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SAP Q4 Profit Rises, Despite Weak Revenues

German software major SAP SE (SAP) announced its fourth-quarter preliminary results, reporting profit after tax on IFRS basis of 1.93 billion euros, up 18 percent from 1.64 billion euros last year.

Non-IFRS profit after tax was 2.02 billion euros, compared to 2.19 billion euros a year ago.

IFRS operating profit increased 26 percent year-over-year to 2.65 billion euros. Operating margin increased 9.1 percentage points to 35.2 percent. IFRS operating profit and operating margin were positively impacted by lower share-based compensation expenses.

Non-IFRS operating profit was down 3 percent to 2.77 billion euros, while operating margin increased 1.4 percentage points year over year to 36.7 percent.

Total revenue declined 6 percent to 7.54 billion euros from 8.04 billion euros a year ago. Total revenue was down 2 percent at constant currencies.

Cloud revenue was up 8 percent year-over-year to 2.04 billion euros, while software licenses revenue was down 15 percent to 1.70 billion euros. Cloud and software revenue fell 4 percent to 6.58 billion euros.

Current cloud backlog was up 7 percent to 7.15 billion euros.

SAP said its business performance sequentially improved in the fourth quarter even as the COVID-19 crisis persisted and lockdowns were reintroduced in many regions.

Luka Mucic, CFO, said, "In a uniquely challenging environment, 2020 was a record year for cash flow in every single quarter and the full year. Our better-than-anticipated top line performance combined with our quick response on the cost side drove strong operating profit. SAP's expedited shift to the cloud will drive long-term, sustainable growth while significantly increasing the resiliency and predictability of our business."

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