- Stock expected to chalk-up new record close
- Cloud and AI demand have been surging
- Analysts flag robust read-across for enterprise software segment
German enterprise software giant SAP (SAP:ETR), and now Europe’s largest company since ASML’s (ASML:AMS) recent falls, is on track to close at an all-time high after posting robust quarterly results and upping 2024 guidance thanks to rampant cloud computing demand.
The shares, up nearly 5% at one stage (22 Oct), are changing hands at close on €219, above their previous record close of $212.85 which would value the firm at €278 billion and change.
SAP announced earnings per share of €1.23 on revenue of €8.47 billion for the three months to 30 September 2024, beating the Investing.com consensus of €1.21 and €8.45 billion.
In terms of forward guidance, SAP said that it expects to generate between €29.5 billion and €29.8 billion in cloud and software revenue for the full year, raising the midpoint by €400 million.
CLOUD CRUSHING IT
Cloud revenue grew 27%, adjusted for currency effects, to €4.35 billion in the third quarter, boosted by a 36% rise in sales of Cloud ERP Suite resource planning software. Customers hungry for AI (artificial intelligence) tools was a key growth driver, according to CEO Christian Klein.
‘Around 30% of our cloud contracts in the third quarter included AI use scenarios’, he said in a statement. With its guidance for 2025 unchanged, Barclays analysts wrote in a note that even the new guide looks conservative, adding that management ‘encouragingly spoke on this conservatism’.
JPM analysts see SAP’s performance as ‘a read-across to the health of enterprise IT spending and specifically software within that’, pointing to rivals Oracle (ORCL:NYSE), Workday (WDAY:NASDAQ) and Microsoft (MSFT:NASDAQ).
