SAP Q1 Profit Down; Updates FY23 Outlook

SAP SE (SAP) reported that its first quarter profit after tax declined to 509 million euros from last year’s 632 million euros, with earnings per share decreasing to 0.41 euros from 0.63 euros in the previous year.

Profit after tax from continuing operations for the first quarter dropped to 403 million euros from 1.02 billion euros in the prior year.

On a Non-IFRS basis, earnings per basic share were 1.27 euros up from 1.00 euros last year.

IFRS operating profit decreased 45% to 803 million euros from the prior year. The decrease was mainly driven by the increase in share-based compensation which reflected the increase in share price over the first quarter as compared to last year’s decline over the same period. In addition, IFRS operating profit was impacted by restructuring expenses associated with the targeted restructuring program, as well as expenses resulting from a provision for pre-existing regulatory compliance matters.

But total revenues for the first quarter rose to 7.44 billion euros from 6.77 billion euros in the prior year.

SAP proposed a dividend of 2.05 euros per share for fiscal year 2022 representing a year-over-year increase of 5% compared to the regular dividend paid for fiscal year 2021. The dividend is subject to shareholder approval at the upcoming AGM scheduled for May 11, 2023.

SAP updated its full-year 2023 outlook to cover only continuing operations, reflecting the expected Qualtrics divestiture.

For 2023, the company now expects non-IFRS operating profit from continuing operations to be in the range of 8.6 billion euros to 8.9 billion euros up 8 percent to 11 percent at constant currencies. Previously, it expected annual adjusted operating profit of 8.8 billion euros to 9.1 billion euros, up 10 percent to 13 percent at constant currencies.

The company now projects 14.0 billion euros to 14.4 billion euros cloud revenue, up 23 percent to 26 percent at constant currencies, and 26.9 billion euros to 27.4 billion euros cloud and software revenue, up 6 percent to 8 percent at constant currencies.

Previously, the company projected 15.3 billion euros to 15.7 billion euros cloud revenue, up 22 percent to 25 percent at constant currencies, and 28.2 billion euros to 28.7 billion euros cloud and software revenue, up 6 percent to 8 percent at constant currencies.

SAP expects to update its mid-term ambition as part of its financial analyst conference at Sapphire on May 16, 2023.

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