was able to generate a little more operating profit.
With the preliminary business figures, SAP gave shareholders a positive surprise. The course of the Walldorf group rose on Wednesday morning by up to 3.7 percent to a good 121 euros and thus developed better than all other Dax 40 values.
Compared to other software manufacturers, however, SAP still has room for improvement. If you include the most recent increase, the share has been up around 14 percent since the beginning of the year. The MSCI World Software index, on the other hand, rose by 22 percent.
Most analysts see potential in the SAP share. A majority recommend buying the paper; the average target price is around 132 euros.
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