Walldorf Despite the withdrawal from Russia and the economic uncertainty, SAP is making progress with the conversion of its business model. In the second quarter, the Dax Group increased revenues from cloud products by 34 percent to EUR 3.1 billion, an increase of 24 percent at constant currency. Sales increased by 13 percent to 7.5 billion euros. Both figures exceeded analysts’ expectations.
However, the withdrawal from Russia and Belarus places a significant burden on the software manufacturer. The operating result fell by 32 percent to EUR 637 million from the beginning of April to the end of June, mainly due to special effects from the abandonment of the business. “This quarter, we have already recorded the biggest impact of the war in Ukraine,” Chief Financial Officer Mucic said.
For the entire year, the Dax Group therefore lowered its profit forecast: the margin for the operating result is 250 million euros lower at the midpoint. In addition to the Ukraine war, Mucic led the strong growth of 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 transformation of the business model is progressing faster than expected – cloud services are the largest source of revenue for the first time in a quarter.
SAP announced another share buyback program, this time worth 500 million euros. The securities are used for share-based compensation programs. Given the weakness of the markets, it was “an opportune opportunity,” said CFO Mucic.
Shares have lost significantly since the beginning of the year
SAP is suffering from the weak development on the stock exchanges, which is hitting technology companies particularly hard. The stock has lost almost 28 percent of its value since the beginning of the year, on Thursday it went out of trading with 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 corporations in the world.
However, analysts see potential in the SAP share, especially after the significant decline in recent months. Although several financial experts have adjusted the valuation downwards in recent weeks in view of the difficult economic environment, most of them continue to recommend the Dax Group for purchase. The average price target is around 117 euros.
