SAP Raises Full-Year Guidance

Investing.com — SAP raised its full-year guidance on Monday after fiscal third-quarter results beat analyst expectations on both the top and bottom lines, driven by a jump in cloud revenue.

SAP increases its 2024 adjusted operating profit outlook to between €7.8 billion and €8.0 billion, up from prior guidance of €7.6 billion to €7.9 billion. The heightened guidance reflects expectations for increased cloud and software revenue.

The company now anticipates cloud and software revenue in a range of €29.5 billion to €29.8 billion, representing a 10% to 11% increase from a year earlier and surpassing the previous forecast range of €29.0 billion to €29.5 billion.

SAP SE ADR (NYSE: SAP) saw about a 5% rise in premarket trading on Tuesday.

For the three months ending September 30, SAP reported adjusted earnings of €1.23 per share on revenue of €8.47 billion, exceeding consensus estimates of €1.06 per share and €8.63 billion, respectively.

Cloud revenue surged by 25%, reaching €4.35 billion in Q3 year-on-year.

"Given the strength of momentum, we expect the results to be well received, although cautionary macro comments and a reminder of tough Q4 comps will likely temper some of the enthusiasm," Jefferies analysts stated in a post-earnings note.

Additionally, analysts at JMP Securities raised their SAP price target from $245 to $300 after the report.

The firm continues to view SAP as an attractive opportunity for long-term capital appreciation, citing its successful growth strategy, a massive total addressable market (TAM) that could hit $670 billion by 2025, progress in SAP Business AI, and an ambition to accelerate business through 2027.

Yasin Ebrahim contributed to this report.