WALLDORF, Germany, April 8, 2020 /PRNewswire/ --
"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."
Jennifer Morgan and Christian Klein, 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, CFO
First Quarter Business Update
After an initial review of its first quarter 2020 performance,
SAP SE (NYSE: SAP) today announced its preliminary financial
results for the first quarter ended March
31, 2020. All 2020 figures in this release are approximate
due to the preliminary nature of the announcement and the high
uncertainty associated with the COVID-19 crisis.
Business activity in the first two months of the quarter was
healthy. As the impact of the COVID-19 crisis rapidly intensified
towards the end of the quarter, a significant amount of new
business was postponed. This is reflected, in particular, in the
significant year over year decrease in software licenses
revenue.
SAP has quickly responded to the new environment by adopting a
virtual sales and remote implementation strategy. To protect
profitability SAP is slowing hiring and reducing discretionary
spend in addition to natural savings e.g. from lower travel and
virtualized events.
SAP remains committed to its long-term strategy and prospects
and is continuing to invest in innovation. SAP expects to emerge
from the COVID-19 crisis in an even stronger competitive position
than before.
Financial Performance
In the first quarter, cloud revenue grew 29% year over year to
€2.01 billion (IFRS), up 27% to €2.01 billion (non-IFRS) and 25%
(non-IFRS at constant currencies). Software licenses revenue was
down 31% year over year to €0.45 billion (IFRS and non-IFRS) and
31% (non-IFRS at constant currencies). Cloud and software revenue
grew 7% year over year to €5.40 billion (IFRS), up 6% to €5.40
billion (non-IFRS) and 5% (non-IFRS at constant currencies). Total
revenue grew 7% year over year to €6.52 billion (IFRS), up 7% to
€6.52 billion (non-IFRS) and 5% (non-IFRS at constant
currencies).
The share of more predictable revenue1 grew by
approximately 4 percentage points year over year to approximately
76% in the first quarter.
As expected, the IFRS operating profit in the first quarter
increased significantly primarily due to a significantly lower
impact from both restructuring expenses and share-based
compensation expenses. Operating profit increased more than 100%
year over year to €1.21 billion (IFRS) and up 1% to €1.48 billion
(non-IFRS) and down 1% (non-IFRS at constant currencies).
In the first quarter, SAP incurred a cost of approximately €36
million in relation to the cancellation of its in-person annual
SAPPHIRE NOW and other customer events. Absent the cancellations,
these expenses would have been recognized in the later quarters for
which the events were originally scheduled.
Operating margin increased 20.7 percentage points year over year
to 18.5% (IFRS) and declined 1.3 percentage points year over year
to 22.7% (non-IFRS) and 1.3 percentage points to 22.6% (non-IFRS at
constant currencies).
Non-IFRS Adjustments
The total difference between non-IFRS revenue metrics and the
respective IFRS revenue metrics results from adjusting the impact
of business combination fair value accounting. The difference
between non-IFRS operating profit and IFRS operating profit
includes, in addition to the revenue adjustments of significantly
less than €0.01 billion (Q1 2019: €0.03 billion), adjustments for
acquisition-related charges of €0.16 billion (Q1 2019: €0.17
billion), adjustments for share-based payment expenses of €0.09
billion (Q1 2019: €0.52 billion) and adjustments for restructuring
expenses of €0.02 billion (Q1 2019: €0.89 billion). For more
details on the individual adjusted expense and revenue categories,
our reasons for providing non-IFRS measures and the limitations of
our non-IFRS measures please refer to
https://www.sap.com/docs/download/investors/2018/sap-non-ifrs-measures.pdf
Business Outlook 2020
The Company is updating its 2020 outlook to reflect the
estimated impact of the COVID-19 crisis. The revised outlook
assumes the current COVID-19 induced challenging demand environment
deteriorates through the second quarter before gradually improving
in the third and fourth quarter as economies reopen and population
lockdowns end.
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% to 24% at constant currencies. The previous range
was €8.7 billion to €9.0 billion 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% to 4% at constant currencies. The previous
range was €24.7 to €25.1 billion at constant currencies.
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% to 3% at constant currencies. The previous range was €29.2 to
€29.7 billion at constant currencies.
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% to up 6% at constant currencies. The previous range was
€8.9 to €9.3 billion at constant currencies.
The share of more predictable revenue (defined as the total of
cloud revenue and software support revenue) is now expected to
reach approximately 72%. The respective previously expected share
was approximately 70%.
While SAP's full-year 2020 business outlook is at constant
currencies, actual currency reported figures are expected to be
impacted by currency exchange rate fluctuations as the Company
progresses through the year.
Ambition 2023
SAP confirms its 2023 ambition which was previously published in
its 2019 Integrated Report.
The Company remains in its quiet period until reporting its
complete first quarter 2020 results on April
21st when it will provide further details on its
first quarter and projected full-year 2020 performance.
Additional Information
This press release and all information therein is preliminary
and unaudited.
The 2019 comparative numbers for first quarter only include
Qualtrics revenues and profits from acquisition date of
January 23rd.
First Quarter 2020 Quarterly Statement
SAP's first quarter 2020 quarterly statement will be published
on April 21, 2020 and will be
available for download at www.sap.com/investor.
Webcast
SAP senior management will host a financial analyst conference
call on Tuesday, April 21st at
2:00 PM (CET) / 1:00 PM (GMT) / 8:00
AM (Eastern) / 5:00 AM
(Pacific). The call will be webcast live on the Company's website
at www.sap.com/investor and will be available for replay.
Supplementary financial information pertaining to the first quarter
results can be found at www.sap.com/investor.
About SAP
As the Experience Company powered by the Intelligent
Enterprise, SAP is the market leader in enterprise application
software, helping companies of all sizes and in all industries run
at their best: 77% of the world's transaction revenue touches an
SAP® system. Our machine learning, Internet of Things (IoT), and
advanced analytics technologies help turn customers' businesses
into intelligent enterprises. SAP helps give people and
organizations deep business insight and fosters collaboration that
helps them stay ahead of their competition. We simplify technology
for companies so they can consume our software the way they want –
without disruption. Our end-to-end suite of applications and
services enables more than 440,000 business and public customers to
operate profitably, adapt continuously, and make a difference. With
a global network of customers, partners, employees, and thought
leaders, SAP helps the world run better and improve people's lives.
For more information, visit http://www.sap.com.
For customers
interested in learning more about SAP products:
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Global Customer
Center:
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+49 180
534-34-24
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United States
Only:
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+1 (800) 872-1SAP
(+1-800-872-1727)
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1 Share of more predictable revenue is the total of
non-IFRS cloud revenue and non-IFRS software support revenue as a
percentage of total revenue.
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