SAP Posts Profit, Backs FY20 View; Co-CEO Jennifer Morgan To Leave; Stock Dips

German software major SAP SE (SAP) reported Tuesday a profit in its first quarter, compared to last year’s loss with good growth in revenues. Going ahead, the company maintained its fiscal 2020 outlook. The company late Monday announced the departure of Co-CEO Jennifer Morgan in April end, as the firm simplifies its leadership structure amid the coronavirus pandemic. The shares were losing around 3 percent in the morning trading in Germany.

For fiscal 2020, Sap expects, as announced on April 8, non-IFRS total revenue in a range of 27.8 billion euros to 28.5 billion euros, up 1 percent to 3 percent at constant currencies.

Non-IFRS operating profit is still expected to be in a range of 8.1 billion euros to 8.7 billion euros, down 1 percent to up 6 percent at constant currencies.

SAP also backed outlook for non-IFRS cloud revenue and non-IFRS cloud and software revenue. The outlook reflects the estimated impact of the COVID-19 crisis.

Further, Sap now expects an operating cash flow of approximately 5 billion euros, down from previous view of 6 billion euros, and free cash flow of about 3.5 billion euros, down from previous view of 4.5 billion euros.

SAP also confirmed its previously announced 2023 ambition.

Further, the company said it does not plan to conduct further share buybacks in 2020, and the dividend proposal of 1.58 euros per share was unchanged.

Regarding its COVID-19 response, the company said it is slowing hiring and reducing discretionary spend to ensure financial flexibility.

For the first quarter, profit after tax was 811 million euros, compared to last year’s loss of 108 million euros. Basic earnings per share were 0.68 euro, compared to loss of 0.10 euro a year ago. Non-IFRS profit was 1.02 billion euros, compared to 1.08 billion euros last year. Non-IFRS earnings per share were 0.85 euro, compared to 0.90 euro a year ago.

Total revenue for the quarter grew 7 percent to 6.52 billion euros from last year’s 6.09 billion euros.

As said earlier, business activity in the first two months of the quarter was healthy, while COVID-19 crisis rapidly intensified towards the end of the quarter. The company noted that a significant amount of new business was postponed, resulting in significant year over year decrease in software licenses revenue.

In a separate statement, Sap announced that Morgan, aged 48, will step down as co-chief executive officer on April 30, just six months after sharing the post with Christian Klein, who will now continue as the sole CEO.

SAP said the current environment requires the company to take swift, determined action, and decided to transfer from Co-CEO to sole CEO model earlier than planned to ensure strong, unambiguous steering in times of the coronavirus crisis.

Morgan joined SAP in 2004 and was appointed co-chief executive officer, together with Klein, in October 2019 after the departure of long time chief executive officer Bill McDermott.

In early April, Sap extended the contract of its Chief Financial Officer Luka Mucic for another five years until the end of March 2026.

In Germany, Sap shares were trading at 110.76 euros, down 2.62 percent.

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