The software company SAP is not directly dependent on the general economy. This is what the latest quarterly figures show. The view is also friendly.
Europe’s largest software manufacturer SAP earned significantly more in the third quarter despite the tense economic situation in many regions and is setting higher goals for the year as a whole. CEO Christian Klein is planning more on both sales and operating profits. With the ongoing major restructuring of its workforce, SAP is making slower progress with the planned new hires than expected. Because SAP is cutting thousands of jobs at the same time, this benefited the result. As did the comparatively lucrative software licensing business, which shrank less than expected.
In the three months of July to September, earnings before interest and taxes, adjusted for special effects, rose unexpectedly sharply year-on-year by 27 percent to 2.24 billion euros, as the DAX heavyweight announced late on Monday evening after the US stock market closed. In 2024, SAP is now aiming for a currency-adjusted increase of 20 to 23 percent in this highly regarded key figure. So far, the plan was to increase 17 to 21 percent.
The Walldorf-based company is also planning to do more when it comes to overall product sales. This should grow by 10 to 11 percent after adjusting for currency effects instead of just 8 to 10 percent. The deciding factor here is also the licensing business, which is currently proving to be more robust than expected. Klein actually focuses entirely on the cloud software, which, with ongoing subscription fees, should bring advantages in terms of customer loyalty and thus sales and profits over several years.
When it comes to the cloud software itself, the previous goals remain the same. Sales from cloud offerings increased by a quarter in the third quarter, and existing bookings for the next twelve months also continued to rise noticeably. Overall, group sales climbed by 9 percent to 8.47 billion euros, and net profit, at 1.44 billion euros, was 13 percent higher than a year earlier.
CFO Dominik Asam made it clear in a conference call that the group would like to be a little quicker in hiring new employees in the fourth quarter. The restructuring program announced at the beginning of the year and tightened again in the summer envisages that up to 10,000 existing positions in the group will be eliminated. Many employees can apply for new positions in the group, but a large number also leave the group. However, due to new hires and the recent billion-dollar acquisition of the Israeli software specialist WalkMe, the number of employees is likely to increase slightly at the end of the year.
Starting next year, SAP wants to noticeably reduce costs through the program; it is currently expected to reduce costs by around 700 million euros. SAP has already booked 2.8 billion in costs this year for, among other things, severance payments, and by the end of the year it is expected to be around 3 billion.
Source: Stern
