SAP has disappointed markets following a readjustment of cloud revenue forecasts despite robust sales in its calendar Q2 profit and loss accounts.
Revenue for the quarter reached €7.55 billion, up 5 percent on the same period last year. Cloud revenue totalled €3.3 billion, up 19 percent, while software license revenue fell 26 percent to €316 million. Operating profit was up 28 percent to €1.36 billion.
Despite the upbeat results, SAP shares dipped owing to the company missing financial estimates on cloud sales, which averaged €3.41 billion, according to a Bloomberg survey. SAP also downgraded estimates for cloud revenue for 2023.
Speaking to analysts on a conference call, CFO Dominik Asam, said: “The transactional volume [there] was a little bit of a headwind… the growth in that business has not been as frothy as overall.”
On the same call, CEO Christian Klein said the company had signed customers up to its on-prem-to-cloud upgrade deal RISE with SAP. This quarter those included Bayer AG and Bacardi-Martini. Elsewhere, more than 20,000 customers have gone live on its Business Technology Platform.
SSD missing from SAP datacenter turns up on eBay, sparking security investigation
SAP admits HANA Cloud makes for multicurrency messes
SAP’s cloud drive hits speed bumps with American users
SAP gets cloudy with a chance of AI in bid to woo on-prem brigade
“This has been a good Q2,” he told analysts. “At the halfway point of 2023 SAP continues to perform well despite a macroeconomic environment that remains uncertain. After reaching the turning point in our transformation, our sharpened focus has yielded real momentum, and we are seeing strong demand across our portfolio.”
However, the CEO later told reporters on the call that forecasts for cloud revenue were cut because of “some economic pressure,” and customers were pushing back deals into the second half of the year. Meanwhile, a group of public sector customers insists on retaining on-premises systems owing to geopolitical risk, according to Bloomberg.
Otherwise, the company seems to be hitting its medium-term targets. In January 2022 then-CFO Luka Mucic said that during 2025, SAP would hit €22 billion in cloud revenue.
Based on estimates for this year, if SAP continues with a 19 percent growth rate, it is on track to meet the strategy it introduced in late 2020, when it adjusted short-term revenue expectations for long-term cloud gain, prompting a 25 percent crash in the valuation. ®
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : The Register – https://go.theregister.com/feed/www.theregister.com/2023/07/21/sap_q2_2023/
