SAP SE reports a 4% annualised decline in third-quarter revenue

SAP SE reports a 4% annualised decline in third-quarter revenue
Written by:
Wajeeh Khan
26th October, 10:40
  • SAP SE reports a 4% year over year decline in third-quarter revenue.
  • The German multinational saw a 1% annualised decline in operating profit.
  • The business software maker cuts its full-year guidance due to COVID-19.

SAP SE (ETR: SAP) said on late on Sunday that its sales and profit in the quarter that concluded on 30th September came in lower than expected. The company attributed the decline to the ongoing Coronavirus pandemic that weighed on demand in recent months.

Shares of the company opened close to 20% down in the stock market on Monday. On a year to date basis, SAP SE is now more than 15% down. It is now trading at £92.51 per share versus a low of £82.59 per share in March when the impact of COVID-19 was at its peak. Confused about choosing a reliable stockbroker to trade online? Here’s a comparison of the top few to make selection easier for you.

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SAP’s revenue from software and cloud services slides 2%

SAP SE reported £5.92 billion of revenue in the fiscal third quarter that represents a 4% decline as compared to the same quarter last year. In terms of operating profit, the business software maker saw a 1% annualised decline in Q3 to £1.87 billion.

The German multinational also highlighted to have generated £1.79 billion of cloud revenue that translates to a 10% growth on a year over year basis. Revenue from software and cloud services combined printed at £4.98 billion or 2% lower than the year-ago figure.

The Walldorf-based company said in a statement on Sunday:

“Lockdowns have been reintroduced in some regions, recovery is uneven and companies are facing more business uncertainty. Consequently, there is a greater scrutiny of larger projects. Transactional revenue continues to be impacted, especially in SAP Concur, where business travel-related revenues have yet to see a meaningful recovery.”

SAP cuts guidance for annual revenue and earnings

Citing the COVID-19 uncertainty, SAP also slashed its guidance for annual revenue and earnings. It now forecasts £7.69 billion of operating profit on an adjusted basis, and up to £25.16 billion of revenue for the full year. In comparison, its previous estimate stood at £7.87 billion of adjusted operating profit and £25.79 billion of revenue.

Earlier in October, SAP had expressed plans of acquiring Emarsys. Emarsys is a cloud-based marketing company headquartered in Vienna. It has a workforce of over 800 employees and a customer base of roughly 1,500.

At the time of writing, the German multinational software corporation now has a market cap of £112.89 billion and a price to earnings ratio of 26.75.

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