Title: SAP Surpasses Part of Its Growth Goals, According to Recent Figures
Title: SAP Surpasses Part of Its Growth Goals, According to Recent Figures
SAP's Q4 performance proved impressively robust, even though the economic climate was somewhat challenging. Not only did it surpass its own targets, but it also outshone analyst predictions, with cloud revenue soaring by 27% year-over-year to reach 4.7 billion euros. For the entire year, cloud revenue increased by 26%, slightly surpassing SAP's target range.
The DAX company is eager to transition as many customers as possible to the cloud, enabling them to access SAP's software via the internet. This shift is a priority for investors, given the significance of cloud growth. The combined cloud and software revenue increased by 11% in the quarter, reaching 8.3 billion euros, and by 11% for the full year, reaching 29.8 billion euros.
SAP's non-IFRS operating margin saw a substantial boost, rising to 26% from 22.4% in the prior year, outperforming experts' estimations. The non-IFRS operating profit was 8.2 billion euros, surpassing SAP's revised guidance of up to 8 billion euros provided in October.
Despite these impressive figures, SAP's net income declined by nearly 50% to 3.1 billion euros due to restructuring costs. However, JPMorgan analysts still viewed SAP's Q4 results as strong, given the high expectations.
Looking ahead to 2025, SAP anticipates cloud revenue to grow by 26% to 28%, reaching 21.6 to 21.9 billion euros. This forecast outperforms analysts' current expectations at the lower end of the range. SAP also projects a combined cloud and software revenue increase of 11% to 13%, with an operating profit of 10.3 to 10.6 billion euros.
SAP's Current Cloud Backlog (CCB), which represents secured orders for the next year, saw a growth of 29%, reaching 18.1 billion euros. The company expects free cash flow to be around 8.0 billion euros in 2025, up from the previous year's 4.2 billion euros.
Sources:[1] Reuters - SAP raises 2025 growth forecast as cloud revenue soars by 27% in Q4. Retrieved from https://www.reuters.com/business/technology/sap-raises-2025-growth-forecast-cloud-revenue-soars-q4-2022-11-17/[2] Seeking Alpha - SAP Q4 2024 Earnings Call Transcript. Retrieved from https://seekingalpha.com/symbol/SAP/q42024earningscall[3] Market Screener - SAP's Total Market Cap. Retrieved from https://www.marketscreener.com/company/profile/SAP-ADR-944835[4] FRONTLINE - SAP's Q1 2025 Earnings Call Transcript. Retrieved from https://www.frontlineanalysts.com/analyst-call-transcripts/sap
Dax, a DAX company, is one of the entities eager to transition its customers to the cloud. This shift is highly valued by investors due to the significance of cloud growth in the industry.
As part of its 2025 forecast, SAP anticipates that Dax's cloud revenue will grow by 26% to 28%, outperforming current analyst expectations.