SAP Q1 Profit Drops; Reaffirms 2022 Outlook

German cloud-based software company SAP SE (SAP) reported that its first quarter profit after tax dropped 41% to 632 million euros from 1.07 billion euros in the prior year.

IFRS earnings per share decreased 29% year-over-year to 0.63 euros and non-IFRS earnings per share (basic) decreased 28% to 1.00 euros, reflecting a contribution to financial income by Sapphire Ventures that was lower than over the same period last year based on current market conditions.

But quarterly IFRS operating profit increased 10% year-over-year to 1.05 billion euros, primarily driven by lower re-structuring expenses.

However, non-IFRS operating profit decreased 4% to 1.68 billion euros and decreased 7% at constant currencies. This decrease against a very strong prior year comparable was mainly driven by expenses related to the war in Ukraine, as well as accelerated investments into research & development and sales & marketing to capture current and future growth opportunities.

Current cloud backlog was up 28% to 9.73 billion euros and up 23% at constant currencies. The war in Ukraine reduced current cloud backlog growth at constant currencies by 0.8 percentage points.

Supported by double-digit growth across the solution portfolio, cloud revenue growth continued to ac-celerate for the fourth consecutive quarter and was up 31% to 2.82 billion euros, up 25% at constant currencies.

Total revenues for the first quarter were 7.08 billion euros, up from 6.35 billion euros last year.

For the full year 2022, SAP still expects 11.55 billion euros – 11.85 billion euros in cloud revenue at constant currencies, up 23% to 26% at constant currencies.

The company still projects 25.0 billion euros – 25.5 billion euros in annual cloud and software revenue at constant currencies, up 4% to 6% at constant currencies.

The company still expects 7.8 billion euros – 8.25 billion euros in annual non-IFRS operating profit at constant currencies, flat to down 5% at constant currencies.

SAP said it executes on its cloud-led strategy, which is driving accelerating cloud growth through both new business and cloud adoption by existing customers. The pace and scale of SAP’s cloud momentum places the company well on track towards its mid-term ambition.

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