SAP SE, a leading German multinational software company that provides enterprise software for managing business processes and customer relationships, is set to release its financial results for the first quarter of 2023 in April 21st. As the market anticipated the report, analysts expected a modest year-over-year increase in earnings per share, driven primarily by strong demand for the company’s products and services, particularly in the cloud business.
According to the zacks Consensus estimate, SAP is expected to report Revenues to $7.97 billion, a 0.4% An increase compared to the same quarter last year. while, profits expected to be $1.21 per shareRepresent 8% Annual increase.
In the prior quarter, SAP’s cloud business was a significant contributor to the company’s growth, with total revenue on a non-IFRS basis of €8.436 billion ($8.614 billion), up 6% year-on-year. The company’s cloud backlog, a key indicator of go-to-market success in the cloud business, also increased by 27%.
SAP’s ongoing restructuring plan, including the sale of its entire stake in Qualtrics to Silver Lake and the Canada Pension Plan Investment Board, is expected to align its operating models with the accelerating cloud transformation. Moreover, the company’s latest offering, Grow with SAP, designed for midsize customers to adopt cloud ERP, can boost speed, predictability, and innovation.
Despite these positive developments, macroeconomic weakness, geopolitical instability and softness in software licenses remain major headwinds for SAP. In addition, the intense competition in the cloud space and the increase in research and development and sales and marketing expenses are concerns that the company must address.
Technical Analysis:
SAP SE price action has been trending to the upside, thus heading towards a channel chart pattern despite the bear markets in general. The bullish momentum was stable because the price action remained above the 50 and 20 MAs. Currently, the price is consolidating between 128.78-125.84 for twelve days. Expect the price to probably face resistance on the upper trendline of the channel if it breaks above the range or if the price breaks below the range, it will probably face key support at 122.83 which is the confluence with the Fibonacci level of 38.2% and below. trend line of the channel.
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Denis Muyinga.
Market Analyst – HF Education Office – Kenya
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