Cloud Segment Pushes Revenue Growth For SAP in Q1

by Trefis Team
-10.35%
Downside
135
Market
121
Trefis
SAP
SAP
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SAP (NYSE: SAP), the German software giant, announced its Q1 2019 results on April 24, 2019 followed by a conference call with analysts. The company beat consensus and reported revenue of $6.8 billion in Q1 2019, an increase of 6.5% on a year-on-year basis. The increase was mainly due to the company’s increasing reach, innovation, and high growth in the Cloud segment. The company reported earnings of $-0.11 per share in Q1 2019 as they are undergoing restructuring as announced previously.

We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven SAP’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019?  In addition, here is more Information Technology Data.

 

Key Factors That May Impact Future Performance:

Cloud Market:

  • The worldwide public cloud market is expected to continue growing at a tremendous pace and SAP is expected to continue to gain higher market share with its expanding products and consumer base. Consequently, we expect the segment to reach a revenue of $7.4 billion by the end of 2019. Further, at the end of 2018, the Cloud Backlog increased 30% and exceeded €10 Billion ($11.4 billion). In Q1 2019 the segment grew by 43.5% to record revenue of $1.76 billion (more than 25% of Total Revenue). Further, New Cloud and Software Order Entry was up 17%, indicating the continuous growth from the segment.

Innovation:

  • SAP is at the forefront of innovation in the industry. Applications like SAP S/4HANA, Human Capital Management (HCM), SAP Leonardo, SAP Cloud Platform, and SAP Data Management Solutions are some examples. The company has diversified its applications to help businesses run intelligently and improve the customer experience.

 

Trefis has an estimate of $122 for SAP’s stock. Expectations from the cloud segment, increasing reach, and continuous innovation are expected to push the stock price higher over time.

 

 

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