Kinzey Capital Management Sees SAP Cloud at Top of Range
Key takeaways
- SAP’s cloud business is growing faster than expected, pushing full‑year to the top of its range and reinforcing the shift to subscription revenue.
guidance
What a company says it expects for future sales or profits — a forecast from the company, not a guarantee.
- Total revenue $11.5 billion (+13% )
YoY
Year over year — compared with the same period last year.
- Cloud revenue $7.5 billion (+26% )
YoY
Year over year — compared with the same period last year.
- Cloud backlog $27 billion (+28% )
YoY
Year over year — compared with the same period last year.
What happened
SAP reported record third‑quarter revenue of $11.5 billion, up 13% year‑on‑year, and cloud revenue of $7.5 billion, a 26% increase. The company’s cloud backlog rose 28% to $27 billion and it now expects full‑year cloud revenue toward the top of its $28.9‑$29.3 billion range. Non‑IFRS operating profit climbed 18% to $3.4 billion and earnings per share were $2.1 versus a $2 estimate.
Why it matters
The jump in cloud revenue and backlog signals strong subscription demand, suggesting that SAP’s shift from licenses to recurring revenue is gaining traction. The upward adjustment of the full‑year cloud What a company says it expects for future sales or profits — a forecast from the company, not a guarantee.guidance
Short-term and longer-term
Short-term. Over the next few days, watch for the market’s reaction to the What a company says it expects for future sales or profits — a forecast from the company, not a guarantee.guidance
Longer-term. For investors looking ahead, the upward What a company says it expects for future sales or profits — a forecast from the company, not a guarantee.guidance
Words on this card
- Non‑IFRS operating profit
- Profit excluding items that are not part of the company’s regular operations, such as restructuring costs or asset write‑downs.
- Cloud backlog
- The value of subscription contracts that have been signed but not yet recognized as revenue.
- SaaS
- Software as a Service, a subscription model where customers use software hosted in the cloud.
- PaaS
- Platform as a Service, a cloud service that provides a platform allowing customers to develop, run, and manage applications.
- Constant currencies
- A measure that removes the effect of exchange rate changes to compare performance across periods.
- EPS Learn
- Earnings per share — profit for one share of the company, in dollars.