January 28, 2020 / 6:04 AM / a month ago

SAP's new leadership duo delivers in-line results, lifts guidance

WALLDORF, Germany, Jan 28 (Reuters) - SAP raised its revenue and profit outlook on Tuesday as new co-CEOs Jennifer Morgan and Christian Klein delivered a solid first set of quarterly results at the leading provider of business software.

Europe’s most valuable technology company now expects adjusted operating profit to grow by between 8% and 13% in 2020, while confirming its longer-term ambition of achieving 35 billion euros ($38.8 billion) in revenue in 2023.

Non-IFRS operating profit is forecast to reach 8.9-9.3 billion euros this year while revenue is expected to gain 6-8% to 29.2-29.7 billion euros, implying a pickup in profitability.

“We have great expectations for continued efficiency gains and expansion of our profitability in 2020,” said Chief Financial Officer Luka Mucic. At the mid-point, margins would increase by 120 basis points to 30.9% in 2020, compared to an 80 basis point gain last year, he told reporters.

In the fourth quarter, non-IFRS operating margin at constant currency was 35.2%, up a percentage point from a year earlier, and just above a median forecast of 35% in a poll of analysts by Vara Research.

Long-time CEO Bill McDermott stood down last October after a decade, handing the task to Morgan and Klein of completing SAP’s transition away from running software at customer sites to hosting its services at remote datacenters. ($1 = 0.9014 euros) (Reporting by Douglas Busvine Editing by Michelle Martin)

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