SAP SE $SAP Stock Up 4% In After-hours On Record Cloud Performance

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SAP stock rose nearly 4% in after-hours trading on January 13, 2022, after the company reported preliminary financial data.

SAP Announces Outstanding Fourth Quarter and Full-Year 2021 With Record Cloud Performance; Exceeds High End of Outlook for Cloud & Software Revenue and Operating Profit

On January 13, 2022, after an initial review of its fourth-quarter 2021 performance, SAP (NYSE: SAP) announced its preliminary financial results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter

Rapid expansion of current cloud backlog to €9.45 billion, up 32% (up 26% at constant currencies), a sequential growth acceleration by 4 percentage points at constant currencies.
Stellar SAP S/4HANA current cloud backlog performance, up 84% (up 76% at constant currencies), driven by strong adoption of “RISE with SAP”.
Cloud revenue up 28% (up 24% at constant currencies), accelerating further with strong execution across the entire cloud portfolio.

Full Year

Continuing cloud acceleration across the board, delivering results above expectations.
IFRS cloud revenue up 17%, non-IFRS cloud revenue up 16% (up 19% at constant currencies), hitting high end of revised 2021 outlook.
Cloud & software revenue up 4% (up 5% at constant currencies), exceeding high end of revised 2021 outlook.
IFRS operating profit down 30%, non-IFRS operating profit down 1% (up 1% at constant currencies), exceeding high end of revised 2021 outlook.
Operating cash flow expected above €6.0 billion; Free cash flow expected at around €5.0 billion.
Strong, accelerating cloud growth reflected in 2022 outlook, targeting up to 26% non-IFRS cloud revenue growth at constant currencies.

Christian Klein, CEO: “The magnitude of our cloud strength is evident. More and more companies are choosing SAP to help them transform their businesses, build resilient supply chains and become sustainable enterprises as they move to the cloud. This momentum is reflected in the tremendous success of “RISE with SAP”, our signature cloud offering, as well as excellent growth across our entire portfolio. Our growth acceleration points to even greater potential ahead.”

Luka Mucic, CFO: “I am proud that our team has delivered an exceptional year with strong results, far exceeding our expectations. After three quarters of home runs with our cloud momentum, we hit it out of the park this quarter. We are confident that we will continue our Q4 current cloud backlog growth in 2022. This is reflected in our accelerated cloud guidance for 2022 as we make great progress towards our mid-term ambition.”

Business Update

After an initial review of its fourth-quarter 2021 performance, SAP SE (NYSE: SAP) today announced its preliminary financial results for the fourth quarter and full year ended December 31, 2021. All 2021 figures in this release are approximate due to the preliminary nature of the announcement.

Businesses around the world are embracing digital technologies and the cloud to transform the way they do business. Today’s unpredictable reality, from supply chain disruptions to new regulatory restrictions, means the need for flexibility and adaptability has never been greater. Our depth of experience in mission critical business processes across all customer sizes, industries and geographies sets us apart and is core to why businesses are choosing SAP for their business transformation.

The strength and the execution of our strategy is showing up on multiple fronts with exceptional customer momentum across our cloud portfolio and financial performance exceeding market expectations.

High customer adoption is underpinned by exceptionally strong demand for “RISE with SAP” across customers of all sizes. It helps customers develop, adopt and automate new business models, and become intelligent enterprises. They also benefit from our Business Network, the largest B2B network in the world, which helps them create more resilient supply chains.

Customer satisfaction continues to increase, echoed by strong renewal rates.

SAP is confident that its positive momentum will continue throughout 2022, and expects accelerating cloud revenue growth, supported by strong traction of SAP S/4HANA Cloud.

Financial Performance

Fourth Quarter 2021

Current cloud backlog accelerated faster than anticipated, up 32% to €9.45 billion and up 26% at constant currencies. SAP S/4HANA current cloud backlog was up 84% to €1.71 billion and up 76% at constant currencies. Cloud revenue was up 28% to €2.61 billion and up 24% at constant currencies. SAP S/4HANA cloud revenue was up 65% to €329 million and up 61% at constant currencies. Software licenses revenue was down 14% year over year to €1.46 billion and down 17% at constant currencies. Cloud and software revenue was up 6% to €6.99 billion and up 3% at constant currencies. Services revenue was up 3% year over year to €0.99 billion and flat at constant currencies. Total revenue was up 6% year over year to €7.98 billion and up 3% at constant currencies.

The share of more predictable revenue grew by 5 percentage points year over year to 69% in the fourth quarter.

IFRS operating profit decreased 45% to €1.47 billion and IFRS operating margin decreased by 16.9 percentage points to 18.4% mainly due to higher share-based compensation expenses, primarily related to Qualtrics. Non-IFRS operating profit decreased 11% to €2.47 billion and decreased 12% at constant currencies. Non-IFRS operating margin decreased by 5.8 percentage points to 30.9% and decreased by 5.4 percentage points at constant currencies. Prior year IFRS operating profit included a disposal gain of €194 million and non-IFRS operating profit of €128 million related to the sale of the SAP Digital Interconnect business.

IFRS earnings per share decreased 23% to €1.24 and non-IFRS earnings per share increased 10% to €1.86.

Full Year 2021

SAP hit the high end of its revised 2021 cloud revenue outlook range and exceeded its cloud and software revenue and operating profit outlook ranges.

IFRS cloud revenue was up 17%, non-IFRS cloud revenue was up 16% to €9.42 billion and up 19% to €9.59 billion at constant currencies, hitting the high end of the revised full year outlook (€9.4 to €9.6 billion non-IFRS at constant currencies). SAP S/4HANA cloud revenue was up 46% to €1.09 billion and up 47% at constant currencies, exceeding the €1 billion cloud revenue mark as anticipated. Software licenses revenue was down 11% year over year to €3.25 billion and down 11% to €3.24 billion at constant currencies. Cloud and software revenue was up 4% year over year to €24.08 billion and up 5% to €24.41 billion at constant currencies, exceeding the revised full year outlook (€23.8 – 24.2 billion non-IFRS at constant currencies). Total revenue was up 2% year over year to €27.84 billion and up 3% to €28.23 billion at constant currencies.

As anticipated, the share of more predictable revenue grew by 3 percentage points year over year to 75% for the full year 2021.

For the full year, IFRS operating profit and operating margin were impacted by significantly higher share-based compensation expenses compared to 2020 mainly due to the Qualtrics IPO and the appreciation of SAP’s share price during the year. IFRS operating profit decreased by 30% year over year to €4.66 billion. IFRS operating margin decreased by 7.5 percentage points year over year to 16.7%. Non-IFRS operating profit was down 1% to €8.23 billion and up 1% to €8.41 billion at constant currencies, exceeding the high end of the revised full year outlook (€8.1 – 8.3 billion non-IFRS at constant currencies). Non-IFRS operating margin decreased by 0.7 percentage points to 29.6% and decreased by 0.5 percentage points at constant currencies.

IFRS earnings per share increased 3% to €4.46 and non-IFRS earnings per share increased 25% to €6.74, reflecting a strong contribution from Sapphire Ventures throughout the entire year.

Operating cash flow for the full year is expected to be above €6.0 billion. Free cash flow is expected to be at around €5.0 billion.

📺 SAP Company History

SAP Company History

📈 SAP Stock Technical Analysis

Both the short-term and long-term trends are neutral. SAP is part of the Software industry. There are 348 other stocks in this industry. SAP outperforms 79% of them. SAP is currently trading in the middle of its 52-week range. The S&P500 Index however is trading in the upper part of its 52-week range, so SAP is lagging the market slightly.

There is support at 131.50 from a trend line in the weekly time frame. There is also a support zone ranging from 128.43 to 128.97. This zone is formed by a combination of multiple trend lines in multiple time frames.

There is a resistance zone ranging from 138.68 to 139.14. This zone is formed by a combination of multiple trend lines and important moving averages in multiple time frames. There is a resistance zone ranging from 145.84 to 146.76. This zone is formed by a combination of multiple trend lines in multiple time frames.

The technical rating of SAP is bad and it also does not present a quality setup at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when SAP stock consolidates and is a good long entry.

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