SAP reveals impressive Q4 results, but still considers restructure
The software firm said its SaaS services were doing well, but legacy software not so much
SAP has unveiled its fourth quarter financials, presenting year-on-year revenue growth of 9%. The company said it met or exceeded all expectations, although has made the decision to restructure its business to take advantage of new opportunities on the horizon.
Operating profit increased by 22% over the entire year, with new cloud bookings up a quarter during the final period of 2018 and cloud subscriptions and revenues rising by 41%.
"In 2018, SAP hit or exceeded all guidance metrics even after multiple raises. With Qualtrics joining SAP, we are now poised to revolutionize the business software industry with Experience Management," said Bill McDermott, CEO at SAP.
"With a consistent track record of unprecedented growth behind us, we are leading our stakeholders forward to bridge the experience gap. Our strategy is innovative, complete and alone at the forefront of the experience economy."
Although cloud revenues were a big winner for the company, with S/4HANA contributing nicely to its overall performance, the company's software revenues fell by 5% year-on-year and it's increasingly relying on its cloud services to keep its growth in an upwards direction.
"It will be interesting to see whether SAP will announce a continuation of the Q3 trend of cloud eclipsing software," said George Lawrie, Forrester VP and principal analyst.
"The company's operating profit demonstrated a marked improvement in Q3 and I expect that as cloud deployments accelerate this will improve even further."
Although these results were pretty impressive, the company explained it wants to innovate to keep up with its competitors and to lessen the impact of retiring employees.
It may let go up to 3,000 of its current employees to boost profitability and reach its goals of reaching 35 billion in revenues.
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