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Yahoo
23-04-2025
- Business
- Yahoo
SAP SE (SAP) Q1 2025 Earnings Call Highlights: Strong Cloud Growth and Robust Profit Margins
Current Cloud Backlog: EUR18.2 billion, up 29%. Cloud Revenue: Increased by 26% year-on-year. Cloud ERP Suite Growth: 33% increase, accounting for 85% of total cloud revenue. Total Revenue: EUR9 billion, up 11%. Operating Profit: Non-IFRS operating profit up 58% to EUR2.5 billion. Cloud Gross Margin: Improved by 2.6 percentage points to 75%. Operating Cash Flow: Increased by 31% to EUR3.8 billion. Free Cash Flow: Increased by 36% to EUR3.6 billion. Basic IFRS Earnings Per Share: EUR1.52. Non-IFRS Earnings Per Share: EUR1.44. Warning! GuruFocus has detected 7 Warning Signs with PMT. Release Date: April 22, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. SAP SE (NYSE:SAP) reported a 29% increase in its current cloud backlog, reaching EUR18.2 billion in Q1 2025. Cloud revenue grew by 26% year-on-year, with the cloud ERP suite showing a 33% increase. Operating profit increased by 58% in Q1, driven by strong execution of SAP's transformation program. SAP SE (NYSE:SAP) maintained its position as the number one enterprise application software vendor according to IDC and Gartner. The company is seeing strong customer engagement across various industries, with significant deals in the automotive sector and public sector. Transactional cloud revenues experienced a slight decline in Q1, reflecting macroeconomic challenges. There is uncertainty regarding the impact of global trade disputes and tariffs on future conversion rates and revenue growth. The cloud revenue growth decelerated slightly from Q4, partly due to delayed ramp-ups from some deals. SAP SE (NYSE:SAP) faces potential risks from geopolitical tensions and tariffs, which could impact its cloud gross margins. The company acknowledges the difficulty in making projections for the entire year due to ongoing macroeconomic uncertainties. Q: Some companies have reported disruptions at the end of the quarter. Given the current environment, is your assumption that historical close rates will continue still valid? A: Christian Klein, CEO: Conversations with customers focus on gaining resiliency in supply chains and managing tariffs. Our pipeline remains solid, and we haven't seen deterioration in conversion rates. However, we are closely monitoring geopolitical developments. Q: Cloud revenue growth decelerated slightly from Q4. What caused this, and when can we expect growth to return to guidance levels? A: Dominik Asam, CFO: The deceleration was partly due to the timing of deal provisioning from Q4. We expect an acceleration in Q2 as these deals ramp up. Transactional revenues were weak due to macro conditions, but we anticipate improvement as the year progresses. Q: The current cloud backlog grew by 29%. Has it tracked above expectations, and what are you seeing in terms of market dynamics? A: Dominik Asam, CFO: The backlog growth was expected due to provisioning lead times. We are on track with our guidance for slight deceleration. We haven't seen significant changes in industry dynamics despite tariff uncertainties. Q: Can you explain how the Business Data Cloud differs from SAP Datasphere and its potential impact on revenue? A: Christian Klein, CEO: Business Data Cloud goes beyond Datasphere by providing a semantic layer that unifies SAP and non-SAP data. It enhances AI capabilities and offers significant value, leading to strong pipeline momentum. It is expected to be additive rather than replacing existing offerings. Q: With the number of large deals increasing, are you seeing any changes in customer behavior regarding deal size and scope? A: Christian Klein, CEO: We ensure large deals have quantified value and involve key decision-makers. The ramp-up of subscription fees aligns with the value delivered, providing stability even in uncertain times. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
12-02-2025
- Business
- Yahoo
Stora Enso Oyj (SEOAY) Q4 2024 Earnings Call Highlights: Strong EBIT Growth Amidst Sales Decline
Adjusted EBIT Growth: 75% year-on-year increase, reaching EUR598 million. Fixed Costs Reduction: Decreased by EUR110 million. Operating Working Capital: Reduced by over EUR700 million, lowering from 14% to 7% of sales. Full-Year Sales: Declined by 4% to EUR9 billion; sales for continuing businesses increased by 1%. Fourth-Quarter Sales: Increased to EUR2.3 billion. Fourth-Quarter Adjusted EBIT: Increased to EUR121 million, a 139% increase from the previous year. Adjusted EBIT Margin: Increased to 7% from 4% the previous year. Net Debt: Increased to EUR3.7 billion; net-debt-to-adjusted-EBITDA ratio improved to 3 times. Dividend Proposal: EUR0.25 per share, up from EUR0.20 last year. Capital Expenditures: Additions to fixed and biological assets slightly over EUR1 billion; expected to decrease to EUR730-790 million in 2025. Forest Assets Valuation: Increased to EUR8.9 billion, translating to EUR11.28 per share. Cash Flow from Operations (Q4): EUR325 million; cash flow after investing activities improved to EUR88 million. Warning! GuruFocus has detected 8 Warning Signs with SEOAY. Release Date: February 11, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Stora Enso Oyj (SEOAY) achieved a robust 75% year-on-year growth in adjusted EBIT for 2024, driven by improved sourcing, operational efficiency, and commercial excellence. The company reduced its fixed costs by EUR110 million, which helped offset rising wood costs. Operating working capital reached an all-time low, decreasing by over EUR700 million, reducing the operating working capital to sales ratio from over 14% to 7%. The Board proposed a dividend increase to EUR0.25 per share, up from EUR0.20 last year, reflecting a commitment to shareholder value. Stora Enso Oyj (SEOAY) achieved a 53% reduction in Scope 1 and 2 emissions, surpassing its target of a 50% reduction by 2030, demonstrating strong progress in sustainability efforts. Full-year sales declined by 4% to EUR9 billion, primarily due to capacity closures and divestments in 2023. The Packaging Solutions division faced margin pressure due to market overcapacity, resulting in a negative adjusted EBIT of EUR6 million. Wood Products division's adjusted EBIT remained negative at EUR12 million, despite improvements in volumes and prices. The company is still far from its long-term financial targets, indicating ongoing challenges in achieving desired profitability levels. Market uncertainties and fluctuations in demand and pricing persisted throughout 2024, impacting overall business performance. Q: Can you indicate the main strategic CapEx items after the Oulu ramp-up? A: Hans Sohlstrom, CEO: The projected CapEx includes strategic investments. One disclosed opportunity is the Langerbrugge newsprint mill conversion to testliner, forming a competitive entity with the De Jong facility. No decisions or timelines are set yet. Regarding working capital, the 7% of sales is sustainable, and we continue to improve efficiency. Q: With the need to improve profitability, are there structural actions planned for the Oulu ramp-up? A: Hans Sohlstrom, CEO: We are systematically improving cost efficiency with 3,600 identified actions. The Oulu investment will gradually ramp up, adding 750,000 tonnes to a 50 million tonne market by 2027. No capacity closures are planned. For Packaging Solutions, a new divisional leader is in place to improve profitability. Q: How do you see the transaction volume dynamics and pricing for forest assets? A: Hans Sohlstrom, CEO: We see wood costs stabilizing. Our forest asset valuation is based on deals over the last three years, showing a long-term trend of increasing value. We don't speculate on future developments. Q: What is the plan for Oulu's sales, considering global market conditions? A: Hans Sohlstrom, CEO: The Oulu line will primarily serve Europe and the USA, with preparations for US market entry ongoing. The US currently represents less than 5% of our sales. We are prepared for potential tariffs, though they currently have minimal impact. Q: Can you quantify the potential cost savings from your efficiency programs? A: Hans Sohlstrom, CEO: Despite a EUR300 million increase in wood costs, we improved adjusted EBIT by 75% last year. We continue to focus on sourcing, operational efficiency, and commercial excellence to enhance profitability. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
