Wed. Apr 21st, 2021


SAP has reported fourth-quarter earnings results with few surprises for investors: the balance sheet is stable despite COVID-19, but there is hope for improvement with the upcoming RISE program.

SAP’s Q4 2020 earnings (statement) (.PDF) reveal revenues of €7.54 billion IFRS, down 6% year-over-year (or down 2% non-IFRS and at constant currencies) with basic earnings per share of €1.62 (€1.69 non-IFRS).

In Q3 2020, SAP reported €6.54 billion IFRS revenue.

SAP reported an operating profit of €2.66 billion IFRS, up 26% year-over-year, down 3% to €2.77 billion non-IFRS and up 3% non-IFRS at constant currencies. Operating cash flow has reached €7.2 billion for the full year.

In a preannouncement of Q4 earnings, SAP said that overall company performance improved over the quarter, “even as the COVID-19 crisis persisted and lockdowns were reintroduced in many regions.” 

Cloud revenue grew by 8% year-over-year, to €2.04 billion (IFRS), up 7% non-IFRS and up 13% non-IFRS at constant currencies. 

Software licenses revenue decreased by 15% year-over-year to €1.7 billion (IFRS and non-IFRS) and down 11% (non-IFRS at constant currencies).

Overall cloud and software licenses revenue reduced by 4% year-over-year to €6.58 billion (IFRS) and up 1% non-IFRS at constant currencies.

A current cloud backlog of €7.15 billion has been recorded. 

For the full year, cloud revenue grew to €8.08 billion (IFRS) and €8.09 billion (non-IFRS). SAP says this exceeds the former revised full-year outlook, which was €8.0 to €8.2 billion non-IFRS at constant currencies.

SAP S/4HANA added an additional 900 customers to the roster in Q4 2020, up 16% year-over-year. SAP S/4HANA now accounts for over 16,000 customers, of which roughly 8,700 are now live.

In the future, SAP intends to shift more customers to the cloud. This week, CEO Christian Klein said that a new program initiated by the company, RISE with SAP, will offer “one single handshake” with SAP to assist clients in transforming into “an intelligent enterprise.”

The four main business segments SAP reports on, “Applications, Technology & Services,” “Qualtrics,” “Concur” and “Services” also felt the ongoing impact of the pandemic over the fourth quarter of 2020.

Applications, Technology & Services revenue decreased by 4% to €6.21 billion year-over-year, up 1% at constant currencies.  

Concur, the firm’s travel, expense, and invoice management solutions unit, reported revenue of €341 million year-over-year, down 20% — or 15% at constant currencies. A reduction in revenue was to be expected considering the disruption caused by COVID-19.

Qualtrics revenue was €183 million, an increase of 17% year-over-year, or 26% at constant currencies. 

The Services segment, including digital transformation and the Intelligence team, reported revenue of €758 million, down 16% year-over-year.

SAP’s 2021 business outlook expects €9.1 billion to €9.5 billion non-IFRS cloud revenue at constant currencies, as well as €23.3 billion to €23.8 billion non-IFRS cloud and software revenue. Operating profit is estimated to be in the €7.8 — €8.2 billion non-IFRS range, at constant currencies.

“In a uniquely challenging environment, 2020 was a record year for cash flow in every single quarter and the full year,” commented Luka Mucic, SAP CFO. Our better-than anticipated top line performance combined with our quick response on the cost side drove strong operating profit. SAP’s expedited shift to the cloud will drive long-term, sustainable growth while significantly increasing the resiliency and predictability of our business.”

In related news this month, SAP and Microsoft inked a deal to extend an existing partnership by announcing the integration of Microsoft Teams with SAP solutions. Teams is set to be linked to SAP S/4HANA, SAP SuccessFactors, and SAP Customer Experience.

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