SAP reported third-quarter earnings and revenue that slightly beat estimates. The company’s profit was flat at $1.32 per share on an adjusted basis, with revenue up 9% to $9.21 billion. Analysts had estimated adjusted earnings per share of $1.31 on revenue of $9.17 billion.
SAP’s cloud computing revenue increased by 25% to $4.7 billion, compared to estimates of $4.72 billion. The company expects cloud and software revenue growth in the range of 10% to 11% for 2024. SAP also reports a financial metric called Current Cloud Backlog, which refers to the revenue expected from contracts with customers in the future.
In Q3, this metric rose 29% to $16.63 billion, surpassing analysts’ expectations of 28% growth. NYSE-listed SAP stock rose 4.8% to 240.49 and is up 51% so far this year. The company recently acquired WalkMe, a digital adoption platform, as part of its shift from software-license sales to subscription-based cloud services.
SAP’s stock holds a Relative Strength Rating of 89 out of a best-possible 99, indicating strong performance relative to other stocks. The stock is extended from an entry point of 196.99.
Sap’s cloud revenue growth
Key highlights from SAP’s Q3 2024 results include:
– Current cloud backlog: €15.4 billion, up 25% year-over-year and up 29% at constant currencies. – Cloud revenue: Increased by 25% year-over-year and up 27% at constant currencies. – Cloud ERP Suite revenue: Grew by 34% year-over-year and up 36% at constant currencies.
– Total revenue: Increased by 9% year-over-year and up 10% at constant currencies. SAP has raised its 2024 outlook for cloud and software revenue, operating profit, and free cash flow. CEO Christian Klein commented, “Q3 was another strong quarter for SAP, and we are confidently raising our 2024 financial outlook.
Cloud revenue growth developed remarkably well in the quarter, especially for our Cloud ERP Suite.”
CFO Dominik Asam said, “We are very pleased with our third-quarter performance. The 2024 transformation program has already started to yield efficiency improvements. This allowed us to deliver a strong operating profit and free cash flow, while retaining our topline momentum.”
SAP’s cloud revenue growth is being driven by the sales of its Cloud ERP Suite.
Notably, 30% of Q3 cloud contracts included AI use scenarios, according to SAP’s CEO. The company’s operating profit has further benefited from cost-cutting measures and fewer hires.
