On Wednesday, DAX 40-listed software giant SAP SE (DE:SAP) announced its Q3 2023 results, with cloud revenues reflecting the sustained growth of its offerings. Despite positive figures, SAP’s share price took a 1.7% dip due to slightly lower-than-expected growth in its cloud segment. The company posted a growth of 16% in its cloud revenues, falling short of analysts’ forecast of 18%. Nevertheless, shares later rebounded in U.S. trading hours.
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The company stated that the Q3 results showcased the “strong execution and resilience of its business,” particularly the consistent growth in its cloud segment despite the prevailing tough economic conditions.
Based in Germany, SAP is the biggest software company in Europe, specializing in enterprise solutions. The company has operations in around 130 countries worldwide.
Q3 Earnings Roundup
In Q3, the company’s total revenue reached €7.7 billion, reflecting a 4% increase over the same quarter a year ago. SAP’s cloud revenue witnessed an increase of 16% (23% at constant currency) to €3.47 billion. The cloud business was mainly driven by growth in its SAP S/4HANA revenues, which increased by 67% to €914 million. The current cloud backlog for SAP grew by 19% to €12.3 billion. Specifically, the SAP S/4HANA current cloud backlog showed remarkable growth, rising by 58% to €4.20 billion.
SAP remains confident in the momentum of its cloud business. The company maintained its outlook for ongoing operations, expecting accelerated growth in both topline revenue and profits.
SAP expects the cloud revenue for 2023 to be around €14–€14.2 billion, up by more than 20% on last year’s numbers. The company expects €8.65–€8.95 billion of operating profit, which will be 8%–12% above the €7.99 billion reported in 2022.
SAP Share Price Forecast
Ahead of its earnings, HSBC analyst Antonin Baudry confirmed his Buy rating on the stock on October 16, predicting an upside of almost 20% in the share price.
According to TipRanks’ rating consensus, SAP stock has a Strong Buy rating, backed by recommendations from 15 analysts. It includes 12 Buy and three Hold ratings. The SAP share price forecast is €140.49, which implies an upside of 15.69% from the current trading levels.
