As anticipated, software giant SAP reported a remarkable second quarter earnings yesterday driven by robust growth in its cloud business. The company added roughly 600 customers due to the improved adoption of its S/4HANA platform, which drove its overall top-line growth. However, the revenue mix shift between cloud and on-premise business continued to weigh on its gross margin, despite improved performance from individual segments. Backed by the strong momentum gained from its cloud business and the acquisition of Callidus, SAP has raised its 2018 outlook as well as 2020 cloud ambition. Accordingly, we expect SAP’s cloud business to continue to drive its value in the long term.
We currently have a price estimate of $120 per share for SAP. You can view our interactive dashboard for SAP and modify the revenue and earnings to visualize the impact of any changes on the company’s valuation.