|Bid||124.66 x 800|
|Ask||124.88 x 1400|
|Day's Range||124.47 - 126.36|
|52 Week Range||94.81 - 140.62|
|Beta (3Y Monthly)||0.93|
|PE Ratio (TTM)||30.11|
|Forward Dividend & Yield||1.67 (1.31%)|
|1y Target Est||N/A|
The German software giant, with headquarters in Newtown Square, is in the midst of boosting its cloud-based software.
Wall Street's cool response to Microsoft's strong earnings report, and its harsh response to SAP's mildly disappointing report, shows that many enterprise software stocks are now dealing with a small margin of error.
(Bloomberg) -- Billionaire Azim Premji has helped create India’s latest tech unicorn: a fast-rising software startup that symbolizes the growing investor interest in the Asian nation’s enterprise technology space.Icertis, which competes with SAP SE and Oracle Corp. to help businesses manage contracts in the cloud, has raised $115 million, propelling it to unicorn status as investors flock to enterprise software makers.The advanced-stage funding round in Bellevue, Washington and Pune, India-based Icertis was co-led by Greycroft Partners LLC and PremjiInvest, the fund managed by the family office of Indian tech billionaire Premji. Existing investors including B Capital Group, Eight Roads Ventures and Cross Creek Advisors participated. With this, Icertis has raised over $211 million.The enterprise software segment is heating up as investors from Tiger Global Management to Sequoia and Accel scour the industry for India’s next startup giants. Many are expected to be business- rather than consumer-focused, as the country’s talent pool shifts from IT outsourcing services for global clients toward designing and providing online software.Icertis said it now helps customers worldwide manage over 5.7 million contracts, from supply chain and procurement deals to employee agreements and nondisclosure pacts, that have a total value of more than $1 trillion.“As contracts get converted from static documents to digital assets for the first time in history, every dollar in or out is governed by a contract, putting them at the heart of every enterprise,” said Samir Bodas, Icertis’s co-founder and chief executive officer. “Every global company faces unprecedented global competition and needs software to manage contracts.”Icertis is currently valued at “well north of one billion dollars,” Bodas added. The company will use the additional funding to grow its business, including by expanding sales and marketing. Global compliance demands involving Brexit, tariffs, European data privacy regulations as well as rapid digitization has worked in Icertis’s favor, while technologies like artificial intelligence helped enhance the sophistication of its services.“We have been able to ride the technology wave and assert leadership in the space despite large competitors,” Bodas said, citing consultancies Forrester Research and Gartner.Icertis works on a subscription model, charging customers based on the number of contracts drawn up and tracked using its software. MGI Research forecasts the total spending by companies for such contract management at over $20 billion from 2018 to 2022, with services on the cloud growing around 37% annually over the same period.Founded in 2009 when Bodas and friend Monish Darda began exploring cloud-based applications, Icertis in 2015 homed in on building a contract management platform. Today, more than 600 of its 850 employees are based in Pune, where the product is developed. The startup operates a dozen offices from Sofia to Sydney.(Corrects wording to reflect right definition in fourth-to-last paragraph.)To contact the reporter on this story: Saritha Rai in Bangalore at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Intel has a new multiyear tech partnership with German enterprise software giant SAP that’s designed to boost cross-selling opportunities between the two companies.
Legacy software providers have been looking for ways to compete with the leading CRM cloud-based software provider, Salesforce.com, Inc. (CRM). One idea to slow down CRM’s rapid growth was to send all the data collected from their various products to a single location where additional analysis could be performed. Microsoft Corporation (MSFT), Adobe Systems Inc. (ADBE) and SAP AG (SAP) announced their joint participation in the Open Data Initiative this September. This collaboration comes as cloud-based software becomes more prevalent, which can make it harder to gain actionable insights from data when information is stored in various disparate systems. “You have these very sophisticated, rich application suites from SAP, from Adobe, from Microsoft. And the commitment you’re hearing from the three of us is that we’re going to unlock the data across all of these suites,” said Microsoft CEO Satya Nadella. While analysts believe this initiative represents a promising opportunity for these companies, we wanted to take a closer look to see if they really have what it takes to compete with Salesforce. Microsoft Corporation (MSFT)With a market cap of $1 trillion, it’s no question that Microsoft is still a force to be reckoned with. The company has maintained its place as a leader in the software market with both its legacy and cloud-based solutions. CRM has been mirroring Microsoft by tailoring its products to run alongside its customers’ existing software, something MSFT has already been doing for quite some time. Salesforce recently acquired MuleSoft, Inc. and Tableau Software, Inc. (DATA), both of which have software offerings that run with pre-existing on-premises systems. CRM’s Sales Cloud has also consistently outperformed MSFT’s cloud-based sales product, Dynamics 365\. The aggregated data from this project will be used to improve Dynamics 365 as well as its Azure product. Ahead of today’s Q4 2019 earnings release, share prices are up 34% year-to-date with management saying it’s only going to get better. Q4 fiscal revenue is expected to reach $33 billion, representing a 9% increase. Expected EPS is $1.21 which would be a 7% jump. Most importantly, management is projecting $9.6 billion in revenue to be generated from its Intelligent Cloud. Oppenheimer analyst, Timothy Horan mirrored that sentiment today stating, “We expect a strong quarter from Microsoft as it is seeing momentum in its cloud-based business, which now represents a third of revenues and is growing 35% year-over-year.” The five-star analyst reiterated his Buy rating and $145 price target. He has a 79% success rating and 17% average return per rating. Another analyst, Brent Bracelin, kept his Buy rating and $143 price target on MSFT yesterday. “We expect another solid quarter with revenue increasing 9% year-over-year to $32.8 billion, driven by strong commercial cloud tailwinds that could elevate the cloud revenue mix to 33% vs 5% in FY15,” he said. The analyst has an average return per rating of 31% and a 77% success rate. The stock boasts a ‘Strong Buy’ analyst consensus and $147 average price target, suggesting 8% upside potential. Adobe Systems Inc. (ADBE)In terms of delivering best in class visual solutions for both the consumer and enterprise sides, nobody does it quite as well as Adobe. Its cloud-based products are growing rapidly. The company’s Document Cloud, Creative Cloud and Experience Cloud are expected to reach 15% annualized revenue growth into fiscal 2025. If the initiative proves successful, this growth could accelerate at an even faster pace. In addition to its cloud-based software, ADBE created a software system, Experience Platform, to compete directly with CRM. It will unify business applications, and connect them with new apps from third-party developers and its customers’ other programs. ADBE had a strong second quarter, with revenue reaching over $5 billion, up 25% year-over-year. Adjusted EPS increased by 10% year-over-year from $3.21 to $3.54. While the stock’s valuation is on the high side, trading at 53.9 times trailing twelve month earnings, analysts believe Adobe can sustain its profit growth.Yesterday, analyst Jennifer Lowe said, “The company's profit growth should support the current enterprise value to expected 2020 earnings multiple of 31-times, and we expect Adobe shares to continue moving higher.” She maintained her Buy rating and $330 price target, suggesting upside potential of 7%. Lowe has a success rate of 69% and a 15% average return per rating. Another top analyst, Joseph Bonner, agrees that more growth is coming. “The company is well positioned at the center of the exploding market for digital video content with a unique asset collection in its Creative Cloud digital content portfolio. We see Adobe continuing to accelerate organic product refreshes and new rollouts as well as partnering with industry leaders to drive further growth,” he said. He kept his Buy rating and $320 price target on June 20. The Street has high hopes for ADBE. The stock has a ‘Strong Buy’ analyst consensus and average price target of $319, suggesting 3% upside potential. SAP AG (SAP)In the past, the German software company has struggled to keep up with the other big names on this list. However, it has made a significant effort to redefine the CRM market. SAP believes it can take market share from Salesforce with its portfolio of SaaS applications including broad sets of apps for HCM, ERP and CRM.However, the situation didn't appear to be improving after the company released disappointing Q2 2019 earnings results today. Management said that investors should not expect big margin gains until 2020, with the company reporting a decline in operating profit of 21%. While support and software license revenues fell flat from last year at €3.8 billion, cloud revenue was up 35% to €1.7 billion. In its full year guidance, management stated that they believe adjusted operating profit will grow by 9.5% to 12.5%. They are committed to reaching their goal of margin expansion by 5 percentage points through 2023. CEO, Bill McDermott, believes that operational performance is on track with 4-point expansion in gross margins for the cloud business. “As shown by our rising cloud gross margins, we are progressing nicely on our ambition to be the Best-Run SAP. With XM driving the CEO digital transformation agenda, we resolutely reaffirm our full year guidance,” he said. Financial blogger, Gary Alexander said, “SAP remains one of the true value names among large-cap software stocks. Overall, SAP's cloud business continues to add recurring billings as it grows both organically and through M&A, while margins and cash flow are trending upward.”Brian Schwartz, an Oppenheimer analyst with a 79% success rate and a 30% average return per rating, reiterated his Buy rating and $141 price target last month. His price target reflects his confidence in the company’s ability to rebound as well as his belief that share prices could rise by as much as 11% in the next twelve months. The Street has mixed feelings about the last stock on the list. SAP has a ‘Moderate Buy’ analyst consensus and $138 average price target, suggesting 8% upside.
SAP SE (NYSE: SAP), the German enterprise software conglomerate, continues to embrace the predictable revenues and higher multiples of its subscription-based cloud business, even as it deals with the acquisition costs of Qualtrics, a deal that closed January 23. Total revenues were up 11 percent year-over-year to €6.65 billion (adjusted), and the share of more predictable revenue – i.e., cloud-based revenue and software support revenue – increased to 69 percent from 66 percent in the previous quarter. SAP management provided guidance that more predictable revenue will account for anywhere between 70 and 75 percent of its total revenue for the full year.
SAP SE (SAP) second-quarter results benefit from favorable growth in cloud revenues, synergies from Qualtrics and expanding clientele. The company maintains 2019 outlook.
(Bloomberg) -- SAP SE fell the most in nearly five years on signs that its $10 billion bet on cloud-based software faces headwinds, but the companies executives are adamant there is still room to grow.After buying U.S. startups Qualtrics International Inc. and Callidus Software Inc. to bolster its portfolio, SAP instead posted slower growth in new cloud bookings -- a keenly watched metric because it indicates future revenue. With profitability diluted by the shift to internet-based computing, a push to shore up margins failed to make progress in the second quarter.SAP fell as much as 10%, its steepest intraday drop since August 2015. The stock was down 5.9% at 3:40 p.m. in Frankfurt trading."What you’re not counting on is how much revenue will come SAP’s way by relying on” cloud partnerships with the likes of Amazon and Google, SAP’s Chief Executive Officer Bill McDermott told analysts during a call. “There’s no reason to think this is slowing down."SAP’s new cloud bookings rose 15% at constant currencies, a drop from the 26% gain in the first three months of 2019 and the weakest figure in at least a year and a half.The lower order figure is due to the fact that SAP is focusing on higher-margin sales, and that more customers chose “pay as you go” products that aren’t counted toward that metric, Chief Financial Officer Luka Mucic said. Excluding infrastructure-as-a-service, growth would be 27%, he said.The figures underscore the difficult transition to internet-based software as McDermott challenges rivals such as Salesforce.com Inc. and Oracle Corp.Cloud sales can initially be less profitable than traditional on-premise installations, and SAP has pledged to increase its operating margin by 1 percentage point a year on average through 2023. In the second quarter, the figure was flat at 27.3%, with Walldorf, Germany-based SAP blaming trade tensions for delaying software spending in Asia as well as acquisition costs.“We’re exactly on track in what we need to hit our mid-term objectives to triple our cloud revenue by 2023,” Mucic said in an interview with Bloomberg TV. “Also the profitability in the cloud is steeply increasing.”Total sales rose 11% to about 6.7 billion euros ($7.5 billion), boosted by strong growth from existing cloud customers, with revenue for the segment jumping 40%. Operating profit increased 11% to 1.82 billion euros.Uptake of SAP’s flagship S/4 Hana software accelerated in the April-June period, with the company adding about 600 customers for a total of more than 11,500 users. The software allows businesses to run tasks on their own machines or in a cloud-computing arrangement hosted by SAP or one of its partners. The company is farming out more of the low-margin computing backend to partners including Amazon Web Services and Microsoft Corp.SAP stuck to its outlook for operating profit to rise at least 9.5% and cloud revenue to increase more than 33%. McDermott maintained his optimism that his strategy would pay off.The Qualtrics acquisition will prove to be a “growth catalyst,” the CEO said in a telephone interview. “There’s plenty of room to continue strong cloud bookings and cloud growth.”(Update with details from analyst call.)To contact the reporter on this story: Stefan Nicola in Berlin at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Chris Reiter, Iain RogersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European stocks traded lower on Thursday, with the German DAX down 0.8% as SAP reported that trade tensions weighed on its second-quarter results. Those tensions remained in focus as The Wall Street Journal reported that progress on U.S.-China talks were stalled over how to handle the Chinese telecommunications giant Huawei. There were some gainers after earnings news, with Ubisoft Entertainment , easyJet and Novartis all gaining ground.
SAP told investors not to expect a major improvement in margins before next year as the German business software group reported a 21% decline in second-quarter operating profit on Thursday, sending its shares sharply lower. Europe's most valuable tech firm reiterated its forward guidance and CEO Bill McDermott expressed his "absolute commitment" to meeting a strategic goal of expanding margins by 5 percentage points through 2023. Shares fell 10% at the open as revenue and operating profit came in below expectations, weighed down by one-off costs and weakness in Asian markets.
SAP told investors they can expect a major improvement in margins only next year as the German business software group reported a 21% decline in second-quarter operating profit on Thursday, weighed down by one-off costs. SAP nonetheless reiterated its forward guidance as CEO Bill McDermott expressed his "absolute commitment" to meeting a strategic goal of expanding margins by 5 percentage points through 2023.
SAP shares traded sharply lower Thursday after the cloud and business software firm posted weaker-than-expected second quarter earnings linked in part to global trade tensions.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.At the heart of Chief Executive Officer Christian Sewing’s turnaround plan for Deutsche Bank AG is a contrarian bet: that he can cut spending on technology while gaining ground on the competition.Even with the digital revolution in finance accelerating, Deutsche Bank expects to trim its annual outlays on tech to 2.9 billion euros ($3.3 billion) in 2022 from a peak of 4.2 billion euros this year.“Deutsche Bank would probably love to be spending more on technology, but they need money for other parts of their restructuring,” said Pierre Drach, managing director of Independent Research in Frankfurt. “It’s pretty much impossible for European banks to catch up with the Americans at this stage.”Sewing’s team says it’s made progress in fixing information networks that his predecessor called “antiquated and inadequate.” Years of expansion left it with systems that couldn’t communicate with each other and didn’t adequately track its business. The bank, which has spent almost $18.5 billion on legal settlements and fines since 2008, has also suggested that the past breakdown in controls stemmed in part from weak systems.The 4.2 billion euros Deutsche Bank has budgeted this year to maintain and modernize its systems represents a fraction of the $11.5 billion JPMorgan Chase & Co. shells out. "You have to spend to win" with new technologies, Jamie Dimon, the bank’s CEO, said Tuesday.The gap is set to widen as the German chief executive wants to cut technology costs by almost a quarter. European banks, meanwhile, are forecast to increase tech spending at a 4.8% annual rate through 2022, according to the consulting firm Celent.“We continue to invest in IT to serve clients better, become safer, more efficient and better controlled,” Senthuran Shanmugasivam, a Deutsche Bank spokesman, said in response to questions from Bloomberg. “Despite our smaller footprint, our investment plans in 2019 are broadly unchanged as we reallocate resources to our core businesses.”It’s all part of a retrenchment Sewing announced last week to exit equities sales and trading and eliminate 18,000 jobs. Deutsche Bank aims to cut adjusted costs to 17 billion euros in 2022 from 22.8 billion euros last year; the share of technology expenses would remain stable over that time period.The company can modernize systems while spending less, for example by moving most of its applications to the cloud, according to Frank Kuhnke, who oversees its technology. He said Deutsche Bank has already cut the cost of crunching data by more than 30% since 2016 even as it increased computing capacity by about 12% a year to meet regulatory demands.Still, Deutsche Bank needs “to make a further step change in embracing technology,” Sewing told analysts last week.New HiresThe CEO has brought in new talent to do that. Bernd Leukert, who left the management board of software company SAP SE earlier this year, will start in September. Neal Pawar will join as chief information officer from AQR Capital Management the same month.Hiring outsiders hasn’t been a panacea in the past. Kim Hammonds, a former Boeing Co. executive, spent about four and a half years rebuilding the bank’s systems only to be ousted in 2018 after reportedly calling the bank “the most dysfunctional company” she’d ever worked for.Deutsche Bank expects its retrenchment from businesses to allow it to focus on its core operations. It will also save about 300 million euros by 2022 by shedding almost 5,000 external IT contractors and replacing them with internal staff at a lower cost. The integration of consumer lender Postbank will avoid duplication of expenses.The digital revolution is upending all aspects of finance -- from taking deposits to bond trading, a traditional Deutsche Bank strength. Citigroup Inc. has created a fintech division to invest in debt-market technologies while Spain’s Banco Bilbao Vizcaya Argentaria SA has created a unit to automate trade processes and generate intelligence from data. Dutch bank ING Groep NV has used artificial intelligence to win 20% more bond trades and cut costs.Cutting tech costs is also notoriously difficult.A three-year initiative announced in 2012 failed to stop technology spending from ballooning 44% by 2015. That was the year that then-CEO John Cryan said he would reduce the number of operating systems from 45 to four in 2020. Deutsche Bank still has 26, Sewing told investors in May. He kept the goal of eventually cutting them to four, but says the lender will need to run 10 to 15 systems for the foreseeable future.“Everyone knows that Deutsche Bank’s systems are a mess and I think they will have to end up spending more,” said Drach. “The fact that their new technology head hasn’t come on board yet gives them a good narrative for increasing the ultimate amount.”\--With assistance from Katie Linsell.To contact the reporter on this story: Nicholas Comfort in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, James Hertling, Giles TurnerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Ifthat name sounds familiar to you, it's most likely because you remember herfrom her 25 years at Microsoft
You can't talk about enterprise software without talking about SAP, theGerman software giant that now has a market cap of more than $172 billion,making it Europe's most valuable tech company
Western Digital's (WDC) IntelliFlash portfolio will be integrated with SAP HANA's in-memory data processing capabilities to enhance productivity of business-critical applications.