SAP SE (SAP) reported that its third-quarter profit after tax rose 31% to 1.65 billion euros from last year’s 1.26 billion euros.
Earnings per basis share was up 26% year over year to 1.32 euros on a IFRS basis and up 31% year over year to 1.70 euros on a non-IFRS basis, reflecting a strong contribution from Sapphire Ventures.
Operating profit decreased by 12% year over year to 1.47 billion euros on a IFRS basis and was down 1% to 2.07 billion euros on a non-IFRS basis, primarily due to higher share-based compensation expenses compared to the prior year period.
Total revenue for the third-quarter was down 4% year over year to 6.54 billion euros on a IFRS and non-IFRS basis, and flat ona non-IFRS basis at constant currencies.
The share of more predictable revenue grew by about 5 percentage points year over year to about 74% in the third quarter.
For 2020, the company now expects non-IFRS total revenue to be 27.2 billion euros – 27.8 billion euros at constant currencies, compared to the prior outlook of 27.8 billion euros – 28.5 billion euros. SAP continues to expect its share of more predictable revenue to be approximately 72%.
The company expects the COVID-19 pandemic to impact the demand environment, particularly in hard hit industries, through at least the first half of 2021 pushing out the achievement of key metrics such as non-IFRS cloud revenue, total revenue, and operating profit, by 1 to 2 years.
SAP said it will accelerate growth in the cloud revenue to more than 22 billion euros in 2025 and expand the share of more predictable revenue to about 85%. The company expects software licenses revenue to continue to trend lower from 2020 levels, as a consequence of the company’s accelerated cloud transition.
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