Disappointing Q2 for German software giant SAP

Source: Xinhua | 2019-07-19

German software company SAP's operating profits in the second quarter 2019 dropped by 21 percent to 827 million euros (928.9 million U.S. dollars), the company announced on Thursday.
Following the announcement, shares of SAP which is listed in the German DAX index, dropped by around seven percent prior to trading on Thursday and was by far the biggest loser among Germany's 30 biggest companies as investors showed their disappointment.
In January, SAP launched its first major restructuring round since 2015, including plans for up to 4,400 employees to either switch to other functions or leave the company with severance pay. SAP had so far set aside almost 1.1 billion euros for the restructuring program.
"We are making good progress toward our goal of becoming an effective powerful and successful SAP," said Chief Executive Officer (CEO) Bill McDermott.
Despite the major drop in operating profit, the German tech giant's strong cloud computing business and the acquisition of Qualtrics helped boost revenue by 11 percent to 6.6 billion euros in the second quarter.
Revenue in SAP's cloud computing segment grew by 40 percent, although incoming orders in the division slowed noticeably and the sale of software licenses in Asia shrank by five percent year-on-year to 948 million euros
The company's Chief Financial Officer (CFO) Luka Mucic described the slowdown in Asia as "short-term trade-related uncertainty."
The majority of SAP's revenue was still generated by SAP systems which accounted for around 77 percent of all global transaction revenues, the company said. (one euro currently equals to 1.12 U.S. dollars)