SAP Q4 Profit Climbs, Sees Growth In FY18; To Buy CallidusCloud For $2.4 Bln

(RTTNews) - German software giant SAP SE (SAP) reported Tuesday strong growth in fourth-quarter profit and new cloud bookings. Looking ahead, the company projects higher profit and cloud subscriptions and support revenues for fiscal 2018. The firm also reiterated its 2020 outlook.

SAP announced late Monday that SAP America, Inc. has entered into an agreement to acquire Callidus Software Inc., doing business as CallidusCloud, (CALD), a cloud-based Lead to Money (Quote-to-Cash) solutions provider. The per share purchase price of $36 represents an enterprise value of approximately $2.4 billion. In pre-market activity, Callidus shares were gaining 12 percent.

The transaction is expected to be essentially neutral to SAP's non-IFRS earnings per share for fiscal 2018 and accretive to SAP's non-IFRS earnings per share for fiscal 2019. The per share price represents a 21% premium over the 30-day volume weighted average price per share and a 28% premium over CallidusCloud's 90-day volume weighted average price per share.

Upon completion of the transaction, SAP expects to consolidate all CallidusCloud product assets within SAP Hybris solutions as part of SAP's Cloud Business Group.

Regarding its outlook, SAP said it expects full year 2018 non-IFRS total revenue to be in a range of 24.6 billion euros - 25.1 billion euros at constant currencies. This range represents a growth rate of 5% - 7% at constant currencies from last year's 23.46 billion euros.

Based on the continued strong momentum in SAP's cloud business, the company expects full year 2018 non-IFRS cloud subscriptions and support revenue to be in a range of 4.8 billion euros to 5 billion euros at constant currencies, representing a growth rate of 27% - 33%.

The company expects full-year 2018 non-IFRS operating profit to be in a range of 7.3 billion euros - 7.5 billion euros at constant currencies. This range represents a growth rate of 8% - 11% at constant currencies.

Looking beyond 2018, SAP reiterated its 2020 ambition for cloud, total revenue, operating profit and more predictable revenue share last provided at the beginning of 2017.SAP continues to strive to reach 8.0 billion euros - 8.5 billion euros non-IFRS cloud subscriptions and support revenue; 28 billion euros - 29 billion euros non-IFRS total revenue; and 8.5 billion euros- 9.0 billion euros non-IFRS operating profit.

SAP continues to expect the share of more predictable revenue to reach 70% - 75% in 2020.

In its fourth quarter, SAP's profit after tax rose 22% to 1.87 billion euros from 1.53 billion euros last year. Earnings per share increased 21% to 1.55 euros.

Adjusted profit was 2.14 billion euros or 1.77 euros per share, compared to 1.83 billion euros or 1.53 euros per share last year.

Fourth-quarter operating profit was up 1% year over year to 1.96 billion euros, while adjusted operating profit grew 6%.

Total revenue for the quarter was 6.81 billion euros, up 1% from last year's 6.72 billion euros. Revenues grew 6% at constant currencies.

New cloud and software license order entry grew by 13% at constant currencies. New cloud bookings climbed 22% or 31% at constant currencies and reached 591 million euros.

Luka Mucic, CFO, said, "We ended the year strongly with new cloud bookings surging 31% on top of a stellar prior Q4. As promised we initiated the margin turnaround with a Q4 Non-IFRS operating margin of 35.2% at constant currencies. This paves the way for the strong growth and margin expansion we expect in 2018 and beyond."

In Germany, SAP is trading at 92.77 euros, up 0.74%.