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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
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.
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
Having released its Q3 preliminary results two weeks ago, SAP today provided further details with its final Q3 release. The margin development was good in both cloud and software licences. The new partnership with Microsoft is good news as it will accelerate and simplify the migration to S/4HANA. SAP confirmed its 2019 outlook as well as its medium-term ambitions. SAP’s equity story, however, does not change, and therefore we stick to our Reduce recommendation.
SAP reported a mixed set of results. Revenues grew, while margins remained flat (non-IFRS) or were down (IFRS). The street is focused on Cloud and margins, which we fully understand, but what about the gap between IFRS and non-IFRS figures? Once again, share-based compensations and restructuring costs have penalised the FCF development. When will SAP think about its shareholders? Actually, we could accept this kind of fee if the Cloud had clearly taken off. But that is not the case….
SAP reported a good set of results over the first quarter. Revenues and operating profit grew under non-IFRS standards, while the latter declined in IFRS mainly due to restructuring costs (€886m) and high share-based compensation (€517m). Further details will be disclosed at the second CMD announced for 12 November, with a focus on margins and operating leverage initiatives. We confirm our positive view on the stock, though it is not yet a strong buy.
Research Tree provides access to ongoing research coverage, media content and regulatory news on SAP SE. We currently have 141 research reports from 4 professional analysts.
Weekly round-up of AIM-listed healthcare news. Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics
Companies: ANIC RUA CREO GENI HEIQ IHC IXI IUG OPTI SBTX VAL VLG
Kromek has announced that it has received an order from a US federal entity for the D3S-ID wearable nuclear radiation detector, which provides an early warning system for potential radiation threats. The order is worth $0.65m and is to be delivered in the coming months. This is the second order for the D3S-ID from this customer, following the award of a $1.6m two-year contract in September 2021, and provides further endorsement of Kromek’s capabilities within a market over which Kromek has visib
Companies: Kromek Group Plc
*A corporate client of Hybridan LLP Dish of the day Joiners: EnSilica (ENSI.L), has join AIM. EnSilica provides an end-to-end service for the design and supply of mixed signal ASICs, outsourcing certain elements such as the wafer fabrication of the manufacturing and packaging to third parties - otherwise known as a Fabless Semiconductor Model. ASICs are Integrated Circuits or semiconductor chips developed for a particular use or product rather than for general purpose usage. ASICs help
Companies: YGEN AFRN ALBA ART BLV CCS EPWN FIPP NWT KETL
Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Psych Capital PLC, intends to list on the AQSE Growth Market. Psych operates the Psych Platform (a business-to-business networking platform), that is developing the Blossom Database pursuant to a third party licensing arrangement. The Company also has an investment of 426,000 common shares in Awakn, a Canadian NEO Exchange listed psychedelics research and clinical group, with operations in th
Companies: YCA 7DIG BOOM DMTR EYE KIBO NFC RST SPSY
Companies: ARB D4T4 ORPH SPE
Companies: Cerillion Plc
Joiners: No Joiners Today. Leavers: Clipper Logistics has left the Main Market following a Cash takeover. What’s cooking in the IPO kitchen? According to news reports, The Very Group, is looking to float after calling off their plan for a £4bn IPO last year due to a volatile market. The ecommerce group is owned by the Barclays family. According to the Sunday Times, the retailer has offered incentives to senior leaders at the firm for pulling off a flotation, which the Barclays family now hope to
Companies: AXS AMS EVG FRAN KMK MRL SDX TEK TGP
National World has released a very robust AGM update and we maintain our FY22 estimates.
Companies: National World PLC
Having updated in April that FY22 revenues and operating profits were expected to be in line with consensus, Eckoh today updates that operating profits grew strongly in the period and will now be ahead of consensus. Revenues are expected to be in line. We suspect this means operating profits will be slightly above £5.0m compared to our forecasts of £4.9m. This de-risks our FY23 forecasts, where we are looking for AOP of £7.7m. We are forecasting FY23 AOP of £5.9m from the existing business, up f
Companies: Eckoh plc
Dish of the day Joiners: Lekoil, the oil and gas exploration and production Company with a focus on Nigeria and West Africa has joined the Access Segment of the AQSE Growth Market. The Company was previously listed on AIM (LEK.L), however, Ordinary Shares have been suspended from trading on AIM since October 2021. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Psych Capital PLC, intends to list on the AQSE Growth Market. Psych operates the Psych Platform (a business-to-business ne
Companies: CZA AXL AEE CORA D4T4 EKF ORPH PWM PPH SYM
TPXimpact has announced that it has spun out OpenDialog alongside a £4m raise by Dowgate Capital; TPXimpact will retain a 17% holding in OpenDialog at a post-new money valuation of £12.7m.
Companies: TPXimpact Holdings PLC
1Spatial continues its US expansion with the announcement of a contract win to support replacing the Transportation System Network (TSN) for the California Department of Transportation (Caltrans). The contract is worth c $1.4m over four years, including US$0.7m in software licence revenue, and was won in partnership with Rizing, a global SAP partner. The US market is a key growth engine for 1Spatial and the Caltrans win shows its strategic plan continues to bear fruit. This contract follows othe
Companies: 1Spatial Plc
Companies: FDM Group (Holdings) plc
Companies: Audioboom Group PLC (BOOM:LON)Eleco Plc (ELCO:LON)
Companies: GetBusy Plc
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