SAP announced its preliminary year end financial results for the fourth quarter of 2018. These results come with a very ambitious forecast for the future.
Year End Result Highlights
SAP announced a 11 percent increase in 2018 non-IFRS revenues, at constant currencies, that beat its thrice-raised guidance. Operating profits rose 10 per cent as forecasted. SAP will more than triple cloud subscription and support revenues, with total revenues reaching 35 billion euros and operating profits outgrowing revenues to expand at an annual rate of 7.5 to 10 percent by 2023.
“In 2018, SAP hit or exceeded all guidance metrics even after multiple raises. With Qualtrics joining SAP, we are now poised to revolutionise the business software industry with Experience Management. With a consistent track record of unprecedented growth behind us, we are leading our stakeholders to bridge the experience gap. Our strategy is innovative, complete and alone at the forefront of the experience economy.” Said Bill McDermott, SAP CEO.
“SAP remains a beacon of growth and stability. New order entry surged 18% in Q4, taking the total for the full year to over €10 billion for the first time ever. This stellar business momentum sets us up perfectly for continued strong profitable growth in 2019 and beyond, while we expect our cloud growth will continue to outperform our business software cloud peers.”Said Luka Mucic, CFO
Global layoffs will be necessarily to remain a beacon of growth and stability. SAP has confirmed its Australian operations will be hit by a mass redundancy that will impact 4400 employees globally, as the company continues to transitions away from traditional software delivery in favour of a cloud subscription model. The extent of the local retrenchments are expected to be substantial as the company consolidates its efforts .
“SAP will execute a company-wide restructuring program to further simplify company structures and processes and to ensure its organisational setup, skills set and resource allocation continue to meet evolving customer demand. Restructuring expenses are projected to be €800 million to €950 million, the vast majority of which will be recognized in the first quarter 2019,” SAP reported in a quarterly markets statement.