In 2019, the first quarter SAP Financial Performance Report displayed a stellar performance across cloud and core business with cloud revenue exceeding €1.5 Billion for the first time in a quarter, with IFRS up by 45{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} and non-IFRS up by 48{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd}.
Last 8 April 2020, SAP announced it’s preliminary financial performance report for the first quarter ended 31 March 2020 showing the company’s healthy business despite COVID-19 disrupting the global economy. The approximate figures in the initial review considered the high uncertainty associated with the current crisis.
“As the world navigates the COVID-19 pandemic, SAP has remained focused on our employees, customers, and communities. To support them, we made our vast business networks and technology available for companies to find new sources of supply and manage demand, understand and act on sentiment across value chains that went virtual overnight, and support learning efforts at scale. Our customers will continue to rely on us to listen and engage with their employees in new ways, manage their supply chains, and connect with their customers in a virtual world where sentiment will become a leading indicator,” said Jennifer Morgan and Christian Klein, SAP Co-CEOs.
“Our multi-year emphasis on building a strong base of more predictable revenue has made SAP more resilient than ever. Combined with an even more prudent expense management and a continued focus on innovation we will weather the COVID-19 crisis and emerge stronger than before as we have done in past downturns. Our updated guidance demonstrates that even in this challenging environment SAP remains healthy and stable,” Luka Mucic, SAP CFO.
Q1 Financial Performance Report
This year’s first quarter showed total revenue growth of 7{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} year over year to €6.52 billion (IFRS), up 7{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €6.52 billion (non-IFRS) and 5{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (non-IFRS at constant currencies). Cloud revenue grew 29{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} year over year to €2.01 billion (IFRS), up 27{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €2.01 billion (non- IFRS) and 25{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (non-IFRS at constant currencies). As for cloud and software revenue, it achieved a 7{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} growth year over year to €5.40 billion (IFRS), up 6{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €5.40 billion (non-IFRS) and 5{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (non-IFRS at constant currencies). A decline in the software licenses revenue was seen at 31{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} year over year to €0.45 billion (IFRS and non-IFRS) and 31{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} (non-IFRS at constant currencies).
An increase of approximately 4-percentage points year over year to approximately 76{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} was seen in the first quarter for the share of more predictable revenue (defined as the total of cloud revenue and software support revenue).
The Q1 report showed a significant increase in the IFRS operating profit due to a significantly lower impact from both restructuring expenses and share-based compensation expenses. The IFRS operating profit increased more than 100{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} year over year to €1.21 billion and non-IFRS increased 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to €1.48 billion. However, non-IFRS at constant currencies went down by 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd}.
SAP events in March 2020 including SAPPHIRE NOW have been cancelled due to COVID-19 incurring a cost of approximately €36 million.
IFRS operating margin increased 20.7 percentage points year over year to 18.5{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} and non-IFRS declined 1.3 percentage points year over year to 22.7{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} and non-IFRS at constant currencies also declined 1.3 percentage points to 22.6{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd}.
2020 Outlook
In consideration of COVID-19, SAP is updating its 2020 outlook to reflect the impact of the pandemic. In the revised outlook, it is assumed that the current COVID-19 induced challenging demand environment will taper down through the second quarter before gradually improving in the third and fourth quarter as economies reopen and population lockdowns end.
Non-IFRS total revenue is now expected to be in a range of €27.8 to €28.5 billion at constant currencies (2019: €27.63 billion), up 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to 3{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} at constant currencies. Non-IFRS cloud revenue is now expected to be in a range of €8.3 billion to €8.7 billion at constant currencies (2019: €7.01 billion), up 18{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to 24{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} at constant currencies. Non-IFRS cloud and software revenue is now expected to be in a range of €23.4 to €24.0 billion at constant currencies (2019: €23.09 billion), up 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to 4{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} at constant currencies.
For the total revenue of non-IFRS, it is now expected to be in a range of €27.8 to €28.5 billion at constant currencies (2019: €27.63 billion), up 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to 3{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} at constant currencies while non-IFRS operating profit is now expected to be in a range of €8.1 to €8.7 billion at constant currencies (2019: €8.21 billion), down 1{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} to up 6{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd} at constant currencies.
The share of more predictable revenue is now expected to reach approximately 72{8bf2b29f36318f0ac46ab1cc03d7035abce669a1cea16c9ed62389a818fa22fd}.
The complete 2020 first quarter SAP financials will be released by 21 April 2020 to include further details on its first-quarter and projected full-year 2020 performance.
As previously published in SAP 2019 Integrated Report, the company confirms its 2023 ambition of doubling the SAP market value, up to 300 billion Euros.
