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SAP SE: Updates 2020 Outlook and Mid-Term Ambition - Accelerates Transition to Cloud

·6-min read

SAP SE / Key word(s): Change in Forecast
SAP SE: Updates 2020 Outlook and Mid-Term Ambition - Accelerates Transition to Cloud

25-Oct-2020 / 19:19 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

Updated Business Outlook 2020

SAP's previous full year 2020 outlook issued on April 8th, 2020 reflected its best estimates concerning the timing and pace of recovery from the COVID-19 crisis. This outlook assumed economies would reopen and population lockdowns would ease, leading to a gradually improving demand environment in the third and fourth quarters.

While SAP continues to see robust interest in its solutions to drive digital transformation as customers look to emerge from the crisis with more resilience and agility, lockdowns have been recently re-introduced in some regions and demand recovery has been more muted than expected. Further and for the same reasons, SAP no longer anticipates a meaningful recovery in SAP Concur business travel-related revenues for the remainder of the year 2020.

SAP is therefore updating its full year 2020 outlook and now expects:

SAP continues to expect its share of more predictable revenue to be approximately 72%.

The Company has raised its cash flow expectations for 2020 on the back of a strong year-to-date cash flow performance and now expects an operating cash flow of approximately €6.0 billion (previously above €5.0 billion) and a free cash flow above €4.5 billion (previously approximately €4.0 billion).


Updated Mid-Term Ambition

SAP's previous mid-term ambition was issued on April 24th, 2019, before the COVID-19 crisis. The company is now updating its mid-term ambition to reflect the following factors:

As a consequence of SAP's accelerated cloud transition, the Company expects software licenses revenue to continue to trend lower from 2020 levels.

The combined impact of the above factors and the mechanics of the associated business model switch are expected to lead to muted non-IFRS total revenue growth as well as flat or slightly lower non-IFRS operating profit over the next two years, followed by accelerated non-IFRS total revenue and double-digit non-IFRS operating profit growth from 2023 onwards.

By 2025, this trajectory is expected to take SAP to:


Contact:
Stefan Gruber
Head of Investor Relations
Phone: +49 6227 7-44872
Email: investor@sap.com
 

Information and Explanation of the Issuer to this News:

While SAP's full year 2020 business outlook is at constant currencies, actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as the Company progresses through the year. See the table below for the Q4 and FY 2020 expected currency impacts.

 

Extended Earnings Conference Call

SAP senior management will host an extended earnings conference call including slide presentations to discuss the key drivers behind the updated mid term ambition on Monday, October 26th, from 2:00 - 3:30 PM (CET) / 1:00 - 2:30 PM (GMT) / 9:00 - 10:30 AM (EDT) / 6:00 - 7:30 AM (PDT).

This extended earnings conference call will be webcast live on SAP's website at www.sap.com/investor and will be held in lieu of a virtual capital markets day in the fourth quarter. The presentation slides will be published prior to the earnings call on SAP's website at www.sap.com/investor as well.

 

###

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as 'anticipate,' 'believe,' 'estimate,' 'expect,' 'forecast,' 'intend,' 'may,' 'plan,' 'project,' 'predict,' 'should' and 'will' and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ('SEC'), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
 

25-Oct-2020 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de

Expected Currency Impact Based on September 2020 Level for the Rest of the Year

In percentage points

Q4

FY

Cloud revenue

-6pp to -4pp

-3pp to -1pp

Cloud and software revenue

-5pp to -3pp

-3pp to -1pp

Operating profit

-5pp to -3pp

-4pp to -2pp

Expected Currency Impact Based on September 2020 Level for the Rest of the Year

In percentage points

Q4

FY

Cloud revenue

-6pp to -4pp

-3pp to -1pp

Cloud and software revenue

-5pp to -3pp

-3pp to -1pp

Operating profit

-5pp to -3pp

-4pp to -2pp

Language:

English

Company:

SAP SE

Dietmar-Hopp-Allee 16

69190 Walldorf

Germany

Phone:

+49 (0)6227 - 74 74 74

Fax:

+49 (0)6227 - 75 75 75

E-mail:

investor@sap.com

Internet:

www.sap.com

ISIN:

DE0007164600

WKN:

716460

Indices:

DAX, TecDAX

Listed:

Regulated Market in Berlin, Frankfurt (Prime Standard), Stuttgart; Regulated Unofficial Market in Dusseldorf, Hamburg, Hanover, Munich, Tradegate Exchange; NYSE

EQS News ID:

1142892


 

End of Announcement

DGAP News Service

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