SAP To Focus On Integration Of Acquisitions

Tech giant SAP (NYSE: SAP) announced its third-quarter results last month that failed to impress the market. Its weak outlook, driven by the impact of COVID-19, sent its stock falling 21% in a single day – a record decline in the past 25 years.

SAP’s Financials

SAP’s third-quarter revenues were down 4% to €6.54 billion (~$7.7 billion), missing the market’s estimates of $8.2 billion. Adjusted net income increased 40% to €1.70 per share (~$1.99), surpassing the analyst estimates of $1.54 for the quarter.

During the quarter, Cloud revenues grew 11% over the year to €1.98 billion (~$2.3 billion). Software licenses revenue fell 7% to €3.6 billion (~$4.2 billion). Overall cloud and software revenue fell 2% to €5.54 billion (~$6.5 billion).

By segment, Applications, Technology & Support revenues decreased 2% to €5.17 billion (~$6.1 billion). Qualtrics revenue grew 22% over the year to €169 million (~$200 million). Concur revenues dropped 14% to €357 million (~$422 million) as business travel continued to remain slow in the quarter. SAP’s Services segment which includes digital transformation and the Intelligence team saw revenues decrease 16% to €753 million (~$887 million).

SAP reduced its revenue outlook significantly for the remainder of the year. It now expects its non-IFRS cloud revenue to be at €8-€8.2 billion (~$9.5-$9.7 billion) and total revenues to be at €23.1-€23.6 billion (~$27.3-$28 billion) for the year.

SAP’s Acquisition

Recently, SAP announced the acquisition of Austria-based Emarsys for an undisclosed amount. Founded in 2000 by Daniel Harari, Hagai Hartman, and Josef Ahorner, Emarsys is an omnichannel customer engagement platform set up to help business owners accelerate time-to-value, deliver one-on-one experiences, and quickly produce measurable results.

SAP plans to integrate Emarsys’s offerings in its Customer Experience platform to help power a foundation of personalized engagement that can allow organizations to engage with their customers where and when they choose. Prior to the acquisition, Emarsys had raised $55.3 million in two rounds of funding from Venture Capital.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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