SAP Q1 2019: First quarter operating profit slammed by restructuring hit

SAP’s earnings have been seriously impacted by planned restructuring efforts and the promotion of growth.

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SAP has reported an operating loss in Q1 2019 chiefly resulting from a restructuring effort designed to tighten up the tech giant's growth margins in the future. 

 SAP's Q1 2019 earnings (statement) reveal revenues of €6.09 billion IFRS or €6.11 billion non-IFRS, up 16 percent year-over-year with basic earnings per share of -€0.10 (€0.90 non-IFRS), a reduction from 2018's €0.59 earnings per share.

In Q4 2018, SAP warned that the majority of an €886 million restructuring charge would impact Q1 2019 earnings. The charge is on the table due to early retirement offers and job cuts made in the name of growth. 

SAP reported an operating loss of -€136 million IFRS. Non-IFRS profit was up 19 percent at €1,467 million or 13 percent at constant currencies. 

At the end of Q1 2019, net liquidity was -€6.19 billion. 

 New cloud bookings were up 32 percent or 26 percent at constant currencies. Cloud revenue grew 45 percent year-over-year to €1.56 billion IFRS, or up 48 percent non-IFRS. 

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Software license revenue increased by 4 percent year-over-year to €650 million IFRS or 1 percent non-IFRS at constant currencies. Cloud and software revenue grew 16 percent year-over-year to €5.04 billion IFRS and up 12 percent non-IFRS at constant currencies. 

The three main business segments SAP reports on, "Applications, Technology & Services," "Customer Experience" and "SAP Business Network" performed well over the first quarter of 2019. 

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Applications, Technology & Services grew by 12 percent to €3.99 billion year-over-year, up 9 percent at constant currencies, with SAP S/4HANA contributing to revenue through increased adoption rates of 30 percent year-over-year.  

SAP S/4HANA now accounts for over 10,900 customers. 

In the Customer Experience category, SAP reports revenue of €305 million, an increase of over 100 percent year-over-year. The SAP Business Network reported Q1 2019 earnings of €740 million, a rise of 25 percent year-over-year or 18 percent at constant currencies. 

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SAP previously reported 2018 full-year revenue of €24.71 billion IFRS or €25.96 billion non-IFRS at constant currencies. Operating profit reached €5.71 billion IFRS or €7.48 billion non-IFRS at constant currencies and cloud subscriptions & support revenue were reported as €4.99 billion IFRS or €5.21 billion non-IFRS.

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