SAP shares jump after better-than-expected quarterly results

Shares in SAP jumped 7per cent on Thursday to the top of Germany’s blue-chip index after the software maker confirmed its outlook and said its quarterly business activity recovered from the effects of a global lockdown faster than expected.

FILE PHOTO: The company logo is seen at a showroom that hosts software company SAP in Davos, Switzerland Januar 22, 2020.

FRANKFURT: Shares in SAP jumped 7per cent on Thursday to the top of Germany’s blue-chip index after the software maker confirmed its outlook and said its quarterly business activity recovered from the effects of a global lockdown faster than expected.

Total revenue in the period increased by 2per cent to 6.74 billion euros (US$7.64 billion). Software licenses, SAP’s cash-cow business, slumped 18per cent, and cloud revenues were up by the same amount.

“Software licenses revenue, while still below normal levels, recovered more than expected”, SAP said in a pre-released earnings statement, adding that the revenue showed a strong sequential improvement compared to the first quarter.

Europe’s most valuable technology company confirmed its 2020 outlook for an operating profit, adjusted for special items, in a range of 8.1 billion-8.7 billion euros, a fall of 1per cent-6per cent at constant currencies.

Analysts at Jefferies said SAP’s unchanged 2023 guidance, which used to look realistic before the pandemic, implies a very strong rebound in new cloud bookings in 2021 and 2022.

Operating profit increased by 7per cent to 1.96 billion euros as SAP slowed hiring new staff and cut costs, including by spending less on travel and staging more virtual events.

“Our quick response to the crisis on the cost side drove strong operating profit and margin expansion,” Chief Financial Officer Luka Mucic said in a statement.

SAP said it will continue to invest in innovation to emerge from the COVID-19 crisis even stronger.

SAP plans to publish full second-quarter earnings on July 27.

(US$1 = 0.8827 euros)

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