After an initial review of its fourth-quarter 2020 performance, SAP SE announced its preliminary financial results for the fourth quarter and full year ended December 31, 2020. All 2020 figures in this release are approximate due to the preliminary nature of the announcement.
Topline Exceeds Revised 2020 Outlook, Profit Hits High End
Stellar Cash Flow Performance
Fourth Quarter
- IFRS Cloud Revenue Up 8%; Non-IFRS Cloud Revenue Up 13% At Constant Currencies
- Current Cloud Backlog Up 14% At Constant Currencies
- IFRS Software Licenses Revenue Down 15%; Non-IFRS Software Licenses Revenue Down 11% At Constant Currencies
- IFRS Cloud & Software Revenue Down 4%; Non-IFRS Cloud & Software Revenue Up 1% At Constant Currencies
- IFRS Operating Profit Up 26%; Non-IFRS Operating Profit Up 3% At Constant Currencies
- IFRS Operating Margin Up 9.1pp; Non-IFRS Operating Margin Up 1.5pp At Constant Currencies
Full Year
- Non-IFRS Operating Profit Reaches High End of Revised Outlook Range
- Operating Cash Flow Expected At Around €7.0 Billion, Approximately Doubling Year-over-Year; Free Cash Flow Expected At Around €5.9 Billion; Significantly Exceeding Raised Outlook
- 2021 Outlook Reflects Expedited Move to Cloud
The world’s leading companies are turning to SAP to become intelligent enterprises. We are reinventing how businesses run by accelerating our customers’ transformation in the cloud. Our strong finish to the year and the upcoming launch of our new holistic business transformation offering position us well to meet our new outlook targets.
Christian Klein, CEO
In a uniquely challenging environment, 2020 was a record year for cash flow in every single quarter and the full year. 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.
Luka Mucic, CFO
Fourth Quarter Business Update
SAP’s business performance sequentially improved in the fourth quarter even as the COVID-19 crisis persisted and lockdowns were reintroduced in many regions. Cloud revenue in the fourth quarter continued to be impacted by lower pay-as-you-go transactional revenue, mainly Concur business travel related. However, continued high demand for e-commerce, Business Technology Platform, and Qualtrics solutions along with several competitive wins – particularly for SuccessFactors Human Experience Management – produced a strong finish to the year for SAP’s cloud business. SAP also saw strong early take up of its new holistic business transformation offering among pilot customers, contributing to the cloud performance in the quarter. Both North America and Europe experienced a better-than-expected performance in cloud order entry as well as software licenses revenue reflecting strong demand for SAP’s digital supply chain solutions in particular. In addition SAP had significant competitive wins in ERP.
Throughout the COVID-19 crisis, SAP continues to serve its customers effectively with an embedded virtual sales and remote implementation strategy. The company retains a disciplined approach to hiring and discretionary spend while capturing natural savings e.g. from lower travel, facility-related costs and virtual events. In combination with the strong topline performance these actions drove higher operating profit (IFRS and non-IFRS at constant currencies) and operating margin despite the challenging macro environment.
