The shares of SAP SE (SAP.DE), Europe's largest software company, managed to recover from losses triggered by the publication of its Q1 2023 results. The mood was supported above all by a rebound in European markets and raised earnings forecasts, which are expected to be driven by a very good upturn in the cloud sector, the most promising part of SAP's business, and the sale of the Qualtrics assets for $7.7 billion.
How does the company want to achieve this? The business optimization process is already underway, with SAP announcing job cuts and plans to refocus on the faster-growing cloud business. The company is aiming to generate an operating profit of between €8.6bn and €8.9bn in 2023, compared to previous forecasts of €8.49bn.
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Open account Try demo Download mobile app Download mobile appIn total, the company is expected to reduce its workforce by 3,000 this year. SAP is moving away from selling software licenses, which used to be its largest source of revenue, to subscription-based cloud services. In this way, the company hopes for a more profitable and predictable model based on recurring revenue.
The company's report at this point, however, comes out mixed. Cloud revenues were weak in Q1, with higher revenues largely due to one-off royalty gains. Sentiment is also weighed down by an underperforming free cash flow (FCF) result.
Detailed results reported by the company. Source: Bloomberg
SAP SE (SAP.DE) share price, D1 interval. Source: Bloomberg
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