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SAP Reports Upbeat Preliminary Q4 Results Driven by Cloud

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SAP SE SAP recently reported upbeat preliminary results for the fourth quarter of 2021 and full-year 2021. SAP’s performance benefited from strength in its cloud business, especially the strong adoption of the company’s “Rise with SAP” solution across customers of varying sizes.

The company is confident that strength in its cloud business and solid uptake of the SAP S/4HANA cloud will drive the momentum throughout 2022. The company is scheduled to announce fourth-quarter 2021 results on Jan 27, 2022.

SAP also announced a new up to €1-billion share buyback authorization that will be executed between Feb 1, 2022 and Dec 31, 2022. SAP noted that the repurchased shares will be utilized to service the future awards granted under the “Move SAP” share-based compensation scheme.

SAP SE Price and Consensus

SAP SE Price and Consensus
SAP SE Price and Consensus

SAP SE price-consensus-chart | SAP SE Quote

A Look at Q4 Preliminary Results

For the fourth quarter of 2021, on a non-IFRS basis, cloud revenues jumped 28% (up 24% at constant currency or cc) to €2.61 billion. The current cloud backlog increased 32% (up 26% at cc) to €9.45 billion. The SAP S/4HANA current cloud backlog increased 84% (up 76% at cc) to €1.71 billion.

However, the company noted that non-IFRS software licenses and support revenues of €4.38 billion declined 4% (down 6% at cc) year over year. Software license revenues were down 14% (down 17% at cc) to €1.46 billion.

On a non-IFRS basis, the cloud and software business reported revenues of €6.99 billion, up 6% year over year (up 3% at cc). Service revenues were up 3% year over year (unchanged at cc) to €0.99 billion.

SAP reported total revenues, on a non-IFRS basis, of €7.98 billion, up 6% year over year (up 3% at cc).

SAP’s non-IFRS operating profit came in at €2.47 billion, declining 11% (down 12% at cc) year over year. The company’s non-IFRS earnings per share (EPS) came in at €1.86, up 10% from the prior-year quarter.

A Look at 2021 Results

For 2021, SAP’s non-IFRS cloud revenues were up 16% (up 19% at cc) to €9.42 billion.

However, the company noted that non-IFRS software licenses and support revenues of €14.66 billion declined 3% (down 2% at cc) year over year. Software license revenues were down 11% (down 11% at cc) to €3.25 billion.

On a non-IFRS basis, cloud and software business reported revenues of €24.08 billion, up 4% year over year (up 5% at cc), exceeding the high end of the company’s revised 2021 outlook.

SAP reported total revenues, on a non-IFRS basis, of €27.84 billion, up 2% year over year (up 3% at cc).

SAP’s non-IFRS operating profit came in at €8.23 billion, declining 1% (up 1% at cc) year over year. The company’s non-IFRS EPS came in at €6.74, up 25% from the prior-year quarter.

2022 Guidance

For 2022, SAP anticipates non-IFRS cloud revenues in the range of €11.55-€11.85 billion, which suggests an increase of 23-26% at cc.

Non-IFRS cloud and software revenues are expected between €25 billion and €25.5 billion, implying a 4-6% rise at cc.

SAP projects non-IFRS operating profit at cc in the range of €7.8-€8.25 billion, flat to down 5% at cc.

Zacks Rank & Stocks to Consider

At present, SAP carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the broader technology sector include Salesforce CRM, Hewlett Packard HPE and Microsoft MSFT. While Salesforce and Hewlett Packard sport a Zacks Rank #1 (Strong Buy), Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share, up 6.4% in the past 60 days. The long-term earnings growth rate is pegged at 16.8%.

Salesforce’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 44.2%. Shares of CRM have increased 7.2% in the past year.

The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate is pegged at 5.8%.

Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of HPE have rallied 39.4% in the past year.

The Zacks Consensus Estimate for Microsoft’s fiscal 2022 earnings is pegged at $9.13 per share. The long-term earnings growth rate is pegged at 12%.

Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.8%. Shares of MSFT have surged 43.3% in the past year.


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