SAP Announces Quarterly Revenue Increase - Stock Price Decreases
SAP's Q4 Results: A Mixed Bag Amid Un certainty
SAP, post-Linde, dominates the DAX, making it essential to scrutinize its quarterly reports, including the recent Q4 2022 figures.
A Mixed Q4Kicking off the new year, SAP announced its Q4 2022 earnings at 7 a.m. CET. The company reported a revenue of €8.44 billion, marking a modest 1% increase. Cloud growth soared by 22%, while operating profit edged up 2% to €2.581 billion year-end. However, the operating revenue dropped 7% year-over-year to €8.03 billion, and net profit tumbled 39% to €4.08 per share.
Furthermore, the outlook remained circumspect due to the prevailing macroeconomic turbulence.
Cost-Cutting Measures and Job CutsApproximately 3,000 employees are set to lose their jobs, along with SAP's cost-cutting program. CEO Christian Klein believes this move will boost SAP's profitability significantly. This initiative positions SAP alongside several tech companies executive layoffs, primarily due to hiring surges during the pandemic[1].
Subsidiary Sale and Forward ThinkingSAP has put its online market research subsidiary Quatrics up for sale, aiming to streamline its portfolio. Morgan Stanley has been roped in as advisor for the process. However, the company reserves the right to retract the sale based on the current market situation[2].
Investors should keep an eye on SAP, given the positive developments, but also mindful of its stiff competition from US-based tech giants.
(With relevant insights from Reuters)
[1] Essig, Max(2023, February 7). SAP Wants to Cut Costs and Headcount, and Buy Back Shares. Bloomberg. https://www.bloomberg.com/news/articles/2023-02-07/sap-wants-to-cut-costs-headcount-buy-back-shares
[2] Kreisky, Christian(2023, February 7). German software giant SAP to lay off employees as part of new strategy. Reuters. https://www.reuters.com/business/sap-lay-off-thousands-workers-following-co-ceo-exit-report-2023-02-07/
- The mixed Q4 results for SAP, despite a 22% surge in cloud growth and a 2% increase in operating profit, were overshadowed by a 7% decline in operating revenue and a 39% drop in net profit.
- In an attempt to boost profitability, SAP announced cost-cutting measures, including the elimination of around 3,000 jobs, mirroring similar actions taken by several technology companies.
