Sales in the cloud division have caused SAP SE to raise its forecasts for the third quarter in a row. Despite this, the company missed analysts’ expectations, which led to a significant decline in the value of its shares.
Shares of SAP fell by nearly seven percent in value today – the lowest level since May. Still, CEO Bill McDermott thinks it won’t be too bad; according to him, SAP will not repeat the mistakes of previous leadership. They set margins for growth and that won’t happen under McDermott. This is not our strategy; we will continue to grow and remain the number one in the cloud for decades to come.
One of SAP’s most successful products is the S/4HANA enterprise resource planning system. Soon the 10,000th customer will connect. But remarkably enough, only a fraction of the 9,500 customers out there have already completed the full implementation of the database software.
More and more customers will be using SAP services for the installation and adjustment of the S/4HANA in the near future. This has an impact on turnover and margins. Stock market analysts are particularly concerned about how sustainable growth can be. Turnover growth is nice, but not if you only have to solve problems afterwards.
Turnover this quarter
Cloud subscription sales were up 41 percent on the previous quarter. Total sales now amount to 1.3 billion euros, which has grown faster than in the previous quarter. Currently, SAP generates more revenue from its cloud offering than from software licenses.
Total sales amounted to 6.03 billion euros. That’s ten percent more than a year ago. Turnover per share was 1.14 dollars. The profit margin further increased by ten percentage points to 29.4 percent. That’s a little less than analysts had predicted. This is partly due to SAP’s efforts to switch to cloud offerings. But that won’t change the strategy according to CFO Luca Mucic.
Nevertheless, confidence is maintained; an annual turnover of 25.35 million euros – 210 million euros more than predicted earlier is forecast.This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.