“I am extremely proud that our teams successfully navigated the very challenging environment to deliver a better than anticipated quarter. It’s clear, customers are turning to SAP Intelligent Enterprise to drive resilience, profitability and sustainability. Our portfolio is key to drive the kind of business transformation our customers want as our applications run the world’s most mission critical business processes. As a result, our customers can emerge even stronger from the crisis. In line with our strategy we continue to invest in our growth drivers such as Industry Cloud.”
Christian Klein, CEO
“SAP’s broad solution portfolio, unmatched industry and geographic diversification coupled with our strong base of more predictable revenue have allowed us to weather the COVID-19 crisis well in this quarter. Software licenses revenue in Asia saw a solid rebound. Our quick response to the crisis on the cost side drove strong operating profit and margin expansion.”
Luka Mucic, CFO
Second Quarter Business Update
After an initial review of its second quarter 2020 performance, SAP announced its preliminary financial results for the second quarter ended June 30, 2020. All 2020 figures in this release are approximate due to the preliminary nature of the announcement and the uncertainty associated with the COVID-19 crisis.
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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. Software licenses revenue, while still below normal levels, recovered more than expected. In particular, the APJ region had a strong recovery in software licenses revenue. Cloud revenue in the second quarter was impacted by lower pay-as-you-go transactional revenue as a result of the COVID-19 crisis. Current cloud backlog remained strong with continued high demand for digital supply chain, e-commerce, cloud platform and Qualtrics solutions.
SAP continues to operate effectively with a largely virtual sales and remote implementation strategy. To protect profitability, SAP responded quickly to the COVID-19 crisis by slowing hiring and reducing discretionary spend in addition to natural savings e.g. from lower travel, facility related costs and virtualized events. In combination with the strong topline performance these prompt actions drove higher operating profit and margin despite the challenging macro environment.
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