SAP slashes revenue outlook due to coronavirus epidemic

Business software major SAP has slashed its revenue outlook for 2020 in the wake of the spread of coronavirus epidemic.
sap-hana-erp-for-enterprisesGermany-based SAP said revenue is now expected to be in a range of €27.8 to €28.5 billion at constant currencies as compared with previous target of €29.2-€29.7 billion. SAP reported €27.63 billion revenue in 2019.

SAP is expecting operating profit of €8.1-€8.7 billion against the previous target of €8.9-€9.3 billion. SAP’s operating profit touched €8.21 billion in 2019.

SAP co-CEOs Jennifer Morgan and Christian Klein said: “Our emphasis on building a strong base of more predictable revenue has made SAP more resilient than ever. Combined with an expense management and a focus on innovation we will weather the COVID-19 crisis.”

SAP said cloud revenue is expected to be €8.3-€8.7 billion as compared with the earlier target of €8.7-€9 billion. SAP’s could revenue in 2019 was €7.01 billion.

SAP is expecting cloud and software revenue of €23.4-€24 billion against the previous target of €24.7-€25.1 billion. SAP generated cloud and software revenue of €23.09 billion in 2019.

SAP in first quarter

SAP said its revenue grew 7 percent to €6.52 billion in the first quarter of 2020 despite the spread of coronavirus epidemic.

SAP’s cloud revenue grew 29 percent to €2.01 billion in the first quarter. Software licenses revenue fell 31 percent to €0.45 billion. Cloud and software revenue grew 7 percent to €5.40 billion.

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 percent to €1.21 billion.

SAP incurred a cost of approximately €36 million in relation to the cancellation of its in-person annual SAPPHIRE NOW and other customer events.