SAP AG Misses Analyst Targets Due to Strong Currency Headwinds

Image source: SAP.

Germany-based enterprise software giant SAP (NYSE: SAP  ) reported first-quarter results early this morning. The stock fell more than 3% on the German Xetra exchange, and American depositary receipts are following suit in pre-market trading.

SAP's adjusted earnings fell 3% year over year, landing at $0.78 per share. Total revenue increased 3% to $5.1 billion. U.S. analysts expected earnings of $0.80 per share on $5.3 billion in sales, so SAP whiffed on both the top and bottom lines.

The miss was largely a result of unfavorable currency effects, according to SAP's management. Cloud service subscriptions grew 38% at constant currencies but only 32% as reported. Software and support sales would have seen 7% growth rather than 2% if currencies had stayed flat.

"Constant currencies" was a common theme in this report. On that basis, software sales more than doubled year-over-year in growth markets like Venezuela and Colombia. Sales in Japan fell short of internal projections but double-digit sales growth in China "demonstrates the success of SAP's long term commitment and growth strategy for China," according to SAP press materials.

Co-CEOs Jim Hagemann Snabe and Bill McDermott preferred to talk about the shift to cloud-based services. "We are well on our way to becoming THE cloud company powered by SAP HANA with fast growth in the cloud and broad adoption of HANA as the real-time business platform," they said in a prepared statement.

Looking ahead, SAP reiterated its existing top-to-bottom outlook for fiscal year 2014 -- at constant currencies. However, currency exchange effects are expected to continue putting pressure on SAP's reported sales and earnings throughout 2014.

 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2918860, ~/Articles/ArticleHandler.aspx, 7/25/2014 3:49:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement