Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Brazil, India and the Netherlands had outstanding cloud revenue growth while Canada, China, France, Germany, Japan and Switzerland performed particularly strong |
| Meaning thirdly, despite ongoing macroeconomic headwinds, our cloud momentum remains strong and growth continues to accelerate, all in all, putting us well on track to achieve our 2025 ambition |
| So the extended capability through that integration that we've invested so heavily over the past few years, they're now able to seize upon that opportunity to be able to drive forward, which means the future is obviously, notwithstanding the macroeconomic conditions, we feel like we're well placed |
| As we celebrate this milestone, note that the focus on sustainable growth remains unwavering and that the company is poised to keep innovating and creating shareholder value |
| And on top, you heard the announcement around SAP Business AI and of course we have to deliver that in the cloud and that's of course another strong driver for our pipeline in the next quarter |
| Our results clearly reflect the strong foundation we've built over the last three years for the next phase of SAP's transformation |
| In Q3, we once again achieved strong cloud growth and double-digit operating profit growth, up 16% for Q3 and 19% for the first nine months, confirming what we have said all along |
| But second, GROW with SAP has also had an exceptionally strong start and these are really representing new customers to the SAP family |
| I mean, look, first of all, from the customer base perspective, I mean, we see strong momentum both in converting our installed base, as you heard, with a very healthy conversion factor to the cloud |
| Current cloud backlog is up 25% again, driven by strong order entry across the portfolio and backed by significantly lower churn |
| And so the GROW offering has been really successful in markets like North America |
| So it's a real premium package with real value, and we see actually positive customer feedback for those ones who actually are our first customers |
| The foundation of SAP's success story is the business technology platform which underpins both our RISE and GROW offerings |
| All of this gives us confidence in our ability to capitalize on the massive market opportunity presenting itself to SAP |
| In addition to the top-line, we continue to balance growth and profitability, allowing us to boost our bottom line |
| But we remain strong in the foundation of what we deliver to around the world is equally is true in North America |
| In summary, Q3 proved to be another solid quarter as evidenced by strong revenue and current cloud backlog growth |
| In the third quarter, non-IFRS operating profit increased by 16%, supported by the resilience of our on-premise business as well as operational discipline which overcompensated the negative impact of an accelerated amortization of capitalized sales commissions |
| Growth in cloud gross margin in turn improved for the third consecutive quarter, expanding roughly 2.9 percentage points to 73.7% year-over-year |
| This quarter, we have once again seen significant momentum in our RISE customer number, reaching well over 4,300 RISE customers |
| Our cloud gross profit grew by 28%, driven by the effective leveraging of economies of scale and operational efficiencies as evidenced by reduced cost ratios across the board |
| Obviously, really strong orders and acceleration in Europe and Asia Pac on a constant currency basis |
| And if you think about what are the priorities in the current planning process, which will then, of course, drive the budget for 2024, I'd say it's, of course, derisking 2025 to make sure that it's really solid and deliver to that ambition |
| This dual listing is a testament to an amazing growth story |
| This continued momentum was again fueled by the strong contribution of the Business Technology Platform, which underpins every single SAP application |
| Finally, total revenue was up 9%, driven by broad-based strength across all predictable revenue streams |
| RISE and GROW are also very exciting opportunities for SAP |
| And by always being on the latest release, our customers also gain greater agility through continuous innovation |
| Our combined SaaS and the PaaS portfolio continued to grow by 26%, with the SaaS cloud revenue up 23% and PaaS cloud revenue even up 46% |
| And so I'm actually very happy with the underlying strength of our portfolio |
| Statement |
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| So that business has been very difficult |
| It would imply that Q4 free cash flow would be down year-over-year |
| SAP condemns in the strongest possible terms all acts of terror, and we are deeply concerned by the escalating conflict |
| Now we are talking about a high inflation environment and some macroeconomic challenges and still we keep our 2025 guidance |
| So worries on that front, I think, for 2025 |
| And it is definitely a market that has the macroeconomic pressure |
| If you think about the prior year, we were down 39% constant currency |
| So maintenance has been down, I think, 1% only three quarters in a row |
| But I was seeing some other vendors in the market that there is persistent macro concerns of slowing, slowing to the pipeline, et cetera |
| Now on top of that, there is of course the discussion about the transactional business, where Q2 has already been difficult |
| We had a really a very mild decline in software in especially Q1 and Q3 |
| America was down slightly Q-over-Q |
| Your implied operating profit growth guidance implies sort of at the low-end significant sort of decline |
| So we have not seen much relief on that front |
| And I think it's also clear that the Q4 is the biggest quarter on licenses, so it has a big disproportionate impact |
| The structural move to the cloud and the interest of our customers in future-proofing their businesses remain unabated |
| And actually, on average, we have been declining more slowly than, for instance, in the prior year |
| I mean, for the full year, we think that Litmos will add a good percentage point of basically headwind |
| We see the same macroeconomic pressure points |
| There are other parts in it which are growing fast, but the kind of decline for instance in contingent workforce has resulted in a flattish environment |
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