SAP Saw Strong Cloud Demand In Q4, Expects FY21 Operating Profit Decline

SAP SE (NYSE: SAP) reported a revenue decline of 6% year-on-year to €7.54 billion in the fourth quarter of FY20.
The e-commerce solution exuded robust performance, more than doubling the cloud revenue due to their increased demand during the pandemic.
The cloud revenue grew 8% year-on-year to €2.04 billion. It was negatively impacted by lower transactional revenue from Concur due to reduced business travel amidst the pandemic.
The software license revenue declined 15% to €1.70 billion), and the cloud and software revenue declined 4% to €6.58 billion.
The gross margin for cloud expanded 210 basis points to 67.2%.
The operating profit rose 26% to €2.66 billion, with a margin expansion of 910 basis points to 35.2%.
The adjusted EPS €1.69 was down 7% Y/Y, beating consensus by €0.13.
Operating cash flow for fiscal 2020 almost doubled Y/Y to €7.2 billion.
SAP’s expedited shift to the cloud will drive long-term, sustainable growth while significantly increasing the resiliency and predictability of our business,” said SAP CFO Luka Mucic.
Outlook: SAP expects FY21 cloud revenue growth of 13% to 18%, cloud and software revenue growth of 0% to 2%, operating profit decline of 1% to 6%.
The share of cloud revenue and software support revenue could expand by 300 basis points to 75%. The cash flow expectations stand lower at €6.0 billion in anticipation of discreetly lower profit, higher expected income tax payments, and adverse currency movement.
Price action: SAP’s shares were down by 0.82% at $129.37 on the last check Friday.

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