SAP forecasts flat 2021 revenue after fourth-quarter recovery

BERLIN: Business software group SAP forecast flat revenue and a decline in operating profit in 2021, as it released preliminary annual results that came at the high end of guidance slashed last autumn.

Walldorf-based SAP said it expected adjusted revenue, at constant currency, to be flat to up 2% this year, while adjusted operating profit was seen falling by 1%-6%.

CEO Christian Klein abandoned his medium-term profit targets last October and said SAP would go all-in on its shift to cloud computing, cautioning that business would take longer than expected to recover from the coronavirus pandemic.

That announcement sparked the biggest drop in SAP shares in a generation, causing the leading provider of enterprise software to lose its mantle as Europe's most valuable technology company.

SAP's full-year revenue for 2020 exceeded its lowered guidance while profit hit the high end, the company said in an ad hoc news release on Thursday night issued ahead of results scheduled on Jan. 29.

"SAP's business performance sequentially improved in the fourth quarter even as the COVID-19 crisis persisted and lockdowns were reintroduced in many regions," SAP said in a statement.

Cloud revenue continued to be impacted by lower pay-as-you-go transactional revenue, however, in particular for Concur, SAP's expense management app that has been hit by a slump in corporate travel.

That was offset by strength in e-commerce, business technology platform and customer experience sales, as well as wins for SAP's human resources application Success Factors.

"SAP also saw strong early take-up of its new holistic business transformation offering among pilot customers, contributing to the cloud performance in the quarter," the company said.

Non-IFRS cloud revenue at constant currencies rose by 13% in the fourth quarter while current cloud backlog - the company's preferred indicator of sales performance - grew by 14%, also at constant currencies.

Quarterly operating profit was lifted by lower share-based compensation expenses, rising 3% at constant currency. Adjusted operating margin, also at constant currency, expanded by 1.5 percentage points to 36.8%.