Wednesday, July 30, 2025

SAP cuts 2020 earnings guidance as customers postpone

The German business software maker said it now sees operating profit, adjusted for special items, in a range of 8.1 billion euros ($8.8 billion) to 8.7 billion euros, a fall of 1%-6% at constant currencies. 

Many listed companies have abandoned guidance due to coronavirus however SAP, Europe’s most valuable technology company, has more visibility than most as it makes most of revenue from subscriptions and software support that are predictable. 

SAP stood by its mid-term growth forecasts that foresee an expansion of its profit margins of one percentage point per year through to 2023 as it focuses on shifting its business model to cloud subscriptions and away from software licenses. 

“Our multi-year emphasis on building a strong base of more predictable revenue has made SAP more resilient than ever,” CFO Luka Mucic said in a statement. 

“We will weather the COVID-19 crisis and emerge stronger than before as we have done in past downturns. Our updated guidance demonstrates that even in this challenging environment SAP remains healthy and stable.” 

Citi analyst Julian Serafini said SAP’s guidance “implies very soft new business throughout the year … which in turn implies a strong rebound in out-years in order to meet the maintained 2023 targets.” 

The company’s shares were indicated to open up to 1.3%, having declined by 13% in the current year to date. 

Prompted by German stock exchange rules that require listed companies to report material divergences in results or changes to guidance, SAP said that its adjusted operating profit edged 1% higher to 1.48 billion euros in the first quarter. 

It said that, as the impact of the COVID-19 crisis rapidly intensified towards the end of the first quarter, a significant amount of new business was postponed. 

This was reflected in a 31% decline in revenue from software licenses – SAP’s cash cow business that generates much of its profits but is ‘lumpy’ because revenue is recognised up front. 

 

Reported by Ludwig Burger and Douglas Busvine 

Sourced Reuters  

For more Business & Technology news follow i-invest Online. 

Latest

Scale AI-driven improvements across your organisation: A Q&A with Michael Wade

From ensuring AI delivers on sustainability, to managing change...

Tech must-reads for the modern business leader

As technological change continues to influence the world of...

i-invest announces media partnership with GITEX GLOBAL 2025

i-invest is proud to be a media partner of...

Prime property a strong option amid market volatility

Sotheby’s International Realty have recently released their much anticipated...

Subscribe To Our Content

Don't miss

Scale AI-driven improvements across your organisation: A Q&A with Michael Wade

From ensuring AI delivers on sustainability, to managing change...

Tech must-reads for the modern business leader

As technological change continues to influence the world of...

i-invest announces media partnership with GITEX GLOBAL 2025

i-invest is proud to be a media partner of...

Prime property a strong option amid market volatility

Sotheby’s International Realty have recently released their much anticipated...

Silver linings: How to change the midlife career narrative

Midlife job-seeking is often subject to ageism and disheartening...

Scale AI-driven improvements across your organisation: A Q&A with Michael Wade

From ensuring AI delivers on sustainability, to managing change fatigue within organisations, IMD Business School Professor and tech author Michael Wade discusses all things...

Tech must-reads for the modern business leader

As technological change continues to influence the world of business in ever more pronounced ways, gaining insight from within industry and academia has never...

i-invest announces media partnership with GITEX GLOBAL 2025

i-invest is proud to be a media partner of GITEX GLOBAL 2025, the world’s largest tech, AI, and startup show, which takes place at...

LEAVE A REPLY

Please enter your comment!
Please enter your name here