SAP Sap SE

   By Mauro Orru 
 

Shares in Germany's SAP SE rose Wednesday as its cloud business continued to grow in the last quarter, prompting the business-software giant to raise targets for the third time this year.

At 0855 GMT, SAP shares traded 5% higher at EUR122.74.

SAP said late Tuesday that operating profit and revenue rose in the third quarter, citing preliminary figures, with a marked increase in cloud revenue.

Reporting on a non-IFRS basis, SAP said operating profit rose to 2.10 billion euros ($2.42 billion) from EUR2.07 billion last year, with its operating margin down to 30.7% from 31.7%.

Total revenue climbed to EUR6.84 billion from EUR6.54 billion, with cloud revenue up to EUR2.39 billion from EUR1.98 billion.

SAP is pivoting away from software-licenses sales, once its biggest revenue stream, to subscription-based cloud services, banking on a more profitable and predictable model based on recurring revenue.

The company is seeking a share of more predictable revenue of about 75% in 2021, up from 72% last year. In the third quarter, the share stood at 77%, a 3% increase from the third quarter last year.

"Our strategy is clearly working. Customers are choosing SAP for their business transformation in the cloud. We see record adoption of our applications and our platform. This has resulted in strong acceleration of our cloud growth," Chief Executive Christian Klein said.

The company raised its outlook for the year as it expects cloud revenue growth to continue, accompanied by a decline in software-licenses revenue.

SAP expects non-IFRS operating profit at constant currencies between EUR8.1 billion and EUR8.3 billion, instead of between EUR7.95 billion and EUR8.25 billion as previously expected.

Non-IFRS cloud revenue at constant currencies should come in between EUR9.4 billion and EUR9.6 billion, rather than between EUR9.3 billion and EUR9.5 billion.

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

October 13, 2021 05:19 ET (09:19 GMT)

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