Calling the quarter "disastrous," Jim Cramer said he's staying away from the stock. "There are things not to like about SAP and the lack of clarity of what went wrong here is really stunning," Cramer said.
SAP reported its third-quarter earnings Sunday, which showed revenues falling 4% to €6.54 billion ($7.67 billion) and operating profits slumping 12% to €1.47 billion, but cut its full-year forecasts and said the company's transition to cloud-focused growth, and a decline in software licensing revenues, will trigger notable changes to the group's medium-term outlook first published by former CEO Bill McDermott.
SAP said cloud revenues will begin to overtake software sales by 2025, with cloud rising to €22 billion in sales, but cautioned that the transition will likely keep profit margins flat at around 32%, a disappointing outlook that caused investors to re-set price expectations for Europe's most important tech stock.
"While SAP continues to see robust interest in its solutions to drive digital transformation as customers look to emerge from the crisis with more resilience and agility, lockdowns have been recently re-introduced in some regions and demand recovery has been more muted than expected," the company said. "Further and for the same reasons, SAP no longer anticipates a meaningful recovery in SAP Concur business travel-related revenues for the remainder of the year 2020."
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