SAP rolls out early Q2 numbers, says 18% decline in licensing revenue is an 'improvement'

CEO reckons team 'navigated a very challenging environment'


Typically when businesses release financial results ahead of schedule it means one of two things: that the numbers were far worse than forecast or better. In the case of SAP it is the latter - not that all that glitters is gold.

Amid a lack of commitment from customers to sign off ERP upgrade projects in a pandemic, and with SAP revising its full year guidance revenue downward after a slower-than-expected March, things look to be gradually improving.

According to preliminary calendar Q2 figures, SAP revenues went up 2 per cent year-on-year to €6.74bn. For context, arch rival Oracle recently reported a 6 per cent drop in sales for its Q4 fiscal '20.

The team "navigated the very challenging environment to deliver a better than anticipated quarter," said Christian Klein, SAP CEO, whose partner in crime, co-chief exec Jennifer Morgan resigned in April when the company determined one head at the top was better than two for the purposes of decision making.

Software licence revenue fell 18 per cent to €770m from the same quarter last year, although it could also be described, and was, as a "strong sequential improvement" on the 31 per cent decline SAP reported in the prior quarter. The question on analysts' lips is whether this is a more lasting trend or something that will dissipate once the current crisis abates.

SAP said "business activity gradually improved over the course of the second quarter following the global emergence of the COVID-19 crisis primarily in the last month of the first quarter". It added that while software licensing was "still below normal levels" they had "recovered more than expected".

Another major pillar for SAP, cloud revenue, was up 21 per cent to €2.04bn, but this was slower than the 40 per cent jump posted a year ago or the 29 per cent spike in the prior quarter.

SAP said: “Cloud revenue in the second quarter was impacted by lower pay-as-you-go transactional revenue”. The outbreak of the virus and its consequences were blamed for this.

Operating profit for Q2 jumped 55 per cent to €1.28bn, according to the preliminary figures.

SAP reaffirmed that it expects annual turnover to be between €27.8bn and €28.5bn, unchanged since the initial forecast of €29.2bn to €29.7bn was downgraded by 5 per cent in April. The company is banking on Q3 and Q4 showing improvements. ®

Similar topics

Narrower topics


Other stories you might like

  • Experts: AI should be recognized as inventors in patent law
    Plus: Police release deepfake of murdered teen in cold case, and more

    In-brief Governments around the world should pass intellectual property laws that grant rights to AI systems, two academics at the University of New South Wales in Australia argued.

    Alexandra George, and Toby Walsh, professors of law and AI, respectively, believe failing to recognize machines as inventors could have long-lasting impacts on economies and societies. 

    "If courts and governments decide that AI-made inventions cannot be patented, the implications could be huge," they wrote in a comment article published in Nature. "Funders and businesses would be less incentivized to pursue useful research using AI inventors when a return on their investment could be limited. Society could miss out on the development of worthwhile and life-saving inventions."

    Continue reading
  • Declassified and released: More secret files on US govt's emergency doomsday powers
    Nuke incoming? Quick break out the plans for rationing, censorship, property seizures, and more

    More papers describing the orders and messages the US President can issue in the event of apocalyptic crises, such as a devastating nuclear attack, have been declassified and released for all to see.

    These government files are part of a larger collection of records that discuss the nature, reach, and use of secret Presidential Emergency Action Documents: these are executive orders, announcements, and statements to Congress that are all ready to sign and send out as soon as a doomsday scenario occurs. PEADs are supposed to give America's commander-in-chief immediate extraordinary powers to overcome extraordinary events.

    PEADs have never been declassified or revealed before. They remain hush-hush, and their exact details are not publicly known.

    Continue reading
  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading

Biting the hand that feeds IT © 1998–2022