“In a uniquely challenging environment, 2020 was a record year for cash flow in every single quarter and the full year,” CFO Luka Mucic said in a statement. “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.”
SAP (ticker: SAP) said its performance sequentially improved in the fourth quarter “even as the Covid-19 crisis persisted and lockdowns were reintroduced in many regions.” The company noted that fourth quarter cloud revenue “continued to be impacted by lower pay-as-you-go transactional revenue,” mainly due to reduced business travel bookings at Concur. But the company said that high demand in other areas “produced a strong finish to the year for SAP’s cloud business.”
SAP’s results can be a little confusing to American eyes. The results are reported in euros, on both an IFRS basis—the equivalent of GAAP (generally accepted accounting principles)—and on a non-IFRS basis, much like non-GAAP U.S. accounting. Like other large international enterprise technology firms, SAP tends to focus on data reported in constant currency. Also note that the company characterized the disclosure as a pre-announcement ahead of the regularly scheduled earnings release.
All that said, for the full year, SAP estimates that total revenue on a non-IFRS basis was €27.3 billion ($33.2 billion), toward the lower end of the company’s revised guidance range of €27.2 billion to €27.8 billion, and down 1% from a year ago. (That seems contradictory to Mucic’s quote on the quarter which says that performance was better than expected at the top line; a spokesman says that reflects the fact that the interim results today were on an as-reported basis, and not adjusted for currency.)
Cloud revenue for the year was €8.1 billion, up 15% from the previous year, in the middle of the company’s guidance range, while cloud and software license revenues combined were €23.2 billion, up 1%; the guidance range had been €23.1 billion to €23.6 billion. Operating profit on a non-IFRS basis was €8.28 billion, in the middle of the guidance range of €8.1 billion to €8.5 billion.
SAP said that fourth quarter cloud-related revenues were up 8% on an IFRS-basis or 13% on an adjusted basis, while software license revenue was down 15%, or 11% on an adjusted basis in constant currency. Cloud and software revenue combined was down 4%, or up 1% on an adjusted basis in constant currency. The company had not provided detailed fourth-quarter guidance.
Overall fourth-quarter revenue of €7.54 billion was a little ahead of the Street consensus at €7.49 billion as tracked by FactSet. After-tax profit of €2.02 billion was likewise slightly ahead of the Street at €1.94 billion.
For 2021, SAP is projecting non-IFRS cloud revenues of €9.1 billion to €9.5 billion, up 13%, or 18% in constant currency, consistent with the Street consensus at €9.3 billion. SAP projects cloud and software revenue on the same basis of €23.3 billion to €23.8 billion, flat to up 2% in constant currency, and a little below the Street at €24.3 billion, with non-IFRS operating profit of €7.8 billion to €8.2 billion; the Street has been projecting €8.1 billion.
SAP shares in late trading were up 2.3%, to $129.
Write to Eric J. Savitz at email@example.com