What's going on?

SAP released an overwhelmingly adequate fourth-quarter update on Friday, and the cloud provider�s throngs of relatively satisfied investors went mild.

What does this mean?

SAP�s last earnings announcement went horribly � so horribly, in fact, that its share price plummeted and lost the software giant its title as Europe�s most valuable tech company. To calm investors� nerves this time around, then, the software giant opted to deliver last quarter�s more reassuring news � that its profit had beaten analysts� estimates � earlier than it�d originally promised. And it seemed to work: SAP�s share price barely moved on Friday � a big step up from the 23% drop investors saw last time around.

Why should I care?

For markets: Ready, willing, and stable.�

Even SAP�s acknowledgement that 2021�s profits might be 6% lower than last year�s didn�t seem to do too much damage to its share price. That might be thanks to some smart preemptive expectation-setting: the company had previously announced that its shift towards cloud computing � which doesn�t benefit from up-front fees like its legacy software does � would negatively impact profitability in the short term. And in any case, SAP was able to point to a 13% growth in its cloud segment�s revenue compared to the same time in 2019. That�s in line with the previous quarter, sure, but it came as welcome news after a few pretty volatile ones.

The bigger picture: Unhealthy competition.�

The cloud industry proved it could hold its own during the pandemic, which might be why it�s expected to grow three times as quickly this year as it did last (tweet this). So it�s no wonder SAP has big competition in the segment, with Microsoft, Amazon, and Google all getting involved. That means the pressure will be on SAP all over again when those firms announce their own results, and its investors have a better insight into whether it can keep up with the industry�s heavy-hitters.