SAP Earnings Preview: What Are We Watching

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European software giant SAP SE (NYSE: SAP) is slated to report its third quarter results on October 21st. The first six months of the year were quite eventful for SAP, with a number of major product updates and new acquisitions. In the first half of the current year, the company reported revenues of $11.13 billion, posting moderate 5% growth on year over year basis. Driven by the strong performance of the Cloud and Software segments and substantial reductions in restructuring costs, the company was able to post a 57% increase in earnings per share to $1.30 for the first six months.

The table below shows consensus expectations for the company’s upcoming earnings.

Screen Shot 2016-10-17 at 15.07.03

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Cloud Offerings To Drive Growth

Last year, SAP released the biggest update to its ERP platform in two decades in the form of SAP S/4 HANA, the company’s answer to cloud computing rivals Oracle and Microsoft. The latest offerings by the company have been well received by customers, with the customer count reaching 3,700 by the end of the first six months of the current year. This trend is expected to have fueled growth in the results for the third quarter.

Additionally, SAP has strengthened its offerings in the Internet of Things (IoT) space through the acquisition of PLAT.ONE. [1] The acquisition starts the $2.2 billion investment in the next five years in IoT space, something the company wants to strengthen in the near future. We can expect the company to throw some light on the latest acquisition and its plans going forward in IoT space.

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Notes:
  1. PLAT.ONE Announces Acquisition by SAP, PR Newswire, September 28 2016 []