SAP’s new leadership raises guidance following strong results
SAP raised its guidance today following a strong set of quarterly results under its new leadership duo.
The technology firm has raised its revenue and profit outlook. SAP forecasts that operating profit will reach €8.9bn to €9.3bn in 2020. Revenues are expected to gain 6-8 per cent to €29.2bn (£24.7bn) to €29.7bn (£25.16bn).
It is a solid first set of results for new co-chief executives Jennifer Morgan and Christian Klein, who joined in October 2019.
SAP now expects adjusted operating profit to grow 8 to 13 per cent in 2020. It has set a target of boosting margins by one percentage point per year.
Non-IFRS operating profits gained 9 per cent to €2.8bn (£2.37bn) in the fourth quarter, in line with analyst expectations.
“We are seeing a huge acceleration into the cloud”, said Klein on a conference call. In the fourth quarter, cloud bookings were up 19 per cent to €878m (£743.8m).
SAP’s finance chief Luka Mucic said: “We have great expectations for continued efficiency gains and expansion of our profitability in 2020”.
However, unadjusted profit fell by 11 per cent in the fourth quarter on account of its restructuring and costs related to SAP’s $8bn (£6.2bn) takeover of Qualtrics in 2018.
Last year Morgan and Klein replaced long-time boss Bill McDermott, who had been at the helm for nine years.
The duo have spent their first three months streamlining SAP’s sales organisation. Morgan said: “Around integration: we know the combinations of solutions that most of our customers are using today. We know what the (sales) pipeline tells us about where we’re headed tomorrow”.
McDermott oversaw the acquisition of Qualtrics which marked a shift towards cloud technology. At the time McDermott said: “The combination of Qualtrics and SAP reaffirms experience management as the groundbreaking new frontier for the technology industry.”
SAP’s share price fell three per cent to €117.56 (£99.6) in afternoon trading before recovering to €119.7 (£101.4), representing a 2 per cent drop.