Quarterly growth reported by SAP, but shares experience a decline
Busting the Tide: Can SAP's Recent Performance Propel a Stock Surge in 2023?
After the exodus of Linde, SAP has reigned supreme in the DAX. As the heavyweight, it's time to scrutinize the software titan and its latest financials, fresh from the press.
A Mixed Bag of Quarterly Results
At the crack of dawn German time, SAP unveiled its earnings for Q4 2022. The company registered a revenue of 8.44 billion euros, inching up a tad more than one percent. Cloud revenue surged by a whopping 22 percent. Operating profit climbed two percent to 2.581 billion euros year-end, a noteworthy rebound after falling eight percent in the previous quarter.
The outlook also remained within expectations, with SAP cautioning investors about the tense macroeconomic climate. For the full year, the operating result dipped seven percent to 8.03 billion euros, while net profit plummeted 39 percent to 4.08 euros per share. The slump in Sapphire Ventures' financial results contributed to this underwhelming outcome.
Before the market open, the SAP stock showed a sluggish response.
Layoffs and Cost-Cutting Crusade
What could impress the market even more is SAP's announcement of laying off 3,000 employees and instituting a cost-cutting program. CEO Christian Klein asserted that these measures would boost the profitability of the DAX giant.
SAP isn't the sole technology company trimming its workforce in response to the surge in staffing during the pandemic. The firm currently employs around 20 percent more personnel as compared to pre-pandemic levels.
Sale of SAP Subsidiary in the Works
Additionally, SAP put the sale of its online market research subsidiary Quatrics on the auction block to refine its portfolio further. Morgan Stanley has been enlisted as a consultant for this endeavor.
However, the company reserves the right to withdraw the sale offer depending on the current market situation.
Is it Time to Buy SAP?
The company has some promising news worth considering, as it closed yesterday hovering around the 106-euro mark. The robust cloud growth was a crucial factor, while the sale of Quatrics and layoffs instill a sense of foresight.
Investors should certainly delve deeper into SAP, but let's not forget the formidable US competition nipping at its heels.
For your info, here's a recap of Tesla's quarterly performance from yesterday.
(With insights from Reuters)
- SAP's recent financial performance shows a slight revenue increase, with cloud revenue surging by 22%, but net profit plummeted 39% due to factors like the slump in Sapphire Ventures' financial results.
- Amidst these quarterly results, SAP announced plans for a cost-cutting program, including layoffs of 3,000 employees, in an attempt to boost profitability.
- The sale of SAP's online market research subsidiary Quatrics is also being considered to refine the company's portfolio further.
- In the technology sector, SAP isn't alone in resizing its workforce in response to the pandemic, as it currently employs around 20% more personnel than pre-pandemic levels.
- Despite these measures and the promising cloud growth, it's important for investors to consider the formidable US competition that continues to pressure SAP's stock.
