SAP SE (NYSE:SAP) stock rose 5.80% (As on July 23, 11:17:03 AM UTC-4, Source: Google Finance) after the company reported fiscal second-quarter results that surpassed Wall Street estimates as its cloud business was boosted by growing enterprise demand for its artificial intelligence offering. The beat was fueled by cloud growth momentum, which “remained strong in Q2, with Business AI enabling many deals”. Cloud and software revenue jumped 10% to €7.17B in Q2 year on year and the software maker continues to win new business, boosting its current backlog. The current cloud backlog jumped to 28% to €14.8B. Cloud ERP Suite revenue reached €3.41B, surpassing the consensus estimate of €3.38B, reflecting an acceleration of 33.0% growth in constant currency. Cloud revenue was up 25% to €4.15 billion and up 25% at constant currencies, mainly driven by Cloud ERP Suite revenue, which was up 33% to €3.41 billion and up 33% at constant currencies. Software licenses revenue decreased by 28% to €0.2 billion and was down 27% at constant currencies. Services revenue was up 6% to €1.11 billion and up 6% at constant currencies. Cloud gross profit was up 29% (IFRS) to €3.03 billion, up 28% to €3.04 billion (non-IFRS), and up 29% (non-IFRS at constant currencies).
SAP in the second quarter of FY 24 has reported the adjusted earnings per share of €1.10, beating the analysts’ estimates for the adjusted earnings per share of €1.09. The company had reported the adjusted revenue growth of 10 percent to €8.29 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of €8.26 billion. Non-IFRS operating profit was up 33% to €1.94 billion and was up 35% at constant currencies.
Additionally, free cash flow in the second quarter increased by 114% to €1.3 billion. While around €0.5 billion was paid out for restructuring, the positive development was primarily attributable to increased profitability and enhanced working capital management. For the first six months, free cash flow was up 48% to €3.8 billion. In May 2023, SAP announced a share repurchase program with an aggregate volume of up to €5 billion and a term until December 31, 2025. As of June 30, 2024, SAP had repurchased 12,895,525 shares at an average price of €145.20 resulting in a purchased volume of approximately €1.87 billion under the program.
In addition, SAP is executing a company-wide restructuring program which is anticipated to conclude in early 2025.