SAP misses third-quarter revenue estimates, US-listed shares fall 3%
FILE PHOTO: Figurines with computers and smartphones are seen in front of SAP logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
German software maker SAP on Wednesday reported third-quarter revenue below analysts' estimates and forecast full-year cloud revenue at the lower end of its outlook range, sending its U.S.-listed shares down 3 per cent in extended trading.
Walldorf, Germany-based SAP said revenue for the third quarter ended Sept. 30 rose 7 per cent to 9.08 billion euros ($10.59 billion), missing analysts' expectations of 9.17 billion euros, according to LSEG IBES data.
Revenue from SAP's lucrative cloud business rose 22 per cent, its slowest pace of growth since the fourth quarter of 2023.
"We've maintained forward momentum despite an uncertain macroeconomic backdrop," CFO Dominik Asam said.
The company has focused on cloud operations for the last few years, adopting a subscription-based service model that generates predictable revenue over time rather than the lumpy up-front cash flows from software licences.
Operating profit, on a non-IFRS basis, rose 14 per cent to 2.57 billion euros, slightly above estimates of 2.55 billion euros, while free cash flow, used to determine dividends to investors, grew 5 per cent to 1.27 billion euros.
The company also said it was expecting cloud revenue for 2025 to be at the lower end of its forecast of 21.6 billion to 21.9 billion euros.
However, operating profit was seen at the upper end of the its outlook range of 10.3 billion to 10.6 billion euros and free cash flow is expected at 8 billion to 8.2 billion euros, compared wth 8 billion euros earlier.
($1 = 0.8575 euros)
