SAP confirms revenue outlook despite Covid-19

German software maker SAP on Wednesday confirmed its full-year outlook despite the negative effects of a global lockdown.
SAP customersThe global business technology company confirmed its 2020 outlook for an operating profit, adjusted for special items, in a range of 8.1 billion-8.7 billion euros, a fall of 1 percent-6 percent at constant currencies.

SAP had cut its earnings guidance in April after the coronavirus pandemic caused customers to put orders on hold, after having earlier forecast 10 percent growth.

“The outlook continues to be based on the assumption of a gradually improving demand environment in the third and fourth quarter as economies reopen further and population lockdowns ease,” SAP said.

SAP plans to publish full second-quarter earnings on July 27.

SAP said total revenue in the period increased by 2 percent to 6.74 billion euros or $7.64 billion. SAP’s revenue from Software licenses slumped 18 percent. SAP’s cloud revenues rose by 18 percent.

“Software licenses revenue, while still below normal levels, recovered more than expected,” SAP said in a pre-released earnings statement. SAP said that the revenue showed a strong sequential improvement compared to the first quarter.

Operating profit increased by 7 percent to 1.96 billion euros as SAP slowed hiring new staff and cut costs, including by spending less on travel and staging more virtual events.

“Our quick response to the crisis on the cost side drove strong operating profit and margin expansion,” Chief Financial Officer Luka Mucic said in a statement.

SAP said it will continue to invest in innovation to emerge from the COVID-19 crisis even stronger.