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SAP's Q1 Preliminary Results & 2020 View Hurt by Coronavirus
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SAP SE (SAP - Free Report) recently reported preliminary first-quarter 2020 results. The company will release final first-quarter 2020 results in detail on Apr 21.
The company also cut short 2020 projections for revenues and operating profit citing the impact of coronavirus-induced population lockdowns. The company notes that the first two months of 2020, business remained “healthy.” However, as the pandemic intensified, demand deteriorated, which the company anticipates to continue through the second quarter.
Nevertheless, SAP anticipates business to gradually improve as the situation comes under control, and lockdowns are withdrawn, and economies begin to function normally.
Meanwhile, SAP is striving to deal with the coronavirus-induced business woes by focusing on virtual sales, remote implementation, reduced hiring and other spend, amid savings from restricted travel and virtualized events.
Notably, shares of SAP are down 14.1% year to date compared with the industry’s decline of 0.7%.
Bleak Q1 Preliminary Results
Per the results, SAP reported total revenues, on a non-IFRS basis, of €6.52 billion ($7.19 billion). The figure rose 7% year over year, up 5% at constant currency (cc). On IFRS basis, revenues were €6.52 billion ($7.19 billion), up 7% year over year.
The Zacks Consensus Estimate for revenues is currently pegged at $7.24 billion.
On a non-IFRS basis, Cloud and software business reported revenues of €5.40 billion, up 6% year over year (up 5% at cc). On IFRS basis, revenues were €5.40 billion, up 7% year over year.
Cloud revenues came in at €2.01 billion, up 27% year over year on a non-IFRS basis (25% at cc).
However, the company noted Software licenses revenues of €0.45 billion, down 31% (down 31% at cc) year over year. Management attributes the decline to the impact of coronavirus outbreak that intensified in March and let to postponement of “significant” amount of new business.
Operating profit of €1.48 billion grew 1% on a year-over-year basis (down 1% at cc).
Operating margin of 22.7% contracted 130 basis points (bps) year over year. On a cc basis, the figure contracted 130 bps and came in at 22.6%.
The company notes that during the first quarter, it incurred cost of €36 million due to cancellation of its annual SAPPHIRE NOW and other customer events owing to the pandemic.
Trimmed Guidance for 2020
For 2020, SAP now projects non-IFRS cloud revenues in the range of €8.3-€8.7 billion at cc (mid-point €8.5 billion), compared with prior projected range of €8.7-€9.0 billion (mid-point €8.85 billion). The figure indicates decline of almost 4% at the mid-point.
Non-IFRS cloud and software revenues are now anticipated between €23.4 billion and €24 billion, up 1-4% at cc. The earlier guided range was €24.7-€25.1 billion at cc.
Non-IFRS total revenues are now projected to come in the range of €27.8 to €28.5 billion (mid-point €28.15 billion), up 1-3% year over year at cc. The prior guided range was €29.2 billion to €29.7 billion (mid-point €29.45 billion). Markedly, the figure indicates decline of 4.4% at the mid-point.
Notably, the company now anticipates non-IFRS operating profit in the band of €8.1 billion to €8.7 billion, compared with prior predicted range of €8.9 billion to €9.3 billion.
The long-term earnings growth rate for Netlist, CyberOptics and LogMeIn are currently pegged at 15%, 12% and 5%, respectively.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
SAP's Q1 Preliminary Results & 2020 View Hurt by Coronavirus
SAP SE (SAP - Free Report) recently reported preliminary first-quarter 2020 results. The company will release final first-quarter 2020 results in detail on Apr 21.
The company also cut short 2020 projections for revenues and operating profit citing the impact of coronavirus-induced population lockdowns. The company notes that the first two months of 2020, business remained “healthy.” However, as the pandemic intensified, demand deteriorated, which the company anticipates to continue through the second quarter.
Nevertheless, SAP anticipates business to gradually improve as the situation comes under control, and lockdowns are withdrawn, and economies begin to function normally.
Meanwhile, SAP is striving to deal with the coronavirus-induced business woes by focusing on virtual sales, remote implementation, reduced hiring and other spend, amid savings from restricted travel and virtualized events.
Notably, shares of SAP are down 14.1% year to date compared with the industry’s decline of 0.7%.
Bleak Q1 Preliminary Results
Per the results, SAP reported total revenues, on a non-IFRS basis, of €6.52 billion ($7.19 billion). The figure rose 7% year over year, up 5% at constant currency (cc). On IFRS basis, revenues were €6.52 billion ($7.19 billion), up 7% year over year.
The Zacks Consensus Estimate for revenues is currently pegged at $7.24 billion.
On a non-IFRS basis, Cloud and software business reported revenues of €5.40 billion, up 6% year over year (up 5% at cc). On IFRS basis, revenues were €5.40 billion, up 7% year over year.
Cloud revenues came in at €2.01 billion, up 27% year over year on a non-IFRS basis (25% at cc).
However, the company noted Software licenses revenues of €0.45 billion, down 31% (down 31% at cc) year over year. Management attributes the decline to the impact of coronavirus outbreak that intensified in March and let to postponement of “significant” amount of new business.
Operating profit of €1.48 billion grew 1% on a year-over-year basis (down 1% at cc).
Operating margin of 22.7% contracted 130 basis points (bps) year over year. On a cc basis, the figure contracted 130 bps and came in at 22.6%.
The company notes that during the first quarter, it incurred cost of €36 million due to cancellation of its annual SAPPHIRE NOW and other customer events owing to the pandemic.
Trimmed Guidance for 2020
For 2020, SAP now projects non-IFRS cloud revenues in the range of €8.3-€8.7 billion at cc (mid-point €8.5 billion), compared with prior projected range of €8.7-€9.0 billion (mid-point €8.85 billion). The figure indicates decline of almost 4% at the mid-point.
Non-IFRS cloud and software revenues are now anticipated between €23.4 billion and €24 billion, up 1-4% at cc. The earlier guided range was €24.7-€25.1 billion at cc.
Non-IFRS total revenues are now projected to come in the range of €27.8 to €28.5 billion (mid-point €28.15 billion), up 1-3% year over year at cc. The prior guided range was €29.2 billion to €29.7 billion (mid-point €29.45 billion). Markedly, the figure indicates decline of 4.4% at the mid-point.
Notably, the company now anticipates non-IFRS operating profit in the band of €8.1 billion to €8.7 billion, compared with prior predicted range of €8.9 billion to €9.3 billion.
Zacks Rank & Other Stocks to Consider
SAP currently carries a Zacks Rank #2 (Buy).
Some better-ranked stocks in the broader technology sector are Netlist, Inc. (NLST - Free Report) , CyberOptics Corporation and LogMeIn, Inc. which sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Netlist, CyberOptics and LogMeIn are currently pegged at 15%, 12% and 5%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>