SAP Q3 2020: Software license revenues collapse, demand weakens as COVID-19 strengthens its grip

SAP released third quarter results showing declining revenue and the impact of COVID-19 on the company’s cloud business.

SAP profits in the third quarter of 2020 (declaration) (.PDF), at the end of September 2020, revealed IFRS revenues of 6.54 billion euros, down 4% year-on-year (or stable non-IFRS and at a rate of constant exchange rates) with basic earnings per share of € 1.32 (€ 1.70 non-IFRS) IFRS).

In the second quarter of 2020, SAP achieved IFRS revenue of 6.74 billion euros.

SAP reported operating income of 1.47 billion euros under IFRS, down 12% year-on-year and 1% to 2.07 billion euros under non-IFRS and up 4% on non-IFRS IFRS at constant exchange rates.

SAP says the reduction in operating profit is “primarily due to higher stock-based compensation expenses compared to the prior year period.”

Operating cash flow for the first nine months of the year was 5.09 billion euros, up 54% year-over-year due to “lower payments related to restructuring and lower income tax payments “.

A cloud backlog of 6.6 billion euros was recorded, while cloud revenue increased 11% year-on-year to 1.98 billion euros (IFRS), up 10% non-IFRS and 14% non-IFRS at constant exchange rates. Software license revenue decreased 23% year-on-year to € 0.71 billion (IFRS and non-IFRS) and 19% (non-IFRS at constant exchange rates) .

Global cloud and software revenue down 2% year-on-year to € 5.54 billion (IFRS) and up 2% non-IFRS at constant currencies.

SAP S / 4HANA added 500 more customers to the list in Q3 2020, up 20% year-over-year. SAP S / 4HANA now has more than 15,100 customers, of which approximately 8,100 are now active.

The four main business lines of SAP reports, “Applications, Technology and Services”, “Qualtrics”, “Concur” and “Services” also felt the continued impact of the pandemic during the third quarter of 2020.

Applications, technologies and services revenue decreased 2% to 5.17 billion euros year-on-year.

Concur, the company’s travel, expense and invoice management solutions unit, reported year-over-year revenue of € 357 million, down 14%, or 10% at rate constant exchange rates. Concur is believed to be responsible for negatively impacting cloud growth of around 6%.

Qualtrics’ revenue was € 169 million, an increase of 22% year-on-year, or 28% at constant currencies.

The Services segment, comprising the digital transformation and the Intelligence team, achieved a turnover of 753 million euros, down 16% year-on-year.

“While the vast majority of consulting projects continue to be efficiently delivered remotely and premium services from SAP remain in high demand, in particular, SAP’s training business has also been affected due to delays in reopening. global training centers, ”the company added.

SAP business prospects for the whole of fiscal year 2020 has changed. SAP says that due to the reintroduction of lockdowns amid a second wave of COVID-19, the company “no longer anticipates a significant recovery in SAP Concur’s business travel revenue for the remainder of the year. year”.

The tech giant also cut its cloud revenue forecast for fiscal 2020 from $ 8.3 billion to $ 8.7 billion (non-IFRS at constant exchange rates) to $ 8 billion to $ 8.2 billion. euros.

Cloud and software revenues have been reduced from € 23.4 billion – € 24 billion to € 23.1 billion – € 23.6 billion, and total revenue forecast has been reduced from 27.8 billion euros – 28.5 billion euros to 27.2 billion euros – 27.8 billion euros.

The cash flow forecast for 2020 has, however, been raised to € 6 billion, from previously expected to be € 5 billion or more.

“COVID-19 has created an inflection point for our customers,” commented Christian Klein, CEO of SAP. “The move to the cloud combined with a real business transformation has become a must for companies, to gain resilience and position them to emerge stronger from the crisis. With our customers and partners, we will co-innovate and reinvent the way businesses operate in a digital world. ”

screenshot-2020-10-26-at-06-02-24.png

Prior and related coverage


Do you have any advice? Contact us securely via WhatsApp | Call +447 713 025 499, or on Keybase: charlie0