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SAP delivered a highly disappointing set of results failing to meet the revenue expectations as well as the earnings expectations of Wall Street. The backlog in the cloud increased by 25% in the quarter which was a good sign. Also, revenue from the cloud increased by 22% from the previous quarter. The current cloud backlog and cloud revenue for S/4HANA increased by 79% which is why Q1 revenue increased by 9% overall. Furthermore, the company produced double-digit operating profit growth in Q1, u
Companies: SAP SE Sponsored ADR
Baptista Research
SAP delivered a mixed set of results in the final quarter of 2022 as it surpassed the revenue expectations of Wall Street but missed out on earnings. Despite the macroeconomic situation, 2022 was a decent year for SAP, highlighted by its cloud performance across all geographies. The company went ahead in increasing cloud revenue by 24%. Its cloud transformation is in full swing, with recurring revenue up to 79% in 2022. This year, cloud revenue also surpassed support revenue to become SAP's sing
This is our first report on SAP, the global ERP, market leader. The company delivered a mixed quarterly result as it managed to surpass Wall Street expectations on the revenue front with a strong double-digit cloud order entry growth but missed out on meeting earnings expectations. SAP’s performance in the North American and Latin American markets is particularly robust. Larger cloud transactions are becoming more common. The company’s cloud revenue has gradually become its largest revenue stre
SAP’s Q1 results were a mixed bag. While revenues were above consensus, profitability came in lower due to the impact of the Russia-Ukraine war. Nevertheless, the group reported better-than-expected momentum for its Cloud business. This was visible in the marked growth across all regions. The growth in S/4 HANA was also solid. Backed by these positives, the group is confident of making up for the negative impact from the war and confirmed its outlook.
Companies: SAP SE
AlphaValue
Throughout 2021, SAP continued to see an increasing shift towards cloud transition. The group’s ‘RISE with SAP’ programme continued to attract customers and S/4HANA showcased robust growth. These trends are expected to persist in 2022. Licensing revenues declined with a similar trend expected going forward. Operating profitability was lower than expected but the bottom line benefited from a strong contribution by Sapphire Ventures. The profitability target for 2022 is lower than expectations but
SAP, in Q3, built up on the traction seen in cloud transition in the previous quarter. SAP posted encouraging numbers as ‘Rise with SAP’ gathered further momentum and attracted new customers as well. S/4HANA also continued to attract customers as demand remained solid. Consequently, licence revenues declined. Similar to the previous quarter, the group once again raised its outlook up a notch. However, we see no monumental change to our estimates.
In Q2, SAP built on the good traction seen in its cloud transition through its Rise with SAP programme. This was visible in its current cloud backlog growth and cloud revenues. Licence revenues declined as expected. Good momentum was also seen in S/4 HANA and the group saw a general improvement in demand as reopening took place. After this release, the group raised its outlook albeit marginally. We will keep our recommendation unchanged.
SAP’s Q1 numbers were very similar to Q1 FY20’s in terms of revenues but lower in terms of operating profits. A clear positive, though, was the good traction in the group’s cloud business which was evident from the group’s current cloud backlog and cloud revenues. While it is still too early to call on 2025 plan, these developments are a good omen that SAP will be able to handle the transition well and deliver on its medium-term targets.
SAP’s Q4 figures showed a sequential improvement. They also helped it to surpass its revised FY20 guidance for revenue and achieve the high-end of the range in operating margins. FCF generation in particular was a positive and some ways ahead of the guidance. The group also put forward its FY21 outlook and reiterated its FY25 ambitions. The transformation will take time.
SAP’s Q3 results were average at best and missed our expectations. Consequently, the group not only lowered its FY20 guidance but also pushed its mid-term target out by two years from FY23 to FY25. These developments come as a result of two crucial mistakes: 1/being late to drive the push from licenses to cloud and 2/under-estimating how fast the transformation would occur, mostly aided by COVID. The result, a long road ahead to growth.
Companies: SAP SAP SAP SAP SAP 1SAP SAPGF
SAP today posted its final Q2 figures, confirming the preliminary results reported last week. The company raised its operating cash flow and FCF expectations for the year. It also announced the listing of Qualtrics, which it acquired in November 2018, while keeping a majority stake in the company, which looks logical given the synergies between both. All in all, this is positive news.
There were no major surprises in the figures compared to the pre-release in early April. The main surprise was the announcement regarding the departure of Jennifer Morgan, the co-CEO with Christian Klein, with the latter now taking over as sole CEO.
SAP’s 19Q4 results were mixed, though globally in line with consensus, with sales up +8% and a margin contraction of 590bp on an IFRS basis, while it expanded by 110bp on non-IFRS. It is always strange to observe such a difference trough in accounting methods. The cloud development quarter over quarter was also disappointing with a clear deceleration in new cloud bookings in relative terms. We remain unconvinced by SAP’s current equity story based on shifting from licences to cloud revenues.
As part of its Capital Markets Day, the SAP’s new team confirmed the mid-term targets (growth and margins) set earlier by the former CEO. While revenues of above €35bn and operating profit of c.€11.9bn by 2023 were both already known, the new target was on FCF, which is expected to grow by 15-25% per year and reach c.€8bn by 2023. The ambitions are there, but the execution will be more complicated in our view. We stick to our Reduce recommendation.
Europe clearly admits the domination of the cloud by the American majors. Independence is becoming increasingly urgent, especially since the Trump administration signed the Cloud Act in 2018, allowing it to ask American companies to deliver their customers’ data, including those stored outside the US. The German project, called Gaia-X, aims to create a European legal framework necessary for the development of a European cloud. Although the European Commission supports the initiative, it remains
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Journeo has confirmed record results for FY23A, in-line with recent upgraded expectations across the board. FY23A revenue increased significantly by 118% to £46.1m (including 20% organic growth) and Adj PBT increased 270% to £4m, representing a near doubling of the Adj PBT margin. Journeo has positioned itself for a period of sustained growth following the transformational Infotec acquisition, the bolt-on MultiQ acquisition and ongoing R&D in the existing business. Journeo looks compelling on an
Companies: Journeo plc
Cavendish
Craneware is the market leader in value cycle SaaS provision in the US with a 40% market penetration and the ambition to become ubiquitous in US hospitals. The shackles of Covid disruption, digestion of the Sentry acquisition, and the transitioning of its customers to the fully cloud based Trisus platform, have fallen away and opened up new sales opportunities for the group. While the shares have out-performed strongly, multiples look reasonable compared with peers. We calculate a DCF based fair
Companies: Craneware plc
Capital Access Group
In 2023, the company delivered strong 13% organic constant currency revenue growth and Adjusted EBITDA in line with expectations, even after including one-off inventory provisions.
Companies: Big Technologies PLC
Zeus Capital
Companies: CML Microsystems Plc
Shore Capital
Companies: FOG PEB KBT EMR TIME GETB JNEO
The trading update confirms revenues in line with our expectations. Excess inventory flow through and market softness in China have impacted CML’s core business, but Microwave Technologies Inc (MwT) is performing ahead of expectations. The net effect, along with MwT acquisition related costs, is that Reported PBT and EBITDA are to be lower than expectations, but not substantially so. The long-term investment case is founded upon the opportunity in next-generation wireless and, with £18m cash and
Progressive Equity Research
Companies: Nanoco Group PLC
Turner Pope Investments
Nanoco, the world-leading provider of cadmium-free Quantum Dot technology, has reported positive 1H24 results, and stated that FY24 performance is expected to be in-line with market expectations. We reiterate our FY24E forecasts. Operationally, the company has achieved strong progress over the past six months, and the interims statement includes further progress on the company’s next-generation revenue programmes being implemented post period end. We maintain our 60.2p price target.
GetBusy’s FY23 results show organic revenue growth of +10% to £21.1m, FY23 adjusted EBITDA +£0.1m ahead of our +£0.3m upgrade at the January trading update, and a promising outlook that leads us to reiterate our FY24E forecasts. At constant currency, ARR grew +10% yoy to £20.5m, recurring revenue grew +12% to £20.3m, and net revenue retention of 100.0% per month reflects upselling and price increases, with gross monthly churn of 0.8% per month vs 0.9% in FY22. Within SmartVault, the July 2023 la
Companies: GetBusy Plc
Companies: PMG DUKE CMCL BOOM
Companies: FOG TND BVXP ACC HDD
Broadcast playout automation solutions provider Pebble Beach has reported confident FY23 results to Dec 2023 in line with updated January trading update expectations, and has announced the much-anticipated Project Oceans will launch as PRIMA (Platform for Real-time Integrated Media Applications) in April 2024. This underpins a mid-term 80% recurring revenue ambition and expansion in addressable market. FY23 delivered +11% revenue growth to £12.4m, which benefitted from the unwind of defensive in
Companies: Pebble Beach Systems Group PLC
Companies: LPA SOLI NANO QTX
Companies: Windward Ltd.
Canaccord Genuity
Companies: BILN IGP RBN SBTX
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