SAP’s Q4 shows improvement, adds Microsoft Azure alum as marketing chief

SAP said the fourth quarter will be better than expected as the company plans to move its customer base to the cloud.

The enterprise software giant announced that fourth quarter cloud revenue will increase 8% under International Financial Reporting Standards (IFRS), but software license revenue will increase 15%.

In October, SAP presented a comprehensive plan to move to a data structure and aggressively move customers from licenses to cloud subscriptions. SAP also went public for Qualtrics.

SAP will publish its full results on January 29th.

For 2020, SAP announced that non-IFRS operating income will be at the high end of forecast and operating cash flow will be around € 7.0 billion.

Regarding the outlook for 2021, SAP’s guidance has been muted to reflect efforts to bring customers to the cloud. For the year 2021, SAP expects revenue of 9.1 to 9.5 billion euros for non-IFRS clouds at constant exchange rates and revenue of 23.3 to 23.8 billion euros for non-IFRS clouds and software.

Jefferies analyst Julian Serafini said that SAP’s outlook for 2021 is “achievable”. Patrick Walravens, analyst at JMP Securities said:

We continue to believe that SAP will benefit from a product upgrade cycle when its massive ERP base moves from 30,000 customers to S / 4HANA – and those benefits will continue to grow with so many of these new S / 4HANA customers are hosted the cloud as possible.

CFO Luka Mucic said the fourth quarter improved sequentially. Mucic said in a statement:

SAP’s business performance improved sequentially in the fourth quarter, although the COVID-19 crisis persisted and lockdowns were reintroduced in many regions. Cloud revenue in the fourth quarter continued to be impacted by lower cost allocation revenue, primarily related to Concur business travel. However, the continued high demand for e-commerce, business technology platform and Qualtrics solutions, as well as several competitive wins – especially for SuccessFactors Human Experience Management – resulted in strong annual results for SAP’s cloud business. SAP also saw strong early adoption of its new holistic business transformation offering from pilot customers, which contributed to cloud performance for the quarter.

Separately, SAP announced that it had appointed Julie White and Scott Russell to the board. White becomes Chief Marketing and Solutions Officer and is leaving Microsoft, where she previously led product marketing for Microsoft Azure and Office 365. Also:

Russell, who led SAP’s Asia operations, will now lead SAP’s Customer Success organization.