LONDON, Oct 13 (Reuters Breakingviews) – Christian Klein’s strategy for 145 billion euro software giant SAP (SAPG.DE) seems to be working, but investors aren’t giving him credit. The chief executive wants so-called cloud revenue, which means sales from IT products that are hosted remotely rather than on local servers, to hit 22 billion euros by 2025. An ad-hoc market update on Wednesday, which pushed the share price up by 4.6%, showed he’s on track. Cloud sales grew by 20% as corporate clients bought more of its subscription software; that’s roughly the pace at which revenue needs to increase to hit Klein’s 2025 target.
But the shares are still lower than they were last October, before Klein released his five-year plan. And investors don’t value SAP like a fast-growing cloud specialist. U.S. rivals Salesforce.com (CRM.N), Workday (WDAY.O) and ServiceNow (NOW.N) on average trade at 20 times 2025 revenue. Apply the same multiple to Klein’s targeted 22 billion euros of cloud sales, and that division alone should be worth 447 billion euros including debt – roughly three times SAP’s total enterprise value. Klein has won over customers but not yet investors. (By Liam Proud)