WALLDORF / LONDON (IT BOLTWISE) – SAP posted impressive profit growth in the third quarter, although its cloud business fell short of expectations. Cloud segment revenue rose 22 percent, but not enough to meet analysts’ forecasts. Despite these challenges, SAP remains optimistic for the fourth quarter, particularly with a recovery in the US market.
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In the third quarter, SAP recorded a significant increase in profits, although growth in its cloud business fell short of expectations. Cloud sales rose by 22 percent to 5.29 billion euros, which represents a solid result, but did not meet analysts’ forecasts. They had expected growth of 26 to 28 percent. Subdued demand, particularly from US authorities and industrial customers, is cited as the main reason for the missed expectations.
CFO Dominik Asam emphasized the challenges of an uncertain macroeconomic environment, which is delaying investment decisions for many customers. Despite these uncertainties, SAP was able to increase its operating result by 14 percent to 2.57 billion euros, while net profit climbed by 42 percent to 2.05 billion euros. The company’s total sales increased by seven percent to 9.08 billion euros.
The cash inflow developed particularly positively, which makes SAP optimistic about the year as a whole. CEO Christian Klein expressed confidence about the prospects for the fourth quarter, which is traditionally the strongest in terms of sales of the year. The pipeline is well filled and there are signs of recovery, particularly in US business, after many customers had recently hesitated to sign new contracts.
However, the slower momentum in the cloud business shows that customers are becoming more cautious and the economy is putting a damper on investment enthusiasm. The fourth quarter will be crucial to see whether SAP manages to turn things around in the cloud sector or has to continue to pump the brakes. Competition in the cloud market remains strong, and SAP must compete against other major providers to consolidate its market position.
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