The software giant SAP is coming through the summer solidly. Above all, the cloud business is growing. However, investments in this area are eating away at the result. The final quarter should be significantly better.
Thanks to the weak euro, Europe's largest software manufacturer SAP got through the difficult third quarter better than feared. Adjusted for special effects, earnings before interest and taxes were at almost 2.1 billion euros at the previous year's level, as the DAX heavyweight announced. That was more than analysts had previously estimated on average.
Adjusted for exchange rate effects, the operating result would have fallen by eight percent. Management had previously indicated that investments in the cloud business would weigh on results. CEO Christian Klein spoke of a turning point - the fourth quarter should be significantly better.
Total sales increased by 15 percent to an unexpectedly high EUR 7.84 billion - two-thirds of the growth came from currency effects. While the software licenses were weaker than expected, SAP was able to show a 38 percent increase in sales in the declared growth area from the cloud - driven by the core software S/4 Hana.
The bottom line, however, was that SAP's profit fell by more than 60 percent to 547 million euros. A year ago, venture capital fund Sapphire Ventures, which invests primarily in startups, had seen equity results boost profits significantly.
Full-year guidance was unchanged on operating income, cloud and cloud/software revenue, but was slightly lowered on free cash flow. SAP confirmed its goal of achieving double-digit growth in operating profit in the coming year.
