SAP Pre-Announces Strong Sales and Profits. The Cloud Transition Continues.

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German software giant SAP revealed strong fourth-quarter financial results, indicating it is making great progress in moving business to the cloud.

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Alex Cross / Businesshala

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SAP late night pre-announced Better-than-expected fourth quarter financial results, along with strong initial guidance for 2022. The German enterprise-application-software giant is moving its business to the cloud, and the latest results show the company is making great strides.

For the quarter, SAP (ticker: SAP) reported revenue of 7.98 billion euros, up 6% from a year ago, or 3% when adjusted for currency rates, ahead of the Street consensus forecast for 7.71 billion euros. Cloud revenue was 2.61 billion euros, up 28%, or 24% at constant currency. Software-licensed revenue was 1.46 billion euros, down 14%, or 17% at constant currency, as the company continues to move customers to cloud-based versions of its software. Earnings were up 1.86 euros per share on an adjusted basis, well ahead of the Street consensus at 1.63 euros.

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The company hit the high end of its previous guidance for the full year on most measures. On an adjusted basis, cloud revenue in constant currency was 9.59 billion euros for the year, at the top end of the company’s forecast. Overall revenue was €27.84 billion, up 2% or 3% in constant currency.

SAP said its current cloud backlog grew faster than expected in the quarter, increasing 32% to 9.45 billion euros. For S/4 HANA, the cloud version of the company’s flagship enterprise-resource-planning software, backlog was up 84% to 1.71 billion euros.

“The magnitude of our cloud strength is clear,” SAP CEO Christian Klein said in a statement. “More and more companies are choosing SAP to help them transform their businesses, build resilient supply chains and become sustainable enterprises as they move to the cloud…. Our growth acceleration points to even greater potential ahead. We do.”

For 2022, the company is forecasting cloud revenue of 11.55 billion to 11.85 billion euros, up between 23% and 26% in constant currency, with cloud and software revenues from 25 billion to 25.5 billion euros, up 4% to 6% till combined. The company sees adjusted operating profit of 7.8 billion to 8.25 billion euros, down 5%.

SAP also announced a new 1 billion euro stock-repurchase program, in which the stock will be used for the company’s share-based compensation plan.

As of late in trading, SAP’s US-listed US depository receipts are up 2% to $138.50.

Eric J. Write Savitz to [email protected]

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