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SAP rises on strong cloud segment performance

Published Oct 19, 2023 07:09AM ET
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© Reuters. SAP rises on strong cloud segment performance
 
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SAP (ETR:SAPG) stock rose 4.5% on Thursday after the software company reported higher revenue and operating profit for the third quarter, primarily driven by growth in its core cloud business.

SAP reported its results on a non-IFRS basis, revealing that total revenue had risen to €7.74 billion ($8.16B) from €7.48B in the same period the previous year.

Cloud revenue also saw substantial growth, reaching €3.47B from €2.99B. However, software-licenses revenue declined to €335 million from €406M.

Analysts were expecting revenue of €7.73B and cloud revenue of €3.53B, with expected operating profit of €2.19B and a 28.4% operating margin.

The company's CEO, Christian Klein, noted, "We accelerated cloud growth across our portfolio and significantly expanded our cloud gross margins."

For the full year, SAP is maintaining its expectations. The company anticipates non-IFRS operating profit at constant currencies to be in the range of €8.65B to €8.95B.

Additionally, SAP forecasts cloud revenue at constant currencies to fall within the range of €14B to €14.2B.

Analysts at UBS said the results were “very solid.”

“We expect the shares to react well, given the continued solid performance in the cloud and improving margins despite the continued macro uncertainty,” they wrote.

For analysts at Oppenheimer, the results were “mixed.”

“In our view, management is doing a good job improving profit margins and free cash flow. We maintain our Perform rating over a lack of perceived near-term catalysts,” the analysts said in a note.

SAP rises on strong cloud segment performance
 

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