SAP results driven by cloud business and venture capital firm
- The company raised its outlook for the year last week
- Cloud revenue for the fiscal year increased 16-19%
- Sapphire Ventures fund accounts for a quarter of third quarter earnings
- Equities down 3.4% as 2022 profit remains flat or down
BERLIN, Oct.21 (Reuters) – SAP (SAPG.DE) said on Thursday that demand for its cloud-based enterprise database was increasing as the German enterprise software group confirmed its preliminary third quarter results and his forecast for the entire year, boosted by the big returns from his bonds. to a venture capital firm.
Last week, the company forecasted 16-19% growth in cloud revenue for the full year, helping its overall cloud and software revenue to grow 2-4%. Read more
Cloud backlog for the flagship S / 4HANA database grew 58% at constant currencies and the current cloud backlog – a measure of inbound business – grew 22% in the third quarter.
“Our cloud revenues now represent 35% of our total revenues and this increases our share of more predictable revenues, which increased by 3 percentage points year on year to reach 77%,” said CFO Luka Mucic on a call with reporters.
Shares of the software maker, however, fell 3.4% to the bottom of the Frankfurt blue chip index after traders said Mucic confirmed the group’s forecast for stable or slightly lower profits in 2022. during a separate call with analysts.
“If the market thought this would be the EU’s tech game for 2022, now they might have other ideas,” said one trader.
SAP still raised its forecast for cloud and software revenue for the full year from € 200 million ($ 232 million) to € 23.8 billion to € 24.2 billion.
Adjusted revenue increased 5% to 6.68 billion euros ($ 7.70 billion) for the third quarter ended September 30, and adjusted earnings per share increased 2% to 1, 74 euro.
Quarterly results were also improved by the company’s venture capital arm, Sapphire Ventures, which accounted for a quarter of SAP’s more than € 2 billion profit in the third quarter, highlighting the fund’s recent success in the support for small tech startups.
The venture capital firm, which emerged from SAP in 2011, has supported top startups such as Square (SQ.N), Box (BOX.N), Fitbit and Wise (WISEa.L).
Some analysts say they do not take the fund’s performance into account in their forecasts, preferring to focus on the more predictable results of its cloud offering.
But since the start of the year, the company has contributed about $ 1.8 billion to profits, up $ 1 billion year-over-year, Mucic said on the call with journalists.
“Our typical check size is $ 10 million to $ 60 million, but we can go up to $ 100 million,” Andreas Weiskam, co-founder and partner of Sapphire Ventures, said in an interview with Reuters.
Weiskam said the fund’s assets under management currently stand at more than $ 6.8 billion. SAP had committed $ 1.75 billion in the last quarter.
“Sapphire Ventures gives SAP the tailwind. But it also means volatility – depending on the capital markets,” said Knut Woller of brokerage firm Baader Helvea.
($ 1 = 0.8581 euro)
Reporting by Nadine Schimroszik and Riham Alkousaa in Berlin and Supantha Mukherjee in Stockholm Additional reporting by Danilo Masoni in London and Christoph Steitz in Frankfurt; Editing by Joséphine Mason, David Evans and Matthew Lewis
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