Shares of SAP SE hit a six-month high in early trading after the company released preliminary first-quarter results that showed customers are beginning to pick up information technology spending after cutting back during the pandemic.
The Walldorf, Germany-based software company said late Tuesday it saw a 7% rise in first-quarter cloud revenue and raised the lower end of its full-year forecast for cloud sales. Adjusted cloud revenue was 2.15 billion euros ($2.57 billion) in the period ended March 31.
SAP rose 3.8% to 116.46 euros in Frankfurt trading at 9:41 a.m., their highest level since October.
- “The results are likely to alleviate some pessimism,” Jefferies analysts wrote in a note, adding that investors will want to know the pace of customers’ cloud transition and extent of growth in new bookings for the business.
- Cloud and software sales increased 1% to 5.43 billion euros from a year earlier, the company said.
- Full-year adjusted cloud sales will be 9.2 billion to 9.5 billion euros, based on “the strong new cloud business performance” the company said in the statement. The new forecast raises the lower end of the guidance from the previous 9.1 billion euros.
- Concur, its expenses unit, continued to struggle due to the lack of business travel.
- First-quarter adjusted operating profit increased 17% to 1.74 billion euros.
- Chief Executive Officer Christian Klein is attempting to overhaul SAP, focusing on making it easier for customers to move to a newer suite of products and ramping up competition with rivals such as Salesforce.com Inc.
- The European firm has also been pushing to integrate its products with other tech platforms, to allow clients to run programs on Microsoft Corp.’s Azure or Amazon.com Inc.’s AWS.
- SAP said on Tuesday it was moving its businesses for the financial services industry into a venture with Dediq GmbH.
- SAP is scheduled to report formal quarterly earnings on April 22.
(Updates throughout with shares, analyst commentary)