SAP 2Q Operating Profit Takes Hit From Ukraine War
July 21 2022 - 1:47AM
Dow Jones News
By Mauro Orru
SAP SE on Thursday posted higher revenue for the second quarter
as its cloud business continued to grow, but the war in Ukraine
harmed operating profit, prompting the German business-software
giant to lower its forecast for the year.
Reporting on a non-IFRS basis, SAP said operating profit slipped
to 1.68 billion euros ($1.71 billion) from EUR1.92 billion, with
its operating margin down to 22.4% from 28.8%. Analysts polled by
FactSet had forecast operating profit of EUR1.74 billion.
SAP blamed lower software-licenses revenue and bad debt expenses
linked to the war in Ukraine for the decline, saying it expects a
hit of roughly EUR350 million to operating profit at constant
currencies for the year.
As a result, SAP lowered its forecast for the year and now
expects non-IFRS operating profit at constant currencies between
EUR7.6 billion and EUR7.9 billion, rather than between EUR7.8
billion and EUR8.25 billion.
Total revenue for the second quarter climbed to EUR7.52 billion
from EUR6.67 billion, with cloud revenue up to EUR3.06 billion from
EUR2.28 billion. Software-licenses revenue fell to EUR426 million
from EUR650 million.
SAP is pivoting away from software-licenses sales, once its
biggest revenue stream, to subscription-based cloud services,
banking on a more profitable and predictable model based on
recurring revenue.
Analysts polled by FactSet had forecast total revenue of EUR7.43
billion, and cloud revenue of EUR3 billion.
For the year, SAP continues to expect cloud revenue at constant
currencies between EUR11.55 billion and EUR11.85 billion.
Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94
(END) Dow Jones Newswires
July 21, 2022 01:32 ET (05:32 GMT)
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