Unexpectedly strong second Quarter

09. Juli 2020, 08:07 Uhr   |  dpa

Unexpectedly strong second Quarter

Headquarters of SAP in Walldorf

Europe's largest software manufacturer SAP has had an unexpectedly strong second quarter in the coronavirus crisis.

After the pandemic hit Asia so hard in the first quarter that CEO Christian Klein and CFO Luka Mucic had to trim the forecasts, SAP now posted surprisingly high revenue and profit, according to the Dax heavyweight's surprise announcement late Wednesday evening.

Earnings before interest and taxes adjusted for special effects climbed 8 percent to €1.96 billion compared to the same period last year. This was considerably more than analysts had previously expected at an average of around EUR 1.8 billion. "Our rapid response to the crisis on the cost side promoted a strong increase in operating profit and margin," said CFO Mucic.

Sales also showed a surprising increase of 2 percent to 6.74 billion euros, with the majority of experts expecting a decline. "I am very proud that our teams have successfully mastered the very difficult environment and achieved a better quarterly result than expected," said CEO Klein. He added that the Group's broad range of products and services played a decisive role in the digitization of customers: "This will enable our customers to emerge from the crisis stronger than before.

The driving force in terms of revenues was again the cloud software business, which grew by around one-fifth to EUR 2.04 billion. Normally, SAP records even higher growth rates here. However, due to the corona crisis, business in the second quarter was impacted by lower volume-based transaction revenue - for example, SAP is earning from the volume of trade processed on the Ariba procurement platform, which probably suffered in the economic downturn.

However, the order backlog for cloud contracts already concluded is expected to have grown by a fifth, the company said. Demand for digital supply chains, e-commerce, the cloud platform, and solutions from market research subsidiary Qualtrics remains high.
Despite an 18 percent decline in cyclically sensitive license revenues, SAP performed significantly better than feared, despite an even sharper damper than expected by analysts. In the first quarter, lucrative one-time sales had already collapsed due to the corona pandemic. Asia and Japan in particular, however, had now experienced a strong recovery in business, they said.

SAP confirmed its lowered forecasts for the year after the first quarter. After the corona crisis had a significant impact on the global economy in the last month of the first quarter, business gradually picked up again during the second quarter, SAP said. SAP did not initially disclose its net income figures, but will present detailed results on July 27.

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