SAP Misses in Q2 Due to Exiting Russia as Cloud Becomes SAP's Main Revenue Stream; Shares Attractive

SAP reported mixed second-quarter results missing FactSet consensus earnings per share despite a moderate revenue beat. Despite the EPS miss, we found it comforting that omitting the Russia exit, SAP would be outperforming against its operating profit goals. Revenue guidance for the year was reconfirmed but the range of non-IFRS operating profit for fiscal 2022 was reduced due to headwinds from exiting Russia. On the bright side, SAP's cloud business became the largest revenue contributor for the first time in the second quarter—as SAP added larger enterprises to its cloud software mix, compared with historically having a higher mix of net new midsize firms.